Exhibit 10.5

 

CONTINUING GUARANTY

 

October 25, 2019

 

TO: MIDCAP BUSINESS CREDIT LLC

 

1. GUARANTY; DEFINITIONS. In consideration of any credit or other financial
accommodation heretofore, now or hereafter extended or made to BLONDER TONGUE
LABORATORIES, INC., a Delaware corporation (together with its successors and
permitted assigns, “Parent”), (the “Borrower”) by MIDCAP BUSINESS CREDIT LLC
("MidCap"), and for other valuable consideration, each of the undersigned, being
BLONDER TONGUE FAR EAST, LLC, a Delaware limited liability company and R. L.
DRAKE HOLDINGS, LLC, a Delaware limited liability company, each having an
address of c/o Blonder Tongue Laboratories, Inc., One Jake Brown Road, Old
Bridge, NJ 08857 (each a "Guarantor"), unconditionally jointly and severally
guarantees and promises to pay to MidCap, or order, on demand in lawful money of
the United States of America and in immediately available funds, any and all
Indebtedness. The term "Indebtedness" is used in its most comprehensive sense
and means any debts, obligations and liabilities of Borrower to MidCap,
including, without limitation, the “Obligations” as defined in that certain Loan
and Security Agreement (All Assets), by and between the Borrower, Guarantor and
MidCap, dated as of the date hereof (as amended or modified from time to time,
the “Loan Agreement”; capitalized terms used herein but not otherwise defined
shall have the meanings ascribed thereto in the Loan Agreement), whether
incurred in the past, present or future, whether voluntary or involuntary, and
however arising, and whether due or not due, absolute or contingent, liquidated
or unliquidated, determined or undetermined, and including without limitation
all obligations arising under any swap, derivative, foreign exchange, hedge,
deposit, treasury management or similar transaction or arrangement however
described or defined that Borrower may enter into at any time with MidCap,
whether or not Borrower may be liable individually or jointly with others, or
whether recovery upon such Indebtedness may subsequently become unenforceable.
This Guaranty is a guaranty of payment and not collection.

 

 

 

 

2. SUCCESSIVE TRANSACTIONS; REVOCATION; OBLIGATION UNDER OTHER GUARANTIES. This
is a continuing guaranty and all rights, powers and remedies hereunder shall
apply to all past, present and future Indebtedness, including that arising under
successive transactions which shall either continue the Indebtedness, increase
or decrease it, or from time to time create new Indebtedness after all or any
prior Indebtedness has been satisfied, and notwithstanding the death,
incapacity, dissolution, liquidation or bankruptcy of Borrower or Guarantor or
any other event or proceeding affecting either Borrower or Guarantor. This
Guaranty shall not apply to any new Indebtedness created after actual receipt by
MidCap of written notice of Guarantor’s revocation as to such new Indebtedness;
provided however, that loans or advances made by MidCap to Borrower after
revocation under commitments existing prior to receipt by MidCap of such
revocation, and extensions, renewals or modifications, of any kind, of
Indebtedness incurred by Borrower or committed by MidCap prior to receipt by
MidCap of such notice of revocation, shall not be considered new Indebtedness.
Any such notice must be sent to MidCap by registered U.S. mail, postage prepaid,
addressed to its office at 433 South Main Street, West Hartford, Connecticut
06110, Attn: Steven A. Samson, or at such other address as MidCap shall from
time to time designate. Any payment by Guarantor shall not reduce Guarantor's
maximum obligation hereunder unless written notice to that effect is actually
received by MidCap at or prior to the time of such payment. The obligations of
Guarantor under this Guaranty shall be in addition to any obligations of
Guarantor under any other guaranties of any liabilities or obligations of
Borrower or other persons that may be given to MidCap at any time, unless the
other guaranties are expressly modified or revoked in writing; and this Guaranty
shall not, unless expressly provided for in this Guaranty, affect or invalidate
any such other guaranties.

 

3. OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF
LIMITATIONS; REINSTATEMENT OF LIABILITY. The obligations of Guarantor under this
Guaranty are joint and several and independent of the obligations of Borrower,
and a separate action or actions may be brought and prosecuted against
Guarantor, whether the action is brought against Borrower or other persons, or
whether Borrower or other persons are joined in any such action or actions.
Guarantor acknowledges that this Guaranty is absolute and unconditional, that
there are no conditions precedent to the effectiveness of this Guaranty, and
that this Guaranty is in full force and effect and binding on Guarantor as of
the date written below, regardless of whether MidCap obtains collateral or any
guaranties from others or takes any other action contemplated by Guarantor.
Guarantor waives the benefit of any statute of limitations affecting the
enforcement or Guarantor's liability under this Guaranty, and Guarantor agrees
that any payment of any Indebtedness or other act which shall toll any
applicable statute of limitations shall similarly toll the statute of
limitations applicable to Guarantor's liability under this Guaranty. The
liability of Guarantor hereunder shall be reinstated and revived and the rights
of MidCap shall continue if and to the extent for any reason any amount at any
time paid on account of any Indebtedness guaranteed hereby is rescinded or must
otherwise be restored by MidCap, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise, all as though such amount had not
been paid. The determination as to whether any amount so paid must be rescinded
or restored shall be made by MidCap in its sole discretion; provided however,
that if MidCap chooses to contest any such matter at the request of Guarantor,
Guarantor agrees to indemnify and hold MidCap harmless from and against all
costs and expenses, including reasonable attorneys' fees, expended or incurred
by MidCap in connection therewith, including without limitation, in any
litigation with respect thereto.

 

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4. AUTHORIZATIONS TO MidCap. Guarantor authorizes MidCap either before or after
revocation hereof, without notice to or demand on Guarantor, and without
affecting Guarantor's liability hereunder, from time to time to: (a) alter,
compromise, renew, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of the Indebtedness or any portion thereof,
including increase or decrease of the rate of interest thereon; (b) take and
hold security for the payment of this Guaranty or the Indebtedness or any
portion thereof, and exchange, enforce, waive, subordinate or release any such
security; (c) apply such security and direct the order or manner of sale
thereof, including without limitation, a non-judicial sale permitted by the
terms of the controlling security agreement, mortgage or deed of trust, as
MidCap in its discretion may determine; (d) release or substitute any one or
more of the endorsers or any other guarantors of the Indebtedness, or any
portion thereof, or any other party thereto; and (e) apply payments received by
MidCap from Borrower to any portion of the Indebtedness, in such order as MidCap
shall determine in its sole discretion, whether or not such Indebtedness is
covered by this Guaranty, and Guarantor hereby waives any provision of law
regarding application of payments which specifies otherwise. MidCap may without
notice assign this Guaranty in whole or in part. Until the Guarantor is other
than a disregarded entity not engaged in any material business, upon MidCap's
request, Guarantor agrees to provide to MidCap copies of Guarantor's financial
statements.

 

5. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to MidCap
that: (a) this Guaranty is executed at Borrower's request; (b) Guarantor shall
not, without MidCap's prior written consent, sell, lease, assign, encumber,
hypothecate, transfer or otherwise dispose of all or a substantial or material
part of Guarantor's assets other than in the ordinary course of Guarantor's
business; (c) MidCap has made no representation to Guarantor as to the
creditworthiness of Borrower; and (d) Guarantor has established adequate means
of obtaining from Borrower on a continuing basis financial and other information
pertaining to Borrower's financial condition. Guarantor agrees to keep
adequately informed of any facts, events or circumstances which might in any way
affect Guarantor's liability under this Guaranty, and Guarantor further agrees
that MidCap shall have no obligation to disclose to Guarantor any information or
material about Borrower which is acquired by MidCap in any manner.

 

6. GUARANTOR’S COVENANTS. Guarantor covenants and agrees from the date hereof
until payment and performance in full of all Indebtedness, and until the
termination of the Loan Agreement, unless MidCap otherwise consents in writing,
Guarantor shall deliver or cause to be delivered to Midcap promptly upon
MidCap’s written request, such information about the financial condition and
operations of Guarantor as MidCap may, from time to time, reasonably request.

 

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7. GUARANTOR'S WAIVERS.

 

(a) Guarantor waives any right to require MidCap to: (i) proceed against
Borrower or any other person; (ii) marshal assets or proceed against or exhaust
any security granted by Borrower or any other person; (iii) give notice of the
terms, time and place of any public or private sale or other disposition of
personal property security granted by Borrower or any other person; (iv) take
any other action or pursue any other remedy in MidCap's power; or (v) make any
presentment or demand for performance, or give any notice of nonperformance,
protest, notice of protest or notice of dishonor hereunder or in connection with
any obligations or evidences of indebtedness held by MidCap as security for or
which constitute in whole or in part the Indebtedness guaranteed hereunder, or
in connection with the creation of new or additional Indebtedness.

 

(b) Guarantor waives any defense to its obligations hereunder based upon or
arising by reason of: (i) any disability or other defense of Borrower or any
other person; (ii) the cessation or limitation from any cause whatsoever, other
than payment in full, of the Indebtedness or the indebtedness of any other
person; (iii) any lack of authority of any officer, director, partner, agent or
any other person acting or purporting to act on behalf of Borrower, if it is a
corporation, partnership or other type of entity, or any defect in the formation
of Borrower; (iv) the application by Borrower of the proceeds of any
Indebtedness for purposes other than the purposes represented by Borrower to, or
intended or understood by, MidCap or Guarantor; (v) any act or omission by
MidCap which directly or indirectly results in or aids the discharge of Borrower
or any portion of the Indebtedness by operation of law or otherwise, or which in
any way impairs or suspends any rights or remedies of MidCap against Borrower;
(vi) any impairment of the value of any interest in any security for the
Indebtedness or any portion thereof, including without limitation, the failure
to obtain or maintain perfection or recordation of any interest in any such
security, the release of any such security without substitution, and/or the
failure to preserve the value of, or to comply with applicable law in disposing
of, any such security; (vii) any modification of the Indebtedness, in any form
whatsoever, including any modification made after revocation hereof to any
Indebtedness incurred prior to such revocation, and including without limitation
the renewal, extension, acceleration or other change in time for payment of, or
other change in the terms of, the Indebtedness or any portion thereof, including
increase or decrease of the rate of interest thereon; or (viii) any requirement
that MidCap give any notice of acceptance of this Guaranty. Until all
Indebtedness has been paid in full, Guarantor shall have no right of
subrogation, and Guarantor waives any right to enforce any remedy which MidCap
now has or may hereafter have against Borrower or any other person, and waives
any benefit of, or any right to participate in, any security now or hereafter
held by MidCap. Guarantor further waives all rights and defenses Guarantor may
have arising out of (A) any election of remedies by MidCap, even though that
election of remedies, such as a non-judicial foreclosure with respect to any
security for any portion of the Indebtedness, destroys Guarantor's rights of
subrogation or Guarantor's rights to proceed against Borrower for reimbursement,
or (B) any loss of rights Guarantor may suffer by reason of any rights, powers
or remedies of Borrower in connection with any anti-deficiency laws or any other
laws limiting, qualifying or discharging Borrower's Indebtedness, whether by
operation of law or otherwise, including any rights Guarantor may have to a fair
market value hearing to determine the size of a deficiency following any
foreclosure sale or other disposition of any real property security for any
portion of the Indebtedness.

 

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8. MIDCAP'S RIGHTS WITH RESPECT TO GUARANTOR'S PROPERTY IN ITS POSSESSION;
WAIVER. In addition to all liens upon and rights of setoff against the monies,
securities or other property of Guarantor given to MidCap by law, Guarantor
hereby grants to MidCap a lien, security interest and right of setoff as
security for all liabilities and Indebtedness to MidCap, whether now existing or
hereafter arising, upon and against all deposits, credits, collateral and
property, now or hereafter in the possession, custody, safekeeping or control of
MidCap. At any time, without demand or notice, MidCap may set off the same or
any part thereof and apply the same to any liability or Obligation of Guarantor
even though unmatured and regardless of the adequacy of any other collateral
securing the Indebtedness. No lien or right of setoff shall be deemed to have
been waived by any act or conduct on the part of MidCap, or by any neglect to
exercise such right of setoff or to enforce such lien, or by any delay in so
doing, and every right of setoff and lien shall continue in full force and
effect until such right of setoff or lien is specifically waived or released by
MidCap in writing. ANY AND ALL RIGHTS TO REQUIRE MIDCAP TO EXERCISE ITS RIGHTS
OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL OF WHICH SECURES THE
INDEBTEDNESS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF GUARANTOR, ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.

 

9. SUBORDINATION. Any indebtedness of Borrower or any other Loan Party now or
hereafter held by Guarantor is hereby subordinated to the Indebtedness. Such
indebtedness of Borrower or any other Loan Party to Guarantor is assigned to
MidCap as security for this Guaranty and the Indebtedness and, if MidCap
requests, shall be collected and received by Guarantor as trustee for MidCap and
paid over to MidCap on account of the Indebtedness but without reducing or
affecting in any manner the liability of Guarantor under the other provisions of
this Guaranty. Any notes or other instruments now or hereafter evidencing such
indebtedness of Borrower or any other Loan Party to Guarantor shall be marked
with a legend that indicates that the notes or other instruments are subject to
this Guaranty and, if MidCap so requests, such notes and instruments shall be
delivered to MidCap. MidCap is hereby authorized in the name of Guarantor from
time to time to file financing statements and continuation statements and
execute such other documents and take such other action as MidCap deems
necessary or appropriate to perfect, preserve and enforce its rights hereunder.

 

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10. REMEDIES; NO WAIVER. All rights, powers and remedies of MidCap hereunder are
cumulative. No delay, failure or discontinuance of MidCap in exercising any
right, power or remedy hereunder shall affect or operate as a waiver of such
right, power or remedy; nor shall any single or partial exercise of any such
right, power or remedy preclude, waive or otherwise affect any other or further
exercise thereof or the exercise of any other right, power or remedy. Any
waiver, permit, consent or approval of any kind by MidCap of any breach of this
Guaranty, or any such waiver of any provisions or conditions hereof, must be in
writing and shall be effective only to the extent set forth in writing.

 

11. COSTS, EXPENSES AND ATTORNEYS' FEES. Guarantor shall pay to MidCap promptly
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of MidCap's in-house counsel), expended or incurred by
MidCap in connection with the enforcement of any of MidCap's rights, powers or
remedies and/or the collection of any amounts which become due to MidCap under
this Guaranty, and the prosecution or defense of any action in any way related
to this Guaranty, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by MidCap or any other
person) relating to Guarantor or any other person or entity. All of the
foregoing shall be paid by Guarantor with interest from the date of demand until
paid in full at a rate per annum equal to the greater of ten percent (10%) or
MidCap’s Prime Rate in effect from time to time.

 

12. SUCCESSORS; ASSIGNMENT. This Guaranty shall be binding upon and inure to the
benefit of the successors and assigns of the parties; provided however, that
Guarantor may not assign or transfer any of its interests or rights hereunder
without MidCap's prior written consent and any prohibited assignment shall be
absolutely void. Guarantor acknowledges that MidCap has the right to sell,
assign, transfer, negotiate or grant participations in all or any part of, or
any interest in, the Indebtedness and any obligations with respect thereto,
including this Guaranty. In connection therewith, MidCap may disclose all
documents and information which MidCap now has or hereafter acquires relating to
Guarantor and/or this Guaranty, whether furnished by Borrower, Guarantor or
otherwise. Guarantor further agrees that MidCap may disclose such documents and
information to Borrower.

 

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13. AMENDMENT. This Guaranty may be amended or modified only in writing signed
by MidCap and Guarantor.

 

14. APPLICATION OF SINGULAR AND PLURAL. In all cases where there is more than
one Borrower named in this instrument, then the term “Borrower” shall be deemed
to have been used in the plural where context and construction so require; and
when this Guaranty is executed by more than one Guarantor, the word "Guarantor"
shall mean all or any one or more of them as the context requires.

 

15. UNDERSTANDING WITH RESPECT TO WAIVERS; SEVERABILITY OF PROVISIONS. Guarantor
warrants and agrees that each of the waivers set forth herein is made with
Guarantor's full knowledge of its significance and consequences, and that under
the circumstances, the waivers are reasonable and not contrary to public policy
or law. If any waiver or other provision of this Guaranty shall be held to be
prohibited by or invalid under applicable public policy or law, such waiver or
other provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such waiver or other provision
or any remaining provisions of this Guaranty.

 

16. GOVERNING LAW AND CONSENT TO JURISDICTION. This Guaranty shall be governed
by and construed in accordance with the laws of the State of New York. The
Guarantor agrees that any suit for the enforcement of this Guaranty may be
brought in the courts of State of Connecticut or in the District Court of the
United States for the District of Connecticut and consents to the non-exclusive
jurisdiction of such court and to service of process in any such suit being made
upon the Guarantor by mail at the address specified in the preamble hereto. The
Guarantor hereby waives any objection that it may now or hereafter have to the
venue of any such suit or any such court or that such suit was brought in an
inconvenient court.

 

[continued on following page]

 

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17. Waiver of Jury Trial. GUARANTOR IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, BASED ON OR
PERTAINING TO THIS GUARANTY.

 

IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of
the date first written above.

 

BLONDER TONGUE FAR EAST, LLC         By:     Name: Eric Skolnik   Title: Senior
Vice President and Chief Financial Officer         R. L. DRAKE HOLDINGS, LLC    
    By:     Name: Eric Skolnik   Title: Senior Vice President and Chief
Financial Officer  

 

[Guaranty Signature Page]