UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date
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| (State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on October 25, 2019, Blonder Tongue Laboratories, Inc. (the “Company”), R. L. Drake Holdings, LLC, a wholly-owned subsidiary of the Company, Blonder Tongue Far East, LLC, a wholly-owned subsidiary of the Company and MidCap Business Credit LLC (“MidCap”) entered into a Loan and Security Agreement (All Assets) (the “Original Agreement”), which was subsequently amended by a Consent and Amendment to Loan Agreement and Loan Documents dated as of April 7, 2020 (the “First Amendment”), a Second Amendment to Loan Agreement dated as of January 8, 2021 (the "Second Amendment"), a Third Amendment to Loan Agreement dated as of June 14, 2021 (the "Third Amendment") and a Fourth Amendment to Loan Agreement dated as of July 30, 2021 (the "Fourth Amendment" and together with the Original Agreement, the First Amendment, the Second Amendment and the Third Amendment, the “Loan Agreement”).
The parties have entered into a Fifth Amendment to Loan Agreement, dated as of August 26, 2021, (the "Fifth Amendment"), which revised the Loan Agreement to, among other things (i) provide for an over-advance facility in the maximum amount of $400,000, (ii) defer the monthly incremental increase to the existing availability block and (iii) modify the Loan Agreement's definition of “Minimum EBITDA Covenant Trigger Event (with such amendment to the definition retroactive to and as of August 1, 2021). All other substantive terms of the Loan Agreement continue in full force and effect. The Company expects to use the proceeds received under the over-advance facility for working capital and general corporate purposes in the ordinary course of its business.
The foregoing summary of the Fifth Amendment is not complete and is qualified in its entirety by reference to the full text of the Fourth Amendment, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. In addition, the Original Agreement is attached as an exhibit to our Current Report on Form 8-K filed on October 30, 2019, the First Amendment is attached as an exhibit to our Current Report on Form 8-K filed on April 9, 2020, the Second Amendment is attached as an exhibit to our Current Report on Form 8-K filed on January 11, 2021, the Third Amendment is attached as an exhibit to our Current Report on Form 8-K filed on June 15, 2021 and the Fourth Amendment is attached as an exhibit to our Current Report on Form 8-K filed on August 2, 2021. We encourage you to read each of the Original Agreement, the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment and the Fifth Amendment in its entirety.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Midcap Loan Agreement
The information contained in Item 1.01 above with respect to the Fifth Amendment is hereby incorporated by reference into this Item 2.03. Upon a default under the Loan Agreement, as amended, including the non-payment of principal or interest, the obligations of the borrower may be accelerated and MidCap may pursue its rights under the Loan Agreement, as amended, and the related pledge agreement, security agreement and guaranty agreement, and under the Uniform Commercial Code and/or any other applicable law or in equity.
Promissory Note
In connection with the fulfillment of certain of the Company's purchase orders, the Company is financing expediting fees charged in connection with the purchase orders by delivering a promissory note (the “Note”) to the supplier of the goods, in the principal amount of $630,111. The Note is unsecured and has an interest rate of 12% per annum. The Company is obligated to repay the principal balance of the note beginning in September 2021 and continuing thereafter for an additional five consecutive monthly installments on the 15th day of each successive calendar month, as follows: September 2021, $100,000, October 2021, $100,000, November 2021, $100,000, December 2021, $100,000, January 2022, $100,000 and February 2022, 140,371.02. Accrued interest will be paid concurrently with each principal installment. Upon a default under the Note, including the non-payment of principal or interest, the Company's obligations may be accelerated and the Note holder may pursue its rights under the Note and under applicable law.
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The foregoing summary of the Note is not complete and is qualified in its entirety by reference to the copy of the Note, which is attached as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
| (d) | Exhibits. The following exhibits are filed herewith: |
| Exhibit No. | Description | |
| 10.1 | Fifth Amendment to Loan Agreement, dated August 26, 2021. | |
| 10.2* | Promissory Note dated August 24, 2021. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Certain confidential information contained in this exhibit, market by brackets, has been omitted because the information (i) is not material and (ii) would be competitively harmful if disclosed. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BLONDER TONGUE LABORATORIES, INC. | ||
| By: | /s/ Eric Skolnik | |
| Eric Skolnik | ||
| Senior Vice President and Chief Financial Officer | ||
Date: August 30, 2021
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Exhibit 10.1
FIFTH AMENDMENT TO LOAN AGREEMENT
This FIFTH AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is made this as of the 26th day of August, 2021 by and among MidCap Business Credit LLC, a Texas limited liability company, the secured party hereunder (hereinafter called “Lender”), BLONDER TONGUE LABORATORIES, INC., a Delaware corporation (together with its successors and permitted assigns, “Borrower”), R. L. DRAKE HOLDINGS, LLC, a Delaware limited liability company (together with its permitted successors and assigns, “Drake”), and BLONDER TONGUE FAR EAST, LLC, a Delaware limited liability company (together with its permitted successors and assigns, “Far East”). Each of Borrower, Drake and Far East are individually referred to herein as a “Loan Party” and individually, collectively, jointly and severally, the “Loan Parties”.
WHEREAS, the Loan Parties and Lender have entered that Loan and Security Agreement (All Assets) dated as of October 25, 2019, as amended by that certain Consent and Amendment to Loan Agreement and Loan Documents, dated as of April 7, 2020, that certain Second Amendment to Loan Agreement, dated as of January 8, 2021, that certain Third Amendment to Loan Agreement, dated as of June 14, 2021 and that certain Fourth Amendment to Loan Agreement, dated as of July 30, 2021 (as amended, the “Loan Agreement”).
WHEREAS, Borrower has requested that the Loan Agreement be amended to, among other things, provide for an over-advance facility in the maximum amount of $400,000, defer the monthly incremental increase to the Availability Block, and modify the definition of “Minimum EBITDA Covenant Trigger Event” as described therein, and Lender is willing to make such modifications to the Loan Agreement, subject to the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing premises and the mutual benefits to be derived by the Loan Parties and Lender from a continuing relationship under the Loan Agreement and Loan Documents and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms used in this Amendment which are defined in the Loan Agreement shall have the same meanings as defined therein, unless otherwise defined herein.
2. Amendment to Loan Agreement. The Loan Agreement is hereby amended as of the date hereof as follows:
| (a) | Definition of Borrowing Base - Section 5(c). The definition of Borrowing Base in Section 5(c) of the Loan Agreement is hereby amended and restated in its entirety, as follows: |
“(c) The term “Borrowing Base” as used herein shall mean the sum of the following:
(1) up to eighty-five (85%) percent of the unpaid face amount of Qualified Accounts (as defined below), PLUS
(2) the lesser of (A) eighty-five (85%) percent of the Net Orderly Liquidation Value of all Eligible Inventory (as defined below), which such Net Orderly Liquidation Value shall be reset on an annual basis in connection with the updated appraisals obtained in connection herewith, or (B) $2,500,000, PLUS
(3) an over-advance facility in the amount of Four Hundred Thousand and 00/100 Dollars ($400,000), which such amount shall, commencing on December 1, 2021 and continuing on the first Business Day of each succeeding calendar month, reduce by $50,000 per month until such amount reaches $0 (the “Over-Advance Facility”), LESS
(4) the Borrowing Base Reserve (as defined below).”
| (b) | Fees – Section 10 – Section 10 of the Loan Agreement is hereby amended to add a new Section 10(f) immediately following Section 10(e), which such new Section 10(f) shall read as follows: |
“(f) Over-Advance Fee. The Borrower hereby agrees to pay to the Lender a non-refundable over-advance fee equal to one and one-half of one percent (1.50%) times the outstanding balance of the Over-Advance Facility, as determined on the Fifth Amendment Effective Date and thereafter on the first day of each calendar month (each such date, an “Over-Advance Fee Measurement Date”), due and payable on or before the first Business Day following each such Over-Advance Fee Measurement Date.”
| (c) | Definition of “Availability Block” - Section 22(p). The term “Availability Block” in Section 22(p) of the Loan Agreement is hereby deleted in its entirety and replaced with the following in its stead: |
““Availability Block” means (i) as of the date of the First Amendment through May 31, 2020, an amount equal to $0, (ii) as of June 1, 2020, an amount equal to $6,666.66, and continuing on the first Business Day of each succeeding month thereafter, such amount shall increase by $6,666.66 per such applicable date until August 31, 2021, (iii) as of September 1, 2021 through November 30, 2021, an amount equal to $99,999.90, (iv) as of December 1, 2021, an amount equal to $106,666.56, and continuing on the first Business Day of each succeeding month thereafter, such amount shall increase by $6,666.66 per such applicable date until such amount reaches $400,000, and (v) at all times thereafter, an amount equal to $400,000.”
| (d) | Definition of “Minimum EBITDA Covenant Trigger Event” - Section 22(p). Effective retroactively to and as of August 1, 2021, the term “Minimum EBITDA Covenant Trigger Event” in Section 22(p) of the Loan Agreement is hereby deleted in its entirety and replaced with the following in its stead: |
““Minimum EBITDA Covenant Trigger Event” means (A) the failure of the Loan Parties to maintain Excess Availability in an amount equal to $400,000 or more (i) for any seven (7) Business Days in the month of December 2020 (whether such failure occurs on seven (7) consecutive Business Days or not), (ii) for any twelve (12) Business Days during the month of January 2021 (whether such failure occurs on twelve (12) consecutive Business Days or not), (iii) for any seven (7) Business Days in the month of February 2021 (whether such failure occurs on seven (7) consecutive Business Days or not), (iv) for any three (3) Business Days during each of March 2021, April 2021 and May 2021 (whether such failure occurs on three (3) consecutive Business Days or not), and (v) for any twelve (12) Business Days during each of the months of June 2021 and July 2021 (whether such failure occurs on twelve (12) consecutive Business Days or not), and (B) the failure of the Loan Parties to maintain Excess Availability in the following amounts for any three (3) Business Days in a calendar month (whether such failure occurs on three (3) consecutive Business Days or not): (i) $50,000 or more for the month of January 2022, (ii) $100,000 or more for the month of February 2022, (iii) $150,000 or more for the month of March 2022, (iv) $200,000 or more for the month of April 2022, (v) $250,000 or more for the month of May 2022, (vi) $300,000 or more for the month of June 2022, (vii) $350,000 or more for the month of July 2022, and (viii) $400,000 or more for the month of August 2022 or any subsequent calendar month thereafter.”
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| (e) | Definitions - Section 22(p). Section 22(p) of the Loan Agreement is hereby amended to add the following definitions in the appropriate alphabetical order: |
“Over-Advance Facility” shall have the meaning set forth in Section 5(c).
“Over-Advance Fee Measurement Date” shall have the meaning set forth in Section 10(f).
“Fifth Amendment Effective Date” means August 26, 2021.
3. Amendment Fee. Borrower agrees to pay Lender as of the date hereof a fully earned, non-refundable fee in the amount of $10,000 in consideration of the execution by Lender of this Amendment (“Amendment Fee”).
4. Conditions to Closing. The willingness of Lender to enter into this Amendment shall be subject to the condition precedent that Lender shall have received all of the following, each in form and substance satisfactory to Lender:
| (a) | This Amendment properly executed and delivered, |
(b) Payment by Borrower of the Amendment Fee, and
(c) Payment by the Borrower of the fully earned, nonrefundable over-advance fee, if any, referred to in Section 2(b) above, and any and all outstanding reasonable out-of-pocket fees and expenses relating to the Loan Agreement and/or this Amendment incurred by the Lender, including, without limitation, attorney’s fees and expenses.
5. Representations and Warranties. Each Loan Party represents and warrants to Lender that such Loan Party has the full power and authority to execute, deliver and perform its obligations under, this Amendment and the execution and delivery of this Amendment have been duly authorized by all necessary action of the stockholders, directors, members and managers, as applicable, of such Loan Party.
6. Release and Confirmation. Each Loan Party hereby (i) reaffirms that it remains indebted to Lender without defense, counterclaim or offset and, assuming effectiveness of this Amendment, no default or Event of Default has occurred or exists under the Loan Documents, (ii) restates, and reaffirms, all of its covenants, representations and warranties set forth in the Loan Documents to the same extent as if fully set forth herein and each Loan Party hereby certifies that after giving effect to this Amendment, all such covenants, representations and warranties are true and accurate as of the date hereof and (iii) acknowledges and warrants that it does not have any claims, actions or causes of action whatsoever in law or in equity against Lender, its’ officers, directors, employees, agents, successors, subsidiaries, related companies or attorneys (for the purpose of this paragraph, collectively referred to herein as the “Lenders”) or any of them, in connection with or related to or arising from any and all transactions with Lenders, whether known or unknown, including, but not limited to, the loans, through the date of this Amendment, and each Loan Party for good and valuable consideration hereby waives, remises, releases and discharges any and all rights with respect to such claims, additions or causes of action, if any.
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7. Counterparts. This Amendment may be executed in one or more counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Counterpart signature pages to this Amendment transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.
8. References. Upon and after the date of this Amendment all references to the Loan Agreement in the Loan Documents, or in any related document, shall mean the Loan Agreement as amended by this Amendment. Except as expressly provided in this Amendment, the execution and delivery of this Amendment does not and will not amend, modify or supplement any provision of, or constitute a consent to or a waiver of any noncompliance with the provisions of the Loan Agreement, and, except as specifically provided in this Amendment, the Loan Agreement shall remain in full force and effect in accordance with the respective terms thereof.
9. Loan Documents Ratified. This Amendment is executed as an instrument under seal and shall be governed by and construed in accordance with the laws of the State of Connecticut without regard to its conflicts of law rules. All parts of the Loan Agreement and the other Loan Documents, not affected by this Amendment are hereby ratified and affirmed in all respects, provided that if any provision of the Loan Documents shall conflict or be inconsistent with this Amendment, the terms of this Amendment shall supersede and prevail.
10. Costs and Expenses. Each Loan Party hereby reaffirms its agreement under the Loan Agreement to pay or reimburse Lender on demand for all costs and expenses incurred by Lender in connection with the Loan Documents, including without limitation all reasonable fees and disbursements of legal counsel. Without limiting the generality of the foregoing, each Loan Party specifically agrees to pay all fees and disbursements of counsel to Lender for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto. Each Loan Party hereby agrees that Lender may, at any time or from time to time in its sole discretion and without further authorization by the Loan Party, make a loan to Borrower under the Loan Agreement, or apply the proceeds of any loan, for the purpose of paying any such fees, disbursements, costs and expenses.
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Amendment under seal as of the day and year first above written.
| BORROWER: | |||
| BLONDER TONGUE LABORATORIES, INC. | |||
| By: | |||
| Name: | Eric Skolnik | ||
| Title: | Senior Vice President and Chief Financial Officer | ||
| OTHER LOAN PARTIES: | |||
| BLONDER TONGUE FAR EAST, LLC | |||
| By: | /s/ Eric Skolnik | ||
| Name: | Eric Skolnik | ||
| Title: | Senior Vice President and Chief Financial Officer | ||
| R. L. DRAKE HOLDINGS, LLC | |||
| By: | /s/ Eric Skolnik | ||
| Name: | Eric Skolnik | ||
| Title: | Senior Vice President and Chief Financial Officer | ||
| LENDER: | |||
| MIDCAP BUSINESS CREDIT LLC | |||
| By: | /s/ Peter F. Rutigliano | ||
| Name: | Peter F. Rutigliano | ||
| Title: | Executive Vice President | ||
[Fifth Amendment to Loan Agreement]
Exhibit 10.2
CONFIDENTIAL TREATMENT
[***] indicates that certain confidential information contained in this document, marked by brackets, has been omitted because the information is (i) not material and (ii) would be competitively harmful if publicly disclosed.
PROMISSORY NOTE
| US $630,111.11 | August 24th, 2021 |
For value received, the undersigned (“Maker”) promises and agrees to pay to [***], the principal sum of Six Hundred Thirty Thousand One Hundred and Eleven Dollars and Eleven Cents ($630,111.11) together with interest on the unpaid principal balance at the annual rate of twelve percent (12%) per annum. Interest shall be calculated on the basis of a 365-day year and date of payment.
This Note relates to and is intended to memorialize and provide a payment schedule for the “Premium Charges” noted on Maker’s purchase order numbers [***], [***], and [***], each dated August 20, 2021, copies of which are attached hereto, relating to goods purchased in the ordinary course of business,. This Note is unsecured.
Principal and interest shall be due and payable via wire transfer, pursuant to the following wire transfer instructions:
[***]
or pursuant to at such other wire transfer instructions, as the holder hereof may designate to Maker in writing.
Principal and interest shall be due and payable per the attached schedule commencing on the 15th day of September, 2021. All unpaid principal and any accrued interest shall be due and payable in full on or before February 15, 2022 (the “Maturity Date”). Principal, interest and all other sums payable hereunder shall be paid in lawful money of the United States of America. At the holder’s option, any payments hereunder may be applied first to accrued interest and then to principal. Maker shall pay to [***] a late charge equal to 1% of the amount of any payment due hereunder which shall not have been made to [***] within five (5) business days after the date that such payment becomes due.
Maker may prepay all or any portion of the unpaid principal balance. Any such prepayment of principal hereunder shall be without any premium or penalty.
This Note shall become immediately due and payable at the option of the holder hereof without presentment or demand or any notice to Maker upon default in the payment of any principal or any interest hereon within fifteen (15) days after the due date, or upon default in payment under any other agreement between Maker and [***] which is not cured within any applicable cure period. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default.
In the event any holder hereof utilizes the services of an attorney in attempting to collect the amounts due hereunder or to enforce the terms hereof or of any agreements related to this indebtedness, or if any holder hereof becomes party plaintiff or defendant in any legal proceeding for the recovery or protection of the indebtedness evidenced hereby, Maker and any endorsers hereof agree to pay, in addition to the principal and interest due hereon, all costs and a reasonable amount as attorneys’ fees, whether or not suit is brought.
The rate of interest agreed to shall include the interest rate as shown above, in accordance with the terms of this Note, plus any additional charges, costs and fees incident to this Note to the extent they are deemed to be interest under applicable law.
Maker and all endorsers of this Note waive (i) demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices, (ii) filing of suit, (iii) diligence in collecting this Note. Maker and all endorsers of this Note further agree that it will not be necessary for any holder hereof, in order to enforce payment of this Note by any of them, to first institute suit or exhaust its remedies against any Maker and all endorsers, and consent to an extension or postponement of time of payment of this Note or any other indulgence with respect hereto, including, but not limited to, the release of any party primarily or secondarily liable hereon, without notice thereof to any of them.
This Note shall be construed in accordance with and governed by the laws of the State of Arizona.
| (Maker) | ||
| Blonder Tongue Laboratories, Inc. | ||
| By: | ||
| Edward R. Grauch, Chief Executive Officer | ||
Cover |
Aug. 24, 2021 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Aug. 24, 2021 |
| Entity File Number | 1-14120 |
| Entity Registrant Name | Blonder Tongue Laboratories, Inc. |
| Entity Central Index Key | 0001000683 |
| Entity Tax Identification Number | 52-1611421 |
| Entity Incorporation, State or Country Code | DE |
| Entity Address, Address Line One | One Jake Brown Road |
| Entity Address, City or Town | Old Bridge |
| Entity Address, State or Province | NJ |
| Entity Address, Postal Zip Code | 08857 |
| City Area Code | (732) |
| Local Phone Number | 679-4000 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, par value $.001 |
| Trading Symbol | BDR |
| Security Exchange Name | NYSEAMER |
| Entity Emerging Growth Company | false |
| Entity Information, Former Legal or Registered Name | Not Applicable |
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