Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Chief Executive Officer and President Resignation
On January 17, 2023, Edward R. Grauch submitted to the board of directors (the
"Board") of Blonder Tongue Laboratories, Inc. (the "Company") his resignation
from his positions as Chief Executive Officer and President of the Company,
effective March 18, 2023 ("CEO Resignation"). In connection with Mr. Grauch's
departure, the Company and Mr. Grauch agreed to enter into a separation
agreement, which is currently being negotiated in good faith. The material terms
of the separation agreement have not been finalized as of the date of this
Current Report on Form 8-K.
Chief Technology Officer Termination
On January 17, 2023, the Board, based on the recommendation of the Compensation
Committee of the Board, following a request by Ronald V. Alterio, approved the
termination of Mr. Alterio from his positions as the Company's Senior Vice
President-Engineering and Chief Technology Officer, effective immediately. The
termination was not as a result of any disagreement between Mr. Alterio and the
Company on any matter relating to the Company's operations, policies or
practices.
Senior Vice President of Operations Retirement
On January 17, 2023, Allen Horvath submitted to the Board notice of his
retirement from his position as Senior Vice President- Operations of the
Company, effective July 31, 2023. Mr. Horvath's cash compensation was previously
reduced by 50% to an annual salary of $95,000, effective May 23, 2022. The Board
and Mr. Horvath agreed to a further 50% reduction of his salary for three months
commencing May 1, 2023, which will be followed by his retirement on July 31,
2023.
Chief Executive Officer and President Appointment
On January 17, 2023, in connection with the CEO Resignation, the Board has
appointed Robert J. Palle to Chief Executive Officer and President of the
Company, effective concurrently with the departure of Mr. Grauch. (the "CEO
Appointment").
Robert J. Palle, CEO and President
Robert ("Bob") J. Palle brings over 30 years of experience in the private cable
industry in Officer and Senior Management roles. He has been a director of the
Company since September 1993. In 2020, Mr. Palle served as the Company's
Managing Director-Strategic Accounts and as the Company's Chief Executive
Officer from May 2015 to December 2019. Between 2003 and 2019, Mr. Palle served
as the President of the Company.
The Board believes that Mr. Palle's experience in business and management and
his extensive knowledge of the Company's products, lines of business and
long-term strategies make him uniquely qualified to help lead the Company
towards continued growth and success.
Family Relationships
Mr. Palle does not have a family relationship with any of the current officers
or directors of the Company.
Related Party Transactions
Other than as described below, there are no related party transactions with
regard to Mr. Palle reportable under Item 404(a) of Regulation S-K.
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Subordinated Loan Agreement
On April 8, 2020, the Company, as borrower, together with Livewire Ventures, LLC
(wholly owned by the Company's former Chief Executive Officer, Edward R.
Grauch), MidAtlantic IRA, LLC FBO Steven L. Shea IRA (an IRA account for the
benefit of the Company's Chairman of the Board, Steven Shea), Carol M. Palle and
Robert J. Palle (the Company's new Chief Executive Officer and President, and a
member of the Board), Anthony J. Bruno (a member of the Board), and Stephen K.
Necessary (a member of the Board), as lenders (collectively, the "Initial
Lenders") and Robert J. Palle, as Agent for the Lenders (in such capacity, the
"Agent") entered into a certain Senior Subordinated Convertible Loan and
Security Agreement (the "Subordinated Loan Agreement"), pursuant to which the
lenders from time to time party thereto were permitted to provide up to
$1,500,000 of loans to the Company (the "Subordinated Loan Facility"). Interest
accrues on the outstanding amounts advanced under the Subordinated Loan Facility
at the rate of 12% per annum, compounded and payable monthly, in-kind, by the
automatic increase of the principal amount of the loan on each monthly interest
payment date, by the amount of the accrued interest payable at that time ("PIK
Interest").
Loan Agreement
On October 25, 2019, the Company entered into a Loan and Security Agreement (All
Assets) (the "Loan Agreement") with MidCap Business Credit LLC ("MidCap"), as
subsequently amended. On April 5, 2022, the Company entered into a ninth
amendment to the Loan Agreement (the "Ninth Amendment"). Among other things, the
amendment modified the Loan Agreement's definition of "Borrowing Base" so as to
provide for an over-advance facility (the "2022 Over-Advance Facility") in an
aggregate amount of up to $1,000,000. MidCap's agreement to enter into the Ninth
Amendment was conditioned, in part, on the entry into a participation agreement
between MidCap and Robert J. Palle, a Director, and an affiliate of Mr. Palle
(the "Palle Parties"). The terms of the Ninth Amendment and the participation
agreement contemplate that any advances made by Midcap pursuant to the 2022
Over-Advance Facility would be funded by the Palle Parties under the
participation agreement. Advances under the 2022 Over-Advance Facility are
subject to the discretion of MidCap and the Palle Parties. On April 5, 2022,
pursuant to the 2022 Over-Advance Facility and the participation agreement, the
Palle Parties funded an initial advance of $200,000 that was provided to the
Company. Since April 5, 2022, a total of $975,000 was made by Midcap to the
Company, which was funded by the Palle Parties. Further advances may be made to
the Company upon its request, subject to the discretion of MidCap and the Palle
Parties, in minimum amounts of not less than $100,000 per tranche, unless a
lesser amount is agreed to by the parties. The amount advanced in each tranche
will bear an interest rate of 1% per month.
Turn Around Committee
Since February 27, 2022, Mr. Palle, through his wholly owned entity TelePortXX,
has been paid $150 per hour for work performed on behalf of the Company's Turn
Around Committee. Upon consummation of his role as Chief Executive Officer, it
is expected that the Turn Around Committee will be disbanded and no additional
compensation will be owed thereafter.
Compensatory Arrangements
In connection with the CEO Appointment, Mr. Palle will be compensated at the
annual salary rate of $156,000 and will be entitled to participate in all
employee benefits afforded other employees of the Company.
Item 7.01 Regulation FD Disclosure
On January 23, 2023, the Company issued a press release announcing departure of
Mr. Grauch and the appointment of Mr. Palle to role of Chief Executive Officer
and President. A copy of the press release is attached hereto as Exhibit 99.1.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
99.1* Press Release issued on January 23, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Filed herewith.
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