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Item
1.01
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Entry
into a Material Definitive Agreement.
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On
December 14, 2020, Blonder Tongue Laboratories, Inc. (the “Company”) entered into a Securities Purchase Agreement (the
“Purchase Agreement”) with accredited investors (the “Purchasers”) for the sale and issuance by the Company
to the Purchasers of (i) an aggregate of 1,428,571 shares (the “Shares”) of the Company’s common stock, $0.001 par value
per share (the “Common Stock”) and (ii) warrants (the “Purchaser Warrants”) to purchase an aggregate of up
to 714,286 shares of Common Stock (the “Purchaser Warrant Shares”), for aggregate gross proceeds to the Company of $1
million, before deducting placement agent fees and offering expenses payable by the Company. The Company also agreed to issue
to the placement agents and certain persons affiliated with the placement agents, as additional compensation, (a) fully-vested
warrants (the “Placement Agent Warrants”) to purchase an aggregate of up to 100,000 shares (the “Placement Agent
Warrant Shares”) of Common Stock and (b) contingent warrants (the “Placement Agent Contingent Warrants”) to purchase
an aggregate of up to an additional 50,001 shares (the “Placement Agent Contingent Warrant Shares”) of Common Stock.
The transaction closed on December 15, 2020.
The
Purchase Agreement contains customary representations, warranties and covenants of the Company and the Purchasers, indemnification
obligations of the Company (including for liabilities under the Securities Act of 1933, as amended) and certain termination provisions.
The Purchase Agreement also includes terms that give the Purchasers certain price protections, providing for adjustments of the
number of shares of Common Stock held by them in the event of certain future dilutive securities issuances by the Company for
a period not to exceed 18 months following the closing of the private placement, or such earlier date on which all of the Purchaser
Warrants have been exercised. In addition, the Purchase Agreement provides the Purchasers with a right to participate in certain
future Company financings, up to 30% of the amount of such financings, for a period of 24 months following the closing of the
private placement. The Purchase Agreement also requires the Company to register the resale of the Shares and the Warrant Shares
under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the terms of a Registration Rights
Agreement between the Company and the Purchasers, dated as of December 14, 2020 (the “Registration Rights Agreement”),
as described further below.
The
Purchase Agreement further obligates the Company to call a special meeting of its stockholders to seek stockholder approval of
the issuance of shares of its Common Stock issuable in connection with this transaction in excess of 19.99% of the Company’s presently-outstanding
shares of Common Stock, in accordance with the requirements of Section 713(a) of the NYSE American Company Guide (the “Stockholder
Approval”). Until Stockholder Approval has been obtained, the Company may not issue more than two million shares of its Common
Stock, in the aggregate, pursuant to the Purchase Agreement (including the anti-dilution provisions of Section 4.12 thereof),
the Purchaser Warrants, the Placement Agent Warrants and/or the Placement Agent Contingent Warrants.
The
Purchaser Warrants have an exercise price of $1.25 per share, are exercisable beginning on December 15, 2020, and have a term
of three years. The exercise price and the number of shares of Common Stock issuable upon exercise of each Purchaser Warrant is
subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting the Common Stock.
In
certain circumstances, upon the occurrence of a fundamental transaction, a holder of Purchaser Warrants is entitled to receive,
upon any subsequent exercise of the Purchaser Warrant, for each Purchaser Warrant Share that would have been issuable upon such
exercise of the Purchaser Warrant immediately prior to the fundamental transaction, at the option of the holder, the number of
shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any
additional consideration receivable as a result of the fundamental transaction by a holder of the number of shares of Common Stock
of the Company for which the Purchaser Warrant is exercisable immediately prior to the fundamental transaction. If holders of
the Company’s Common Stock are given any choice as to the securities, cash or property to be received in a fundamental transaction,
then the Holder shall be given the choice as to the additional consideration it receives upon any exercise of the Purchaser Warrant
following the fundamental transaction.
The
Placement Agent Warrants have an exercise price of $0.70 per share, a term of five years from December 14, 2020, and become exercisable
beginning on the earlier of (i) the receipt of Stockholder Approval and (ii) the exercise or expiration of all of the Purchaser
Warrants. The exercise price and the number of shares of Common Stock issuable upon exercise of each Placement Agent Warrant is
subject to appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations,
reclassifications or similar events affecting the Common Stock. The Placement Agent Warrants also provide the holders with certain
“piggyback” registration rights, permitting the holders to request that the Company include the Placement Agent Warrant
Shares for sale in certain registration statements filed by the Company under the Securities Act.
The
Placement Agent Contingent Warrants have an exercise price of $1.25 per share, a term of five years from December 14, 2020, and
become exercisable if, and to the extent, holders of the Purchaser Warrants exercise such Purchaser Warrants. In no event, however,
will the Placement Agent Contingent Warrants become exercisable unless and until Stockholder Approval has been obtained. The exercise
price and the number of shares of Common Stock issuable upon exercise of each Placement Agent Contingent Warrant is subject to
appropriate adjustments in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications
or similar events affecting the Common Stock. The Placement Agent Contingent Warrants also provide the holders with certain “piggyback”
registration rights, permitting the holders to request that the Company include the Placement Agent Contingent Warrant Shares
for sale in certain registration statements filed by the Company under the Securities Act.
The
Registration Rights Agreement obligates the Company, at its expense, to file a registration statement with the Securities and
Exchange Commission (the “Commission”) to register the resale of the Shares and the Warrant Shares by the Purchasers
no more than 30 days following December 14, 2020. The Company is required to use its best efforts to cause the registration statement
to be declared effective by the Commission as promptly as possible after the filing thereof, but in any event no later than the
90th calendar day following the date of the Registration Rights Agreement (or, in the event of a “full review” by
the Commission, the 120th calendar day following the date of the Registration Rights Agreement). In the event the Company is notified
by the Commission that the registration statement will not be reviewed or is no longer subject to further review and comments,
the Company must cause the registration statement to become effective on the fifth Trading Day (as defined) following the date
of such notice. In addition, the Company is required to use its best efforts to keep the registration statement continuously effective
until the date that all registrable securities covered by the registration statement (i) have been sold thereunder or pursuant
to Rule 144 under the Securities Act, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and
without the requirement for the Company to be in compliance with the current public information requirement of Rule 144. The Registration
Rights agreement provides for certain indemnification obligations of the Company and the Purchasers (including for liabilities
under the Securities Act).
The
foregoing descriptions of the material terms of the Purchase Agreement, Purchaser Warrants, Placement Agent Warrants, Placement
Agent Contingent Warrants and Registration Rights Agreement are not complete and are qualified in their entirety by reference
to the Purchase Agreement, Purchaser Warrants, Placement Agent Warrants, Placement Agent Contingent Warrants and Registration
Rights Agreement attached as Exhibits 10.1, 4.1, 4.2, 4.3 and 10.2, respectively, to this Current Report on Form 8-K and are incorporated
herein by reference.
The
representations, warranties and covenants of the parties included in the summary of the material terms of the agreements and documents
provided above were made only for purposes of such agreements and documents and as of specific dates, were solely for the benefit
of the parties to such agreements and documents and may be subject to limitations agreed upon by the contracting parties. Accordingly,
these agreements should not be read alone, but should instead be read in conjunction with the other information regarding the
Company included in its filings made with the Securities and Exchange Commission.
This
Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor
shall there be any offer or sale of these securities in any state in which such offer, solicitation or sale would be unlawful
prior to the registration or qualification under the securities laws of any such state.