Current Report Filing (8-k)

On October 25, 2019, Blonder Tongue Laboratories, Inc. (the “Company” or “Borrower”), R. L. Drake Holdings, LLC, a wholly-owned subsidiary of the Company (“R. L. Drake”), Blonder Tongue Far East, LLC, a wholly-owned subsidiary of the Company (“Blonder Tongue Far East”) and MidCap Business Credit LLC (as lender, “MidCap”) entered into a Loan and Security Agreement (All Assets) (the “Loan Agreement”).

The Loan Agreement provides the Company with a credit facility comprising a $5,000,000 revolving line of credit. The credit facility matures following the third anniversary of the Loan Agreement. Interest on the amounts outstanding under the Loan Agreement is variable, based upon the three-month LIBOR rate plus a margin of 4.75%, subject to re-set each month. All outstanding indebtedness under the Loan Agreement is secured by all of the assets of the Company and its subsidiaries, and is guaranteed by R. L. Drake and Blonder Tongue Far East.

The Company expects to use the proceeds received under the Loan Agreement for working capital and general corporate purposes in the ordinary course of its business.

The Loan Agreement contains customary covenants, including restrictions on the incurrence of additional indebtedness, the payment of cash dividends or similar distributions, the repayment of any subordinated indebtedness and the encumbrance, sale or other disposition of assets. Events of default under the Loan Agreement include Borrower’s payment defaults, material misrepresentations, uncured breaches of covenants, cross defaults with certain other indebtedness, bankruptcy and insolvency events, changes of control and the occurrence of certain material adverse events.

Borrower also is obligated to pay MidCap certain fees and charges, including (i) a facility fee equal to 1.00% times the credit limit under the Loan Agreement, (ii) an annual fee equal to 0.75% times the credit limit under the Loan Agreement, (iii) audit fees in connection with any audits or inspections by MidCap or its agents of collateral or Borrower’s operations or business (not to exceed $12,500 in any 12 month period), (iv) a collateral monitoring charge of $2,500 per month and (v) an unused line fee of 0.50% per annum on the daily average of the credit limit reduced by outstanding advances.

The Loan Agreement and the related agreements summarized herein replace the Company’s borrowing facilities under its Loan and Security Agreement with Sterling National Bank (as lender and as administrative agent) (as amended, the “Sterling Loan Agreement”) and certain related agreements (as amended, collectively, the “Additional Sterling Agreements”). The Sterling Loan Agreement and Additional Sterling Agreements have been terminated.

Contemporaneously with the entry into the Loan Agreement, (i) the Company and MidCap entered into a Pledge and Security Agreement (the “Pledge Agreement”), pursuant to which the obligations of Borrower under the Loan Agreement are secured by Borrower’s pledge and assignment of all of its right, title and interest in the membership interests of R. L. Drake and Blonder Tongue Far East (including rights to receive dividends, distributions and other proceeds relating to Borrower’s ownership interest), (ii) Borrower, R. L. Drake and MidCap entered into a Patent and Trademark Security Agreement (the “Security Agreement”), pursuant to which Borrower and R. L. Drake pledged and assigned their interests in their Patents and Trademarks (as defined in the Security Agreement) to secure the obligations of Borrower under the Loan Agreement and (iii) Blonder Tongue Far East and R. L. Drake entered into a Continuing Guaranty (the “Guaranty Agreement”) with MidCap, whereby in the event of default by Borrower, Blonder Tongue Far East and R. L. Drake jointly and severally agree to perform under the Loan Agreement.

The foregoing summaries of the Loan Agreement, the Pledge Agreement, the Security Agreement and the Guaranty Agreement are not complete and are qualified in their entirety by reference to the full text of those agreements, which are attached hereto as Exhibit 10.1, Exhibit 10.3 , Exhibit 10.4, and Exhibit 10.5, respectively, and are incorporated herein by reference.