SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996, OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO
_______.
Commission file number 1-14120
BLONDER TONGUE LABORATORIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 52-1611421
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Jake Brown Road, Old Bridge, New Jersey 08857
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 679-4000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ---
Number of shares of common stock, par value $.001, outstanding as of
August 9, 1996: 8,166,685.
The Exhibit Index appears on page 14 of 14.
<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30, Dec. 31,
1996 1995
----------- --------
(unaudited)
<S> <C> <C>
Assets (Note 5)
Current assets:
Cash ....................................................................................... $ 181 $ 477
Accounts receivable, net of allowance for doubtful
accounts of $215 and $205, respectively .................................................. 8,859 9,155
Inventories (Note 4) ....................................................................... 17,213 13,390
Other current assets ....................................................................... 351 906
Deferred income taxes ...................................................................... 326 137
------- -------
Total current assets ........................................................... 26,930 24,065
Property, plant and equipment, net of accumulated
depreciation and amortization ............................................................ 7,041 6,486
Other assets ................................................................................. 1,128 1,253
------- -------
$35,099 $31,804
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Revolving line of credit (Note 5) .......................................................... $ 3,238 $ 2,709
Current portion of long-term debt .......................................................... 455 221
Accounts payable ........................................................................... 1,129 4,630
Accrued compensation ....................................................................... 977 843
Other accrued expenses ..................................................................... 934 729
Income taxes ............................................................................... 67 526
------- -------
Total current liabilities ...................................................... 6,800 9,658
------- -------
Deferred income taxes ........................................................................ 464 482
Long-term debt, including related party debt of $1,591 ....................................... 4,926 1,924
Commitments and contingencies (Note 7) ....................................................... -- --
Stockholders' equity (Note 8):
Preferred stock, $.001 par value; authorized 5,000,000 shares;
no shares outstanding .................................................................... -- --
Common stock, $.001 par value; authorized 25,000,000 shares,
7,919,285 shares issued and outstanding at December 31, 1995 and
8,155,400 shares issued and outstanding at June 30, 1996 ................................. 8 8
Paid-in capital ............................................................................ 21,318 19,546
Retained earnings .......................................................................... 1,583 186
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Total stockholders' equity ..................................................... 22,909 19,740
------- -------
$35,099 $31,804
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
----------------------------------- ------------------------------------
1996 1995 1996 1995
--------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Net sales................................... $11,693 $15,394 $23,265 $27,258
Cost of goods sold.......................... 7,153 9,534 14,768 16,856
------- ------- ------- -------
Gross profit.............................. 4,540 5,860 8,497 10,402
------- ------- ------- -------
Operating expenses:
Selling expenses.......................... 1,323 1,275 2,538 2,361
General and administrative................ 1,244 1,362 2,314 2,534
Research and development.................. 431 429 954 888
------- ------- ------- -------
2,998 3,066 5,806 5,783
------- ------- ------- -------
Earnings from operations.................... 1,542 2,794 2,691 4,619
------- ------- ------- -------
Other income (expense):
Interest expense.......................... (202) (342) (367) (554)
Other income.............................. -- 10 -- 31
------- ------- ------- -------
(202) (332) (367) (523)
------- ------- ------- -------
Earnings before income taxes................ 1,340 2,462 2,324 4,096
Provision for income taxes.................. 533 126 927 209
------- ------- ------- -------
Net earnings.............................. $ 807 $ 2,336 $ 1,397 $ 3,887
======== ======= ======== =======
Net earnings per share...................... $ 0.10 $ 0.17
======== ========
Weighted average shares outstanding......... 8,319 8,293
======== ========
Pro forma data (Note 3):
Historical earnings before income taxes... $ 2,462 $ 4,096
Pro forma provision for income taxes...... 984 1,638
------- -----
Net earnings............................ $ 1,478 $ 2,458
======= =======
Pro forma net earnings per share............ $ 0.25 $ 0.41
======= =======
Weighted average shares outstanding......... 5,967 5,967
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1996 1995
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings............................................................................ $ 1,397 $ 3,887
Adjustments to reconcile net earnings to cash
used in operating activities:
Depreciation and amortization....................................................... 538 158
Provision for doubtful accounts..................................................... 105 76
Deferred income taxes............................................................... (207) --
Changes in operating assets and liabilities:
Accounts receivable............................................................... 191 (10,834)
Inventories....................................................................... (3,823) (1,943)
Other current assets.............................................................. 555 (35)
Other assets...................................................................... 30 (131)
Income taxes...................................................................... (459) 196
Accounts payable and accrued expenses............................................. (3,162) 4,582
------ -----
Net cash used in operating activities............................................ (4,835) (4,044)
------ -----
Cash Flows From Investing Activities:
Capital expenditures.................................................................... (998) (306)
------ -----
Net cash used in investing activities............................................ (998) (306)
------ -----
Cash Flows From Financing Activities:
Net borrowings under revolving line of credit........................................... 529 6,766
Proceeds from long-term debt............................................................ 3,419 --
Repayments of long-term debt............................................................ (183) (426)
Proceeds from sale of common stock...................................................... 1,772 --
Distributions paid to stockholders...................................................... -- (2,367)
------ -----
Net cash provided by financing activities........................................ 5,537 3,973
------ -----
Net Decrease In Cash...................................................................... (296) (377)
Cash, beginning of period................................................................. 477 502
------ -----
Cash, end of period....................................................................... $ 181 $ 125
======= =======
Supplemental Cash Flow Information:
Cash paid for interest.................................................................. $ 316 $ 477
Cash paid for income taxes.............................................................. 1,301 --
======= =======
Non-cash transactions:
Accrued dividends....................................................................... -- 1,897
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(unaudited)
Note 1 - Company and Basis of Presentation
Blonder Tongue Laboratories, Inc. (the "Company") is a manufacturer of
television and satellite signal distribution equipment supplied to the private
cable television and broadcast industries. The consolidated financial statements
include the accounts of Blonder Tongue Laboratories, Inc. and subsidiaries as
discussed below. Significant intercompany accounts and transactions have been
eliminated in consolidation.
The results for the six months ended June 30, 1996 are not necessarily
indicative of the results to be expected for the full fiscal year and have not
been audited. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting only of
normal recurring accruals, necessary for a fair statement of the results of
operations for the period presented and the consolidated balance sheet at June
30, 1996. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the SEC rules and
regulations. These financial statements should be read in conjunction with the
financial statements and notes thereto that were included in the Company's
latest annual report on Form 10-K.
Note 2 - Reorganization and Recapitalization
On December 11, 1995, the Company acquired Blonder Tongue International,
Inc. (BTI). BTI was an S Corporation formed in 1994 by the stockholders of the
Company. The acquisition was consummated by contribution of BTI's shares to the
Company. The acquisition was accounted for at historical cost similar to a
pooling of interests, due to the common control exercised over the entities by
related parties. The accompanying consolidated statements of earnings and of
cash flows have been restated for the period ended June 30, 1995. As a result of
the acquisition of BTI, the S Corporation elections for both BTI and the Company
automatically terminated on December 11, 1995.
The Company is planning to sell substantially all of the assets of BTI. This
transaction is not expected to have a material impact on the Company's operating
results.
On October 3, 1995, the Board of Directors and stockholders approved the
following actions in connection with the Company's initial public offering,
which actions were implemented on December 11, 1995:
Authorized capital consisting of 25 million shares of $.001 par value common
stock and 5 million shares of $.001 par value preferred stock. The preferred
stock may be issued in one or more series with such rights, preferences and
limitations as the Board of Directors of the Company may determine.
Declared a 2,011 for 1 stock split for the common stock. The consolidated
financial statements reflect the impact of the stock split for all periods
presented.
Note 3 - Pro Forma Presentations
The income tax provision for the period ended June 30, 1995 has been
calculated as if the Company were taxable as a C Corporation under the Internal
Revenue Code.
Pro forma net earnings per share is based on the weighted average number of
common stock shares and common stock equivalent shares outstanding during each
period, as adjusted for the effects of the application of Securities and
Exchange Commission Staff Accounting Bulletin ("SAB") No. 83 (53 for June 30,
1995). Pursuant to SAB No. 83, options granted within one year of the initial
public offering which have an exercise price less than the initial public
offering price are treated as outstanding for all periods presented. Pro forma
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<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(unaudited)
net earnings per share is computed using the treasury stock method, under which
the number of shares outstanding reflects an assumed use of the proceeds from
the assumed exercise of such options to repurchase shares of the Company's
common stock at the initial public offering price.
Note 4 - Inventories
Inventories are summarized as follows:
June 30, Dec. 31,
1996 1995
------- --------
Raw Materials .......................... $ 9,140 $ 7,293
Work in process ........................ 3,132 2,786
Finished Goods ......................... 4,941 3,311
------- --------
$17,213 $ 13,390
======= ========
Note 5 - Line of Credit
The Company has a $15 million line of credit with a bank on which funds may be
borrowed at the bank's prime rate (8.25% at June 30, 1996). As of June 30, 1996,
the Company had drawn down $3,238 under the line of credit for working capital
needs. Borrowings under the line of credit are limited based on a percentage of
accounts receivable and inventory. The line of credit is collateralized by a
security interest in all of the Company's assets. The agreement contains
restrictions as to the amount of capital expenditures and investments and
requires the Company to maintain certain financial ratios. The line of credit
expired on June 30, 1996, however, the Company was granted a three month
extension of the line of credit during which time the terms of a new line of
credit will be negotiated. The terms of the extension are the same as the terms
under the original line of credit.
Note 6 - Debt
On May 24, 1996, the Company borrowed $2.8 million for a 10-year term secured
by a mortgage against the Company's manufacturing and administrative facility
located in Old Bridge, New Jersey. The interest rate is fixed at 7.25% for three
years and may be negotiated to another fixed rate or remain variable for the
remaining seven years of the mortgage.
Note 7 - Commitments and Contingencies
In the first quarter of 1996, the Company entered into three five-year capital
lease agreements for certain machinery and equipment totaling $929. As of June
30, 1996, two leases have commenced and one lease in the amount of $577 remains
to be completed with advances of $279 being made.
Note 8 - Stockholders' Equity
In January 1996, 182 shares of Common Stock were sold at a price of $9.50
per share pursuant to the exercise of the underwriters' over-allotment option
which generated net proceeds of approximately $1,606. The proceeds were used for
working capital.
On July 30, 1996, the Company's Board of Directors granted options to purchase
225 shares of common stock under the 1995 Long Term Incentive Plan and options
to purchase 28 shares of common stock under the 1994
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<PAGE>
BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(unaudited)
Incentive Stock Option Plan. 205 of the options were granted at $9.63 per
share, representing 100% of the fair market value thereof as of the date of
grant. 48 of the options were granted to individuals who own more than 10% of
the voting stock of the Company at $10.59 per share, representing 110% of the
fair market value thereof as of the date of grant. The options granted under
both plans expire 10 years from the date of grant and vest one-third each year
commencing on the first anniversary of the date of grant.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Second three months of 1996 Compared with second three months of 1995
Net Sales. Net sales decreased $3,701,000, or 24.0%, to $11,693,000 in the
second three months of 1996 from $15,394,000 in the second three months of 1995.
International sales accounted for $636,000 (5.4% of total sales) for the second
three months of 1996 compared to $1,255,000 (8.2% of total sales) for the second
three months of 1995. Net sales included approximately $536,000 of VideoMask(TM)
interdiction equipment. Net sales also included $525,000 under the Company's
agreement to supply interdiction equipment to Pacific Bell.
Sales in the lodging market remained strong during the period but MDU sales
were impacted by the uncertainty surrounding the installation of private cable
systems in properties under contract to Interactive Cable Systems, Inc. ("ICS"),
one of the Company's largest customers in 1995. Net sales to ICS were
approximately $6,000 in the second three months of 1996 compared to
approximately $5,900,000 in the second three months of 1995. It is anticipated
that these properties will be upgraded in future time periods either by ICS or
by other private cable operators. Approximately $759,000 of accounts receivable
outstanding at June 30, 1996 was due from ICS for more than 60 days.
Volume interdiction sales have been delayed due to the inability of ICS to
complete the installation of private cable systems in properties under contract
to them and the shift in demand to other users of Interdiction whose
requirements were for product configurations not yet in production. While there
can be no assurances, the Company anticipates the production of these products
to be accelerated through the third and fourth quarters of 1996.
Cost of Goods Sold. Cost of goods sold decreased to $7,153,000 for the second
three months of 1996 from $9,534,000 for the second three months of 1995 and
also decreased as a percentage of sales to 61.2% from 61.9%. The decrease was
caused primarily by a greater proportion of sales during the period being
comprised of higher margin products.
Selling Expenses. Selling expenses increased to $1,323,000 in the second three
months of 1996 from $1,275,000 in the second three months of 1995, primarily due
to increased costs incurred for advertising, marketing materials and trade
shows, as well as increased operational costs of the BTI sales office and
additional costs incurred in connection with the anticipated closing of this
office.
General and Administrative Expenses. General and administrative expenses
decreased to $1,244,000 in the second three months of 1996 from $1,362,000 for
the second three months of 1995 but increased as a percentage of sales to 10.6%
in the second three months of 1996 from 8.8% for the second three months of
1995. The $118,000 decrease can be attributed to a reduction in rent expense,
net of increased depreciation, as a result of the purchase of the manufacturing
facility and a decline in salaries due to a reduction in personnel, offset by an
increase in expenditures for professional services and insurance.
Research and Development Expenses. Research and development expenses increased
to $431,000 in the second three months of 1996 from $429,000 in the second three
months of 1995, primarily due to an increase in purchased materials for research
and development and increased expenditures related to the VideoMask(TM)
interdiction product line. Research and development expenses also increased as a
percentage of sales to 3.7% from 2.8% and the Company anticipates continuing to
increase its research and development expenditures.
Operating Income. Operating income decreased 45% to $1,542,000 for the second
three months of 1996 from $2,794,000 for the second three months of 1995.
Operating income as a percentage of sales decreased to 13.2% in the second three
months of 1996 from 18.1% in the second three months of 1995.
Interest and Other Expenses. Other expenses, net, decreased to $202,000 in the
second three months of 1996 from $332,000 in the second three months of 1995.
These expenses in the second three months of 1996 consisted of interest expense
in the amount of $202,000. Other expenses in the second three months of 1995
consisted of interest expense of $342,000, offset by $10,000 of other income.
The reduction in interest expense is primarily attributed to reduced borrowings
under the Company's credit line.
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<PAGE>
Income Taxes. The Company with the consent of its stockholders elected to be
taxed as an S Corporation for federal income tax purposes since its
organization. As a consequence, the taxable net earnings of the Company were
taxed as income to the Company's stockholders in proportion to their individual
stockholdings, and the payment of federal income taxes on such proportionate
share of the Company's taxable earnings is the personal obligation of each
stockholder. The Company's status as an S Corporation terminated on December 11,
1995, and as a result the Company is now a C Corporation for income tax
purposes. As a C Corporation, the Company is currently taxed at a combined
effective rate of 40% based upon current federal and state income tax
regulations. Had the Company been taxable as a C Corporation for the second
quarter of 1995, pro forma income taxes and pro forma net earnings after taxes
would have been $984,000 and $1,478,000, respectively, for the quarter ended
June 30, 1995.
First six months of 1996 Compared with first six months of 1995
Net Sales. Net sales decreased $3,993,000, or 14.6%, to $23,265,000 in the
first six months of 1996 from $27,258,000 in the first six months of 1995.
International sales accounted for $1,425,000 (6.1% of total sales) for the first
six months of 1996 compared to $2,699,000 (9.9% of total sales) for the first
six months of 1995. Net sales included approximately $806,000 of VideoMask(TM)
interdiction equipment. Net sales also included $825,000 under the Company's
agreement to supply interdiction equipment to Pacific Bell.
Sales in the lodging market remained strong during the period but MDU sales
were impacted by the uncertainty surrounding the installation of private cable
systems in properties under contract to Interactive Cable Systems, Inc. ("ICS"),
one of the Company's largest customers in 1995. Net sales to ICS were
approximately $659,000 in the first six months of 1996 compared to approximately
$7,900,000 in the first six months of 1995. It is anticipated that these
properties will be upgraded in future time periods either by ICS or by other
private cable operators. Approximately $759,000 of accounts receivable
outstanding at June 30, 1996 was due from ICS for more than 60 days.
Volume interdiction sales have been delayed due to the inability of ICS to
complete the installation of private cable systems in properties under contract
to them and the shift in demand to other users of Interdiction whose
requirements were for product configurations not yet in production. While there
can be no assurances, the Company anticipates the production of these products
to be accelerated through the third and fourth quarters of 1996.
Cost of Goods Sold. Cost of goods sold decreased to $14,768,000 for the first
six months of 1996 from $16,856,000 for the first six months of 1995 but
increased as a percentage of sales to 63.5% from 61.8%. The increase as a
percentage of sales was caused primarily by a greater proportion of sales during
the period being comprised of lower margin products.
Selling Expenses. Selling expenses increased to $2,538,000 in the first six
months of 1996 from $2,361,000 in the first six months of 1995, primarily due to
increased costs incurred for advertising, marketing materials and trade shows,
as well as increased operational costs of the BTI sales office and additional
costs incurred in connection with the anticipated closing of this office.
General and Administrative Expenses. General and administrative expenses
decreased to $2,314,000 in the first six months of 1996 from $2,534,000 for the
first six months of 1995 but increased as a percentage of sales to 9.9% in the
first six months of 1996 from 9.3% for the first six months of 1995. The
$220,000 decrease can be attributed to a reduction in rent expense, net of
increased depreciation, as a result of the purchase of the manufacturing
facility and a decline in salaries due to a reduction in personnel, offset by an
increase in expenditures for professional services and insurance.
Research and Development Expenses. Research and development expenses increased
7.4% to $954,000 in the first six months of 1996 from $888,000 in the first six
months of 1995, primarily due to an increase in purchased materials for research
and development and increased expenditures related to the VideoMask(TM)
interdiction product line. Research and development expenses also increased as a
percentage of sales to 4.1% from 3.3% and the Company anticipates continuing to
increase its research and development expenditures.
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<PAGE>
Operating Income. Operating income decreased 42% to $2,691,000 for the first
six months of 1996 from $4,619,000 for the first six months of 1995. Operating
income as a percentage of sales decreased to 11.6% in the first six months of
1996 from 16.9% in the first six months of 1995.
Interest and Other Expenses. Other expenses, net, decreased to $367,000 in the
first six months of 1996 from $523,000 in the first six months of 1995. These
expenses in the first six months of 1996 consisted of interest expense in the
amount of $367,000. Other expenses in the first six months of 1995 consisted of
interest expense of $554,000, offset by $31,000 of other income. The reduction
in interest expense is primarily attributed to reduced borrowings under the
Company's credit line.
Income Taxes. The Company with the consent of its stockholders elected to be
taxed as an S Corporation for federal income tax purposes since its
organization. As a consequence, the taxable net earnings of the Company were
taxed as income to the Company's stockholders in proportion to their individual
stockholdings, and the payment of federal income taxes on such proportionate
share of the Company's taxable earnings is the personal obligation of each
stockholder. The Company's status as an S Corporation terminated on December 11,
1995, and as a result the Company is now a C Corporation for income tax
purposes. As a C Corporation, the Company is currently taxed at a combined
effective rate of 40% based upon current federal and state income tax
regulations. Had the Company been taxable as a C Corporation for the first two
quarters of 1995, pro forma income taxes and pro forma net earnings after taxes
would have been $1,638,000 and $2,458,000, respectively, for the six-month
period ended June 30, 1995.
Liquidity and Capital Resources
As of June 30, 1996, the Company's working capital was $20,130,000, compared
to $14,407,000 as of December 31, 1995. The increase in working capital is
primarily attributable to a $1,606,000 equity capital infusion as a result of
the exercise by the Company's underwriters of their over-allotment option in
connection with the Company's initial public offering of Common Stock and
proceeds from a $2,800,000 loan secured by a mortgage against the Company's
principal office/manufacturing facility located in Old Bridge, New Jersey. These
additional proceeds were applied against the outstanding balance under the
Company's revolving line of credit. Historically, the Company has satisfied its
cash requirements primarily from net cash provided by operating activities and
from borrowings under its line of credit.
The Company's net cash used in operating activities for the six-month period
ended June 30, 1996 was $4,835,000, including $3,823,000 to fund the increase in
inventory, compared to cash used in operating activities for the six-month
period ended June 30, 1995, which was $4,044,000. Cash flows from operating
activities have been negative, due primarily to the increase in inventory of
$3,823,000, and a reduction in accounts payable of $3,501,000 offset by an
increase of $339,000 in accrued expenses.
Cash used in investing activities was $998,000, substantially all of which is
attributable to capital expenditures for new equipment. The Company anticipates
capital expenditures during calendar year 1996 aggregating, approximately
$1,500,000, $560,000 of which will be used for the purchase of several high
speed robotic insertion machines to be used primarily in the manufacture of
circuit boards for the Company's new VideoMask(TM) product line and the balance
of which will be used for the purchase of other automated assembly and test
equipment. The Company does not have any present plans or commitments for
material capital expenditures for fiscal year 1997.
Cash provided by financing activities was $5,537,000 for the first six months
of 1996, comprised primarily of debt proceeds, net of repayments, of $3,765,000,
net proceeds from the Company's sale of an additional 181,735 shares of Common
Stock pursuant to an over-allotment option relating to the Company's initial
public offering of $1,606,000 and an additional $166,000 relating to the
exercise of stock options.
As of June 30, 1996, the Company's outstanding balance under its line of
credit was $3,238,000. This loan is secured by substantially all of the
Company's assets. In October, 1995, the Company's line of credit was increased
to $15,000,000. The credit line bore interest at Meridian Bank's prime rate
(8.25% as of July 31, 1996), and was subject to certain covenants, including the
maintenance of certain financial ratios and limitations on capital expenditures
and payment of dividends. The credit line expired on June 30, 1996, however, the
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<PAGE>
Company was granted a three month extension on the same terms as the terms under
the original line of credit, pending negotiation of a new revolving line of
credit agreement.
On May 24, 1996, the Company borrowed $2,800,000 from Meridian Bank for a
10-year term, secured by a mortgage against its principal office/manufacturing
facility located in Old Bridge, New Jersey. Proceeds of the loan were applied
against the outstanding balance of the Company's revolving line of credit. The
mortgage loan bears interest at the fixed rate of 7.25% per annum for the first
three years and may be negotiated to another fixed rate or remain variable for
the remaining seven years of the loan.
The Company currently anticipates that the cash generated from operations,
existing cash balances and amounts available under its existing or a replacement
line of credit, will be sufficient to satisfy its foreseeable working capital
needs.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings pending or, to the knowledge of
management, threatened against the Company.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders (the "Meeting") on April
25, 1996. The Company solicited proxies in connection with the Meeting. At the
record date of the Meeting (March 25, 1996), there were 8,133,196 shares of
Common Stock outstanding and entitled to vote. The following were the matters
voted upon at the Meeting.
1. Election of Directors. The following directors were elected at the Meeting:
James A. Luksch and John E. Dwight. The number of votes cast for and withheld
from each director are as follows:
DIRECTORS FOR WITHHELD
--------- --- --------
James A. Luksch 7,318,436 2,000
John E. Dwight 7,318,436 2,000
2. Ratification of Auditors. The appointment of BDO Seidman, LLP as the
Company's independent auditors for the year ending December 31, 1996 was
ratified by the following vote of Common Stock:
FOR AGAINST ABSTAIN
--- ------- -------
7,316,336 800 3,300
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits are listed in the Exhibit Index appearing at page 13 herein.
(b) No reports on Form 8-K were filed in the quarter ended June 30, 1996.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BLONDER TONGUE LABORATORIES, INC.,
Date: August 14, 1996
By:/s/JAMES A. LUKSCH
--------------------------------------------------
James A. Luksch
President and Chief Executive Officer
By:/s/PETER PUGIELLI
--------------------------------------------------
Peter Pugielli, Senior Vice President - Finance
(Principal Financial Officer)
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<PAGE>
EXHIBIT INDEX
Sequential
Exhibit # Description Page Number
- --------- ----------- -----------
3.1 Restated Certificate of Incorporation of Blonder
Tongue Laboratories, Inc.*
3.2 Restated Bylaws of Blonder Tongue Laboratories,
Inc.**
10.1 Second Amendment to Amended and Restated
Loan Agreement dated as of May 23, 1996,
between the Blonder Tongue Laboratories,
Inc. and Meridian Bank.
10.2 Mortgage, Assignment of Leases, and
Security Agreement dated May 23, 1996 by
Blonder Tongue Laboratories, Inc. in favor
of Meridian Bank.
10.3 Real Estate Loan Note dated May 23, 1996
from Blonder Tongue Laboratories, Inc. in
favor of Meridian Bank.
27 Financial Data Schedule
- -----------------------------
* Incorporated by reference from Exhibit 3.1 to S-1 Registration Statement No.
33-98070 originally filed October 12, 1995, as amended.
** Incorporated by reference from Exhibit 3.2 to S-1 Registration Statement No.
33-98070 originally filed October 12, 1995, as amended.
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<PAGE>
SECOND AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
THIS IS A SECOND AMENDMENT dated as of May 23, 1996, ("Second Amendment")
to the Amended and Restated Loan Agreement dated as of October 2, 1995, and
subsequently amended by a letter agreement dated December 11, 1995 (as amended,
modified and/or extended, the "Loan Agreement") between MERIDIAN BANK, a
Pennsylvania banking corporation (the "Bank"), and BLONDER TONGUE LABORATORIES,
INC., a Delaware corporation (the "Borrower").
BACKGROUND
A. Pursuant to the Loan Agreement the Bank has made available to the
Borrower a line of credit in the maximum principal amount of Fifteen Million
Dollars ($15,000,000) (the "Line of Credit").
B. The parties hereto now desire to amend the Loan Agreement to provide
for a real estate loan in the principal amount of $2,800,000 for the purpose of
refinancing certain real property owned by the Borrower.
Accordingly, the Bank and the Borrower, intending to be legally bound,
hereby agree as follows:
1. Effect of Prior Amendments.
This Second Amendment is intended to amend the Loan Agreement, as it
has been in effect to the date hereof and as it shall be amended on and after
the date hereof. Except as modified hereby, all capitalized terms used herein
which are defined in the Loan Agreement shall have the same meanings herein as
in the Loan Agreement unless herein provided to the contrary.
2. Amendments.
(a) New Definitions. The following new definitions are hereby added
to Article I of the Loan Agreement to read as follows:
"First Amendment" shall mean that certain letter agreement
between the Bank and the Borrower dated December 11, 1995.
"Mortgage" shall mean a mortgage, dated the Second Amendment
Closing Date, in form and substance satisfactory to the Bank, by which the
Borrower shall grant to the Bank a mortgage lien on real property located at One
Jake Brown Road, Old Bridge, New Jersey, together with all amendments,
modifications, exhibits and schedules thereto as may be in effect from time to
time.
<PAGE>
"Second Amendment" shall mean the Second Amendment to the Amended
and Restated Loan Agreement dated the Second Amendment Closing Date.
"Second Amendment Closing Date" shall mean the date of the Second
Amendment.
"Second Amendment Loan Documents" shall mean the Second
Amendment, the Real Estate Loan Note, the Reaffirmations, the Mortgage and all
replacements, amendments, extensions and renewals of any of the foregoing.
"Reaffirmation of Blonder Security Agreement" shall mean that
certain reaffirmation by the Borrower of the Blonder Security Agreement, dated
the Second Amendment Closing Date.
"Reaffirmation of Patent Assignment" shall mean that certain
reaffirmation by the Borrower of the Patent Assignment, dated the Second
Amendment Closing Date.
"Reaffirmation of Trademark Assignment" shall mean that certain
reaffirmation by the Borrower of the Trademark Assignment dated the Second
Amendment Closing Date.
"Real Estate Loan" shall mean the loan made by the Bank to the
Borrower pursuant to Section 2.7 of the Loan Agreement.
"Real Estate Loan Note" shall have the meaning set forth in
Section 2.7(c) of the Loan Agreement, together with all replacements, amendments
and renewals thereof.
(b) Amended Definitions. The following definitions set forth in
Article I of the Loan Agreement are hereby amended and restated in their
entirety as follows:
"Loan Documents" shall mean this Agreement, the Security
Agreements, the Mortgage, the Notes, the Guaranty Agreements, the Patent
Assignment, the Trademark Assignment, the Life Insurance Assignments, the First
Amendment, the Second Amendment Loan Documents 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 and the Real Estate
Loan.
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<PAGE>
"Notes" shall mean the Line of Credit Note, and the Real Estate
Loan Note and all replacements, amendments, extensions and renewals thereof.
"Reaffirmations" shall mean the Reaffirmation of Patent
Assignment, the Reaffirmation of Trademark Assignment and the Reaffirmation of
Blonder Security Agreement.
(c) Deleted Definitions. The following definitions set forth in
Article I of the Loan Agreement are hereby deleted in their entirety: Leasehold
Mortgage, International Guaranty, International Security Agreement,
Reaffirmation and Amendment of International Guaranty, Reaffirmation and
Amendment of International Security Agreement, Limited Guaranty, Pledge
Agreement.
(d) Section 2.5 of the Loan Agreement is hereby amended by changing
the word "Loans" on the second line of such Section to "Line of Credit Loans."
(e) Section 2.2 of the Loan Agreement is hereby deleted in its
entirety.
(f) Article II of the Loan Agreement is hereby amended by adding the
new Sections 2.7 and 2.8 which shall read in their entirety as follows:
2.7 Real Estate Loan.
(a) Generally. The Bank shall make available to the Borrower
on the Second Amendment Closing Date a term loan ("Real
Estate Loan") of $2,800,000, the proceeds of which shall be
used refinance certain land and the buildings and other
improvements thereon owned by the Borrower and located at
One Jake Brown Road, Old Bridge, New Jersey (the
"Property"). The Borrower shall repay the outstanding
principal of the Real Estate Loan in one hundred nineteen
(119) equal, consecutive, monthly installments in the amount
of $15,555.56 on the first day of each month beginning June
1, 1996, and a final installment, consisting of the entire
remaining principal balance of the Real Estate Loan,
together with all accrued interest thereon due and payable
May 1, 2006.
-3-
<PAGE>
(b) Interest. Interest shall accrue on the outstanding
principal of the Real Estate Loan at an annual rate equal to
seven and one quarter of one percent (7.25%) for the period
commencing on the Second Amendment Closing Date and ending
on June 1, 1999. Thereafter, interest shall accrue at an
annual rate equal at all times to the National Commercial
Rate, which rate shall change simultaneously and
automatically upon each change in the Bank's National
Commercial Rate, or another fixed rate agreed upon between
the Bank and the Borrower. Interest shall be payable monthly
on the first day of each month beginning June 1, 1996.
(c) Real Estate Loan Note. The obligations of the Borrower
to repay the aggregate outstanding principal under the Real
Estate Loan and to pay accrued interest thereon shall be
evidenced by a promissory note, in form and substance
satisfactory to the Bank, to be executed and delivered to
the Bank on the Second Amendment Closing Date (the "Real
Estate Loan Note").
(d) Commitment Fee. In addition to the interest payable by
the Borrower to the Bank in respect of the Real Estate Loan,
the Borrower shall pay to the Bank on or prior to the Second
Amendment closing Date, a commitment fee of $7,000.00. The
Borrower hereby irrevocably authorizes the Bank to charge
any account maintained by the Borrower at the Bank for the
payment of such fee.
2.8 Prepayment and Repayment. The Borrower shall pay a prepayment
premium with respect to the Real Estate Loan 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 in no event beyond the date on
which interest on the Real Estate Loan converts from a fixed rate
to a floating rate as prescribed in Section 2.7(b) above), unless
the parties have 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
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<PAGE>
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 in no event beyond the date on which interest
on the Real Estate Loan converts from a fixed rate to a floating
rate as prescribed in Section 2.7(b) above), 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 they do 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.
(f) Article VII of the Loan Agreement is hereby amended by adding the
new Section 7.15 which shall read in its entirety as follows:
"7.14 Blonder International. From and after the Second Amendment
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.
3. Sale of Blonder International. Notwithstanding any other provisions of
the Loan Agreement to the contrary, the Bank hereby consents to the sale of all
or substantially all of the assets or stock of Blonder International.
-5-
<PAGE>
4. Representations and Warranties.
The Borrower hereby represents and warrants to the Bank that:
(a) It has the power and authority to execute, deliver and perform
the Second Amendment Loan Documents and all other documents referenced or
delivered in connection therewith, it has taken all necessary corporate action
to authorize the execution, delivery and performance of the Second Amendment
Loan Documents, and the Second Amendment Loan Documents constitute the legal,
valid and binding obligations of the Borrower, enforceable in accordance with
their respective terms;
(b) No default or Event of Default has occurred, and no event has
occurred which, with the passage of time, the giving of notice or both would
result in a default or an Event of Default under the Loan Agreement, or any
other documents executed in connection therewith except such as has been waived
in writing by the Bank;
(c) Since the date of execution and delivery of the Loan Agreement,
except to the extent previously disclosed by the Borrower to the Bank in
writing, there has not been any material adverse change in the business,
operations, properties or financial position of the Borrower;
(d) All of the representations and warranties made by the Borrower in
the Loan Agreement, and any other documents executed in connection therewith are
true and correct as of the date of this Second Amendment as if such
representations and warranties had been made on the date hereof.
5. Conditions Precedent.
In order to induce the Bank to enter into this Second Amendment, the
Borrower shall first satisfy the following conditions precedent:
(a) The Borrower shall have executed and delivered to the Bank the
Second Amendment and all such other documents and instruments as the Bank may
reasonably request;
(b) The Borrower shall have executed and delivered to the Bank the
Mortgage, in form suitable for recording;
(c) The Borrower shall have executed and delivered to the Bank the
Real Estate Loan Note;
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<PAGE>
(d) Each of the Reaffirmations shall have been duly executed by the
parties thereto and delivered to the Bank;
(e) The Borrower shall furnish to the Bank copies of resolutions of
its Board of Directors, which shall be certified as of the date hereof as being
true, correct and complete, authorizing the Borrower's execution and delivery of
the Second Amendment Loan Documents, its performance of the transactions
contemplated thereby, and the taking of all such other and further actions by
the Borrower in connection herewith and therewith as may be necessary or proper;
(f) The Borrower shall have furnished to the Bank a certificate,
dated as of the date hereof, as to the incumbency and signatures of the
officer(s) signing the Second Amendment Loan Documents and each other document
to be executed and delivered pursuant hereto;
(g) The Borrower shall have furnished to the Bank a certificate,
dated as of the date hereof, certifying that the Certificate of Incorporation
and the Bylaws of the Borrower have not been amended since October, 1995, except
as otherwise previously disclosed in writing to the Bank;
(h) The Borrower shall deliver a certificate of authority or good
standing for the Borrower issued by the secretary of state of the State of
Delaware and the State of New Jersey;
(i) The Borrower shall pay to the Bank the commitment fee of $7,000;
(j) An opinion from Borrower's counsel in form and substance
satisfactory to the Bank and its counsel;
(k) A commitment for a policy of title insurance issued by a title
company satisfactory to the Bank insuring the Mortgage as a valid mortgage lien,
subject only to such exceptions approved by the Bank shall be delivered to the
Bank.
6. Payment of Expenses.
The Borrower shall pay or reimburse the Bank promptly for all
reasonable counsel fees, costs and other expenses incurred by the Bank in
connection with the preparation and execution of the Second Amendment Loan
Documents and all documents and instruments executed in connection herewith.
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<PAGE>
7. Ratification and Confirmation.
Except as amended hereby or unless no longer applicable by their
terms, all of the terms and provisions of the Loan Agreement continue unchanged,
shall remain in full force and effect and are hereby ratified and confirmed. To
the extent that any term or provision of this Second Amendment is or may be
deemed expressly inconsistent with any term or provision in the Loan Agreement,
the terms and provisions hereof shall control.
8. Miscellaneous.
(a) All references to the "Agreement" or the "Loan Agreement" in the
Loan Documents shall be deemed to refer to the Loan Agreement as the same has
been amended through the date hereof, and as the same may be amended in the
future.
(b) This Second Amendment may be executed in two or more counterparts
and by the Bank and the Borrower on separate counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same Second Amendment.
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<PAGE>
IN WITNESS WHEREOF, the Bank and the Borrower have caused this Second
Amendment to be executed by the duly authorized officers on the date first above
written.
MERIDIAN BANK
By:____________________________
Title:_________________________
Attest: BLONDER TONGUE LABORATORIES,
INC.
By:____________________________ By:____________________________
Title: James A. Luksch, President
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<PAGE>
STATE OF :
: SS
COUNTY OF :
I CERTIFY that on May __, 1996, James A. Luksch, 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.
______________________________
Name:_________________________
Title:________________________
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Prepared by:__________________________
Andrew Hamilton, Esquire
MORTGAGE, ASSIGNMENT OF LEASES, AND SECURITY AGREEMENT
THIS MORTGAGE, ASSIGNMENT OF LEASES, AND SECURITY AGREEMENT (this
"Mortgage") dated May 23, 1996 is made by BLONDER TONGUE LABORATORIES, INC., a
Delaware corporation, with an address of One Jake Brown Road, Old Bridge, New
Jersey ("Mortgagor"), in favor of MERIDIAN BANK, a Pennsylvania banking
corporation, with an address of 601 Penn Street, Reading, PA 19603
("Mortgagee").
ARTICLE I
OBLIGATIONS; SECURITY
1.1 Obligations; Loan Documents. This Mortgage is executed, acknowledged
and delivered by Mortgagor to secure and enforce the following obligations and
liabilities (collectively, the "Obligations"):
(a) The payment of the principal sum of SEVENTEEN MILLION EIGHT
HUNDRED THOUSAND DOLLARS ($17,800,000) as evidenced by (i) a certain Line of
Credit Note dated October 2, 1995 made by Mortgagor in favor of Mortgagee in the
principal amount of $15,000,000, (ii) a certain Real Estate Loan Note dated the
date hereof made by Mortgagor in favor of Mortgagee in the principal amount of
$2,800,000 (collectively, the "Notes"), together with interest thereon; (iii)
all sums now or in the future advanced or coming due or required to be paid
under the Loan Documents (hereafter defined) whether for principal, interest,
fees, costs, charges, expenses, or other amounts owing under reimbursement or
indemnification obligations under the Loan Documents; whether such advances are
voluntary or obligatory; whether such obligations presently exist or come into
existence at some future time; and whether such advances, costs and expenses
were made or incurred at the request of Mortgagor or Mortgagee; and (iv) all
sums which may hereafter be lent to Mortgagor when evidenced by a promissory
note or other obligation reciting that said note or obligation is intended to be
secured by this Mortgage; and
(b) The performance of (i) all of the terms, covenants, conditions,
agreements, obligations and liabilities of Mortgagor under the Notes, this
Mortgage, all other documents referred to as "Loan Documents" in the Amended and
Restated Loan Agreement dated October 2, 1995 between Mortgagor and Mortgagee,
as previously amended, as amended by that certain Second Amendment to Amended
and Restated Loan Agreement dated the date hereof (as amended, modified and/or
extended, the "Loan Agreement"), and any other document now or hereafter given
to evidence, secure or facilitate the payment and performance of any of the
Obligations; (ii) all extensions, renewals, replacements
<PAGE>
or modifications of, or amendments or additions to any of the foregoing; and
(iii) any note, document or instrument now or hereafter evidencing an obligation
of Mortgagor to Mortgagee which recites that it is intended to be secured by
this Mortgage (all of the foregoing being collectively referred to in this
Mortgage as the "Loan Documents"). Mortgagor shall pay and perform the
Obligations required in accordance with the provisions of the Loan Documents.
1.2 Grant of Mortgage; Mortgaged Property. For the purpose of securing
payment and performance of all Obligations, Mortgagor has granted, conveyed,
bargained, sold, aliened, enfeoffed, released, confirmed, assigned to, granted a
security interest in and mortgaged, and by these presents does hereby grant,
convey, bargain, sell, alien, enfeoff, release, confirm, assign to, grant a
security interest in and mortgage unto Mortgagee all of the following whether
presently in existence or to come into existence at some future time
(collectively, the "Mortgaged Property"):
(a) The parcel(s) of land situated generally in Middlesex County, New
Jersey and more fully described in Exhibit "A" attached hereto and made a part
hereof (the "Land");
(b) All buildings, structures and improvements of every kind erected
on, under or over the Land (the "Improvements") (the Land and the Improvements
being hereinafter referred to as, collectively, the "Real Estate");
(c) all fixtures, machinery, equipment and other articles of real,
personal or mixed property, attached to, situate or installed in or upon, or
used in the operation or maintenance of, the Real Estate or any plant or
business situated thereon, whether or not such real, personal or mixed property
is or shall be affixed to the same, and all replacements, substitutions,
accretions and proceeds of the foregoing (collectively, "Fixtures") including:
(i) all furnishings, furniture, and appliances; all articles of
interior decoration, floor, wall and window coverings; all office, restaurant,
bar, kitchen and laundry fixtures, utensils, appliances and equipment; all
supplies, tools and accessories; all storm and screen windows, shutters, doors,
awnings, signs, trees, and other plantings; and
(ii) all building service fixtures, machinery and equipment of
any kind whatsoever; all lighting, heating, ventilating, air conditioning,
refrigerating, sprinkling, plumbing, security, cleaning, incinerating, waste
disposal, communications, alarm, fire prevention and extinguishing systems,
fixtures, apparatus, machinery and equipment; all elevators, escalators, lifts,
cranes, hoists and platforms; all pipes,
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<PAGE>
conduits, pumps, boilers, tanks, motors, engines, furnaces and compressors; all
dynamos, transformers, generators; and all parts, fittings, accessories,
accessions, substitutions and replacements thereof;
(d) All leases, licenses, occupancy agreements or agreements to lease
all or any part of the Real Estate and all extensions, renewals, amendments, and
modifications thereof, and any options, rights of first refusal, or guarantees
relating thereto (collectively, "Leases"); all rents, income, receipts,
revenues, security deposits, escrow accounts, reserves, issues, profits, awards,
and payments of any kind payable under the Leases or otherwise arising from the
Real Estate (collectively, the "Income"); all contract rights, accounts
receivable and general intangibles relating to the Real Estate or the use,
occupancy, maintenance, construction, repair or operation thereof; all
management agreements, franchise agreements, utility agreements and deposits,
building service contracts, maintenance contracts, construction contracts,
architect's agreements; all maps, plans, surveys and specifications; all
warranties and guaranties; to the extent permitted by law, all permits, licenses
and approvals; all insurance policies, books of account and other documents, of
whatever kind or character, relating to the use, construction upon, occupancy,
leasing, sale or operation of the Real Estate;
(e) All estates, rights, tenements, hereditaments, privileges,
easements, and appurtenances of any kind benefitting the Real Estate; all means
of access to and from the Real Estate, whether public or private; all water and
mineral rights; all rights of Mortgagor as declarant or unit owner under any
declaration of condominium or association applicable to the Real Estate; and all
other claims or demands of Mortgagor, either at law or in equity, in possession
or expectancy, of, in, or to the Real Estate; and
(f) All "Proceeds" of any of the above-described property, which term
shall have the meaning given to it in the Uniform Commercial Code of the state
in which the Real Estate is located and shall additionally include whatever is
received upon the use, lease, sale, exchange, collection, or other utilization
or any disposition of any of the above-described property, voluntary or
involuntary, whether cash or non-cash, including proceeds of insurance and
condemnation awards, rental or lease payments, accounts, chattel paper,
instruments, documents, contract rights, general intangibles, equipment and
inventory.
TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee to and for
the use of the Mortgagee forever.
1.3 Security Agreement. This Mortgage is also a security agreement under
the Uniform Commercial Code of the state
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<PAGE>
in which the Real Estate is located. Mortgagor grants, and Mortgagee shall have
and may enforce, a security interest in all those property interests included in
the Mortgaged Property which may be "personal property" to secure payment and
performance of all Obligations. Mortgagor shall execute, deliver, file and
refile any financing statements, continuation statements, or other security
agreements Mortgagee may require to confirm the lien of this Mortgage with
respect to such property. Mortgagor irrevocably appoints Mortgagee
attorney-in-fact for Mortgagor to execute, deliver and file such instruments.
1.4 Assignment of Leases and Income.
(a) This Mortgage is also an absolute and unconditional assignment to
Mortgagee of all Leases and Income, whether now in existence or hereafter
arising, for the purpose of vesting in Assignee the Leases and the Income.
Mortgagor hereby assigns, transfers and sets over to Mortgagee all Leases, all
Income and all rights of Mortgagor to enforce the Leases and collect the Income.
This assignment includes any award received or receivable by Mortgagor in any
legal proceeding involving any tenant under a Lease whether under the Bankruptcy
Code or otherwise.
(b) Mortgagor irrevocably appoints Mortgagee the attorney-in-fact of
Mortgagor to enforce the Leases and demand, receive and collect the Income and
the sole and exclusive agent of Mortgagor to agree to any modifications of the
Leases. This power is coupled with an interest and is therefore irrevocable.
Mortgagor shall notify any person which Mortgagee may from time to time specify
that the Income should be paid directly to Mortgagee and that any modification
of the Leases must be approved by Mortgagee.
(c) So long as Mortgagor is not in default in any respect under the
Loan Documents, Mortgagor shall have the right to enforce the Leases and collect
the Income subject to any applicable provisions contained in the Loan Documents.
Upon request of Mortgagee, Mortgagor shall execute and deliver to Mortgagee (i)
a specific assignment, in recordable form, of any Lease now or hereafter
affecting the Mortgaged Property or any portion thereof to further evidence the
assignment hereby made; and (ii) such other instruments as Mortgagee may deem
necessary, convenient or appropriate in connection with the payment and delivery
directly to Mortgagee of all of the Income.
(d) All security deposits, prepaid rent permitted to be collected by
Mortgagor, if any (other than prepaid rent for the next succeeding calendar
month), and similar payments under any Lease shall be deposited in a separate
escrow account with an escrowee satisfactory to Mortgagee which, if Mortgagee is
permitted to hold such accounts under applicable law, shall, at
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<PAGE>
Mortgagee's election, be Mortgagee. Mortgagor shall notify Mortgagee of the
identification of the escrow account. Such sums shall be disbursed only upon the
prior written consent of Mortgagee except such consent shall not be required
when by law or by the terms of the Lease Mortgagor is required to, and does,
return such sums to the party entitled to same under the Lease.
(e) Mortgagor shall not accept or permit the payment of rent in any
medium other than lawful money of the United States of America, or anticipate,
discount, compromise, forgive, encumber or further assign the Leases or the
Income or any part thereof or any interest therein without the prior written
consent of Mortgagee.
(f) Mortgagor hereby authorizes and directs that all other parties now
or hereafter owing or paying Income under any Lease or now or hereafter having
in their possession or control any Income from or allocated to the Mortgaged
Property, or any part thereof, or the Proceeds therefrom, shall, upon the
request of Mortgagee and until Mortgagee directs otherwise, pay and deliver such
Income directly to Mortgagee at Mortgagee's address set forth in the
introduction to this Mortgage, or in such other manner as Mortgagee may direct
such parties in writing and this authorization shall continue until this
Mortgage is released of record. No payor making payments to Mortgagee at its
request under the assignment contained in this Mortgage shall have any
responsibility to see to the application of any of such funds, and any party
paying or delivering Income to Mortgagee under such assignment shall be released
thereby from any and all liability to Mortgagor to the full extent and amount of
all such Income so delivered.
(g) Notwithstanding any legal presumption to the contrary, Mortgagee
shall not be obligated by reason of its acceptance of this assignment to perform
any obligation of Mortgagor as lessor under any Lease. Neither the acceptance of
this assignment nor the collection of Income under the Leases shall constitute a
waiver of any rights of Mortgagee under the Loan Documents or constitute a cure
of any default by Mortgagor thereunder.
ARTICLE II
TITLE MATTERS
2.1 Warranty of Title. Until the Obligations are fully satisfied, Mortgagor
represents, warrants and covenants that:
(a) Mortgagor has good and marketable fee simple absolute title to the
Mortgaged Property subject only to those exceptions to title more particularly
described in Title Commitment issued by Commonwealth Land Title Insurance
Company
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<PAGE>
(the "Permitted Encumbrances") and Mortgagor shall defend the validity, priority
and enforceability of the lien of this Mortgage against the claims of all
persons excepting only those claiming under Permitted Encumbrances;
(b) Mortgagor has full power and lawful authority to subject the
Mortgaged Property to the lien of this Mortgage;
(c) The execution, delivery and performance of this Mortgage and the
other Loan Documents will not contravene any Legal Requirements (hereafter
defined) or any agreement, document or instrument to which Mortgagor is a party
or by which Mortgagor or the Mortgaged Property is bound;
(d) Mortgagor shall make, execute, acknowledge and deliver all such
further or other deeds, documents, instruments or assurances and cause to be
done all such further acts and things as may at any time be reasonably required
by Mortgagee to confirm and fully protect the lien and priority of this
Mortgage; and
(e) Mortgagor shall make such payments, all before the same shall
become delinquent, and perform all obligations as are required under any
Permitted Encumbrances affecting the Mortgaged Property.
2.2 No Transfer. Without the prior written consent of Mortgagee in each
instance, which consent may be given or withheld in Mortgagee's reasonable
discretion, Mortgagor will abstain from, and will not cause or permit, any
transfer of the Mortgaged Property or any portion thereof, whether voluntary,
involuntary, by operation of law, or otherwise, nor shall Mortgagor enter into
any agreement or transaction to transfer, or accomplish in form or substance a
transfer, of the Mortgaged Property.
(a) A "transfer" of the Mortgaged Property includes (i) the direct or
indirect sale, agreement to sell, transfer or conveyance of the Mortgaged
Property or any portion thereof or interest therein; and (ii) the execution of
any installment land sale contract or similar instrument affecting all or a
portion of the Mortgaged Property.
(b) Consent to any such transfer shall not be deemed to be a waiver of
the right to require consent to future or successive transfers. If consent
should be given to a transfer and if this Mortgage is not released to the extent
of the transferred portion of the Mortgaged Property by a writing signed by
Mortgagee and recorded in the appropriate office of public record, then any such
transfer shall be subject to this Mortgage and any such transferee shall be
deemed, by acceptance of the deed or other instrument of transfer, to have
assumed all
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Obligations under this Mortgage and to have agreed to be bound by all provisions
contained herein. Any such assumption shall not, however, release Mortgagor or
any other obligor or guarantor of the Obligations from any liability under the
Loan Documents.
2.3 No Other Financing or Liens. Without the prior written consent of
Mortgagee in each instance, which consent may be given or withheld in
Mortgagee's reasonable discretion, Mortgagor shall not create or cause or permit
to exist any lien on the Mortgaged Property whether superior to or subject to
the lien of this Mortgage except the Permitted Encumbrances (if any) and such
other liens or security interests as are expressly and specifically agreed to be
permitted upon the Mortgaged Property by Mortgagee under the Loan Documents.
2.4 Leases. Mortgagor represents and warrants that there are no Leases
affecting the Mortgaged Property. Mortgagor shall not enter into any Leases
without the prior written consent of Mortgagee being obtained in each instance,
which consent shall not be unreasonably withheld.
ARTICLE III
OBLIGATIONS REGARDING MORTGAGED PROPERTY
3.1 Legal Requirements Generally. Mortgagor represents and warrants to
Mortgagee that, to the best of Mortgagor's knowledge, the Mortgaged Property is
in all material respects in compliance with Legal Requirements (hereafter
defined). Mortgagor shall promptly comply in all material respects with, and
cause the Mortgaged Property to be kept in all material respects in compliance
with, all present and future laws, statutes, codes, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, restrictions and
requirements (collectively "Legal Requirements") of the United States of
America, the state in which the Real Estate is located and any political
subdivision thereof or any town, city, county or municipality in which the Real
Estate is located or any agency, department, bureau, board, commission or
instrumentality of any of the foregoing now existing or hereafter created
(individually, a "Governmental Authority" and, collectively, "Governmental
Authorities") having jurisdiction over Mortgagor or the Mortgaged Property or
the construction, use, occupancy, operation, maintenance, or improvement of the
Mortgaged Property, whether foreseen or unforeseen, ordinary or extraordinary,
provided however, that Mortgagor shall be free to contest any Legal Requirement
in good faith, and during the period of such contest, to allow the Mortgaged
Property to fail to comply with such contested Legal Requirements.
3.2 Land Use Approvals. Mortgagor represents and warrants to Mortgagee that
the Land is and shall remain one or more separate zoning lots separate and apart
from all other
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premises. Mortgagor shall not, by any act or omission, impair the integrity of
the Land as such separate zoning lot or lots. Mortgagor shall not, without the
prior written consent of Mortgagee, submit or cause to be submitted to any
Governmental Authority an application for zoning, subdivision or development
approval affecting the Real Estate if any of the following would result from
such proposed zoning change, subdivision or development: (a) the separate
transfer, use and ownership of the Real Estate is not permitted as a matter of
right under applicable Legal Requirements; (b) the use of the Real Estate as of
the date of this Mortgage is no longer permitted as a matter of right under
applicable Legal Requirements; or (c) any portion of the Real Estate is used to
fulfill a Legal Requirement of other property not subject to the lien of this
Mortgage.
3.3 Environmental Matters.
(a) Mortgagor represents and warrants that neither Mortgagor nor, to
the best of its knowledge, any other person has (i) used, installed or disposed
of any Hazardous Materials (hereafter defined) on, from, or affecting the
Mortgaged Property except in full compliance with Applicable Environmental Laws
(hereafter defined); (ii) received any notice from any Governmental Authority
with regard to Hazardous Materials on, from or affecting the Mortgaged Property;
(iii) this Mortgage does not constitute a "transfer" as defined in the New
Jersey Industrial Site Recovery Act ("ISRA") and Mortgagor is not required under
ISRA or any other Applicable Environmental Laws to obtain, or provide to
Mortgagee, a letter of non-applicability in connection with this transaction,
and (iv) Mortgagor does not know or have reason to know of any lien or
threatened lien on its personal or real property requiring or obligating
Mortgagor to make payment pursuant to the New Jersey Spill Compensation and
Control Act ("SCCA"). If the Mortgaged Property were used as an "industrial
establishment," and hazardous substances were handled there, and Mortgagor's
transactions constitute a closing, termination of, or transfer of, operations,
Mortgagor has provided Mortgagee with an approved cleanup plan or a negative
declaration, obtained at its own expense and Mortgagor, at its own expense,
shall implement the cleanup plan to clean up the contamination caused or
permitted in whole or in part by Mortgagor's activities.
(b) Mortgagor shall not use the Mortgaged Property, nor allow it to be
used, to generate, manufacture, refine, transport, treat, store, handle,
dispose, transfer, produce or process Hazardous Materials except in full
compliance with Applicable Environmental Laws. Mortgagor shall not operate a
"major facility" as defined under SCCA. Mortgagor shall not cause or permit, as
a result of any intentional or unintentional act or omission on the part of
Mortgagor or any other person, a release of Hazardous Materials onto, from or
affecting the
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Mortgaged Property or any other use, installation, or disposition of Hazardous
Materials in violation of Applicable Environmental Laws. Mortgagor shall comply,
and shall enforce compliance by all tenants and subtenants, with all Applicable
Environmental Laws and shall keep the Mortgaged Property free and clear of any
liens imposed pursuant to any Applicable Environmental Laws.
(c) If Mortgagor receives any notice from any Governmental Authority
with regard to Hazardous Materials on, from or affecting the Mortgaged Property,
or any notice of violation of Applicable Environmental Laws, Mortgagor shall
promptly notify Mortgagee. Mortgagor shall conduct and complete all
investigations, studies, sampling, and testing, and all remedial, removal, and
other actions necessary to clean up and remove all Hazardous Materials on, from
or affecting the Mortgaged Property in accordance with all Applicable
Environmental Laws, and to the reasonable satisfaction of Mortgagee.
(d) The term "Applicable Environmental Laws" shall mean, without
limitation, all Legal Requirements of any Governmental Authority pertaining to
the preservation or enhancement of the quality of the environment or regulating
or restricting the use, transfer, storage or remediation of Hazardous Materials
including the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et
seq.), ISRA, SCCA and the rules, regulations adopted and publications
promulgated pursuant thereto at any time. The term "Hazardous Materials" shall
mean, without limitation, any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances, or related
materials, asbestos or any material containing asbestos, or any other substance
or material regulated under any Applicable Environmental Laws.
3.4 General Obligations. Until the Obligations are fully satisfied,
Mortgagor shall:
(a) Perform all maintenance, repair, restoration and rebuilding
required to keep the Mortgaged Property in good repair, order and condition in
full compliance with the requirements of the Loan Documents, any Leases
affecting the Mortgaged Property and all Legal Requirements;
(b) Pay all charges for water, sewer, gas, electric and other utility
services provided to the Mortgaged Property promptly as and when due;
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(c) Complete any improvements to the Mortgaged Property required under
the Loan Documents, any Leases affecting the Mortgaged Property, or required by
any Governmental Authority or insurer insuring the Mortgaged Property, in a good
and workmanlike manner and free of mechanics' liens;
(d) Permit, and cause any lessee or occupant of the Mortgaged Property
to permit, Mortgagee and its agents and representatives, upon at least 48 hours
written notice, to enter upon the Mortgaged Property at any reasonable time to
appraise and photograph the Mortgaged Property and to inspect for compliance
with Legal Requirements (including subsurface investigations to determine
compliance with Applicable Environmental Laws, provided that Mortgagee returns
the Mortgaged Property to its state prior to such subsurface investigation),
insurance requirements, and the Obligations of Mortgagor under this Mortgage and
the other Loan Documents; and
(e) Make the books and accounts relating to the Mortgaged Property
available for inspection by Mortgagee, or its representatives, upon request at
any reasonable time upon at least 48 hours written notice.
3.5 General Restrictions. Until the Obligations are fully satisfied,
Mortgagor shall not, without the prior written consent of Mortgagee being
obtained in each instance:
(a) Abandon the Mortgaged Property or any portion thereof or allow the
same to become vacant;
(b) Commit or suffer waste with respect to the Mortgaged Property;
(c) Impair or diminish the value or integrity of the Mortgaged
Property or the priority or security of the lien of this Mortgage;
(d) Remove, demolish or materially alter any of the Mortgaged Property
without the prior written consent of Mortgagee in each instance, which consent
will not be unreasonably withheld or delayed; except that Mortgagor shall have
the right to remove and dispose of, free of the lien of this Mortgage, such
Fixtures as may, from time to time, become worn out or obsolete, provided that,
simultaneously with or prior to such removal, any such Fixtures shall be
replaced with other Fixtures which shall have a value and utility at least equal
to that of the replaced Fixtures and, by such removal and replacement, Mortgagor
shall be deemed to have subjected such replacement Fixtures to the lien and
priority of this Mortgage;
(e) Make, install or permit to be made or installed, any additions or
improvements to the Mortgaged
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Property except in a good and workmanlike manner, free of mechanic's liens, in
compliance with Legal Requirements, and in accordance with plans and
specifications approved by Mortgagee, which approval will not be unreasonably
withheld or delayed; provided, however, that such approval will not be required
for additions or improvements that do not affect the structure or systems of the
Real Estate and which do not cost in excess of $100,000 in the aggregate in any
consecutive twelve-month period; or
(f) Make, suffer or permit any nuisance to exist on the Mortgaged
Property or any portion thereof.
3.6 Required Notices. Mortgagor shall notify Mortgagee promptly of the
occurrence of any of the following:
(a) A fire or other casualty causing damage to the Mortgaged Property;
(b) A pending or threatened condemnation of the Mortgaged Property;
(c) A violation of a Legal Requirement or other notice from or to a
Governmental Authority relating to the Mortgaged Property;
(d) Receipt or giving of any notice of default or cancellation under
any Lease of all or a material portion of the Mortgaged Property;
(e) Commencement of any litigation affecting the Mortgaged Property;
(f) Discovery, discharge or release of any Hazardous Material for
which Mortgagor is or may be responsible under any Applicable Environmental
Laws;
(g) The existence of any event or condition which presents a risk of
creating material liability in Mortgagor under ERISA (Public Law 93-406, as
amended); or
(h) The occurrence of a default under, or the receipt or giving of any
notice under, any Permitted Encumbrance.
ARTICLE IV
TAXES AND INSURANCE
4.1 Real Estate Taxes and Assessments.
(a) Mortgagor shall pay when due and before interest or penalties
commence to accrue thereon, all taxes, assessments, water and sewer rents,
levies, encumbrances and all
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other charges or claims of any nature and kind, whether public or private, which
may be assessed, levied, imposed, suffered, placed or filed at any time against
the Mortgaged Property or any part thereof or which by any present or future law
may have priority (either in lien or in distribution out of the proceeds of any
sale) over the lien of this Mortgage (individually, an "Imposition" and,
collectively, "Impositions").
(b) Mortgagor shall produce to Mortgagee within thirty (30) days after
the last date any such Imposition is due and payable without interest or
penalty, official receipts evidencing payment of such Imposition. If Mortgagor
is not in default under this Mortgage or any Loan Document, and in good faith
and by appropriate legal action shall contest the validity or amount of any
Imposition and shall have established a reserve for the payment thereof in such
form and amount as Mortgagee may reasonably require (including any interest and
penalties which may be payable in connection therewith), then Mortgagor shall
not be required to pay the Imposition or to produce the receipts while the
reserve is maintained and so long as the contest operates to prevent collection,
is maintained and prosecuted with diligence, and shall not have been terminated
or discontinued adversely to Mortgagor.
4.2 Taxes on Mortgagee. If any Governmental Authority shall levy, assess or
charge any tax, assessment or imposition upon this Mortgage or any other Loan
Document (including any requirement to have affixed to this Mortgage any
revenue, documentary or similar stamps) or upon the interest of Mortgagee in the
Mortgaged Property by reason of this Mortgage or any other Loan Document,
Mortgagor shall pay the same directly to such Governmental Authority as an
Imposition. If Mortgagor is not legally permitted to pay such Imposition or to
reimburse Mortgagee for amounts advanced on account of such payment, then
Mortgagee may declare the entire amount of the Obligations immediately due and
payable on demand.
4.3 Corporate, Partnership or Limited Liability Company Mortgagor. If
Mortgagor (or any successor or transferee of Mortgagor) is a corporation,
partnership or limited liability company, Mortgagor shall at all times until the
Obligations are satisfied in full:
(a) Keep in effect and in good standing its existence and rights as a
corporation, partnership or limited liability company, as the case may be, under
the laws of the state of its incorporation, formation or constitution and its
right to own property and transact business in the state in which the Real
Estate is situated; and
(b) File returns for all federal, state and local taxes with the
proper Governmental Authorities, and pay, when due
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and payable and before interest or penalties are due thereon, all taxes owing by
Mortgagor to any Governmental Authorities.
4.4 Insurance Coverages. Until the Obligations are fully satisfied,
Mortgagor shall maintain and keep in force the following policies of insurance
with respect to the Mortgaged Property:
(a) Insurance against loss or damage to the Mortgaged Property by fire
and any of the risks covered by insurance of the type commonly known as
"all-risk coverage," in an amount not less than the replacement value (evidenced
by a "Replacement Cost Endorsement") of the Mortgaged Property;
(b) During the course of any construction or repair of any
improvements on the Mortgaged Property, builder's completed value risk insurance
against "all risks of physical loss," including collapse and transit coverage,
during construction of such improvements, in non-reporting form;
(c) Boiler and machinery insurance (to the extent the Mortgaged
Property includes items covered by such insurance), in such amounts as are
reasonably satisfactory to Mortgagee;
(d) Coverage against sprinkler leakage;
(e) Vandalism and malicious mischief insurance;
(f) Commercial general liability insurance on an "occurrence basis"
against claims for personal injury including bodily injury, death or property
damage occurring on or about the Mortgaged Property and the adjoining streets,
sidewalks and passageways, with minimum protection to a limit of not less than
$1,000,000 (or such higher amounts as are required under any other Loan
Document) with respect to personal injury or death to any one or more persons or
damage to property;
(g) Worker's compensation insurance (including employer's liability
insurance) for all employees of Mortgagor engaged on or with respect to the
Mortgaged Property in such amount as is reasonably satisfactory to Mortgagee,
or, if such limits are established by law, in such amounts;
(h) Flood insurance, in accordance with the National Flood Insurance
Act of 1968, as amended by the Flood Disaster Protection Act of 1973, if any
portion of the Real Estate lies within a flood hazard area designated by the
Department of Housing and Urban Development, Federal Insurance Administration as
a "Flood Hazard Area";
(i) Business interruption and/or rental loss coverage for a period
equal to the reasonable period of time
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required to rebuild and restore the Mortgaged Property upon the
occurrence of a substantial destruction; and
(j) Such other insurance, and in such amounts, as may from time to
time be reasonably required by Mortgagee.
4.5 Policy Requirements. The insurance coverages required above shall be
insured under policies: (a) in form reasonably satisfactory to Mortgagee
(Mortgagee agrees that Chubb is a satisfactory insurer); (b) issued by companies
reasonably satisfactory to Mortgagee; (c) endorsed with a standard mortgagee
clause in favor of the Mortgagee providing not less than thirty days' notice to
Mortgagee of any cancellation or change in coverage; (d) endorsed to name
Mortgagee as additional insured and, subject only to Permitted Encumbrances (if
any), as loss payee; and (e) not subject to contribution or co-insurance.
Certificates of insurance, addressed to Mortgagee, evidencing such insurance
coverage, may be delivered to Mortgagee in lieu of the policies therefor, but
only if Mortgagor provides to Mortgagee copies of such policies. Certificates
shall be delivered to Mortgagee on or before the date of this Mortgage and,
thereafter, at least thirty (30) days before expiration of the existing
policies. If any insurance required under this Mortgage is cancelled, expires,
becomes void or voidable or otherwise becomes reasonably unsatisfactory to
Mortgagee, Mortgagor shall place or cause to be placed new insurance on the
Mortgaged Property reasonably satisfactory to Mortgagee. In the event of any
loss, Mortgagee may make proof of loss if not made promptly by Mortgagor. Each
insurance company concerned is hereby authorized and directed to make payment
under such insurance including (unless the insurance covers more than just the
Mortgaged Property) return of unearned premiums, directly to Mortgagee instead
of to Mortgagor and Mortgagee jointly, and Mortgagor appoints Mortgagee,
irrevocably, as Mortgagor's attorney-in-fact to endorse any draft therefor.
4.6 Installments for Insurance, Taxes and Other Charges. Without limiting
the effect of the other provisions of this Article, Mortgagor, if required by
Mortgagee, either upon an Event of Default or an occurrence, which with the
passage of time or the giving of notice would constitute an Event of Default,
shall pay to Mortgagee monthly an amount equal to one-twelfth (1/12) of the
annual amount of all Impositions and premiums for insurance policies maintained
only with respect to the Mortgaged Property, required under this Article plus
any additional sums necessary to pay, or establish adequate reserves for the
payment of, such premiums and Impositions as and when due. The amounts so paid
shall be security for the premiums and Impositions and shall be used in payment
thereof if Mortgagor is not otherwise in default under this or any other Loan
Document. No amount so paid shall be deemed to be trust funds but may be
commingled with general funds of Mortgagee and no interest shall be payable
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thereon. Upon the occurrence of an Event of Default under this Mortgage or any
Loan Document, Mortgagee shall have the right, at its election, to apply any
amount so held against the Obligations. At Mortgagee's option, Mortgagee from
time to time may waive, and after any such waiver may reinstate, the provisions
of this section requiring installment payments.
ARTICLE V
CASUALTY; CONDEMNATION
5.1 Casualty. If the Mortgaged Property is damaged by fire or other
casualty, Mortgagor shall promptly repair and restore the same to its condition
prior to the damage. If, and only for so long as, the following terms and
conditions are fully satisfied by Mortgagor, Mortgagee shall release insurance
proceeds for repair and restoration of the Mortgaged Property; otherwise, and to
the extent of any excess proceeds, Mortgagee shall have the right to apply the
proceeds toward reduction of the Obligations:
(a) No default under this or any other Loan Document shall have
occurred and be continuing uncured;
(b) Mortgagor shall have delivered evidence satisfactory to Mortgagee
that the Mortgaged Property can be fully repaired and restored within a period
of time during which all payments coming due under the Obligations are fully
covered by the proceeds of business interruption or rental loss insurance
applicable to the loss or damage to the Mortgaged Property, or that Mortgagor
shall otherwise be in a position to continue making payments under the
Obligations;
(c) No holder of a Permitted Encumbrance has a right to apply
insurance proceeds to the obligations secured by such Permitted Encumbrance or,
if it does, the holder has waived in writing its right to do so;
(d) No Lease is cancelable by the lessee on account of the casualty
or, if it is, the lessee has waived in writing its right to cancel;
(e) The work is performed by a reputable general contractor reasonably
satisfactory to Mortgagee under a fixed price or guaranteed maximum price
contract reasonably satisfactory to Mortgagee, in accordance with plans and
specifications reasonably satisfactory to Mortgagee and in compliance with all
Legal Requirements;
(f) Mortgagor shall have deposited with Mortgagee for disbursement in
connection with the restoration, the greater of (i) the applicable deductible
under the insurance policies covering the loss; or (ii) the amount by which the
cost of
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restoration is estimated by Mortgagee to exceed the insurance proceeds available
for restoration;
(g) The insurance proceeds are held by Mortgagee (or an escrowee
satisfactory to Mortgagee) for disbursement periodically as the work progresses
in amounts not exceeding 90% of the value of labor and materials incorporated
into the restoration. The remaining 10% will be released upon final completion
of the work in accordance with the aforesaid plans and specifications, and upon
a receipt of a release of liens from all contractors and subcontractors engaged
in the restoration; and
(h) Mortgagor has paid as and when due all of Mortgagee's costs and
expenses incurred in connection with the collection of insurance proceeds,
approval of plans, charges of Mortgagee's inspection representative and such
reasonable fee as may be charged by Mortgagee to monitor the restoration and
disburse the insurance proceeds.
5.2 Condemnation.
(a) In the event of any condemnation or taking of any part of the
Mortgaged Property by eminent domain, alteration of the grade of any street, or
other injury to, or decrease in the value of, the Mortgaged Property by any
public or quasi-public authority or corporation, all Proceeds (including the
award or agreed compensation for the damages sustained) allocable to Mortgagor,
after deducting therefrom all costs and expenses (regardless of the particular
nature thereof and whether incurred with or without suit) including reasonable
attorney's fees incurred by Mortgagee in connection with the collection of such
Proceeds, shall be paid to Mortgagee and applied, at Mortgagee's reasonable
election, (i) toward restoration of the Mortgaged Property (in which case the
terms and conditions applicable to restoration in the case of casualty shall
apply); or (ii) to the Obligations. No settlement for damages sustained shall be
made by Mortgagor without Mortgagee's prior written approval which approval will
not be unreasonably withheld or delayed.
(b) If prior to the receipt of the Proceeds by Mortgagee, the
Mortgaged Property shall have been sold on foreclosure of this Mortgage,
Mortgagee shall have the right to receive the Proceeds to the extent of:
(i) the full amount of all such Proceeds if Mortgagee is the
successful purchaser at the foreclosure sale; or
(ii) if anyone other than Mortgagee is the successful purchaser
at the foreclosure sale, in addition to the net sale proceeds to be received by
Mortgagee in connection with the sale, any deficiency (as hereinafter defined)
due to Mortgagee in connection with the foreclosure sale, with legal
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interest thereon, and reasonable counsel fees, costs and disbursements incurred
by Mortgagee in connection with collection of such Proceeds of condemnation and
the establishment of such deficiency. For purposes of this section, the word
"deficiency" shall be deemed to mean the difference between (A) the aggregate
amount of all sums which Mortgagee is entitled to collect under the Loan
Documents, and (B) the net sale proceeds actually received by Mortgagee as a
result of such foreclosure sale less any costs and expenses incurred by
Mortgagee in connection with enforcement of its rights under the Loan Documents.
(c) After the occurrence of an Event of Default, Mortgagee shall have
the right to prosecute to final determination, or settlement, an appeal or other
appropriate proceedings in the name of Mortgagee or Mortgagor, for which
Mortgagee will then be appointed as attorney-in-fact for Mortgagor, which
appointment, being for security, is irrevocable. In that event, the expenses of
the proceedings, including reasonable counsel fees, shall be paid first out of
the Proceeds, and only the excess, if any, paid to Mortgagee shall be applied to
the Obligations.
(d) Nothing herein shall limit the rights otherwise available to
Mortgagee, at law or in equity, including the right to intervene as a party to
any condemnation proceeding.
ARTICLE VI
DEFAULTS; REMEDIES
6.1 Right to Make Advances. If Mortgagor should fail to pay or perform any
of its Obligations with respect to the Mortgaged Property as required under
Article III and Article IV of this Mortgage, or otherwise fails to pay or
perform any of its other Obligations under this or any other Loan Document, then
Mortgagee, at its election, shall have the right, but not the obligation, to
make any payment or expenditure and to take any action which Mortgagor should
have made or taken or which Mortgagee deems advisable to protect the security of
this Mortgage or the Mortgaged Property. Such action shall be without prejudice
to any of Mortgagee's rights or remedies available under this Mortgage or the
other Loan Documents or otherwise at law or in equity. All such sums, as well as
costs and expenses, advanced by Mortgagee shall be due immediately from
Mortgagor to Mortgagee, shall become part of the Obligations secured by this
Mortgage and the other Loan Documents, and shall bear interest (including any
judgment obtained on account of any of the Obligations) at the applicable rate
provided in the Loan Documents in effect after maturity or default (the "Default
Rate") until repayment in full to Mortgagee.
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6.2 Events of Default. The occurrence of any one or more of the following
events shall, at the election of Mortgagee, constitute an Event of Default under
this Mortgage:
(a) Any "Event of Default" under any other Loan Document unless fully
cured in the applicable time provided in such Loan Document;
(b) Failure to pay any sum required to be paid under this Mortgage
within ten (10) Business Days after the date such payment is due;
(c) Any breach of warranty or other violation of any provision
contained in Article II of this Mortgage by Mortgagor and failure by Mortgagor
to cure such breach or other violation within thirty (30) days after Mortgagee
has given written notice thereof to Mortgagor; or
(d) Nonperformance of, or noncompliance with, any of the agreements,
covenants, conditions, warranties, representations or other provisions contained
in this Mortgage (if and only to the extent not included in any of the
occurrences listed above), which nonperformance or noncompliance is not cured
and remedied within thirty (30) days after notice thereof is given to Mortgagor.
6.3 Remedies; Execution. Upon the occurrence of an Event of Default, and at
all times thereafter, Mortgagee shall have the right to accelerate all
Obligations (including interest thereon at the Default Rate) pursuant to the
terms of the Loan Documents and to enforce its rights under this Mortgage and
the other Loan Documents by exercising such remedies as are available to
Mortgagee under applicable law, either by suit in equity or action at law, or
both, whether for specific performance of any provision contained in this
Mortgage or any of the other Loan Documents or in aid of the exercise of any
power granted in this Mortgage or the other Loan Documents.
(a) Mortgagee shall have the right to obtain judgment for the
Obligations (including all amounts advanced or to be advanced by Mortgagee under
Section 6.1 above, all costs and expenses of collection and suit, including any
bankruptcy or insolvency proceeding affecting Mortgagor, and reasonable
attorneys' fees incurred in connection with any of the foregoing) together with
interest on such judgment at the Default Rate until payment in full is received
by Mortgagee and Mortgagee shall have the right to obtain execution upon the
Mortgaged Property on account of such judgment.
(b) Mortgagee shall have the right to institute an action of mortgage
foreclosure against the Mortgaged Property or take such other action for
realization on the security
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intended to be provided under Article I of this Mortgage as applicable law or
the provisions of the Loan Documents may allow.
6.4 Remedies; Collection of Income. Upon the occurrence of an Event of
Default and at all times thereafter during the continuance thereof, Mortgagee
may, at any time without notice, either in person, by agent or by a receiver
appointed by a court, and without regard to the adequacy of any security for the
Obligations, enter upon the Mortgaged Property and, with or without taking
possession of the Mortgaged Property, and with or without legal action, collect
all Income (which term shall also include amounts determined by Mortgagee as
fair rental value for use and occupation of the Mortgaged Property by any
person, including Mortgagor) and, after deducting all costs of collection and
administration expense including reasonable attorneys' fees and reasonable
reserves, apply the net Income to any of the Obligations in such order and
amounts as Mortgagee in its sole discretion may determine, or any of the
following in such order and amounts as Mortgagee in its sole discretion may
elect: the payment of any sums due, or accumulation of necessary reserves for,
payment of all costs and expenses arising from or incurred in connection with
(a) the preservation and protection of the validity and priority of the lien of
this Mortgage; (b) the preservation and protection of the Mortgaged Property;
(c) compliance with Legal Requirements; and (d) fulfilling any obligations of
Mortgagor or any other obligor or guarantor under the Permitted Encumbrances,
the Leases, this Mortgage or the Loan Documents. Mortgagee shall not be
accountable for more monies than it actually receives from the Mortgaged
Property nor shall it be liable for failure to collect the Income. Mortgagee
shall have the right to determine the method of collection and the extent to
which enforcement of collection of Income shall be prosecuted and Mortgagee's
judgment shall be deemed conclusive and reasonable.
6.5 Remedies; Possession. Upon the occurrence of an Event of Default and at
all times thereafter during the continuance thereof, Mortgagee may, with or
without legal action, take possession and control of the Mortgaged Property to
the exclusion of Mortgagor and all others excepting only those claiming under
Permitted Encumbrances. Mortgagee shall have the authority while so in
possession to insure (at Mortgagor's expense) against all risks by reason of
having taken such possession and Mortgagor will transfer and deliver to the
Mortgagee all policies of insurance upon the Mortgaged Property not theretofore
transferred and delivered to Mortgagee.
6.6 Remedies; Repossession. Upon the occurrence of an Event of Default and
at all times thereafter during the continuance thereof, Mortgagee shall have the
right to take possession of any portion of the Mortgaged Property constituting
fixtures or other personal property subject to the Uniform
- 19 -
<PAGE>
Commercial Code of the state in which the Real Estate is located, and any
records pertaining thereto. Mortgagee shall have the right to use, operate,
manage, lease or otherwise control the Mortgaged Property in any lawful manner
and, in its sole discretion but without any obligation to do so, insure,
maintain, repair, renovate, alter or remove such Mortgaged Property; use, in
connection with any assembly, use or disposition of such Mortgaged Property any
trade mark, trade name, trade style, copyright, brand, patent right or technical
process used or utilized by Mortgagor; sell or otherwise dispose of all or any
of such Mortgaged Property at any public or private sale at any time or times
without advertisement or demand upon or notice to Mortgagor, all of which are
expressly waived to the extent permitted by law, with the right of Mortgagee or
its nominee to become purchaser at any sale (unless prohibited by statute) free
from any equity of redemption and from all other claims, and after deducting all
legal and other expenses for maintaining or selling such Mortgaged Property, and
all reasonable attorneys' fees, legal or other expenses for collection, sale and
delivery, apply the remaining proceeds of any sale to pay (or hold as a reserve
against) the Obligations and exercise all rights and remedies of a secured party
under the Uniform Commercial Code of the state in which the Real Estate is
located or any other applicable law.
6.7 Remedies; Appointment of Receiver. Upon the occurrence of an Event of
Default and at all times thereafter during the continuance thereof, Mortgagee
may, without notice, obtain appointment of a receiver for the Mortgaged Property
without regard to the adequacy of any security for the Obligations.
6.8 Remedies; Actions Prior to Acceleration. Mortgagee shall have the
right, from time to time, to bring an appropriate action or actions to recover
any sums required to be paid by Mortgagor under the terms of this Mortgage, as
they become due, without regard to whether or not the Obligations shall be due
and payable in full, and without prejudice to the right of Mortgagee thereafter
to bring an action of mortgage foreclosure, or any other action, for any default
by Mortgagor existing at the time the earlier action was commenced.
6.9 No Marshalling. Any of the Mortgaged Property sold pursuant to any writ
of execution issued on a judgment obtained on the Obligations or pursuant to any
other judicial proceedings relating to the Loan Documents or this Mortgage, may
be sold in one parcel, as an entirety, or in such parcels, and in such manner or
order as Mortgagee, in its sole discretion, may elect.
- 20 -
<PAGE>
6.10 Rights and Remedies Cumulative.
(a) All rights and remedies of Mortgagee as provided in this Mortgage
and the other Loan Documents shall be cumulative and concurrent, may be pursued
separately, successively or together against Mortgagor or the Mortgaged
Property, or both, at the sole discretion of Mortgagee and may be exercised as
often as occasion therefor shall arise. The failure to exercise any such right
or remedy shall in no event be construed as a waiver or release thereof.
(b) Any failure by Mortgagee to insist upon strict performance by
Mortgagor of any of the terms and provisions of this Mortgage or the other Loan
Documents shall not be deemed to be a waiver of any of the terms or provisions
of this Mortgage or the other Loan Documents, and Mortgagee shall have the right
thereafter to insist upon strict performance by Mortgagor of any and all of
them.
ARTICLE VII
MISCELLANEOUS
7.1 Costs and Expenses. If the Mortgagee becomes a party to any suit or
proceeding affecting the Mortgaged Property, title thereto, the lien created by
this Mortgage or Mortgagee's interest therein, or in the event of the
commencement of any bankruptcy or insolvency proceedings involving Mortgagor, or
if Mortgagee engages counsel to collect or to enforce performance of the
Obligations, or if Mortgagee incurs any other costs and expenses in perfecting,
protecting or enforcing its rights hereunder or in responding to any request of
Mortgagor for any consent, waiver, approval, modification or release in
connection with this Mortgage or the Mortgaged Property, Mortgagee's reasonable
counsel fees, and all other costs and expenses paid or incurred by Mortgagee,
including reasonable fees of appraisers, accountants, consultants, and other
professionals, title premiums, title report and work charges, filing fees, and
mortgage, mortgage registration, transfer, stamp and other excise taxes, whether
or not an Event of Default shall have occurred, shall be paid to Mortgagee, on
demand, with interest at the Default Rate and until paid they shall be deemed to
be part of the Obligations secured by this Mortgage.
7.2 Indemnity. Mortgagor shall indemnify, defend and hold Mortgagee
harmless from and against any claims, expenses, demands, losses, costs, fines or
liabilities of any kind (including those involving death, personal injury or
property damage and including reasonable attorneys' fees and costs) arising from
or in any way related to the failure of Mortgagor to comply with, or the failure
of the Mortgaged Property to be kept in compliance with, the Legal Requirements,
Applicable Environmental Laws, the Leases and the Permitted Encumbrances.
- 21 -
<PAGE>
The indemnification of Mortgagor under this section shall survive the release or
termination of this Mortgage and shall remain effective notwithstanding any
foreclosure of this Mortgage or other execution against the Mortgaged Property
or acceptance of a deed in lieu of foreclosure. The indemnification agreement of
Mortgagor under this section is specifically excepted from any limitation of
liability provision contained in this or any other Loan Document.
7.3 Declaration of No Set-Off. Within ten (10) days after requested to do
so by Mortgagee, Mortgagor shall certify to Mortgagee or to any proposed
assignee of this Mortgage or participant in the Obligations, in a writing duly
acknowledged, the amount of principal, interest and other charges then owing on
the Obligations secured by this Mortgage, and whether there are set-offs or
defenses against them.
7.4 Communications. All notices required under this Mortgage shall be in
writing and shall be delivered in accordance with the applicable provisions
contained in the Loan Agreement. A party may change its address by giving
written notice to the other party as specified therein.
7.5 Covenant Running with the Land. Any act or agreement specified herein
to be done or performed by Mortgagor shall be construed as a covenant running
with the land and shall be binding upon Mortgagor and its successors and assigns
as if each had personally made such agreement.
7.6 Amendment. Any amendment, modification, consent or waiver which may be
hereafter requested by Mortgagor or otherwise required must, be in writing and
signed by both Mortgagor and Mortgagee.
7.7 Applicable Law. This Mortgage shall be governed by, and construed in
accordance with, the law of the state chosen by the parties under the applicable
provision contained in the Loan Agreement except to the extent that rights,
remedies and warrants of attorney which relate to realizing upon the security
covered by this Mortgage are governed by the laws of the state in which the Real
Estate is located. Nothing contained in this Mortgage or in any other Loan
Document shall require Mortgagor to pay, or Mortgagee to accept, interest in an
amount which would subject Mortgagee to penalty under applicable law.
7.8 Construction. Whenever used in this Mortgage, unless the context
clearly indicates a contrary intent:
(a) The word "Mortgagor" shall mean the corporation which executed
this Mortgage and any subsequent fee owner of the Mortgaged Property and his or
its respective heirs,
- 22 -
<PAGE>
executors, administrators, personal representatives, successors
and assigns;
(b) The word "Mortgagee" shall mean, collectively, all of the entities
listed as Mortgagee hereinabove or any subsequent holder of this Mortgage or
participant in the Notes;
(c) The word "person" shall mean an individual, corporation,
partnership, limited liability company or unincorporated association;
(d) The use of any gender shall include all genders;
(e) The singular number shall include the plural, and the plural the
singular, as the context may require;
(f) The word "including" shall mean "including but not limited to" or
"including without limitation," as the context may require.
7.9 Joint and Several Liability. If Mortgagor, or any successor or grantee
of Mortgagor, shall be more than one person, all Obligations of Mortgagor under
this Mortgage shall be joint and several and shall bind and affect all persons
who are defined as "Mortgagor" as fully as though all of them were specifically
named herein wherever the word "Mortgagor" is used.
7.10 Headings. The headings of sections have been included in this Mortgage
for convenience of reference only and shall not be considered in interpreting
this Mortgage.
7.11 Severability. If any provision of this Mortgage shall be held for any
reason to be invalid, illegal or unenforceable, such impairment shall not affect
any other provision of this Mortgage.
7.12 Receipt of Copy. Mortgagor acknowledges receipt of conformed copies of
the Loan Documents and this Mortgage.
7.13 Nonforeign Entity.
(a) Mortgagor hereby certifies, under penalty of perjury, that: (i)
Mortgagor is not a foreign corporation, foreign partnership, foreign trust or
foreign estate, as those terms are defined in the Internal Revenue Code of 1986,
as amended and regulations promulgated thereunder; (ii) Mortgagor's U.S.
employer identification number is 52-1611421; and (iii) Mortgagor's principal
place of business is set forth in the introduction paragraph of this Mortgage.
- 23 -
<PAGE>
(b) Mortgagor warrants that withholding of tax will not be required in
the event of any disposition of the Mortgaged Property, or any portion thereof,
pursuant to the terms of this Mortgage. Mortgagor covenants and agrees to
execute such further certificates, which shall be signed under penalty of
perjury, as Mortgagee shall require. The provisions of this section shall
survive the foreclosure or other execution upon the lien of this Mortgage or
acceptance of a deed in lieu of foreclosure.
7.14 Modifications. This Mortgage is subject to modifications as defined by
N.J.S.A. 46:9-8.1.
7.15 Future Advances. Without limiting any other provisions of this
Mortgage, this Mortgage shall secure additional loans hereafter made by
Mortgagee to Mortgagor but in no event shall the total outstanding principal
indebtedness secured hereby at any such time exceed twice the amount of the
original principal amount of the Notes. Each such additional loan shall be
evidenced by a note or other obligation which recites that it is intended to be
secured by this Mortgage. Nothing herein contained shall imply any obligation on
the part of Mortgagee to make any such additional loan
- 24 -
<PAGE>
IN WITNESS WHEREOF, Mortgagor, intending to be legally bound hereby, has
duly executed this Mortgage, under seal, as of the day and year first above
written.
BLONDER TONGUE LABORATORIES,
INC.
By:___________________________
James A. Luksch, President
(Corporate Seal)
- 25 -
<PAGE>
STATE OF :
: SS
COUNTY OF :
I CERTIFY that on May 23, 1996, James A. Luksch, 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.
------------------------------
Name:_________________________
Title:________________________
- 26 -
<PAGE>
EXHIBIT "A"
- 27 -
REAL ESTATE LOAN NOTE
$2,800,000 Philadelphia, Pennsylvania
May 23, 1996
FOR VALUE RECEIVED, BLONDER TONGUE LABORATORIES, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of MERIDIAN
BANK (the "Bank") the principal amount of TWO MILLION EIGHT HUNDRED THOUSAND
DOLLARS ($2,800,000) in one hundred nineteen (119) consecutive monthly payments
of $15,555.56 payable on the first day of each month, commencing June 1, 1996,
and a final installment, consisting of the entire remaining principal balance
together with all accrued but unpaid interest thereon, payable on May 1, 2006.
This Note is issued under the Amended and Restated Loan Agreement dated October
2, 1995, as amended by a First Amendment and a certain Second Amendment to
Amended and Restated Loan Agreement dated the date hereof by and between the
Borrower and the Bank (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 the rate or rates set forth in
the Loan Agreement. 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 declared in writing by the Bank, and
continuing after 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 601 Penn Street, Reading, Pennsylvania 19603 (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 IRREVOCABLY AUTHORIZES AND EMPOWERS THE BANK, BY ITS
ATTORNEY, OR THE PROTHONOTARY OR THE CLERK OF ANY COURT OF RECORD IN THE
COMMONWEALTH OF PENNSYLVANIA OR IN ANY JURISDICTION WHERE PERMITTED BY LAW, UPON
THE OCCURRENCE OF AN EVENT OF DEFAULT AS DEFINED IN THE LOAN AGREEMENT OR AT ANY
TIME THEREAFTER, TO APPEAR FOR THE BORROWER AND CONFESS AND ENTER
- 1 -
<PAGE>
JUDGMENT AGAINST IT IN FAVOR OF THE BANK IN ANY JURISDICTION IN WHICH THE
BORROWER OR ANY OF ITS PROPERTY IS LOCATED FOR THE AMOUNT OF ALL OBLIGATIONS,
TOGETHER WITH COSTS OF SUIT AND WITH ACTUAL COLLECTION COSTS (INCLUDING
REASONABLE ATTORNEYS' FEES), WITH OR WITHOUT DECLARATION, AND WITHOUT STAY OF
EXECUTION, AND WITH RELEASE OF ERRORS AND THE RIGHT TO ISSUE EXECUTION
FORTHWITH, AND FOR DOING SO THIS AGREEMENT OR A COPY VERIFIED BY AFFIDAVIT SHALL
BE A SUFFICIENT WARRANT. THE BORROWER HEREBY WAIVES AND RELEASES ALL RELIEF FROM
ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE OR
HEREAFTER ENACTED. THIS AUTHORITY AND POWER SHALL NOT BE EXHAUSTED BY THE
EXERCISE THEREOF AND SHALL CONTINUE UNTIL THE OBLIGATIONS ARE FULLY PAID,
PERFORMED, DISCHARGED AND SATISFIED.
BEING FULLY AWARE OF ITS RIGHTS TO PRIOR NOTICE AND HEARING ON THE VALIDITY
OF ANY CLAIMS THAT MAY BE ASSERTED AGAINST IT BY THE BANK UNDER THIS NOTE BEFORE
JUDGMENT CAN BE ENTERED AND BEFORE ASSETS OF THE BORROWER CAN BE GARNISHED AND
ATTACHED, BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THESE
RIGHTS AND EXPRESSLY AGREES AND CONSENTS TO THE BANK, UPON THE OCCURRENCE OF AN
EVENT OF DEFAULT, OR AT ANY TIME THEREAFTER, ENTERING JUDGMENT AGAINST THE
BORROWER BY CONFESSION AND ATTACHING AND GARNISHING THE BANK ACCOUNTS AND OTHER
ASSETS OF THE BORROWER, WITHOUT PRIOR NOTICE OR OPPORTUNITY FOR A HEARING. THE
BORROWER ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF COUNSEL IN THE REVIEW
AND EXECUTION OF THIS NOTE AND FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT
OF THE FOREGOING PROVISIONS CONCERNING CONFESSION OF JUDGMENT HAVE BEEN FULLY
EXPLAINED TO THE BORROWER BY SUCH COUNSEL.
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.
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:______________________ James A. Luksch, President
- 2 -
<PAGE>
STATE OF :
: SS
COUNTY OF :
I CERTIFY that on May __, 1996, James A. Luksch, 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.
______________________________
Name:_________________________
Title:________________________
- 3 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM BLONDER TONGUE LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX-MONTH
PERIOD ENDED JUNE 30, 1996 AND BALANCE SHEET
AS AT JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 181
<SECURITIES> 0
<RECEIVABLES> 9,074
<ALLOWANCES> 215
<INVENTORY> 17,213
<CURRENT-ASSETS> 26,930
<PP&E> 8,622
<DEPRECIATION> 1,581
<TOTAL-ASSETS> 35,099
<CURRENT-LIABILITIES> 6,800
<BONDS> 0
0
0
<COMMON> 8
<OTHER-SE> 22,901
<TOTAL-LIABILITY-AND-EQUITY> 35,099
<SALES> 23,265
<TOTAL-REVENUES> 23,265
<CGS> 14,768
<TOTAL-COSTS> 14,768
<OTHER-EXPENSES> 5,701
<LOSS-PROVISION> 105
<INTEREST-EXPENSE> 367
<INCOME-PRETAX> 2,324
<INCOME-TAX> 927
<INCOME-CONTINUING> 2,691
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,397
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
