THIRD AMENDED AND RESTATED
LOAN AGREEMENT
between
CORESTATES BANK, N.A.
(successor to Meridian Bank)
and
BLONDER TONGUE LABORATORIES, INC.
Dated as of October 29, 1997
(i)
THIRD AMENDED AND RESTATED LOAN AGREEMENT BETWEEN
CORESTATES BANK, N.A. (successor to Meridian Bank) and
BLONDER TONGUE LABORATORIES, INC.
TABLE OF CONTENTS
Article Page
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I. Definitions............................................................................................1
II. Credit Accommodations.................................................................................10
2.1. The Line of Credit.........................................................................10
2.2 Real Estate Loan...........................................................................12
2.3 Acquisition Facility.......................................................................12
2.4 Requirements of Law........................................................................19
2.5 Determinations.............................................................................19
2.6 Payments and Computations..................................................................20
2.7 Borrowing..................................................................................20
2.8 Prepayment and Repayment...................................................................20
III. Security..............................................................................................21
3.1 Security Documents.........................................................................21
IV. Representations and Warranties of the Borrower........................................................21
4.1 Good Standing of the Borrower; Authorization...............................................21
4.2 Compliance with Laws and Other Agreements..................................................21
4.3 No Conflict; Governmental Approvals........................................................22
4.4 Financial and Other Information Regarding
Borrower...................................................................................22
4.5 Taxes......................................................................................22
4.6 Encumbrances and Guaranties................................................................22
4.7 Material Adverse Changes...................................................................23
4.8 Margin Securities..........................................................................23
4.9 ERISA......................................................................................23
4.10 Pending Litigation.........................................................................23
4.11 Valid, Binding and Enforceable.............................................................24
4.12 Priority of Security Interests.............................................................24
4.13 Environmental Matters .....................................................................24
4.14 No Untrue Statements.......................................................................24
4.15 Patents and Trademarks.....................................................................25
V. Conditions Precedent to the Bank's Obligations........................................................25
5.1 Documents to be Delivered by the Borrower at Closing.......................................25
5.2 Conditions Precedent to Making Line of Credit Loans or Acquisition Loans...................26
VI. Affirmative Covenants of the Borrower.................................................................26
6.1 Use of Proceeds............................................................................26
6.2 Financial Statements.......................................................................26
6.3 Ordinary Course of Business; Records.......................................................27
6.4 Information for the Bank...................................................................27
6.5 Insurance..................................................................................27
6.6 Maintenance................................................................................28
(ii)
Article Page
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6.7 Taxes......................................................................................29
6.8 Leases.....................................................................................29
6.9 Corporate Existence; Certain Rights; Laws..................................................29
6.10 Notice of Litigation or Other Proceedings..................................................29
6.11 Indebtedness...............................................................................29
6.12 Notice of Events of Default................................................................29
6.13 ERISA......................................................................................29
6.14 Deposit Accounts...........................................................................30
6.15 Management.................................................................................30
6.16 Financial Covenants........................................................................30
6.17 Compliance with Environmental Laws.........................................................30
6.18 Further Actions............................................................................31
6.19 Material Adverse Change....................................................................31
6.20 Meeting Regarding Projections..............................................................31
6.21 Subordination of Debt......................................................................31
VII. Negative Covenants....................................................................................31
7.1 Fundamental Corporate Changes..............................................................31
7.2 Indebtedness...............................................................................32
7.3 Encumbrances...............................................................................32
7.4 Guaranties.................................................................................33
7.5 Sales and Lease-Backs......................................................................33
7.6 Loans, Investments.........................................................................33
7.7 Change in Business.........................................................................33
7.8 Sale or Discount of Receivables............................................................33
7.9 Prepayment of Indebtedness.................................................................33
7.10 ERISA......................................................................................33
7.11 Compliance with Federal Reserve Board Regulations..........................................33
7.12 Blonder International......................................................................34
VIII. Events of Default.....................................................................................34
8.1 Borrower's Failure to Pay..................................................................34
8.2 Breach of Covenants or Conditions..........................................................34
8.3 Defaults in Other Agreements...............................................................34
8.4 Agreements Invalid.........................................................................35
8.5 False Warranties; Breach of Representations................................................35
8.6 Judgments..................................................................................35
8.7 Bankruptcy or Insolvency of the Borrower or Other Loan Parties.............................35
IX. Remedies..............................................................................................36
9.1 Further Advances; Acceleration; Setoff.....................................................36
9.2 Further Remedies...........................................................................37
X. Miscellaneous.........................................................................................37
10.1 Remedies Cumulative; No Waiver.............................................................37
10.2 Notices....................................................................................37
10.3 Costs, Expenses and Attorneys' Fees........................................................38
10.4 Survival of Covenants......................................................................38
10.5 Counterparts; Effectiveness................................................................39
10.6 Headings...................................................................................39
(iii)
Article Page
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10.7 Payment Due On A Day Other Than a Business Day.............................................39
10.8 Judicial Proceedings.......................................................................39
10.9 Governing Law..............................................................................39
10.10 Integration................................................................................39
10.11 Amendment and Waiver.......................................................................39
10.12 Successors and Assigns.....................................................................40
10.13 Severability of Provisions.................................................................40
10.14 Consent to Jurisdiction and Service of Process.............................................40
10.15 Indemnification............................................................................41
(iv)
THIRD AMENDED AND RESTATED LOAN AGREEMENT
This THIRD AMENDED AND RESTATED LOAN AGREEMENT ("Agreement"),
dated as of October 29, 1997, is between CORESTATES BANK, N.A. (successor to
Meridian Bank), a national banking association (the "Bank"), and BLONDER TONGUE
LABORATORIES, INC., a Delaware corporation (the "Borrower").
BACKGROUND
A. The Bank and the Borrower are parties to a Second Amended
and Restated Loan Agreement dated September 26, 1996 (as amended, modified
and/or extended, the "Existing Loan Agreement").
B. In accordance with the terms of the Existing Loan
Agreement, the Bank has extended to the Borrower (i) a line of credit in the
maximum principal amount of Fifteen Million Dollars ($15,000,000) (the "Existing
Line of Credit") pursuant to which there is no outstanding principal balance on
the date hereof, which line of credit is further evidenced by a certain Amended
and Restated Line of Credit Note dated September 26, 1996 made by the Borrower
in favor of the Bank (the "Existing Line of Credit Note"); (ii) a real estate
loan in the original principal amount of Two Million Eight Hundred Thousand
Dollars ($2,800,000) (the "Existing Real Estate Loan") pursuant to which there
is an outstanding principal balance on the date hereof of $2,535,555.48 (the
"Existing Real Estate Loan Indebtedness"); and an acquisition loan commitment in
the maximum principal amount of $10,000,000 (the "Existing Acquisition Loan")
pursuant to which there is no outstanding principal balance on the date hereof.
C. The Bank and the Borrower now desire to amend and restate
in their entirety the terms and conditions of the Existing Loan Agreement
pursuant to the terms hereof and set forth the terms and conditions upon which
the Bank will continue to make available to the Borrower certain credit
facilities to be used for the purposes specified in this Agreement. Accordingly,
the Bank and the Borrower, each intending to be legally bound hereby, agree as
follows:
ARTICLE I
DEFINITIONS
Terms used herein without definition that are defined in the
Uniform Commercial Code shall have the meanings ascribed to them therein, unless
the context requires otherwise. The following terms shall have the following
meanings in this Agreement:
"Account" shall have the meaning given to that term in the
Uniform Commercial Code and, in addition, shall include any right to payment for
goods sold or leased or services rendered which is evidenced by an instrument or
chattel paper.
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"Acquisition Facility" shall mean the credit facility extended
by the Bank to the Borrower pursuant to Section 2.3 hereof.
"Acquisition Loan" and "Acquisition Loans" shall have the
meaning given such terms in Section 2.3(a) hereof.
"Acquisition Loan Adjusted Overnight Base Rate" shall mean the
interest rate equal to the sum of the Overnight Base Rate plus (i) 1.25%, if the
ratio of Senior Debt to Capital Funds is less than .75:1.00 at the end of the
previous fiscal quarter, (ii) 1.75%, if the ratio of Senior Debt to Capital
Funds is equal to or greater than .75:1.00, but less than 1.00:1.00 at the end
of the previous fiscal quarter, (iii) 2.25%, if the ratio of Senior Debt to
Capital Funds is equal to or greater than 1.00:1.00, but less than 1.25:1.00 at
the end of the previous fiscal quarter, and (iv) 2.75%, if the ratio of Senior
Debt to Capital Funds is equal to or greater than 1.25:1.00, at the end of the
previous fiscal quarter.
"Acquisition Loan Commitment" shall have the meaning given
such term in Section 2.3 hereof.
"Acquisition Loan Note(s)" shall have the meaning given such
term in Section 2.3(e) hereof.
"Affiliate" shall mean any Subsidiary of the Borrower and any
Person or entity that, now or hereafter, directly or indirectly through one or
more intermediaries, controls, is controlled by or is under common ownership or
control with the Borrower. For purposes of this definition, the terms "control,"
"controls" and "controlled" shall refer to the power to determine the management
or policies of a Person, whether resulting from an official position or capacity
with such Person, direct or indirect beneficial ownership of at least twenty
percent (20%) of the voting securities or other equity interests of such Person,
or otherwise.
"Agreement" shall mean this agreement, together with all
exhibits, amendments, modifications and supplements hereto as may be in effect
from time to time.
"Allonge to Existing Real Estate Loan Note" shall mean
the allonge to Existing Real Estate Loan Note, dated September
26, 1996.
"Applicable Law" shall mean all applicable provisions of (i)
constitutions, statutes, rules, regulations and orders of governmental
authorities of any kind having jurisdiction over the Bank or the Borrower, (ii)
authorizations, consents, approvals, and licenses of such governmental
authorities, (iii) Judgments, and (iv) common law and equity.
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"Bank" shall have the meaning specified in the initial
paragraph of this Agreement, together with its successors and assigns.
"Blonder International" shall mean Blonder Tongue
International, Inc., a Delaware corporation, together with its successors and
assigns.
"Borrower" shall have the meaning specified in the initial
paragraph of this Agreement, together with its successors and assigns.
"Business Day" shall mean any day upon which the Bank is open
for business at its office in Reading, Pennsylvania.
"Capital Lease" shall mean any lease of property which, in
accordance with GAAP, should be capitalized on the lessee's balance sheet.
"Capital Lease Obligation" shall mean the amount of the
liability which, according to GAAP, should be capitalized or disclosed with
respect to a Capital Lease.
"Closing" shall mean the execution and delivery to the Bank of
all of the documents and instruments required by the terms of this Agreement and
the closing of the transactions contemplated by this Agreement.
"Closing Date" shall mean the date on which the Closing
takes place.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall have the meaning set forth in the
Security Agreement.
"Default Rate" shall mean the rate of interest applicable to
any Loan, plus two percent (2.0%).
"Encumbrance" shall mean, as to any Person, any mortgage,
lien, pledge, adverse claim, charge, security interest or other encumbrance in
or on, or any interest or title of any vendor, lessor, lender to, or other
secured party of the Person under any conditional sale or other title retention
agreement or Capital Lease with respect to, any property or asset of the Person.
"Environmental Laws" shall mean all provisions of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss.ss.9601 et seq., as amended by the Superfund Amendments and Reauthorization
Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (October 17, 1986), the Resource
Conservation and Recovery Act, 42 U.S.C. ss.6901 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. ss.1801 et seq., the Clean Water
- 3 -
Act, 33 U.S.C. ss.1251 et seq., the Clean Air Act, 42 U.S.C. ss.7401 et seq.,
the Storage Tank and Spill Prevention Act, 35 P.S. ss.6021.101 et seq., the
Solid Waste Management Act, 35 P.S. ss.6018.101 et seq., the Clean Streams Law,
35 P.S. ss.691.1 et seq., the Hazardous Sites Cleanup Act, 35 P.S. ss.6021.101
et seq., and all other federal, state and local legal requirements pertaining to
the environment or regulating or restricting the use, transfer, storage or
disposal of Hazardous Materials and applicable to the Borrower or its business,
operations or assets.
"ERISA" shall mean the federal Employee Retirement Income
Security Act of 1974, as amended.
"Event of Default" shall have the meaning set forth in Article
VIII of this Agreement.
"Existing Line of Credit Note" shall have the meaning given
such term in paragraph B of the Background Section of this Agreement.
"Existing Real Estate Loan" shall have the meaning given such
term in paragraph B of the Background Section of this Agreement.
"Existing Real Estate Loan Indebtedness" shall have the
meaning given such term in paragraph B of the Background Section of this
Agreement.
"Existing Real Estate Loan Note" shall mean the Real Estate
Loan Note, dated May 23, 1996 made by the Borrower in favor of the Bank,
evidencing the Existing Real Estate Loan Indebtedness, as amended by the Allonge
to Existing Real Estate Note.
"Federal Reserve Board" shall mean the Board of Governors of
the United States Federal Reserve System.
"Financial Statements" shall have the meaning set forth in
Section 4.4(a) of this Agreement.
"GAAP" shall mean generally accepted accounting principles, as
in effect at the time of application to the provisions hereof, and consistently
applied.
"Guarantor" shall mean any Person who guarantees the payment
and performance of all or any part of the Obligations.
"Guaranty" shall mean any guaranty or agreement to be a surety
or other contingent liability (other than any endorsement for collection or
deposit in the ordinary course of business), direct or indirect, with respect to
any obligation of another Person.
"Hazardous Materials" shall mean all materials of any kind
which are flammable, explosive, toxic, radioactive or
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otherwise hazardous to animal or plant life or the environment, including,
without limitation, "hazardous wastes," "hazardous substances" and
"contaminants," as such terms are defined by Environmental Laws.
"Indebtedness" shall mean any obligation for borrowed money,
including, without limitation:
(a) any obligation owed for all or any part of the
purchase price of property or other assets or for the cost of property or other
assets constructed or of improvements thereto, other than accounts payable
included in current liabilities and incurred in respect of property purchased in
the ordinary course of business;
(b) any Capital Lease Obligation; and
(c) any reimbursement obligations and other
obligations under any letter of credit, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate management devise,
or any forward sale or purchase agreement for foreign currencies.
"Judgment" shall have the meaning set forth in Section 8.6 of
this Agreement.
"Line of Credit" shall mean the line of credit from the Bank
to the Borrower established pursuant to Section 2.1 of this Agreement.
"Line of Credit Adjusted Overnight Base Rate" shall mean the
interest rate equal to the sum of the Overnight Base Rate plus (i) .95%, if the
ratio of Senior Debt to Capital Funds is less than .75:1.00 at the end of the
previous fiscal quarter, (ii) 1.45%, if the ratio of Senior Debt to Capital
Funds is equal to or greater than .75:1.00, but less than 1.00:1.00, at the end
of the previous fiscal quarter, (iii) 1.95%, if the ratio of Senior Debt to
Capital Funds is equal to or greater than 1.00:1.00, but less than 1.25:1.00, at
the end of the previous fiscal quarter, and (iv) 2.45%, if the ratio of Senior
Debt to Capital Funds is equal to or greater than 1.25:1.00, at the end of the
previous fiscal quarter.
"Line of Credit Commitment" shall have the meaning set forth
in Section 2.1 of this Agreement.
"Line of Credit Loans" shall mean the loans made by the Bank
to the Borrower pursuant to the Line of Credit.
"Line of Credit Note" shall have the meaning set forth in
Section 2.1 of this Agreement, together with all replacements, amendments and
renewals thereof.
"Loan Documents" shall mean this Agreement, the Security
Agreement, the Notes, the Mortgage, the Patent
- 5 -
Assignment, the Trademark Assignment, the Life Insurance Assignments and all
agreements, amendments, certificates, financing statements, schedules, reports,
notices, and exhibits now or hereafter executed or delivered in connection with
any of the foregoing, as may be in effect from time to time.
"Loans" shall mean the Line of Credit Loans, the Existing Real
Estate Loan and the Acquisition Loan(s).
"Mortgage" shall mean the Mortgage, Assignment of Leases, and
Security Agreement dated as of May 23, 1996 from the Borrower to the Bank, and
encumbering real and personal property located generally at Middlesex County,
New Jersey, and any amendments and supplements thereto.
"Notes" shall mean the Line of Credit Note, the Existing Real
Estate Loan Note, the Acquisition Note(s) and all replacements, amendments,
extensions and renewals thereof.
"Obligations" shall mean the obligations of the Borrower:
(a) To pay the principal, interest, commitment fees
and any other liabilities of the Borrower to the Bank under this Agreement and
the other Loan Documents in accordance with the terms thereof;
(b) To satisfy all of the other direct or indirect
liabilities of the Borrower to the Bank, whether hereunder or otherwise, whether
now existing or hereafter incurred, whether or not evidenced by any note or
other instrument, matured or unmatured, direct, absolute or contingent, joint or
several, including any extensions, modifications, renewals thereof and
substitutions therefor;
(c) To repay the Bank all amounts advanced by the
Bank hereunder or otherwise on behalf of the Borrower, including, but without
limitation, advances for principal or interest payments to prior secured
parties, mortgagors or lienors, or for taxes, levies, insurance, rent, wages,
repairs to or maintenance or storage of any Collateral; and
(d) To reimburse the Bank, on demand, for all of the
Bank's expenses and costs, including the reasonable fees and expenses of its
counsel, in connection with the negotiation, preparation, administration,
amendment, modification, or enforcement of this Agreement and the documents
required hereunder, including all amounts payable under Section 10.3 hereof.
"Other Loan Parties" shall mean any Guarantor, together with
their successors or assigns.
"Overnight Base Rate" shall mean a per annum rate of interest
determined by the Bank at its discretion on each banking
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day on the basis of the Bank's assessment of interest rate conditions, and
published internally by the Bank for use as the Overnight Base Rate on that date
and on any immediately succeeding nonbanking days. Said per annum rate of
interest shall change automatically and simultaneously each time the Overnight
Base Rate changes effective on and as of the date of the change and the Bank's
determination and designation from time to time of such a reference rate shall
not in any way preclude the Bank from making loans to other borrowers at rates
which are higher or lower or different from such referenced rate.
"Patent Assignment" shall mean the Patent Collateral
Assignment made by the Borrower to the Bank, dated March 30, 1989, as amended
and reaffirmed pursuant to the Reaffirmation and Amendment of Patent Assignment,
together with all amendments, modifications, exhibits and schedules thereto as
may be in effect from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court or governmental or political subdivision or agency thereof.
"Reaffirmation and Amendment of Patent Assignment" shall mean
that certain reaffirmation and amendment by the Borrower of the Patent
Assignment dated the same date as this Agreement.
"Reaffirmation and Amendment of Security Agreement" shall mean
that certain reaffirmation and amendment by the Borrower of the Security
Agreement dated the same date as this Agreement.
"Reaffirmation and Amendment of Trademark Assignment" shall
mean that certain reaffirmation and amendment by the Borrower of the Trademark
Assignment dated the same date as this Agreement.
"Reaffirmations" shall mean the Reaffirmation and Amendment of
Security Agreement, the Reaffirmation and Amendment of Patent Assignment, and
the Reaffirmation and Amendment of Trademark Assignment.
"Regulatory Change" means (a) the enactment or effectuation
after the date of this Agreement of any new, or change in any existing,
Applicable Law, (b) the adoption after such date of any new, or the adoption or
other effectuation after such date of any change in any existing,
interpretation, directive or request (whether or not having the force of law),
or (c) any change after such date in the administration or enforcement of any
Applicable Law to which the Bank is subject. As used in this definition, the
"effectuation" of a change shall
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include, without limitation, that consisting of or resulting from a
determination of a court or regulatory authority.
"Security Agreement" shall mean the Amended and Restated
Security Agreement between the Borrower as debtor and the Bank as secured party
dated October 2, 1995 by which the Borrower granted security interests in
certain of its assets to the Bank, as amended and reaffirmed pursuant to the
Reaffirmation and Amendment of Security Agreement, together with all amendments,
modifications, exhibits, and schedules thereto as may be in effect from time to
time.
"Subsidiary" shall mean, as to any designated corporation, any
corporation, the outstanding shares of which having sufficient voting power (not
depending on the happening of a contingency) to elect at least a majority of the
members of its board of directors, are at the time owned by the designated
corporation.
"Tax" means any federal, state or foreign tax, assessment or
other governmental levy or duty or other charge (including any withholding tax)
upon a person or entity or upon its assets, revenues, income or profits, other
than income and franchise taxes imposed upon the Bank by the jurisdictions (or
any political subdivision thereof) in which the Bank or any office of the Bank
is located.
"Termination Date" shall have the meaning set forth in Section
2.1 of this Agreement.
"Trademark Assignment" shall mean the Trademark Collateral
Assignment made by the Borrower to the Bank, dated March 30, 1989, as amended
and reaffirmed pursuant to the Reaffirmation and Amendment of Trademark
Assignment, together with all amendments, modifications, exhibits and schedules
thereto as may be in effect from time to time.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code of Pennsylvania as codified at 13 Pa. C.S.A. ss.ss.101 et seq., as in
effect on the date of this Agreement.
"Usage Fee" shall have the meaning given such term in Section
2.3(f) hereof.
ARTICLE II
CREDIT ACCOMMODATIONS
2.1 The Line of Credit. The Bank shall make available to the
Borrower, commencing on the Closing Date, a Line of Credit in the maximum
principal amount of $15,000,000 (the "Line of Credit Commitment"), upon the
terms and conditions set forth herein.
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(a) Generally. At any time and from time to time
during the period commencing on the Closing Date and ending on June 30, 1999
(the "Termination Date"), upon the request of the Borrower, the Bank shall
provide to the Borrower a loan or loans in multiples of One Thousand Dollars
($1,000), which shall be used by the Borrower for working capital. The
indebtedness, if any, outstanding under the Existing Line of Credit Note shall
not be repaid or discharged, but shall be deemed outstanding under the Line of
Credit on and as of the Closing Date and shall be evidenced by the Line of
Credit Note. The Borrower may use the Line of Credit during the period referred
to in the preceding sentence by borrowing, repaying and reborrowing in
accordance with the terms of this Agreement. The aggregate outstanding principal
under the Line of Credit at any time shall not exceed the Line of Credit
Commitment. If, at any time, the aggregate outstanding principal under the Line
of Credit exceeds the Line of Credit Commitment, then, without any requirement
of demand or notice from the Bank, the Borrower shall immediately pay to the
Bank the amount of such excess. Upon the Termination Date, unless the Bank has
agreed in writing to extend the Termination Date through June 30, 2000 based
upon the Borrower's financial statements for the year ended December 31, 1998
and such other information requested by the Bank, the Bank's commitment to make
Line of Credit Loans shall terminate, all Line of Credit Loans shall immediately
mature and all Obligations under the Line of Credit Loans shall be immediately
due and payable in full.
(b) Letters of Credit.
(1) Generally. In addition to making loans to the
Borrower under the Line of Credit as provided in Section 2.1(a) hereof, the Bank
shall, upon the request of the Borrower and subject to the terms of this
Agreement, also issue one or more letters of credit ("Letters of Credit") for
the account of the Borrower up to an aggregate amount not to exceed $1,000,000
(the "Letter of Credit Sublimit"). All amounts drawn under Letters of Credit
shall be deemed to be loans made under the Line of Credit and evidenced by the
Line of Credit Note, and the amount available to be borrowed under the Line of
Credit shall be reduced by the aggregate amounts drawn and available to be drawn
at any time under all outstanding Letters of Credit. In no event shall the
aggregate amount available to be drawn on all outstanding Letters of Credit plus
the outstanding principal balance of Line of Credit Loans exceed the Line of
Credit Commitment. The duration of any Letters of Credit shall not extend beyond
the Termination Date without the written consent of the Bank.
(2) Issuance of Letters of Credit. Subject to the
provisions of Section 2.1(b)(1), the Bank shall issue Letters of Credit for the
account of the Borrower, provided that the Borrower (i) provides a written
request for each such Letter of Credit specifying the terms thereof, including,
without limitation, the amount and the name and address of the beneficiary of
such Letter of Credit; (ii) executes and delivers
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to the Bank an application for each such Letter of Credit pursuant to the form
provided for such purpose by the Bank; and (iii) executes and delivers to the
Bank such other documents and instruments which the Bank, in its sole and
absolute discretion, deems reasonable and necessary. The Borrower shall pay to
the Bank all transactional and customary fees required by the Bank in connection
with the issuance of each Letter of Credit hereunder, including, without
limitation, the Bank's standard remittance, transfer and issuance fees, which
fees may be deducted by the Bank from the Borrower's account as such fees are
incurred.
(c) Interest. Interest shall accrue on all loans
outstanding under the Line of Credit at an annual rate equal at all times to the
Line of Credit Adjusted Overnight Base Rate, which rate shall change
simultaneously and automatically upon each change in the Bank's Overnight Base
Rate. Interest on the aggregate outstanding principal under the Line of Credit
shall be payable monthly on first day of each calendar month commencing with the
first full month following the execution of this Agreement.
(d) Line of Credit Note. The obligations of the
Borrower to repay the aggregate outstanding principal under the Line of Credit
and to pay accrued interest thereon shall be evidenced by a Third Amended and
Restated Line of Credit Note, in form and substance satisfactory to the Bank, to
be executed and delivered to the Bank concurrently with the execution and
delivery of this Agreement (the "Line of Credit Note").
(e) Administrative Fee. In addition to the interest
and other fees payable by the Borrower, the Borrower shall pay to the Bank a
quarterly administrative fee of $1,500, payable on January 1, 1998 and on the
first day after the end of each calendar quarter thereafter. The Bank is
authorized to automatically deduct the foregoing fee from any account of the
Borrower maintained at the Bank on the date such fee is due and owing.
(f) Existing Line of Credit Note. The Bank agrees to
return to the Borrower the Existing Line of Credit Note marked "cancelled."
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2.2 Real Estate Loan.
(a) Generally. The Bank has made available to the
Borrower the Existing Real Estate Loan in the initial principal amount of
$2,800,000, the proceeds of which have been used refinance certain land and the
buildings and other improvements thereon owned by the Borrower and located at
One Xxxx Xxxxx Road, Old Bridge, New Jersey (the "Property"). The Borrower shall
repay the Existing Real Estate Loan Indebtedness in one hundred nineteen (119)
equal, consecutive, monthly installments in the amount of $15,555.56 on the
first day of each month, which payments commenced on June 1, 1996, together with
a final installment, consisting of the entire remaining principal balance of the
Existing Real Estate Loan, together with all accrued interest thereon, which
shall be due and payable May 1, 2006.
(b) Interest. Interest shall accrue on the
outstanding principal of the Existing Real Estate Loan at an annual rate equal
to seven and one quarter of one percent (7.25%) for the period commencing on the
date of disbursement thereof, and ending on June 1, 1999. Thereafter, interest
shall accrue at an annual rate equal at all times to the Prime Rate, which rate
shall change simultaneously and automatically upon each change in the Bank's
Prime Rate, or another fixed rate agreed upon between the Bank and the Borrower.
Interest shall continue to be paid monthly on the first day of each month
beginning October 1, 1996.
(c) Real Estate Loan Note. The obligations of the
Borrower to repay the aggregate outstanding principal under the Existing Real
Estate Loan are evidenced by the Existing Real Estate Loan Note, and the
Borrower agrees to repay the Existing Real Estate Loan Indebtedness in
accordance with the terms of this Agreement and the Existing Real Estate Loan
Note.
2.3 Acquisition Facility.
The Bank shall make available to the Borrower, commencing on
the Closing Date, an Acquisition Facility in the maximum principal amount of
$15,000,000 (the "Acquisition Loan Commitment"), upon the terms and conditions
set forth herein.
(a) Advances. Subject to the terms and conditions of
this Agreement, at any time or times on or before the Termination Date, the Bank
shall provide to the Borrower a loan or loans (each an "Acquisition Loan" and,
collectively, the "Acquisition Loans") to be used by the Borrower to finance
acquisitions. Amounts borrowed under the Acquisition Facility and repaid may not
be reborrowed under the Acquisition Facility. The aggregate amount of all
Acquisition Loans made under the Acquisition Facility shall not exceed the
Acquisition Loan Commitment. If, at any time, the aggregate amount of all
Acquisition Loans made under the Acquisition Facility exceeds the Acquisition
Loan Commitment, then, without any requirement of
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demand or notice from the Bank, the Borrower shall immediately pay to the Bank
the amount of such excess. Upon the Termination Date, the Bank's commitment to
make Acquisition Loans under the Acquisition Facility shall terminate. The
aggregate principal balance of each Acquisition Loan, together with accrued
interest thereon, shall be repaid in either (i) thirty-six (36) equal
consecutive monthly installments, (ii) forty-eight (48) equal consecutive
monthly installments, or (iii) sixty (60) equal consecutive monthly
installments, as selected by the Borrower on the date of funding of such
Acquisition Loan.
(b) Requirements for Acquisition Loans. The Bank
shall not be obligated to make any Acquisition Loan unless the Borrower has
delivered to the Bank the following documents in form and substance satisfactory
to the Bank:
(1) an Acquisition Loan Note, duly executed by
the Borrower evidencing such Acquisition Loan;
(2) such security agreements, guaranty
agreements, financing statements and other documents as may be necessary or
desirable in order to insure that the Bank has a first priority perfected
security interest in the assets to be acquired by the Borrower, including,
without limitation, the assets owned by any corporation whose stock is being
acquired by the Borrower in connection with such Acquisition Loan; and
(3) the Usage Fee payable to the Bank in
connection with such Acquisition Loan, as provided in Section 2.3(f).
(c) Additional Deliveries. The Borrower shall deliver
to the Bank within thirty (30) days after the funding of any Acquisition Loan
the following documents:
(1) copies of any purchase agreement or other
agreement of sale entered into by the Borrower in connection with the
acquisition to be financed with the proceeds of such Acquisition Loan, together
with copies of all other documents executed or delivered in connection
therewith; and
(2) evidence satisfactory to the Bank of the
transfer of the assets or stock acquired by the Borrower, free and clear of all
liens and encumbrances.
(d) Interest. Interest shall accrue on all loans
outstanding under the Acquisition Loan at one of the following rates which shall
be elected by the Borrower at the time the Borrower requests an Acquisition
Loan: (i) an annual rate equal at all times to the Acquisition Loan Adjusted
Overnight Base Rate, which rate shall change simultaneously and automatically
upon each change in the Bank's Overnight Base Rate; or (ii) a fixed annual rate
of interest being offered by the Bank at the time of such Acquisition Loan for
either a three-year or five-year term. Interest on the outstanding principal
under each
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Acquisition Loan shall be payable monthly on the first day of each calendar
month commencing with the first full calendar month after such Acquisition Loan
is made by the Bank.
(e) Acquisition Loan Notes. The obligations of the
Borrower to repay the outstanding principal of each Acquisition Loan and to pay
accrued interest thereon shall be evidenced by a promissory note, in the form
attached hereto as Exhibit "A", to be executed and delivered to the Bank on or
prior to the date of funding such Acquisition Loan (each, an "Acquisition Loan
Note" and, collectively, the "Acquisition Loan Notes").
(f) Usage Fee. On or prior to the disbursement of any
Acquisition Loan, in addition to the interest and other fees payable in respect
of the Acquisition Facility, the Borrower shall pay to the Bank a usage fee
("Usage Fee"), in an amount equal to .25% of the amount of such Acquisition
Loan.
2.4 Requirements of Law. In the event that after the date
hereof, any change in any law, regulation or treaty or in the interpretation or
application thereof or compliance by the Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority, agency or instrumentality:
(a) subjects or shall subject the Bank to any tax of
any kind whatsoever with respect to this Agreement, the loans made hereunder or
the issuance or maintenance of the Letters of Credit hereunder, or changes the
basis of taxation of payments to the Bank of principal, commitment fees,
interest or any other amount payable hereunder (except for changes in the rate
of tax on the overall net income of the Bank);
(b) imposes, modifies or holds or shall impose,
modify or hold applicable any reserve, special deposit, compulsory loan or
similar requirement against assets held by, or deposits or other liabilities in
or for the account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of the Bank, which reserve, special
deposit, compulsory loan or similar requirement is not otherwise included in
determination of the interest rate hereunder;
(c) imposes or shall impose on the Bank any other
condition;
and the result of any of the foregoing is to, directly or indirectly, increase
the cost to the Bank of making, renewing or maintaining advances or extensions
of credit or issuing or maintaining Letters of Credit or to reduce any amount
receivable thereunder then, in any such case, the Borrower shall promptly pay
the Bank, upon its demand, any additional amounts necessary to compensate the
Bank for such additional cost or reduced amount
- 13 -
receivable. If the Bank becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Borrower of the event
by reason of which it has become so entitled. The good faith determination as to
any additional amounts payable pursuant to the foregoing sentence by the Bank
shall be conclusive in the absence of manifest error.
2.5 Determinations. In making the determinations contemplated
by Section 2.4 hereof the Bank may make such estimates, assumptions, allocations
and the like that it, in good faith, determines to be appropriate. All such
determinations shall be final, binding and conclusive upon the Borrower, except
to the extent of any manifest error in computation or transmission, however, the
Bank will permit the Borrower to rebut such determinations if it does so in
writing, with appropriate evidence thereof, within ten (10) Business Days from
the date of notification thereof by the Bank. The Bank shall furnish to the
Borrower a certificate outlining in reasonable detail the computation of any
amounts claimed by it under Section 2.4 and the assumptions underlying such
computations, provided that the failure to deliver a certificate shall not
affect the Bank's right to such amounts, but shall extend the time for the
Borrower to respond thereto as required above.
2.6 Payments and Computations. All amounts payable by the
Borrower to the Bank under this Agreement or the Notes shall be paid directly to
the Bank in immediately available funds at the address of the Bank set forth in
Section 10.2 hereof or at such other address of which the Bank shall give notice
to the Borrower pursuant to Section 10.2 hereof. The Bank is authorized to
charge any account of the Borrower at the Bank for any payment due by the
Borrower under this Agreement or any of the Notes. All computations of interest
hereunder shall be made by the Bank on the basis of a year of 360 days for the
actual number of days elapsed. All payments under each of the Notes shall be
applied first to the payment of interest due and payable thereunder and then to
the reduction of the outstanding principal balance thereof.
2.7 Borrowing. The Borrower shall notify the Bank of each
proposed borrowing under the Line of Credit not later than 2:30 p.m.,
Philadelphia, Pennsylvania time on the day of the proposed borrowing.
2.8 Prepayment and Repayment. The Borrower shall pay a
prepayment premium with respect to voluntary or involuntary prepayments of Loans
bearing interest at a fixed rate equal to the difference between (x) the
aggregate amount of interest which would otherwise have been payable on such
prepaid amount from the date of prepayment to the date when such prepaid amount
was due (but, with respect to the Existing Real Estate Loan, in no event beyond
the date on which interest on the Existing Real Estate Loan converts from a
fixed rate to a floating rate as prescribed in Section 2.2(b) above, unless the
interest rate is thereafter fixed in accordance with such Section), unless the
parties have
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agreed to a new fixed rate of interest to be applicable after such date and (y)
the aggregate amount of interest which the Bank would earn if such prepaid
amount were invested at the Treasury Rate Security Yield from the date of
prepayment to the date when such prepaid amount was due (but, with respect to
the Existing Real Estate Loan, in no event beyond the date on which interest on
the Existing Real Estate Loan converts from a fixed rate to a floating rate as
prescribed in Section 2.2(b) above, unless the interest rate is thereafter fixed
in accordance with such Section), unless the parties have agreed to a new fixed
rate of interest to be applicable after such date, which difference in interest
earnings shall be discounted to present value at the Treasury Rate Security
Yield. The term, "Treasury Rate Security Yield", means the bond equivalent yield
to maturity available on the secondary market on a Treasury Security with a
maturity as close as possible to the scheduled maturity of the prepaid amount
and a coupon as close as possible to the bond equivalent yield. The Bank's
determination of the amount of any prepayment premium will be conclusive and
binding absent manifest error, however, the Bank will permit the Borrower to
rebut such amounts if it does so in writing, with appropriate evidence thereof,
within ten (10) Business Days from the date of notification by the Bank. All
prepayments of outstanding principal shall be applied to installments of
principal due thereunder in the inverse order of maturity.
ARTICLE III
SECURITY
3.1 Security Documents. As security for the prompt payment,
performance, satisfaction and discharge when due of all the Obligations, the
Borrower shall execute and deliver or shall cause to be executed and delivered
to the Bank, concurrently with the execution of this Agreement, the
Reaffirmations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
In order to induce the Bank to execute and deliver this
Agreement and to make the Loans available to the Borrower, the Borrower
represents and warrants to the Bank that, as of the date hereof:
4.1 Good Standing of the Borrower; Authorization. The Borrower
is duly incorporated, organized and existing and in good standing in the State
of Delaware and is duly qualified as a foreign corporation and authorized to do
business in all other jurisdictions wherein the nature of its business or
property makes such qualification necessary, and has the corporate power to own
its properties and to carry on its business as now conducted. The execution,
delivery and performance of this Agreement, and the Loan Documents have been
duly authorized by all necessary corporate proceedings on the part of the
Borrower.
- 15 -
4.2 Compliance with Laws and Other Agreements. The Borrower is
in compliance with all laws, rules, regulations, judgments, decrees, orders,
agreements and requirements which affect in any material way the Borrower, its
assets or the operation of its business and has not received, and has no
knowledge of, any order or notice of any governmental investigation or of any
violation or claim of violation of any law, regulation, judgment, decree, order,
agreement, or other governmental requirement.
4.3 No Conflict; Governmental Approvals. The execution,
delivery, and performance of this Agreement and each of the Loan Documents will
not (i) conflict with, violate, constitute a default under, or result in a
breach of any provision of any applicable law, rule, regulation, judgment,
decree, order, instrument or other agreement, or (ii) conflict with or result in
a breach of any provision of the certificate of incorporation or by-laws of the
Borrower. No authorization, permit, consent or approval of or other action by,
and no filing, registration or declaration with, any governmental authority or
regulatory body is required to be obtained or made by the Borrower for the due
execution, delivery and performance of this Agreement or any of the Loan
Documents, except such as have been duly obtained or made prior to the Closing
Date and are in full force and effect as of the Closing Date (copies of which
have been delivered to the Bank on or before the Closing Date).
4.4 Financial and Other Information Regarding Borrower.
(a) The Borrower has delivered to the Bank true,
correct and complete copies of the balance sheets of the Borrower as of December
31, 1996, and related statements of income for the period then ended, together
with notes thereto and the unqualified opinion thereon, dated March 3, 1997, of
BDO Xxxxxxx, LLP. Those financial statements ("Financial Statements") present
fairly the financial position of the Borrower and the results of the operations
of the Borrower as of the dates and for the periods indicated, in conformity
with GAAP.
(b) Except as set forth on Schedule 4.4(b) hereto,
the Borrower has no Indebtedness other than as shown in the most recent
Financial Statements, and any subsequent interim financial statements which have
been delivered to the Bank.
(c) Except as set forth on Schedule 4.4(c) hereto,
the Borrower has no "investment" (as such term is defined under GAAP), whether
by stock purchase, capital contribution, loan, advance, purchase of property or
otherwise, in any Person, other than as shown in the most recent Financial
Statements, and any subsequent interim financial statements which have been
delivered to the Bank.
4.5 Taxes. The Borrower is not delinquent in payment of any
income, property or other tax, except for any delinquency
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in the payment of a tax which is contested in good faith by the Borrower and for
which appropriate reserves have been established in accordance with GAAP.
4.6 Encumbrances and Guaranties.
(a) All properties and assets of the Borrower are
owned by the Borrower free and clear of all Encumbrances except (i) those for
taxes or other government charges either not yet delinquent or the nonpayment of
which is permitted by Section 4.5 of this Agreement; (ii) those arising in
connection with Indebtedness that do not materially impair the use or value of
the properties or assets of the Borrower in the conduct of its businesses; (iii)
Encumbrances whose release and termination is evidenced by the Borrower's
delivery to the Bank of appropriate documents on the Closing Date; (iv)
Encumbrances otherwise permitted under the Loan Documents, the Security
Agreement and the Mortgage; and (v) Encumbrances disclosed in the most recent
Financial Statements.
(b) The Borrower is not obligated under any Guaranty.
4.7 Material Adverse Changes. Since December 31, 1996, there
has not been any material adverse change in the business, operations, properties
or financial position of the Borrower. The Borrower does not know of any fact
(other than matters of a general economic or political nature) which materially
adversely affects, or, so far as the Borrower can now reasonably foresee, will
materially adversely affect, the business, operations, properties or financial
position of the Borrower or the performance by the Borrower of its obligations
under this Agreement and the other Loan Documents.
4.8 Margin Securities. The assets of the Borrower do not
include any "margin securities" within the meaning of Regulations G or U of the
Board of Governors of the Federal Reserve System (12 C.F.R. 207, 221), and the
Borrower does not have any present intention of acquiring any margin security.
4.9 ERISA. The provisions of each employee benefit plan as
defined in Section 3(3) of ERISA ("Plan") maintained by the Borrower complies
with all applicable requirements of ERISA and of the Code, and with all
applicable rulings and regulations issued under the provisions of ERISA and the
Code setting forth those requirements. No reportable event, as defined in
Section 4043 of ERISA, has occurred with respect to any Plan; no Plan to which
Section 4021 of ERISA applies has been terminated; no Plan has incurred any
liability to PBGC as provided in Section 4062, 4063 and 4064 of ERISA; no Plan
has been involved in any prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code; and there are no unfunded liabilities
with respect to any Plan which are not disclosed in the Financial Statements.
- 17 -
4.10 Pending Litigation. Except as disclosed in the Borrower's
periodic reports filed with the Securities and Exchange Commission and provided
to the Bank, there are no actions, suits, proceedings or investigations pending,
or, to the knowledge of the Borrower, threatened against or affecting the
Borrower, before any court, arbitrator or administrative or governmental body
which, in the aggregate, might adversely affect any action taken or to be taken
by the Borrower under this Agreement and the other Loan Documents or which, in
the aggregate, might materially adversely affect the business, operations,
properties or financial position of the Borrower, or the ability of the Borrower
to perform its obligations under this Agreement and the other Loan Documents.
4.11 Valid, Binding and Enforceable. This Agreement and the
Loan Documents to which the Borrower is a party have been duly and validly
executed and delivered by the Borrower and constitute the valid and legally
binding obligations of such parties enforceable in accordance with their
respective terms, except as enforcement of this Agreement and the other Loan
Documents may be limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights and
except as enforcement is subject to general equitable principles.
4.12 Priority of Security Interests. The Security Agreement,
together with the financing statements which have been filed in connection
therewith have created valid first perfected security interests in the personal
property of the Borrower described therein as collateral for all the Obligations
subject to no prior Encumbrances.
4.13 Environmental Matters.
(a) The Borrower has performed all of its obligations
under, has obtained all necessary approvals, permits, authorizations and other
consents required by, and is not in material violation of, any Environmental
Laws.
(b) The Borrower has not received any notice,
citation, summons, directive, order or other communication, written or oral,
from, and the Borrower has no knowledge of the filing or giving of any such
notice, citation, summons, directive, order or other communication by, any
governmental or quasi-governmental authority or agency or any other Person
concerning the presence, generation, treatment, storage, transportation,
transfer, disposal, release or other handling of any Hazardous Materials within,
on, from, related to, or affecting any real property owned or occupied by the
Borrower.
(c) To the best of the Borrower's knowledge, after
reasonable inquiry, no real property owned or occupied by the Borrower has ever
been used, either by the Borrower or any of its predecessors in interest, to
generate, treat, store, transport, transfer, dispose of, release or otherwise
handle any
- 18 -
Hazardous Material in violation of any applicable Environmental Laws.
(d) To the best of the Borrower's knowledge, after
due inspection, there are no Hazardous Materials within, on or under any real
property owned or occupied by the Borrower in violation of any applicable
Environmental Laws.
4.14 No Untrue Statements. Neither this Agreement, the Loan
Documents nor any other document, certificate or statement furnished or to be
furnished by the Borrower or by any other party to the Bank in connection
herewith contains, or at the time of delivery will contain, any untrue statement
of a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained herein and therein not misleading.
4.15 Patents and Trademarks. Since March 30, 1989, the
Borrower has not held any patents or trademarks which have been registered with
the United States Patent and Trademark Office.
ARTICLE V
CONDITIONS PRECEDENT TO THE BANK'S OBLIGATIONS
The Bank's obligations hereunder are conditioned upon the
satisfaction by the Borrower of the following conditions precedent:
5.1 Documents to be Delivered by the Borrower at Closing. The
Borrower shall deliver or cause to be delivered to the Bank at the Closing the
following:
(a) This Agreement duly executed by the Borrower;
(b) The Line of Credit Note duly executed by the
Borrower;
(c) The Reaffirmations duly executed by the parties
thereto;
(d) Evidence of the Borrower's having complied with
those covenants regarding insurance as are contained in this Agreement and the
other Loan Documents;
(e) A certificate of the Secretary or an Assistant
Secretary of the Borrower dated the Closing Date including (i) resolutions duly
adopted by the Borrower authorizing the transactions under the Loan Documents;
(ii) evidence of the incumbency and signature of the officers executing on the
Borrower's behalf any of the Loan Documents and any other document to be
delivered pursuant to any such documents, together with evidence of the
incumbency of such officers; (iii) a certification that the by-laws and the
articles of incorporation of the Borrower have not been amended since
- 19 -
December 11, 1995; and (iv) certificates of authority or good standing for the
Borrower from its jurisdiction of incorporation and any other jurisdiction where
the Borrower is qualified to do business;
(f) A copy of each and every authorization, permit,
consent, and approval of and other action by, and notice to and filing with,
every governmental authority and regulatory body which is required to be
obtained or made by the Borrower for the due execution, delivery and performance
of this Agreement and the other Loan Documents; and
(g) The opinion of Stradley, Ronon, Xxxxxxx & Xxxxx
dated as of Closing Date, in form and substance reasonably satisfactory to the
Bank and its counsel.
5.2 Conditions Precedent to Making Line of Credit Loans or
Acquisition Loans. The Bank shall not be obligated to make any Line of Credit
Loans or any Acquisition Loan hereunder unless:
(a) As of the date of the proposed advance, no Event
of Default has occurred and is continuing and no event has occurred and is
continuing which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default;
(b) The representations and warranties contained in
Article IV are true and correct on the date of the proposed advance, except that
the representations and warranties in Section 4.4 shall refer to the financial
statements most recently supplied to the Bank pursuant to Section 6.2 of this
Agreement; and
(c) No material adverse change has occurred in the
business, property, operations or condition (financial or otherwise) of the
Borrower since the date hereof; and
(d) The Borrower has delivered to the Bank, upon the
Bank's request, a certificate executed by the chief executive officer of the
Borrower confirming the statements made in paragraphs (a), (b), and (c) above.
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWER
The Borrower hereby covenants and agrees that from the date
hereof and until satisfaction in full of the Obligations, unless the Bank shall
otherwise consent in writing, the Borrower shall do the following:
6.1 Use of Proceeds. Use the proceeds of the borrowings
hereunder only for the purposes specified in Sections 2.1, 2.2 and 2.3 of this
Agreement.
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6.2 Financial Statements. Furnish to the Bank the following
financial statements which shall be prepared in accordance with GAAP and signed
by the chief financial officer of the Borrower:
(a) within one hundred twenty (120) days after the
end of each fiscal year, the financial statements of the Borrower, including a
balance sheet, statement of income and statement of cash flows, as reported on
the Form 10K of the Borrower as filed with the United States Securities and
Exchange Commission, and such other financial statements of the Borrower in such
detail as the Bank may reasonably request. Such financial statements shall
present fairly the financial condition of the Borrower as of the close of such
year and the results of its operations and its cash flows during such year, in
accordance with GAAP, and shall be audited and accompanied by the opinion,
satisfactory in form and substance to the Bank, of BDO Xxxxxxx, LLP or another
independent public accountant acceptable to the Bank;
(b) within sixty (60) days after the end of each
fiscal quarter, the financial statements of the Borrower, including a balance
sheet, statement of income and statement of cash flows, as reported on the Form
10Q of the Borrower as filed with the United States Securities and Exchange
Commission, and such other financial statements of the Borrower in such detail
as the Bank may reasonably request. Such financial statements shall present
fairly the financial condition of the Borrower as of the close of such quarter
and the results of its operations and its cash flows during such quarter, in
accordance with GAAP, certified by the chief financial officer of the Borrower;
(c) within one hundred eighty (180) days after the
end of each fiscal year of the Borrower, a copy of the Management Letter of the
Borrower prepared by BDO Xxxxxxx, LLP or another independent public accountant
acceptable to the Bank; and
(d) such other information in the Borrower's
possession as the Bank may reasonably request.
6.3 Ordinary Course of Business; Records. Conduct its business
only in the ordinary course and keep accurate and complete books and records of
its assets, liabilities and operations consistent with sound business practices
and in accordance with GAAP.
6.4 Information for the Bank. Make available during normal
business hours for inspection by the Bank or its designated representatives any
of its books and records when reasonably requested by the Bank to do so, and
furnish the Bank any information reasonably requested regarding its operations,
business affairs and financial condition within a reasonable time after the Bank
gives notice of its request therefor. In particular, and without limiting the
foregoing, the Borrower shall permit, during normal business hours,
representatives of
- 21 -
the Bank's Audit Department to make such periodic inspections of the Borrower's
books, records and assets as such representatives deem necessary and proper.
6.5 Insurance. Carry at all times in financially sound and
reputable insurers: (a) all workers' compensation or similar insurance as may be
required under the laws of any jurisdiction; (b) public liability insurance
against claims for personal injury, death or property damage suffered upon, in
or about any premises occupied by it or occurring as a result of the ownership,
maintenance or operation by it of any automobile, truck or other vehicle or as a
result of the use of products manufactured, constructed or sold by it, or
services rendered by it; (c) business interruption insurance covering risk of
loss as a result of the cessation for all or any part of one year of any
substantial part of the business conducted by it; (d) hazard insurance against
such other hazards as are usually insured against by business entities of
established reputation engaged in like businesses and similarly situated,
including, without limitation, fire (flood, if applicable) and extended
coverage; and (e) such other insurance as the Bank may from time to time
reasonably require, and pay all premiums on the policies for all such insurance
when and as they become due and take all other actions necessary to maintain
such policies in full force and effect at all times. The insurance specified in
Subsections (b), (c) and (d) shall be maintained in such amounts (and with
co-insurance and deductibles) as such insurance is usually carried by business
entities of established reputation engaged in the same or similar business and
similarly situated, provided that the amount of such coverage shall not be in an
amount less than 80% of the insurable value of the Borrower's assets or 100% of
the amount of the Loans. The Borrower shall from time to time, upon request by
the Bank, promptly furnish or cause to be furnished to the Bank evidence, in
form and substance satisfactory to the Bank, of the maintenance of all insurance
required to be maintained hereby, including, without limitation, such originals
or copies as the Bank may request of policies, certificates of insurance, riders
and endorsements relating to such insurance and proof of premium payments. The
Borrower shall cause each hazard insurance policy to provide, and the insurer
issuing each such policy to certify to the Bank, that (a) if such insurance be
proposed to be cancelled or materially changed for any reason whatsoever, such
insurer will promptly notify the Bank and such cancellation or change shall not
be effective for 30 days after receipt by the Bank of such notice, unless the
effect of such change is to extend or increase coverage under the policy; (b)
the Bank shall be named as lender loss payee with respect to personal property
and mortgagee with respect to real property; and (c) the Bank will have the
right, at its election, to remedy any default in the payment of premiums within
30 days of notice from the insurer of such default. The foregoing covenants
regarding insurance are in addition to, and not intended to supersede, those
covenants regarding insurance set forth in the Security Agreement. In the event
and to the extent of any conflict between the provisions of this Agreement and
the
- 22 -
provisions of the Security Agreement regarding the insuring of Collateral, the
provisions of the Security Agreement with respect thereto shall govern.
6.6 Maintenance. Maintain its equipment, real property and
other properties in good condition and repair (normal wear and tear excepted)
and pay and discharge the cost of repairs thereto or maintenance thereof.
6.7 Taxes. Pay all taxes, assessments, charges and levies
imposed upon it or on any of its property, or which it is required to withhold
and pay over, and provide evidence of payment thereto to the Bank if the Bank so
requests, except where contested in good faith by lawful and appropriate
proceedings and where adequate reserves therefor have been set aside on its
books; provided, however, that the Borrower shall pay all such taxes,
assessments, charges and levies forthwith whenever foreclosure on any lien which
attaches or security therefor appears imminent.
6.8 Leases. Pay all rent or other sums required by every lease
to which the Borrower is a party as the same becomes due and payable, perform
all its obligations as tenant or lessee thereunder except where contested in
good faith by lawful and appropriate proceedings and where adequate reserves
therefor have been set aside; and keep all such leases at all times in full
force and effect during the terms thereof.
6.9 Corporate Existence; Certain Rights; Laws. Do all things
necessary to preserve and keep in full force and effect in each jurisdiction in
which it conducts business the business existence, licenses, permits, rights,
patents, trademarks, trade names and franchises of the Borrower and comply with
all present and future laws, ordinances, rules, regulations judgments, orders
and decrees which affect in any material way the Borrower, its assets or the
operation of its business.
6.10 Notice of Litigation or Other Proceedings. Give immediate
notice to the Bank of (i) the existence of any dispute, (ii) the institution of
any litigation, administrative proceeding or governmental investigation
involving the Borrower or (iii) the entry of any judgment, decree or order
against or involving the Borrower, any of which might materially and adversely
affect the operation, financial condition, property or business of the Borrower
or affect the enforceability of this Agreement or any of the other Loan
Documents.
6.11 Indebtedness. Pay or cause to be paid when due (or within
applicable grace periods) all Indebtedness of the Borrower.
6.12 Notice of Events of Default. Give immediate notice to the
Bank if the Borrower becomes aware of the occurrence of any Event of Default, or
of any fact, condition or event which with the giving of notice or lapse of
time, or both,
- 23 -
would be an Event of Default, or of the failure of the Borrower to observe or
perform any of the conditions or covenants to be observed or performed by it
under this Agreement or any of the other Loan Documents.
6.13 ERISA. Maintain each Plan in compliance with all
applicable requirements of ERISA and of the Code and with all applicable rulings
and regulations issued under the provisions of ERISA and of the Code. As
promptly as practicable (but in any event not later than ten days) after the
Borrower receives from the PBGC a notice of intent to terminate any Plan or to
appoint a trustee to administer any Plan, after the Borrower has notified the
PBGC that any reportable event, as defined in Section 4043 of ERISA, with
respect to any Plan has occurred, or after the Borrower has provided a notice of
intent to terminate to each affected party, as defined for purposes of Section
4041(a)(2) of ERISA, with respect to any Plan, a certificate of the chief
executive officer of the Borrower shall be furnished to the Bank setting forth
the details with respect to the events resulting in such reportable event, as
the case may be, and the action which the Borrower proposes to take with respect
thereto, together with a copy of the notice of intent to terminate or to appoint
a trustee from the PBGC, of the notice of such reportable event or of the
Borrower's notice of intent to terminate, as the case may be.
6.14 Deposit Accounts. Use the Bank as its primary depository
institution to the extent reasonably feasible unless otherwise agreed in writing
by the Bank; and notify the Bank, in writing and on a continuing basis, of all
deposit accounts and certificates of deposit (including the numbers thereof)
maintained with or purchased from other banks and other financial institutions.
Notwithstanding the foregoing, Borrower may use a bank other than the Bank for
its payroll account, and working capital accounts (which accounts may not, at
any time, contain an average daily balance calculated on a monthly basis, in
excess of $250,000 in the aggregate) to be used for incidental expenses of
Borrower, including, travel expenses of its employees, and provided no Events of
Default exist, Borrower may, at Borrower's discretion, in lieu of the Lock Box
Agreement, use a New Jersey bank, satisfactory to the Bank, as a depository
transfer institution, pursuant to an agreement in form and substance
satisfactory to the Bank, establishing a depository transfer arrangement between
the Bank, the depository bank and the Borrower.
6.15 Management. Furnish to Bank within five (5) days of any
election or appointment of officers or directors, written notice of any change
in the persons who from time to time become officers and directors of Borrower
and retain executive management personnel at all times satisfactory to the Bank,
it being understood that management, which consists of Xxxxx X. Xxxxxx as
President and CEO, and Xxxxxx X. Xxxxx as Executive Vice President, of the
Borrower as of the date hereof, is satisfactory.
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6.16 Financial Covenants. Observe the financial covenants set
forth on Schedule 6.16 attached hereto and made a part hereof, provided that
such financial covenants may be revised if the Line of Credit Commitment is
extended beyond the Termination Date.
6.17 Compliance with Environmental Laws. Comply fully with all
Environmental Laws and not use any property which it owns or occupies to
generate, treat, store, transport, transfer, dispose of, release or otherwise
handle any Hazardous Material, except in compliance with all Environmental Laws.
6.18 Further Actions. Cooperate and join with the Bank, at its
own expense, in taking all such further actions as the Bank, in its sole
judgment, shall deem necessary to effectuate the provisions of the Loan
Documents and to perfect or continue the perfected status of all Encumbrances
granted to the Bank pursuant to the Loan Documents, including, without
limitation, the execution, delivery and filing of financing statements,
amendments thereto and continuation statements, the delivery of chattel paper,
documents or instruments to the Bank, and the notation of Encumbrances in favor
of the Bank on certificates of title.
6.19 Material Adverse Change. Notify the Bank in writing upon
any material adverse change in the business, operations, properties or condition
(financial or otherwise) of the Borrower.
6.20 Meeting Regarding Projections. On or prior to June 1,
1998 the Borrower shall participate in a meeting with the Bank at which time the
Borrower shall discuss with the Bank the Borrower's financial statement
projections for the 1998 fiscal year, including without limitation, the
Borrower's projected balance sheet, statement of income and statement of cash
flows for such fiscal year.
6.21 Subordination of Debt. Deliver to the Bank a
subordination agreement in form and substance satisfactory to the Bank with
respect to any Indebtedness of the Borrower (except Indebtedness permitted
pursuant to Section 7.2 hereof) incurred after the date hereof.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that from the Closing
Date until satisfaction in full of the Obligations, it will not do any one or
more of the following without first obtaining the written consent of the Bank:
- 25 -
7.1 Fundamental Corporate Changes.
(a) Change its name, enter into or effect any merger
(except any merger where the Borrower is the surviving corporation),
consolidation, share exchange involving in excess of 25% of the Borrower's
capital stock, or dissolve.
(b) Sell, transfer, lease or otherwise dispose of all
or (except in the ordinary course of business) any material part of its assets
or any significant product line or process;
(c) Have any Subsidiary, except Blonder International
and Vu-Tech Communications, Inc.
7.2 Indebtedness. Incur, create, assume or have any
Indebtedness except:
(a) The Loans; and
(b) Indebtedness constituting either Capital Lease
Obligations or Indebtedness under agreements for the installment purchase of
equipment, provided that such Indebtedness does not exceed 100% of the
installment purchase price of such equipment; and
(c) Obligations to The Business Bank pursuant to a
promissory note dated July 22, 1993 in the original principal amount of
$950,000.
7.3 Encumbrances. Create or allow any Encumbrances to be on or
otherwise affect any of its property or assets except:
(a) Encumbrances in favor of the Bank;
(b) Encumbrances for taxes, assessments and other
governmental charges incurred in the ordinary course of business which are not
yet due and payable or which are being properly contested in good faith by
lawful and appropriate proceedings;
(c) Pledges or deposits made in the ordinary course
of business to secure payment of workmen's compensation or to participate in any
fund in connection with workmen's compensation, unemployment insurance or other
social security obligations;
(d) Good faith pledges or deposits made in the
ordinary course of business to secure performance of tenders, contracts (other
than for the repayment of Indebtedness) or leases or to secure statutory
obligations or surety, appeal, indemnity, performance or other similar bonds
required in the ordinary course of business;
(e) Liens of mechanics, materialmen, warehousemen,
carriers or other similar liens, securing obligations incurred in the ordinary
course of business that are
- 26 -
not yet due and payable or are being contested in good faith by appropriate and
lawful proceedings;
(f) Encumbrances securing Indebtedness permitted
under Section 7.2 (b), provided that (i) no other covenants of this Agreement
are thereby violated and (ii) no equipment other than the equipment so acquired
secures such Indebtedness;
(g) Encumbrances, if any, otherwise expressly
permitted by the Security Agreement or the Mortgage; and
(h) Encumbrances disclosed in the Financial
Statements, and any subsequent interim financial statements which have been
delivered to the Bank prior to the Closing Date, or as set forth on Schedule 7.3
attached hereto.
7.4 Guaranties. Directly or indirectly make any Guaranty,
other than for the benefit of Blonder International.
7.5 Sales and Lease-Backs. Sell, transfer or otherwise dispose
of any property, real or personal, now owned or hereafter acquired, with the
intention of directly or indirectly taking back a lease on such property.
7.6 Loans, Investments. Except as set forth on Schedule
4.4(c), purchase, invest in, or make any loan in the nature of an investment in
the stocks, bonds, notes or other securities or evidence of Indebtedness of any
person, or make any loan or advance to or for the benefit of any Person except
for (i) short-term obligations of the Treasury of the United States of America;
(ii) certificates of deposit issued by banks with shareholders' equity of at
least $100,000,000; (iii) repurchase agreements not exceeding 29 days in
duration issued by banks with shareholders' equity of at least $100,000,000;
(iv) notes and other instruments generally known as "commercial paper" which
arise out of current transactions, which have maturities at the time of issuance
thereof not exceeding nine months and which have, at the time of such purchase,
investment or other acquisition, the highest credit rating of Standard & Poor's
Corporation or Xxxxx'x Investors Service, Inc.; (v) investments in the capital
stock or indebtedness of any person or persons where the aggregate of such
investment(s) does not exceed $5,000,000, provided that at the time of, and
after giving effect to such investment(s), no Event of Default and no event
which with the giving of notice, the passage of time or both, would constitute
an Event of Default has occurred or would occur as a result thereof; and (vi)
purchases by the Borrower of the common stock of the Borrower, pursuant to a
share repurchase program duly adopted by the Borrower's Board of Directors and
conducted in accordance with Rule 10b-18 of the Securities Exchange Act of 1934,
as amended.
7.7 Change in Business. Discontinue any substantial part, or
change the nature of, the business of the Borrower, or
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enter into any new business unrelated to the present business conducted by the
Borrower.
7.8 Sale or Discount of Receivables. Sell any notes receivable
or accounts receivable, with or without recourse.
7.9 Prepayment of Indebtedness. Make any voluntary prepayments
of Indebtedness other than the Loans.
7.10 ERISA.
(a) Terminate any Plan maintained by the Borrower to
which Section 4021 of ERISA applies;
(b) Allow the value of the benefits guaranteed under
Title IV of ERISA to exceed the value of assets allocable to such benefits;
(c) Incur a withdrawal liability within the meaning
of Section 4201 of ERISA.
7.11 Compliance with Federal Reserve Board Regulations. (i)
Use any of the proceeds of the Loans, directly or indirectly, for the purposes
of purchasing or carrying any "margin security" within the meaning of
Regulations G or U of the Board of Governors of the Federal Reserve System (12
X.X.X. 000, 000), (xx) use any of the proceeds of the Loans, directly or
indirectly, for the purpose of purchasing, carrying or trading in any securities
under such circumstances as to involve the Borrower in a violation of Regulation
X of such Board (12 C.F.R. 224), or (iii) take or permit to be taken any other
action which would result in the Loans or the consummation of any of the other
transactions contemplated hereby being violative of such regulations or any
other regulation of such Board.
7.12 Blonder International. From and after the Closing Date,
and until satisfaction in full of all Obligations of the Borrower to the Bank,
unless the Bank shall otherwise consent in writing, the Borrower shall not
transfer assets having a value in excess of $200,000 in the aggregate to Blonder
International, and shall not permit Blonder International to have assets having
an aggregate book value in excess of $200,000.
ARTICLE VIII
EVENTS OF DEFAULT
An event of default ("Event of Default") under this Agreement
shall be deemed to exist if any one or more of the following events occurs and
is continuing, whatever the reason therefor:
8.1 Borrower's Failure to Pay. The Borrower fails to pay any
amount of principal interest, fees or other sums as and when due under this
Agreement or any of the Loan Documents, or
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any other Obligations, whether upon stated maturity, acceleration, or otherwise
and has not remedied and fully cured such failure to pay within ten (10)
Business Days after the date such payment is so due.
8.2 Breach of Covenants or Conditions. The Borrower or any of
the Other Loan Parties fails to perform or observe any term, covenant, agreement
or condition in this Agreement or any of the other Loan Documents or is in
violation of or non-compliance with any provision of this Agreement or any of
the Loan Documents, and has not remedied and fully cured such non-performance,
non-observance, violation of or non-compliance within thirty (30) days after the
Bank has given written notice thereof to the Borrower, or such Other Loan Party;
provided, however, that during such thirty (30) day period the Bank's
obligations to make further Loans to the Borrower shall be suspended.
8.3 Defaults in Other Agreements. The Borrower or any of the
Other Loan Parties fails to perform or observe any term, covenant, agreement or
condition contained in, or there shall occur any default under or as defined in,
any other agreement applicable to the Borrower or any of the Other Loan Parties
or by which any of them is bound involving a material liability of the Borrower
or any of the Other Loan Parties which shall not be remedied within the period
of time (if any) within which such other agreement permits such default to be
remedied, unless such default is waived by the other party thereto or excused as
a matter of law.
8.4 Agreements Invalid. The validity, binding nature of, or
enforceability of any material term or provision of any of the Loan Documents is
disputed by, on behalf of, or in the right or name of the Borrower or any of the
Other Loan Parties or any material term or provision of any such Loan Document
is found or declared to be invalid, avoidable, or non-enforceable by any court
of competent jurisdiction.
8.5 False Warranties; Breach of Representations. Any warranty
or representation made by the Borrower or any of the Other Loan Parties in this
Agreement or any other Loan Document or in any certificate or other writing
delivered under or pursuant to this Agreement or any other Loan Document, or in
connection with any provision of this Agreement or related to the transactions
contemplated hereby shall prove to have been false or incorrect or breached in
any material respect on the date as of which made.
8.6 Judgments. A final judgment or judgments is entered, or an
order or orders of any judicial authority or governmental entity is issued
against the Borrower or any of the Other Loan Parties (such judgment(s) and
order(s) hereinafter collectively referred to as "Judgment") (i) for payment of
money, which Judgment, in the aggregate, exceeds Two Hundred Thousand Dollars
($250,000.00) outstanding at any one time which is not
- 29 -
covered by insurance; or (ii) for injunctive or declaratory relief which would
have a material adverse effect on the ability of the Borrower or any of the
Other Loan Parties to conduct its business, and such Judgment is not discharged
or execution thereon or enforcement thereof stayed pending appeal, within thirty
days after entry or issuance thereof, or, in the event of such a stay, such
Judgment is not discharged within thirty days after such stay expires.
8.7 Bankruptcy or Insolvency of the Borrower or Other Loan
Parties.
(a) The Borrower or any of the Other Loan Parties
becomes insolvent, or generally fails to pay, or is generally unable to pay, or
admits in writing its inability to pay, its debts as they become due or applies
for, consents to, or acquiesces in, the appointment of a trustee, receiver or
other custodian for the Borrower or any of the Other Loan Parties, as the case
may be, or a substantial part of its property, or makes a general assignment for
the benefit of creditors.
(b) The Borrower or any of the Other Loan Parties
commences any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any state or federal bankruptcy or insolvency law, or any
dissolution or liquidation proceeding.
(c) Any bankruptcy, reorganization, debt arrangement,
or other case or proceeding under any state or federal bankruptcy or insolvency
law, or any dissolution or liquidation proceeding, is involuntarily commenced
against or in respect of the Borrower or any of the Other Loan Parties, or an
order for relief is entered in any such proceeding which is not terminated upon
the earlier of (i) the entry of an order to relief in any such proceeding or
(ii) within ninety (90) days after such case or proceeding is involuntarily
commenced.
(d) A trustee, receiver, or other custodian is
appointed for the Borrower or any of the Other Loan Parties or a substantial
part of such Person's property and such appointment is not terminated within
ninety (90) days thereafter.
ARTICLE IX
REMEDIES
9.1 Further Advances; Acceleration; Setoff.
(a) Upon the occurrence of any one or more Events of
Default, the Bank may, in its sole discretion, refuse to make any further
advances or Loans to the Borrower;
(b) Automatically upon the occurrence of any Event of
Default described in Section 8.7 of this Agreement, and in the sole discretion
of the Bank upon the occurrence of any other Event of Default, the unpaid
principal balance of all
- 30 -
Loans, all interest and fees accrued and unpaid thereon, and all other amounts
and Obligations payable by the Borrower under this Agreement and the other Loan
Documents shall immediately become due and payable in full, all without protest,
presentment, demand, or further notice of any kind to the Borrower, all of which
are expressly waived by the Borrower;
(c) If any of the Obligations shall be due and
payable or any one or more Events of Default shall have occurred, the Bank shall
have the right, in addition to all other rights and remedies available to it,
without notice to the Borrower, to apply toward and set-off against and apply to
the then unpaid balance of the Notes and the other Obligations any items or
funds held by the Bank, any and all deposits (whether general or special, time
or demand, matured or unmatured, fixed or contingent, liquidated or
unliquidated) now or hereafter maintained by the Borrower for its own account
with the Bank, and any other indebtedness at any time held or owing by the Bank
to or for the credit or the account of the Borrower. For such purpose the Bank
shall have, and the Borrower hereby grants to the Bank, a first lien on all such
deposits. The Bank is hereby authorized to charge any such account or
indebtedness for any amounts due to the Bank. Such right of set-off shall exist
whether or not the Bank shall have made any demand under this Agreement, the
Notes or any other Loan Document and whether or not the Notes and the other
Obligations are matured or unmatured. The Borrower hereby confirms the Bank's
lien on such accounts and right of set-off, and nothing in this Agreement shall
be deemed any waiver or prohibition of such lien and right of set-off.
9.2 Further Remedies. Upon the occurrence of any one or more
Events of Default, the Bank may proceed to protect and enforce its rights under
this Agreement and the other Loan Documents by exercising such remedies as are
available to the Bank in respect thereof under applicable law, either by suit in
equity or by action at law, or both, whether for specific performance of any
provision contained in this Agreement or any of the other Loan Documents or in
aid of the exercise of any power granted in this Agreement or any of the other
Loan Documents.
ARTICLE X
MISCELLANEOUS
10.1 Remedies Cumulative; No Waiver. The rights, powers and
remedies of the Bank provided in this Agreement and the other Loan Documents are
cumulative and not exclusive of any right, power or remedy provided by law or
equity, and no failure or delay on the part of the Bank in the exercise of any
right, power, or remedy shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power, or remedy preclude other or further
exercise thereof, or the exercise of any other right, power or remedy.
- 31 -
10.2 Notices. Every notice and communication under this
Agreement or any of the other Loan Documents shall be in writing and shall be
given by either (i) hand-delivery, (ii) first class mail (postage prepaid),
(iii) reliable overnight commercial courier (charges prepaid), or (iv) telecopy
or other means of electronic transmission, if confirmed promptly by any of the
methods specified in clauses (i), (ii) and (iii) of this sentence, to the
following addresses:
If to the Borrower:
Blonder Tongue Laboratories, Inc.
Xxx Xxxx Xxxxx Xxxx
Xxx Xxxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxxx, President
Fax: (000) 000-0000
With a copy to:
Stradley, Ronon, Xxxxxxx & Xxxxx
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxxxx, Esquire
Fax: (000) 000-0000
If to the Bank:
CoreStates Bank, N.A.
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxxxxx, Vice President
Fax: (000) 000-0000
With a copy to:
Duane, Morris & Heckscher
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Xx. Esquire
Fax: (000) 000-0000
Notice given by telecopy or other means of electronic
transmission shall be deemed to have been given and received when sent. Notice
by overnight courier shall be deemed to have been given and received on the date
scheduled for delivery. Notice by mail shall be deemed to have been given and
received three (3) calendar days after the date first deposited in the United
States Mail. Notice by hand delivery shall be deemed to have been given and
received upon delivery. A party may change its address by giving written notice
to the other party as specified herein.
10.3 Costs, Expenses and Attorneys' Fees. Whether or not the
transactions contemplated by this Agreement and the other Loan Documents are
fully consummated, the Borrower shall promptly pay (or reimburse, as the Bank
may elect) all costs and expenses
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which the Bank has incurred or may hereafter incur in connection with the
negotiation, preparation, reproduction, interpretation and enforcement of this
Agreement and the other Loan Documents, the collection of all amounts due
hereunder and thereunder, and any amendment, modification, consent or waiver
which may be hereafter requested by the Borrower or otherwise required. Such
costs and expenses shall include, without limitation, the fees and disbursements
of counsel to the Bank, the costs of appraisal fees, searches of public records,
costs of filing and recording documents with public offices, and similar costs
and expenses incurred by the Bank. Upon the occurrence of an Event of Default,
such costs shall also include the fees of any accountants, consultants or other
professionals retained by the Bank. The Borrower's reimbursement obligations
under this Section shall survive any termination of this Agreement.
10.4 Survival of Covenants. This Agreement and all covenants,
agreements, representations and warranties made herein and in any certificates
delivered pursuant hereto shall survive the making of the Loans and the
execution and delivery of the Notes and, subject to the provisions of 10.15
hereof, shall continue in full force and effect until all of the Obligations
have been fully paid, performed, satisfied and discharged.
10.5 Counterparts; Effectiveness. This Agreement may be
executed in any number of counterparts and by the different parties on separate
counterparts. Each such counterpart shall be deemed to be an original, but all
such counterparts shall together constitute one and the same Agreement. This
Agreement shall be deemed to have been executed and delivered when the Bank has
received counterparts hereof executed by all parties listed on the signature
page(s) hereto.
10.6 Headings. The headings of sections have been included
herein for convenience only and shall not be considered in interpreting this
Agreement.
10.7 Payment Due On A Day Other Than A Business Day. If any
payment due or action to be taken under this Agreement or any Loan Document
falls due or is required to be taken on a day which is not a Business Day, such
payment or action shall be made or taken on the next succeeding Business Day and
such extended time shall be included in the computation of interest.
10.8 Judicial Proceedings. Each party to this Agreement agrees
that any suit, action or proceeding, whether claim or counterclaim, brought or
instituted by any party hereto or any successor or assign of any party, on or
with respect to this Agreement or any of the other Loan Documents or the
dealings of the parties with respect hereto, or thereto, shall be tried only by
a court and not by a jury. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. Further, each party waives any right it may have to claim or
recover, in any such suit, action or proceeding, any special, exemplary,
punitive or
- 33 -
consequential damages or any damages other than, or in addition to, actual
damages. THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC
AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE BANK WOULD NOT EXTEND CREDIT
TO THE BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS
AGREEMENT.
10.9 Governing Law. This Agreement shall be construed in
accordance with and governed by the internal laws of the Commonwealth of
Pennsylvania.
10.10 Integration. This Agreement and the other Loan Documents
constitute the sole agreement of the parties with respect to the subject matter
hereof and thereof and supersede all oral negotiations and prior writings with
respect to the subject matter hereof and thereof.
10.11 Amendment and Waiver. No amendment of this Agreement,
and no waiver of any one or more of the provisions hereof shall be effective
unless set forth in writing and signed by the parties hereto.
10.12 Successors and Assigns.
(a) Generally. This Agreement (i) shall be binding
upon the Borrower and the Bank and their respective successors and assigns, and
(ii) shall inure to the benefit of the Borrower and the Bank and its respective
successors and assigns, provided, however, that the Borrower may not assign its
rights hereunder or any interest herein without the prior written consent of the
Bank, and any such assignment or attempted assignment by the Borrower shall be
void and of no effect with respect to the Bank.
(b) Participations. The Bank may from time to time
sell or otherwise grant participations in the Loans and the Notes, and the
holder of any such participation, if the participation agreement so provides,
(i) shall, with respect to its participation, be entitled to all of the rights
of the Bank and (ii) may exercise any and all rights of setoff or banker's lien
with respect thereto, in each case as fully as though the Borrower were directly
indebted to the holder of such participation in the amount of such
participation. The Bank may disclose to prospective participants such
information regarding the Borrower's affairs as the Bank possesses. The Bank
shall give notice to the Borrower of the grant of such participations; however,
the failure to give such notice shall not affect any of the Bank's rights
hereunder.
10.13 Severability of Provisions. Any provision in this
Agreement that is held to be inoperative, unenforceable, voidable, or invalid in
any jurisdiction shall, as to that jurisdiction, be ineffective, unenforceable,
void or invalid without affecting the remaining provisions, and to this end the
provisions of this Agreement are declared to be severable.
- 34 -
10.14 Consent to Jurisdiction and Service of Process. The
Borrower irrevocably appoints each and every officer of the Borrower as its
attorneys upon whom may be served, by regular or certified mail at the address
set forth in Section 10.2 hereof, any notice, process or pleading in any action
or proceeding against it arising out of or in connection with this Agreement or
any of the other Loan Documents; and the Borrower hereby (i) consents that any
action or proceeding against it be commenced and maintained in any court within
the Commonwealth of Pennsylvania or in the United States District Court for the
Eastern District of Pennsylvania by service of process on any such officer; (ii)
agrees that the courts of the Commonwealth of Pennsylvania and the United States
District Court for the Eastern District of Pennsylvania shall have jurisdiction
with respect to the subject matter hereof and the person of the Borrower and the
Collateral, and (iii) waives any objection that such Borrower may now or
hereafter have as to the venue of any such suit, action or proceeding brought in
such a court or that such court is an inconvenient forum. Notwithstanding the
foregoing, the Bank, in its absolute discretion may also initiate proceedings in
the courts of any other jurisdiction in which the Borrower may be found or in
which any of its properties or the Collateral may be located.
10.15 Indemnification
(a) If, after receipt of any payment of all or any
part of the Obligations, the Bank is compelled to surrender such payment to any
Person or entity for any reason (including, without limitation, a determination
that such payment is void or voidable as a preference or fraudulent conveyance,
an impermissible setoff, or a diversion of trust funds), then this Agreement and
the other Loan Documents shall continue in full force and effect, and the
Borrower shall be liable for, and shall indemnify, defend and hold harmless the
Bank with respect to the full amount so surrendered.
(b) The Borrower shall indemnify, defend and hold
harmless the Bank with respect to any and all claims, expenses, demands, losses,
costs, fines or liabilities of any kind, including reasonable attorneys' fees
and costs, arising from or in any way related to (i) acts or conduct of the
Borrower or any of the Other Loan Parties under, pursuant to or related to this
Agreement and the other Loan Documents, (ii) Borrower's or any Other Loan
Party's breach or violation of any representation, warranty, covenant or
undertaking contained in this Agreement or the other Loan Documents, and (iii)
Borrower's or any other Loan Party's failure to comply with any or all laws,
statutes, ordinances, governmental rules, regulations or standards, whether
federal, state, or local, or court or administrative orders or decrees,
including without limitation those resulting from any Hazardous Materials or
dangerous environmental condition within, on, from, related to or affecting any
real property owned or occupied by the Borrower, unless resulting from the acts
or
- 35 -
conduct of the Bank constituting gross negligence or willful misconduct.
(c) The provisions of this section shall survive the
termination of this Agreement and the other Loan Documents and shall be and
remain effective notwithstanding the payment of the Obligations, the
cancellation of any of the Notes, the release of any Encumbrance securing the
Obligations or any other action which the Bank may have taken in reliance upon
its receipt of such payment. Any cancellation of any of the Notes, release of
any Encumbrance or other such action shall be deemed to have been conditioned
upon any payment of the Obligations having become final and irrevocable.
- 36 -
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be executed by their duly authorized officers on the date first above
written.
BLONDER TONGUE LABORATORIES, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------
Xxxxx X. Xxxxxx, President
CORESTATES BANK, N.A.
(successor to Meridian Bank)
By: /s/ Xxxx X. Xxxxxxxx
--------------------------
Xxxx X. Xxxxxxxx,
Vice President
- 37 -
STATE OF NEW JERSEY :
: SS
COUNTY OF MIDDLESEX :
I CERTIFY that on October 29, 1997, Xxxxx X. Xxxxxx, the President of
BLONDER TONGUE LABORATORIES, INC., a Delaware corporation, personally appeared
before me, who I am satisfied to be the person who signed the foregoing
instrument, and acknowledged that he was authorized to execute the same as the
act of said corporation.
/s/ Xxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxx X. Xxxx
Title: Notary Public of New Jersey
---------------------------
My Commission expires
June 4, 2000
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Schedule 4.4(b)
Lease commitments between Borrower and CoreStates Leasing,
Inc. for the aggregate amount of $230,834, as follows:
Locator Machine $ 25,000*
System Manager $ 42,685
Amads Punch Press $135,000
Liquid Dispense Machine $ 28,149
*Note: Lease commenced in September 1997.
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Schedule 4.4(c)
Investment in Enhances Telecommunications, Inc. ("ETI") pursuant to
Share Exchange Agreement dated July 20, 1996 pursuant to which Borrower issued
8,333 shares of its common stock in exchange for 11,211 shares of ETI's common
stock.
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Schedule 6.16
FINANCIAL COVENANTS
This Schedule is a part of the Third Amended and Restated Loan
Agreement dated October 29, 1997 between CoreStates Bank, N.A. (successor to
Meridian Bank) and Blonder Tongue Laboratories, Inc.
A. Debt Coverage Ratio--The Borrower shall have a Debt Coverage Ratio
at the end of the fiscal year ending December 31, 1997 of not less than
2:00:1.00, and for each fiscal year thereafter.
B. Net Working Capital--The Borrower shall have Net Working Capital of
not less than $12,000,000 for the fiscal year ending December 31, 1997, and for
each fiscal quarter thereafter.
C. Ratio of Senior Debt to Capital Funds--The Borrower shall have a
ratio of Senior Debt to Capital Funds of not more than 1.50:1.00 for the fiscal
year ending December 31, 1997, and for each fiscal quarter thereafter.
For purposes of this Schedule, all capitalized terms used herein and
not otherwise defined shall have the meanings given to them, respectively, in
the Loan Agreement, and the following terms shall have the following meanings:
"Capital Funds" shall mean, at any time, the sum of Subordinated
Indebtedness plus Tangible Net Worth.
"Current Assets" shall mean, at any time, all assets which, in
accordance with GAAP, should be classified as current assets of the Borrower.
"Current Liabilities" shall mean, at any time, all Liabilities which,
in accordance with GAAP, should be classified as current liabilities of the
Borrower.
"Debt Coverage Ratio" shall mean for each Fiscal Year the ratio of (A)
the Net Income for such Fiscal Year increased by the sum of (i) interest expense
for such Fiscal Year, plus (ii) income tax expense for such Fiscal Year, plus
(iii) the depreciation and amortization expense included in the income statement
for such Fiscal Year, to (B) interest expense for such Fiscal Year, plus the
prior Fiscal Year's current maturities of long term debt, all as determined in
accordance with GAAP.
"Liabilities" shall mean, at any time, all liabilities which, in
accordance with GAAP, shall be classified as liabilities of the Borrower.
"Net Income" shall mean, for any period, the net income of the
Borrower, determined in accordance with GAAP, excluding:
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(a) the proceeds of any insurance policy;
(b) any gain or loss arising from:
(1) the sale or other disposition of any assets (other
than Current Assets);
(2) any write-up of assets; or
(3) the acquisition of outstanding securities
representing Indebtedness of the Borrower;
(c) any amount representing any interest in the undistributed
earnings of any Person;
(d) any earnings, prior to the date of acquisition, of any
Person acquired in any manner;
(e) any earnings of a successor to or transferee of the assets
of the Borrower prior to becoming such successor or transferee;
(f) any deferred credit (or amortization of a deferred credit)
arising from the acquisition of any Person; and
(g) any other item constituting an extraordinary gain or loss
under GAAP.
"Net Working Capital" shall mean, at any time, the amount by which
Current Assets exceed Current Liabilities, less any amount due from any
Affiliate to the extent that such amount is included in Current Assets.
"Senior Debt" shall mean, at any time, all Liabilities
less all Subordinated Indebtedness.
"Subordinated Indebtedness" shall mean, at any time, all
Indebtedness subordinated to the Obligations on terms satisfactory to the Bank.
"Stockholders' Equity" shall mean, at any time, stockholders'
equity as determined in accordance with GAAP.
"Tangible Net Worth" shall mean, at any time, the aggregate
Stockholders' Equity, less all intangible assets of the Borrower, including,
without limitation, organization costs, securities issuance costs, unamortized
debt discount and expense, goodwill, excess of purchase costs over net assets
acquired, patents, trademarks, trade names, copyrights, trade secrets, knowhow,
licenses, franchises, capitalized research and development expenses, amounts
owing from officers and/or Affiliates and any amount reflected as treasury
stock.
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Schedule 7.3
Liens securing indebtedness disclosed on Schedule 4.4(b).
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Exhibit "A"
ACQUISITION LOAN NOTE
$_____________ Reading, Pennsylvania
___________, 199_
FOR VALUE RECEIVED, BLONDER TONGUE LABORATORIES, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of CORESTATES
BANK, N.A. (successor to Meridian Bank) (the "Bank") the principal amount of
____________________ ($__________) in _____________ consecutive monthly payments
of $_________, payable on the first day of the month, commencing __________ __,
199_, and a final installment, consisting of the entire remaining principal
balance, payable on ______________, 199_. This Acquisition Loan Note is issued
under the Third Amended and Restated Loan Agreement dated , 1997 by and between
the Borrower and the Bank, as amended, modified or restated from time to time
(the "Loan Agreement"). Terms capitalized but not defined herein shall have the
meanings given to them respectively in the Loan Agreement. Reference is made to
the Loan Agreement for a statement of the terms and conditions under which the
loan evidenced hereby has been made, is secured, and may be prepaid or
accelerated.
Until maturity (whether by acceleration or otherwise) interest
shall accrue on the outstanding principal balance hereof at [an annual rate
equal at all times to the Acquisition Loan Adjusted Overnight Base Rate, which
rate shall change automatically and simultaneously upon each change in the
Bank's Overnight Base Rate] or [insert fixed rate]. Interest shall be calculated
on the basis of a 360-day year, counting the actual number of days elapsed.
Subsequent to maturity or the occurrence of any Event of Default, and continuing
after the entry of any judgment against the Borrower with respect to the
obligations evidenced by this Note, interest shall accrue at an annual rate
which shall be two percent (2%) above the rate of interest otherwise payable
hereunder. Accrued interest shall be payable monthly on the first day of each
month commencing with the month immediately following the date hereof and if not
paid when due, shall be added to the principal.
All amounts payable by the Borrower to the Bank hereunder shall be
paid directly to the Bank at 000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000 (or at
such other address of which the Bank shall give notice to the Borrower in
accordance with the Loan Agreement) in immediately available funds.
The Borrower hereby waives the requirements of demand, presentment,
protest, notice of protest and dishonor and all other demands or notices of any
kind in connection with the delivery, acceptance, performance, default, dishonor
or enforcement of this Note.
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The construction, interpretation and enforcement of this Note shall
be governed by the internal laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
Borrower has caused this Note to be executed by its duly authorized officer as
of the day and year first above written.
Attest: BLONDER TONGUE LABORATORIES, INC.
By:_________________________ By: _________________________
Title:______________________ Title:_______________________
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