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): February 27, 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.
On February 27, 2006 (the “Closing Date”), Blonder Tongue Laboratories,
Inc. (“Registrant”) entered into (i) a side letter agreement (“Side Letter”)
with Octalica, Inc. (“Octalica”), and (ii) a Second Amended and Restated
Distribution Agreement (“Amended Distribution Agreement”) with T.M.T. - Third
Millennium Technologies Ltd. (“TMT”), the manufacturer and supplier of the
Registrant’s MegaPort(TM)line of high-speed data communications products, each as
described in greater detail below. These agreements were entered into in
connection with TMT being acquired from Octalica on the Closing Date by Shenzhen
Junao Technology Company Ltd. (“Shenzhen”), pursuant to a Share Purchase
Agreement among Shenzhen, TMT and Octalica (the “Share Purchase Agreement”).
Shenzhen is an affiliate of Master Gain International Industrial, Limited, the
Registrant’s joint venture partner in the Registrant’s ongoing efforts to
develop manufacturing operations in the Peoples Republic of China (the “Joint
Venture”). In addition, on the Closing Date TMT also granted an option to
acquire substantially all of its assets to a newly formed wholly-owned
subsidiary of the Registrant, as this option is further described below.
On the Closing Date, among other things, (i) the Registrant entered into
the Side Letter with Octalica whereby (a) the Registrant agreed to guaranty the
payment by Shenzhen to Octalica of the purchase price described in the Share
Purchase Agreement, and (b) Octalica and the Registrant exchanged mutual general
releases; (ii) the Registrant and TMT entered into the Amended Distribution
Agreement, whereby among other things, (a) the territory for the Registrant’s
existing exclusive distributorship was expanded from merely the United States,
to include the entire world (other than China and the Pacific Rim countries),
(b) certain volume purchase requirements formerly serving as conditions
precedent to the continued exclusivity in favor of the Registrant were
eliminated, (c) product pricing was reduced to more favorable levels for the
Registrant, and (d) the term of the agreement was extended for 10 years from the
Closing Date; and (iii) TMT granted to a newly formed wholly-owned subsidiary of
the Registrant (“Megaport”), an assignable option (the “Option”) to acquire
substantially all of TMT’s assets and assume certain of its liabilities for an
aggregate purchase price of the same amount and payable on the same terms as the
payment obligation of Shenzhen to Octalica under the Share Purchase Agreement.
The purchase price for the TMT Stock under the Share Purchase Agreement
(and therefore the amount and payment terms guaranteed by the Registrant under
the Side Letter and also the purchase price under the Option) is the sum of
$383,150 plus an earn-out. The earn-out will not exceed 4.5% of the net revenues
derived from the sale of certain products during a period of 36 months
commencing after the sale of certain specified quantities of TMT inventory
following the Closing Date. The cash portion of the purchase price is payable
(i) $22,100 on the 120th day following the Closing Date, (ii) $22,100 on the
last day of the twenty-fourth month following the Closing Date, and (iii)
$338,950 commencing upon the later of (A) the second anniversary of the Closing
Date and (B) for each of the products specified in the Share Purchase Agreement,
the date after which certain volume sales targets for such products have been
met, and then only as and to the extent that revenues are derived from sales of
such products. The Registrant anticipates that it will either cause Megaport to
exercise the Option or will assign the Option to the Joint Venture or one or
more of the Joint Venture’s affiliates for exercise, prior to the expiration
thereof. The Option has a term of one year, extendable by the optionee for an
additional 90 days thereafter.
ITEM 2.03. CREATION OF DIRECT FINANCIAL OBLIGATION.
As described above in Item 1.01, the Registrant has guaranteed the
obligations of Shenzhen under the Share Purchase Agreement. These obligations
became effective on February 27, 2006, and the terms and conditions as described
in detail in Item 1.01 above are incorporated into this Item 2.03 by reference.
The exact amount of the obligations cannot be determined at this time as a
portion of the purchase price under the Share Purchase Agreement is contingent
upon or otherwise earned as a percentage of revenues derived from, the sale of
products after closing, which cannot be quantified at this time.
ITEM 7.01. REGULATION FD DISCLOSURE.
The disclosure contained in Item 1.01 above is incorporated into this Item
7.01 by reference.
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 Registrant are provided in the Registrant's annual reports
to shareholders and the Registrant'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
Eric Skolnik
Senior Vice President and CFO
Date: March 2, 2006