SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 15, 2006
Blonder Tongue Laboratories, Inc.
(Exact Name of registrant as specified in its charter)
Delaware 1-14120 52-1611421
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
One Jake Brown Road, Old Bridge, New Jersey 08857
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 679-4000
Not Applicable
(Former name or former address, if changed since last report)
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))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
1. Divestment of BDR Broadband, LLC
On December 15, 2006, Blonder Tongue Laboratories, Inc. (the "Company") and
its wholly-owned subsidiary, BDR Broadband, LLC, a Delaware limited liability
company ("BDR"), entered into a Membership Interest Purchase Agreement
("Purchase Agreement") with DirecPath Holdings, LLC, a Delaware limited
liability company ("DirecPath") pursuant to which the Company sold all of the
issued and outstanding membership interests of BDR to DirecPath. BDR owns
rights-of-entry to provide video and high-speed data services to approximately
25 multi-dwelling unit communities in the State of Texas. The sale was completed
on December 15, 2006.
Pursuant to the Purchase Agreement, DirecPath paid the Company an aggregate
purchase price of $3,130,000 in cash, subject to certain post-closing
adjustments, including an adjustment for cash, an adjustment for working capital
and adjustments related to the number of subscribers for certain types of
services, all as of the closing date and as set forth in the Purchase Agreement.
A portion of the purchase price was deposited into an escrow account pursuant to
an Escrow Agreement dated December 15, 2006, among the Company, DirecPath and
U.S. Bank National Association, to secure the Company's indemnification
obligations under the Purchase Agreement.
In addition, in connection with the purchase transaction, on December 15,
2006, the Company entered into a Purchase and Supply Agreement with DirecPath,
LLC, a wholly-owned subsidiary of DirecPath ("DPLLC"), pursuant to which DPLLC
will purchase $1,630,000 of products from the Company, subject to certain
adjustments, over a period of three (3) years beginning no later than June 13,
2007. The period in which DPLLC is required to satisfy the purchase commitment
may be extended upon the occurrence of certain events, including if the Company
is unable to deliver the products required by DPLLC.
The Purchase Agreement includes customary representations and warranties
and post-closing covenants, including indemnification obligations, subject to
certain limitations, on behalf of the parties with respect to their
representations, warranties and agreements made pursuant to the Purchase
Agreement. In addition, except for certain activities by Hybrid Networks, LLC, a
wholly-owned subsidiary of the Company, the Company agreed, for a period of two
(2) years, not to engage in any business that competes with BDR.
In connection with the Purchase Agreement, the Company also entered into a
Transition Services Agreement with DirecPath, pursuant to which the Company will
provide certain administrative and other services to DirecPath during a
ninety-day transition period.
There is no material relationship, other than in respect of the
transactions consummated by the Purchase Agreement and the related agreements,
between DirecPath or DPLLC and the Company or any of its affiliates, or any
director or officer of the Company or any associate of any such officer or
director.
The foregoing description of the Purchase Agreement is qualified in its
entirety by reference to the complete terms and conditions of the Purchase
Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K.
2. Second Amendment to Credit and Security Agreement
On December 15, 2006, the Company and BDR, as Borrowers, and Blonder Tongue
Investment Company, a wholly-owned subsidiary of the Company, as Guarantor,
executed a Second Amendment to Credit and Security Agreement (the "Amendment")
with National City Business Credit, Inc. ("NCBC") and National City Bank (the
"Bank"). The Amendment removes BDR as a "Borrower" under the Credit and Security
Agreement dated as of December 29, 2005, as amended (the "Credit Agreement"),
and includes other modifications and amendments to the Credit Agreement and
related ancillary agreements necessitated by the removal of BDR as a Borrower,
including a reduction of approximately $1,400,000 to the maximum amount of
Revolving Advances that NCBC will make to the Company due to the release from
collateral of the rights of entry owned by BDR.
The foregoing description of the Amendment is qualified in its entirety by
reference to the complete terms and conditions of the Amendment, which is filed
as Exhibit 10.2 to this Current Report on Form 8-K.
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
The information under Item 1.01 of this Current Report describing the
Purchase Agreement and the transactions consummated thereby is incorporated by
reference into this Item 2.01 in its entirety.
The disposition of the Company's 100% interest in BDR meets the threshold
for filing pro forma financial statements under this Item 2.01. Such pro forma
financial statements are provided in Item 9.01.
ITEM 8.01. OTHER EVENTS.
On December 15, 2006, the Company issued a press release announcing that it
had entered into the Purchase Agreement. The press release is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(b) The unaudited pro forma condensed consolidated financial statements,
including the balance sheet as of September 30, 2006 and the statements of
operations for the year ended December 31, 2005 and the nine months ended
September 30, 2006, are attached as Exhibit 99.2 hereto and incorporated herein
by reference.
(d) The following exhibits are filed herewith:
Exhibit Number Description
Exhibit 10.1 Membership Interest Purchase Agreement
Exhibit 10.2 Second Amendment to Credit and Security Agreement
Exhibit 99.1 Press Release dated December 15, 2006, issued by Blonder
Tongue Laboratories, Inc.
Exhibit 99.2 Unaudited Pro Forma Financial Statements
Forward Looking Statements
This report contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of
1995. These statements are neither promises nor guarantees, are based upon assumptions and estimates that might not be
realized and are subject to risks and uncertainties that could cause actual results to differ materially from those in
the forward looking statements. There are a number of factors that may cause actual results to differ from these
forward-looking statements, including the success of marketing and sales strategies and new product development, the
price of raw materials, and general economic and business conditions. Other risks and uncertainties that may materially
affect the Company are provided in the Company's annual reports to shareholders and the Company's periodic reports filed
with the Securities and Exchange Commission from time to time, including reports on Forms 10-K and 10-Q. Please refer to
these documents for a more thorough description of these and other risk factors.
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
Senior Vice President and
Chief Financial Officer
Date: December 21, 2006
EXHIBIT INDEX
Exhibit Number Description
Exhibit 10.1 Membership Interest Purchase Agreement
Exhibit 10.2 Second Amendment to Credit and Security Agreement
Exhibit 99.1 Press Release dated December 15, 2006, issued by Blonder
Tongue Laboratories, Inc.
Exhibit 99.2 Unaudited Pro Forma Financial Statements
Blonder Tongue Laboratories (BDRL)
Filed: 21 Dec 06, 12:00am