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Blonder Tongue Labs : LABORATORIES INC : Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Other Events, Financial Statements and Exhibits (form 8-K)

02/12/2016 | 03:37pm US/Eastern

Item 1.01 Entry into a Material Definitive Agreement

Blonder Tongue Laboratories, Inc. (the "Company") previously disclosed that it had received a commitment from Robert J. Pallé and Carol M. Pallé (the "Lenders") to provide the Company with financing of up to $600,000 in the form of senior subordinated convertible debt. On February 11, 2016 the Company, R. L. Drake Holdings, LLC, its wholly-owned subsidiary ("RLD"), and the Lenders entered into a Senior Subordinated Convertible Loan and Security Agreement (the "Pallé Loan Agreement"), pursuant to which the Lenders will provide the Company with a delayed draw term loan facility of up to $600,000. The term loan facility consists of an initial advance of $200,000 (inclusive of a $100,000 advance previously provided by the Lenders) and a commitment to make additional advances up to an additional $400,000. Interest on the term loan will accrue at 12% per annum (subject to increase under certain circumstances) and is payable monthly in-kind by the automatic increase of the principal amount of the term loan on each monthly interest payment date, by the amount of the accrued interest payable at that time ("PIK Interest"); provided, however, that at the option of the Company, it may pay interest in cash on any interest payment date, in lieu of PIK Interest. The Lenders will have the option of converting the principal balance of the loan, in whole (unless otherwise agreed by the Company), into shares of the Company's common stock at a conversion price of $0.54 per share (subject to adjustment under certain circumstances). This conversion right is subject to any necessary stockholder approval required by the rules of the NYSE MKT, and the Company has agreed to submit a proposal at its 2016 annual meeting to obtain stockholder approval. The obligations of the Company and RLD under the Pallé Loan Agreement are secured generally by the Company's and RLD's assets, including by the mortgage described below. The Pallé Loan Agreement terminates three years from the date of closing.

On February 11, 2016, the Company, RLD and the Lenders also entered into a Mortgage and Security Agreement (the "Mortgage") pursuant to which the obligations of the Company and RLD under the Pallé Loan Agreement are secured by a mortgage (subordinate to a prior mortgage in favor of Santander Bank, N.A. ("Santander")) on the Company's headquarters property in Old Bridge, New Jersey.

In connection with the Pallé Loan Agreement, on February 11, 2016, the Company, RLD, the Lenders and Santander entered into a Subordination Agreement (the "Subordination Agreement"). Pursuant to the Subordination Agreement, the parties have acknowledged and agreed that the rights of the Lenders under the Pallé Loan Agreement and the Mortgage are subordinate to the rights of Santander under the Revolving Credit, Term Loan and Security Agreement dated August 6, 2008, as amended, between the Company, RLD and Santander, and the Term Note and Revolving Credit Note relating thereto. Further, under the Subordination Agreement, notwithstanding the terms of the Pallé Loan Agreement, the Company is precluded from making (and the Lender is precluded from accepting) cash payments of interest in lieu of PIK Interest, in the absence of the prior written consent of Santander.

The foregoing summary of the Pallé Loan Agreement, the Mortgage and the Subordination Agreement is not complete and is qualified in its entirety by reference to the full text of each of the Pallé Loan Agreement, the Mortgage and the Subordination Agreement, which are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and incorporated herein by reference.



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Item 2.03   Creation of a Direct Financial Obligation or an
            Obligation under an Off-Balance Sheet Arrangement of
            a Registrant


The information contained in Item 1.01 above is hereby incorporated by reference into this Item 2.03. Upon a default under the Pallé Loan Agreement, including the non-payment of principal or interest, the obligations of the Company under the Pallé Loan Agreement may be accelerated and the Lender may (subject to the Subordination Agreement) pursue its rights under the Uniform Commercial Code and any other applicable law or in equity.


Item 8.01   Other Events


The Company previously disclosed that it had received a proposal from ZyCast Technology, Inc. ("ZyCast") to invest $1,000,000 to purchase shares of the Company's common stock. The Company and ZyCast were unable to reach a mutually-acceptable agreement and discussions between the parties as to a possible investment by ZyCast have ceased.


Item 9.01   Financial Statements and Exhibits


(d) Exhibits. The following exhibits are filed herewith:

Exhibit No. Description

10.1        Senior Subordinated Convertible Loan and
            Security Agreement dated as of February 11, 2016
            by and between Blonder Tongue Laboratories,
            Inc., R. L. Drake Holdings, LLC and Robert J.
            Pallé and Carol M. Pallé.

10.2        Mortgage and Security Agreement dated as of
            February 11, 2016 by and between Blonder Tongue
            Laboratories, Inc., as Mortgagor and Robert J.
            Pallé and Carol M. Pallé, as Mortgagee.

10.3        Subordination Agreement dated as of February 11,
            2016 by and between Blonder Tongue Laboratories,
            Inc., R. L. Drake Holdings, LLC, Robert J. Pallé
            and Carol M. Pallé and Santander Bank, N.A.





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© Edgar Online, source Glimpses

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