Document:

EXHIBIT 10.3

 

GUARANTY AGREEMENT

This Guaranty Agreement (as may be amended, restated, or otherwise modified from time to time, this "Guaranty Agreement"), is executed and delivered by the undersigned Guarantor, in favor of STERLING NATIONAL BANK, a national banking association, in its capacity as administrative and collateral agent for the Lender Parties (in such capacity, together with its successors and assigns, the "Administrative Agent"), effective as of December 28, 2016, as provided hereinbelow:

Definitions:

The following terms shall have the following meanings where used in this Guaranty Agreement:

"Borrower" or "Borrowers" means each of Blonder Tongue Laboratories, Inc., a Delaware corporation (who is individually referred to herein as "Parent"), and R.L. Drake Holdings, LLC, a Delaware limited liability company (who is individually referred to herein as "Drake"), and their successors and assigns, including without limitation as debtor or debtor-in-possession in any bankruptcy proceedings.

"Guaranteed Obligations" means all indebtedness and obligations now or hereafter owing by Borrowers to Administrative Agent and the other Lender Parties under and in connection with the Loan Agreement and any other Loan Document (including, without limitation, all Obligations as defined thereunder), whether or not evidenced by any note, or other instrument or document, whether arising from or in connection with a loan, extension of credit, issuance of a letter of credit, acceptance, guaranty, indemnification, or otherwise, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including all principal, interest, charges, costs, fees, expenses, including reasonable costs, fees and expenses of attorneys employed or engaged by Administrative Agent and/or any other Lender Party in connection with any of the foregoing, filing fees, and any other sums chargeable to Borrowers or Guarantor under this Guaranty Agreement or any of the other Loan Documents.  Without limiting the foregoing, "Guaranteed Obligations" includes any of the foregoing arising during any bankruptcy proceedings of Borrowers and any interest or costs, fees expenses that, but for the existence of any such bankruptcy proceedings, would arise or accrue under the Loan Documents.

"Guarantor" means Blonder Tongue Far East, LLC, a Delaware limited liability company.

"Lenders" means each Lender under and as defined in the Loan Agreement, and their successors and assigns permitted thereunder.

"Lender Party" has the meaning given to such term in the Loan Agreement.

"Loan Agreement" means the certain Loan and Security Agreement dated as of the date hereof among the Borrowers, the Guarantor, the Lenders from time to time party thereto and Administrative Agent, as such agreement has been and hereafter may be renewed, amended, restated, or otherwise modified from time to time.

 

 

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Terms defined in the Loan Agreement, wherever used herein, unless otherwise defined herein, shall have the same meanings in this Guaranty Agreement as are set forth in the Loan Agreement, and each of such definitions is incorporated herein by reference. Guarantor expressly acknowledges that it has read and is familiar with all such incorporated definitions and agrees that they shall have the same effect and enforceability in this Guaranty Agreement as though set forth herein at length.

Recitals:

WHEREAS, concurrently herewith, Borrowers, Guarantor, Lenders and Administrative Agent have executed and entered into the Loan Agreement, pursuant to which Lenders have agreed to make available to Borrowers a revolving line of credit and a term loan (terms used and not defined herein shall have the meaning assigned to such terms in the Loan Agreement).

WHEREAS, it is a condition precedent to Lenders' obligation to make the Loans and extensions of credit under the Loan Agreement that Guarantor execute and deliver to Administrative Agent this Guaranty Agreement.

WHEREAS, Guarantor has determined that (a) it will directly and indirectly benefit from the availability of extensions of credit to Borrowers under the Loan Agreement and from the other transactions evidenced by and contemplated in the Loan Documents, (b) it will benefit, directly and indirectly, from executing and delivering this Guaranty Agreement, (c) it is in Guarantor's best interest, and within its organizational purpose, to execute and deliver and, if called upon to do so, to perform its obligations under this Guaranty Agreement, and (d) execution and delivery of this Guaranty Agreement and the other Loan Documents to which Guarantor is a party is necessary or convenient to the conduct, promotion, and attainment of the business of Guarantor.

NOW, THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Guarantor hereby agrees as follows:

1. Guaranty of Guaranteed Obligations.  As an inducement to Lenders to make the Loans or otherwise extend credit and other financial accommodations to Borrowers under the Loan Agreement, Guarantor, for value received, does hereby unconditionally, irrevocably, and absolutely guarantee to Administrative Agent and Lenders the prompt and full payment and performance of the Guaranteed Obligations when due, whether at stated maturity, by acceleration or otherwise.  This Guaranty Agreement is and shall be an absolute, unconditional, irrevocable, and continuing unlimited guaranty of payment, and not solely of collection.  Notwithstanding anything in this Guaranty Agreement to the contrary, the amount of the Guaranteed Obligations shall be limited to a maximum aggregate amount equal to the largest amount that would not render this Guaranty Agreement subject to avoidance as a fraudulent transfer or conveyance under any Applicable Laws, after giving effect to all other liabilities of Guarantor, contingent or otherwise, that are relevant under such laws, and after giving effect to the value, as assets (as determined under the applicable provisions of such laws) of any rights of Guarantor to contribution, indemnity, and/or subrogation from any Borrower or any other Person.

2. Representations and Warranties.  Guarantor hereby represents and warrants to Administrative Agent and each other Lender Party as follows:  Guarantor (a) is wholly-owned by Parent (who also wholly-owns Drake), (b) is an Affiliate of Drake and (c) has received and will receive a direct and indirect material benefit from the transactions evidenced by and contemplated in the Loan Agreement and the other Loan Documents.  This Guaranty Agreement is given by Guarantor in furtherance of the direct and indirect business interests, and is necessary to the conduct, promotion, and attainment of the businesses of Borrowers.  The value of the consideration received and to be received by Guarantor is reasonably worth at least as much as the liability and obligation of Guarantor hereunder.  Guarantor is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Guaranteed Obligations.  Guarantor has read and understands the terms and conditions of the Loan Documents.  Guarantor is familiar with, and has had an opportunity to review the books and records regarding, the financial condition of Borrowers and is familiar with the value of any and all Collateral intended to be security for the payment of all or any part of the Guaranteed Obligations; provided, that Guarantor is not relying on such financial condition or the existence or value of any such security as an inducement to enter into this Guaranty Agreement. Guarantor has adequate means to obtain, on a continuing basis, information concerning the financial condition of Borrowers.  Guarantor has not been induced to enter into this Guaranty Agreement on the basis of a contemplation, belief, understanding, or agreement that any Person other than Borrowers or Guarantor will be liable to pay the Guaranteed Obligations.  No Lender Party has made any representation, warranty, or statement to Guarantor in order to induce Guarantor to execute this Guaranty Agreement.

 

 

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3. Covenants.  Guarantor hereby agrees to comply with each covenant and agreement contained in the Loan Agreement applicable to it as a Credit Party or a Guarantor, as applicable.

4. Obligations Not Impaired.  Guarantor agrees that its obligations under this Guaranty Agreement shall not be released, diminished, impaired, reduced, or affected by the occurrence of any one or more of the following events: (a) lack of organizational authority of any Borrower; (b) any receivership, insolvency, bankruptcy, or other proceedings affecting any Borrower or its property; (c) partial or total release or discharge of any Borrower or any other Person from the performance of any obligation contained in any instrument or agreement evidencing, governing, or securing all or any part of the Guaranteed Obligations, whether occurring pursuant to any Applicable Law or otherwise; (d) any change in the time, manner, or place of payment of, or in any other term of, or any increase or decrease in the amount of, all the Guaranteed Obligations, or any portion thereof, or any other amendment or waiver of any term of, or any consent to departure from any requirement of, any of the Loan Documents; (e) the taking or accepting of any collateral security for all or any part of the Guaranteed Obligations, this Guaranty Agreement, or any other guaranty; (f) the taking or accepting of any other guaranty for all or any part of the Guaranteed Obligations; (g) any failure to acquire, perfect, or continue any security interest or lien on Collateral securing all or any part of the Guaranteed Obligations or on any property securing this Guaranty Agreement; (h) any exchange, release, or subordination of any security interest or lien on any Collateral, or any release, amendment, waiver, or subordination of any term of any guaranty of the Guaranteed Obligations or any other impairment of any collateral security or guaranty now or hereafter securing all or any part of the Guaranteed Obligations; (i) any failure to dispose of any collateral security at any time securing all or any part of the Guaranteed Obligations or this Guaranty Agreement, provided such failure to dispose is commercially reasonable under the circumstances and is otherwise consistent with any Applicable Law; (j) any merger, reorganization, consolidation, or dissolution of any Borrower or any other Person at any time liable for any of the Obligations, any sale, lease, or transfer of any or all of the assets of any Borrower or any other Person at any time liable for any of the Obligations, or any change in name, business, organization, location, composition, structure, or organization of any Borrower or any other Person at any time liable for any of the Obligations; (k) any change of control or any other change in the capitalization or Equity Interest ownership of any Borrower or any other Person at any time liable for any of the Obligations; (l) any invalidity or unenforceability of or defect or deficiency in any of the Loan Documents or all or any part of the Guaranteed Obligations; (m) avoidance or subordination of the Guaranteed Obligations, or any portion thereof, (n) the unenforceability of all or any part of the Guaranteed Obligations against any Borrower because any interest contracted for, charged, or received in respect of the Guaranteed Obligations exceeds the amount permitted by any Applicable Law; (o) any waiver, consent, extension, forbearance, or granting of any indulgence by Administrative Agent or any other Lender Party with respect to the Guaranteed Obligations or any provision of any of the Loan Documents; (p) any delay in or lack of enforcement of any remedies under the Loan Documents; (q) the act of creating all or any part of the Guaranteed Obligations is ultra vires, or the officers or other representatives creating all or any part of the Guaranteed Obligations acted in excess of their authority; (r) any election of remedies by Administrative Agent or any other Lender Party; (s) any of the Loan Documents were forged; (t) the election by Administrative Agent or any other Lender Party in any proceeding under the Bankruptcy Code of the application of Section 1111(b)(2) thereof; (u) any borrowing or grant of a security interest by any Borrower as debtor-in-possession, under Section 364 of the Bankruptcy Code; (v) any use by any Borrower (whether with the consent of Administrative Agent or any other Lender Party or otherwise) of cash collateral during the pendency of any bankruptcy proceeding; (w) the making of post-petition loans or any other provision for the extension of post-petition credit to any Borrower as debtor-in-possession in any bankruptcy proceedings; (x) the disallowance in bankruptcy of all or any portion of the claims of Administrative Agent or any other Lender Party for payment of any of the Guaranteed Obligations; or (y) any other circumstance which might otherwise constitute a legal or equitable discharge or defense available to any Borrower or Guarantor (other than that the Guaranteed Obligations shall have been paid and performed in full excluding any contingent indemnification Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms thereof and hereof).

 

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5. Consent and Waiver.

(a) Guarantor hereby waives: (i) notice of acceptance of this Guaranty Agreement; (ii) notice of any Loans or other financial accommodations or the creation or existence of any Guaranteed Obligations; (iii) notice of the amount of the Guaranteed Obligations; (iv) notice of any adverse change in the financial condition of any Borrower or any other Person or of any other fact that might increase or otherwise change Guarantor's risk with respect to the Guaranteed Obligations, any Borrower or any other Person under or in connection with this Guaranty Agreement; (v) notice of presentment for payment, demand, protest and notice thereof, notice of intent to accelerate, notice of acceleration, notice of dishonor, diligence or promptness in enforcement, and indulgences of every kind as to any promissory notes or other instruments; (vi) notice of any of the events or circumstances enumerated in Section 4, and all other notices and demands to which Guarantor might otherwise be entitled (except if such notice is specifically required to be given to Guarantor hereunder or under any other Loan Documents or pursuant to Applicable Law); (vii) any requirement that Administrative Agent protect, secure, perfect, or insure its security interest and liens on any Collateral or other property as security for the Guaranteed Obligations or exhaust any right or take any action against Administrative Agent or any other Lender Party or any other Person or any Collateral or any other property subject to a security interest or lien; (viii) the benefit of any statute of limitation applicable to enforcement of the Guaranteed Obligations, or any portion thereof, or any security interests or liens in the Collateral or other property as security for the Guaranteed Obligations or this Guaranty Agreement; (ix) all rights by which Guarantor might be entitled to require suit on an accrued right of action in respect of any of the Guaranteed Obligations or require suit against any Borrower or any other Person; or (x) any other defense of any Borrower or any other Person (other than that the Guaranteed Obligations shall have been paid and performed in full, or in part, to the extent of any such partial payment or performance, excluding any contingent indemnification Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms thereof and hereof).

 

 

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(b) Guarantor hereby waives and agrees not to assert against Administrative Agent or any other Lender Party, to the extent allowed by any Applicable Law: (i) any defense, setoff, counterclaim, or claim of any kind or nature available to any Borrower or any other Person against Administrative Agent or any other Lender Party arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Guaranteed Obligations or any security interest or lien in the Collateral or any other property as security for the Guaranteed Obligations; or (ii) any right or defense arising by reason of any claim or defense based upon an election of remedies by Administrative Agent or any other Lender Party under any Applicable Law.

(c) Administrative Agent and any other Lender Party shall have the right to seek recourse against Guarantor to the fullest extent provided for herein, and no election by Administrative Agent or any other Lender Party to proceed in one form of action or proceeding, or against any party, or on any obligation, shall constitute a waiver of Administrative Agent's or any other Lender Party's right to proceed in any other form of action or proceeding or against other parties unless Administrative Agent has expressly waived such right in writing.  Without limiting the foregoing, no action or proceeding by Administrative Agent or any other Lender Party under any document or instrument evidencing the Guaranteed Obligations shall serve to diminish the liability of Guarantor under this Guaranty Agreement except to the extent that Lender Parties finally and unconditionally shall have realized payment in full of the Guaranteed Obligations, excluding any Guaranteed Obligations consisting of contingent indemnification Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms thereof and hereof.

(d) Guarantor waives, and agrees that its liability hereunder shall not be affected by, any neglect, delay, omission, failure, or refusal of Administrative Agent or any other Lender Party to (i) exercise or properly or diligently exercise any right or remedy with respect to any or all of the Guaranteed Obligations or the collection thereof or any security interests or liens or other security for or guaranty of the Guaranteed Obligations, or any portion thereof, (ii) take or prosecute, or properly or diligently take or prosecute, any action for the collection of any or all of the Guaranteed Obligations against any Borrower, Guarantor or any other Person in respect of any or all of the Guaranteed Obligations, (iii) foreclose or prosecute, or properly or diligently foreclose or prosecute, any action in connection with any agreement, document or instrument or arrangement evidencing, securing, or otherwise affecting all or any part of the Guaranteed Obligations, or (iv) mitigate damages or take any other action to reduce, collect, or enforce the Guaranteed Obligations;

(e) Administrative Agent, on behalf of Lender Parties, may at any time, without the consent of or notice to Guarantor, without incurring responsibility to Guarantor and without impairing, releasing, reducing, or affecting the obligations of Guarantor hereunder: (i) change the manner, place, or terms of payment of all or any part of the Guaranteed Obligations, or renew, extend, modify, rearrange, refinance, refund, increase or alter all or any part of the Guaranteed Obligations; (ii) sell, exchange, release, surrender, subordinate, realize upon, or otherwise deal with in any manner and in any order any Collateral and any security interest or lien securing all or any part of the Guaranteed Obligations or this Guaranty Agreement or setoff against all or any part of the Guaranteed Obligations; (iii) neglect, delay, omit, fail, or refuse to take or prosecute any action for the collection of all or any part of the Guaranteed Obligations or this Guaranty Agreement or to take or prosecute any action in connection with any of the Loan Documents; (iv) exercise or refrain from exercising any rights against any Borrower or other Person, or otherwise act or refrain from acting; (v) settle or compromise all or any part of the Guaranteed Obligations and subordinate the payment of all or any part of the Guaranteed Obligations to the payment of any indebtedness, liabilities, or obligations which may be due or become due to Lender Parties; (vi) release all or any one or more parties to any one or more of the Loan Documents or grant forbearance or other indulgences to any Borrower or any other Person in respect thereof; (vii) amend or modify in any manner and at any time (or from time to time) any of the Loan Documents; or (viii) partially or fully release or substitute Guarantor, or enforce, exchange, release, or waive any security for the Guaranteed Obligations, or any portion thereof; (ix) bring suit against any and all Persons liable or obligated in respect of the Guaranteed Obligations, collectively together, jointly and severally or separately, and apply any amounts obtained by Administrative Agent in such manner as Administrative Agent may elect, subject to the Loan Documents; and (x) apply to the Guaranteed Obligations any sums paid to Administrative Agent or any other Lender Party by any Borrower, Guarantor or any other Person as provided by the Loan Documents.

 

 

 

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(f) Should Administrative Agent, on behalf of Lender Parties, seek to enforce this Guaranty Agreement by action in any court or otherwise, Guarantor waives any requirement, substantive or procedural, that (i) rights or remedies be enforced first against Borrowers or any other Person liable for all or any part of the Guaranteed Obligations, including, without limitation, that a judgment first be rendered against Borrowers or any such Person, or that Borrowers or any such Person should be joined in such cause or (ii) enforcement shall first be made against any Collateral or other property which shall ever have been given to secure all or any part of the Guaranteed Obligations or this Guaranty Agreement.

(g) Guarantor's obligations under this Guaranty Agreement shall not be impaired by any action, if any, which results in the denial or impairment of any right to seek a deficiency against Borrowers.

(h) Guarantor agrees that it has the sole responsibility for keeping itself informed of the financial condition of Borrowers and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations or any part thereof, and that none of Administrative Agent or any other Lender Party shall have any obligation or duty to advise Guarantor of information known to it regarding such condition or any such circumstance.

(i) Guarantor consents and agrees that neither Administrative Agent nor any other Lender Party shall have any obligation to marshal assets securing the Guaranteed Obligations in favor of Guarantor.

(j) Administrative Agent may, at any time and from time to time in its discretion (subject to the Loan Agreement) and with or without valuable consideration, allow substitution or withdrawal of Collateral or other security and release Collateral or other security without impairing or diminishing the indebtedness, liabilities, or obligations of Guarantor under this Guaranty Agreement.

(k) Any determination by a court of competent jurisdiction of the amount of any principal and/or interest or other amount constituting any of the Guaranteed Obligations shall be conclusive and binding on Guarantor irrespective of whether Guarantor was a party to the suit or action in which such determination was made.

6. Default.  Upon the occurrence and during the continuation of an Event of Default, Guarantor agrees to pay to Administrative Agent, on behalf of Lender Parties, at its office located in Dallas County, Texas, or at such other place as Administrative Agent may specify to Guarantor in writing, on written demand by Administrative Agent and without further notice of dishonor and without notice of any kind to Borrowers, Guarantor, or any other Person, the full unpaid amount of the Guaranteed Obligations, in immediately available funds, or such lesser amount, if any, as may then be due and payable and demanded by Administrative Agent, on behalf of Lender Parties, from time to time.  If acceleration of the time for payment of any amount payable by Borrowers under or with respect to any of the Guaranteed Obligations is stayed or otherwise delayed upon the insolvency, bankruptcy, or reorganization of any Borrower, all such amounts otherwise subject to acceleration under the terms of the Guaranteed Obligations shall nonetheless be payable by Guarantor hereunder promptly on demand by Administrative Agent, and Guarantor, expressly and unconditionally agrees to make such payment to Administrative Agent, on behalf of Lender Parties, in full.

 

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7. No Waiver.  No failure on the part of either Administrative Agent or any other Lender Party to exercise, and no forbearance, delay or omission by either Administrative Agent or any other Lender Party in exercising, any right or remedy hereunder shall impair such right or remedy or operate or be construed as a waiver thereof or any acquiescence therein, nor shall any single or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right or remedy hereunder.

8. Notice of Sale.  In the event that Guarantor is entitled to receive any notice under the UCC, as it exists in the state governing any such notice, of the sale or other disposition of any Collateral or other property securing all or any part of the Guaranteed Obligations or this Guaranty Agreement, it is agreed that at least ten (10) days written notice to Guarantor of the time and place of any public sale, or the time after which any private sale or other disposition may be made of any such Collateral or other property, shall be deemed to be reasonable notice in conformity with such requirements.

9. Payment by Guarantor.  Whenever Guarantor pays any sum which is or may become due under this Guaranty Agreement, written notice must be delivered to Administrative Agent contemporaneously with such payment.

10. Binding Effect.  This Guaranty Agreement is for the benefit of Administrative Agent, each other Lender Party and their successors, and in the event of an assignment by any Lender Party of the Guaranteed Obligations or any part thereof in accordance with the terms of the Loan Agreement, such Lender Party's assigns, and the rights and benefits hereunder, to the extent applicable to the indebtedness, liabilities, and obligations so assigned, shall be deemed transferred with such indebtedness, liabilities, and obligations without necessity of further express action.  This Guaranty Agreement is binding upon Guarantor and its successors and assigns.

11. Subordination of Indebtedness and Liens.  The payment of any and all principal of and interest on all Debt of any Borrower to the Guarantor, whether direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, now or hereafter existing, due or to become due to Guarantor under any and all circumstances, including, without limitation, any rights of subrogation of Guarantor in respect of any payment by Guarantor under this Guaranty Agreement (herein called the "Subordinated Debt"), shall in all respects be subordinate and junior in right of payment and enforcement to the prior payment and enforcement in full of the Guaranteed Obligations as provided in this Section (excluding contingent Guaranteed Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms hereof and thereof).  Except to the extent, if any, as may be expressly permitted by the Loan Agreement, no payment shall be made on or with respect to the Subordinated Debt unless and until the Guaranteed Obligations shall have been paid and performed in full (excluding contingent Guaranteed Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms hereof and thereof).  In the event that Guarantor shall receive any payment on account of the Subordinated Debt in violation of this Section, Guarantor will hold, or cause to be held (as the case may be), any amount so received in trust for the benefit of Administrative Agent and the other Lender Parties and will forthwith deliver, or cause to be delivered (as the case may be), such payment to Administrative Agent, in the form received, to be applied to the Guaranteed Obligations.  All security interests and liens, if any, at any time securing payment of all or any part of the Subordinated Debt (herein called the "Subordinated Liens") shall be and remain inferior and subordinate to the security interests and liens securing payment of all or any part of the Guaranteed Obligations, regardless of whether such Subordinated Liens presently exist or are hereafter created or when such Subordinated Liens were created, perfected, filed, or recorded (provided that the foregoing shall not be interpreted or deemed to allow the existence of any security interests or liens that are prohibited by the Loan Documents).  Guarantor shall not exercise or enforce any creditors' rights or remedies that it may have against any Borrower, or foreclose, repossess, sequester, or otherwise institute any action or proceeding (whether judicial or otherwise, including, without limitation, the commencement of, or joinder in, any bankruptcy, insolvency, reorganization, liquidation, receivership, or other debtor relief law) to enforce the Subordinated Debt or any Subordinated Lien on any assets of any Borrower unless and until the Guaranteed Obligations shall have been paid and performed in full (excluding contingent Guaranteed Obligations that survive termination of the Loan Agreement and this Guaranty Agreement in accordance with the terms hereof and thereof).  The terms and provisions of this Section are given by Guarantor as additional rights and benefits to any and all other subordination agreements heretofore, concurrently herewith, or hereafter executed by Guarantor to or in favor of Administrative Agent and the other Lender Parties, and nothing in this Guaranty Agreement shall be deemed to in any way negate or replace any other such previous, concurrent, or subsequent subordination agreements.

 

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12. Right of Setoff.  Guarantor hereby grants to Lender Parties a right of offset to secure the payment of the Guaranteed Obligations and Guarantor's obligations and liabilities hereunder, which right of offset shall be upon any and all monies, securities, and other property of Guarantor, and the proceeds therefrom, now or hereafter held or received by or in transit to Administrative Agent or any other Lender Party from or for the account of Guarantor, whether for safekeeping, custody, pledge, transmission, collection, or otherwise, and also upon any and all deposits (general or special), credits and claims of Guarantor at any time existing against Administrative Agent and any other Lender Party.  Upon the occurrence of any Event of Default, Administrative Agent and each other Lender Party is hereby authorized at any time and from time to time after the occurrence of any Event of Default and during the continuance thereof, without notice to Guarantor, to offset, appropriate and apply any and all items hereinabove referred to against the Guaranteed Obligations and Guarantor's obligations and liabilities hereunder irrespective of whether or not Administrative Agent or such other Lender Party shall have made any demand under this Guaranty Agreement and although such obligations and liabilities may be contingent or unmatured.  Administrative Agent agrees promptly to notify Guarantor after any such offset and application made by Administrative Agent or any other Lender Party, provided that the failure to give such notice shall not affect the validity of such offset and application.  The rights of Administrative Agent and the other Lender Parties under this section are in addition to, and shall not be limited by, any other rights and remedies (including other rights of offset) which Administrative Agent and the other Lender Parties may have.

13. Invalid Provisions.  If any provision of this Guaranty Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable, this Guaranty Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision was not a part hereof, and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom.  Notwithstanding any language to the contrary contained herein, no provision herein or in any other Loan Document evidencing the Guaranteed Obligations shall require the payment or permit the collection of interest in excess of the maximum permitted by any Applicable Law.

 

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14. Modification in Writing.  No modification, consent, amendment, or waiver of any provision of this Guaranty Agreement, and no consent to any departure by Guarantor herefrom, shall be effective unless the same shall be in writing and signed by a duly authorized officer of Administrative Agent and, as to any modification or amendment, Guarantor, and then shall be effective only in the specific instance and for the specific purpose for which given.

15. Limited Effect of Notices; Consents.  No notice to or demand on, or consent by, Guarantor in any case shall, of itself, entitle Guarantor to any other or further notice or demand, or right to grant or refuse consent, in similar or other circumstances.

16. Cumulative Rights.  All rights and remedies of Administrative Agent and the other Lender Parties under this Guaranty Agreement are cumulative of each other and of every other right or remedy which Administrative Agent and the other Lender Parties may otherwise have under any applicable law or under any other agreement.

17. Expenses.  Guarantor agrees to pay, without duplication of any amounts paid under Section 14.5 of the Loan Agreement, on written demand all reasonable costs and expenses incurred by Administrative Agent or any other Lender Party in connection with the negotiation, preparation, execution, and performance of this Guaranty Agreement and any and all amendments, modifications, renewals, restatements, and/or supplements hereto from time to time, including, without limitation, reasonable and documented attorneys fees.  If Guarantor should breach or fail to perform any provision of this Guaranty Agreement, Guarantor agrees to pay to Administrative Agent and Lender Parties all reasonable costs and expenses incurred by Administrative Agent and Lender Parties in the enforcement of this Guaranty Agreement from time to time, including, without limitation, reasonable attorneys fees.

18. GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL.

(a) THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND IT AND ALL TRANSACTIONS HEREUNDER OR PURSUANT HERETO SHALL BE GOVERNED AS TO INTERPRETATION, VALIDITY, EFFECT, RIGHTS, DUTIES AND REMEDIES OF THE PARTIES THEREUNDER AND IN ALL OTHER RESPECTS BY THE LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY AGREEMENT OR ANY OTHER RELATIONSHIP BETWEEN ADMINISTRATIVE AGENT, ANY OTHER LENDER PARTY AND GUARANTOR MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR IN ANY FEDERAL OR STATE COURT SITTING IN NEW YORK COUNTY, ROCKLAND COUNTY OR WESTCHESTER COUNTY, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY AGREEMENT, GUARANTOR CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING ANY OBJECTION TO VENUE ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION.

(c) GUARANTOR (AND ADMINISTRATIVE AGENT AND EACH OTHER LENDER PARTY BY ITS ACCEPTANCE OF THIS GUARANTY AGREEMENT) HEREBY (i) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (D) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS GUARANTY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.

 

 

 

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19. Notices.  All notices or demands by any party relating to this Guaranty Agreement shall be given as set forth in the Loan Agreement.

20. Survival.  All representations, warranties, covenants, and agreements of Guarantor in this Guaranty Agreement shall survive the execution of this Guaranty Agreement.

21. Counterparts.  This Guaranty Agreement may be executed in any number of counterparts and a telecopy or other electronic transmission of any such executed counterpart shall be deemed valid as an original.

22. FINAL AGREEMENT.  THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

 

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REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE TO FOLLOW

IN WITNESS WHEREOF, the undersigned has executed this Guaranty Agreement as of the effective date specified in the introductory paragraph hereinabove.

GUARANTOR:

BLONDER TONGUE FAR EAST, LLC

By: _______________________________

Name:_____________________________  

Title: ______________________________  

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DAL 79534189v4EXHIBIT 10.4

SUBORDINATION AGREEMENT

THIS SUBORDINATION AGREEMENT, dated as of December 28, 2016, is by and between STERLING NATIONAL BANK, a national banking association, as administrative and collateral agent for the Senior Lenders (as defined below) under the Senior Loan Documents (as defined below) (together with its successors and assigns, the "Senior Agent"), and the Junior Creditor under the Junior Debt Documents (as each term is defined below), and is acknowledged by BLONDER TONGUE LABORATORIES, INC., a Delaware corporation ("Parent"), and R.L. DRAKE HOLDINGS, LLC, a Delaware limited liability company ("Drake"; Parent, and Drake, along with their successors and assigns are herein collectively called "Borrower").

RECITALS:

A. Borrower, Senior Agent and Senior Lenders have entered into the Senior Loan Agreement (as further defined below) pursuant to which Senior Lenders have made, upon certain terms and conditions, loans and provided other financial accommodations to Borrower, secured by a security interest in all or substantially all of the assets and properties including, without limitation, any real property of Borrower.

B. Junior Creditor has made one or more loans and other financial accommodations to Borrower, and Borrower's repayment and other obligations with respect to such loans and financial accommodations are evidenced by the Junior Debt Documents (as defined below).

C. Senior Agent and Junior Creditor wish to enter into this Subordination Agreement to subordinate the Junior Debt (as hereinafter defined) to the Senior Debt (as hereinafter defined) and the Junior Liens to the Senior Liens in favor of Senior Agent.

In consideration of the mutual benefits accruing to the parties hereunder, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Senior Agent and Junior Creditor hereby agree as follows:

1. DEFINITIONS.

As used in this Subordination Agreement, the following terms shall have the following meanings:

1.1. "Agreements" shall mean, collectively, the Senior Loan Documents and the Junior Debt Documents, and "Agreement" shall mean any one of them, as the context requires.

1.2. "Bankruptcy Code" shall mean Title 11 of the United States Code (as amended from time to time and any successor statute).

1.3. "Bankruptcy Law" shall mean the Bankruptcy Code and any similar federal, state or foreign bankruptcy, insolvency, reorganization or other law of any jurisdiction affecting creditors' rights generally.

 

 

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1.4. "Borrower" shall have the meaning set forth in the preamble of this Subordination Agreement.

1.5. "Business Day" shall mean any day, other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York and a day on which Senior Agent, Senior Lenders and Junior Creditor are open for the transaction of business.

1.6. "Collateral" shall mean all assets and properties of any kind or character whatsoever, real or personal, tangible or intangible, and wherever located, whether now owned or hereafter acquired, upon which a Lien is now or hereafter granted by any Obligor or otherwise exists in favor of any Creditor.

1.7. "Creditors" or "Creditor" shall mean, collectively, Senior Agent, Senior Lenders and Junior Creditor, and their respective successors and assigns.

1.8. "Default" shall mean an event that with the passage of any notice or cure period would become a default under any Agreement.

1.9. "Event of Default" shall mean a default or event of default under, as such term is used and defined in, any Agreement.

1.10. "Insolvency Proceeding" shall mean, as to any Person, any of the following:  (a) any case or proceeding with respect to such Person under the Bankruptcy Code, or any other Bankruptcy Law or any other or similar proceedings seeking any stay, reorganization, arrangement, composition or readjustment of the obligations and indebtedness of such Person, (b) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to such Person or any of its assets, (c) any proceeding for liquidation, dissolution or other winding up of the business of such Person, or (d) any assignment for the benefit of creditors or any marshaling of assets of such Person.

1.11. "Junior Agent" shall mean Robert J. Pallé, in his capacity as agent for the Junior Lenders under the Junior Debt Documents.

1.12. "Junior Creditor" shall mean, collectively, Junior Agent and Junior Lenders.

1.13. "Junior Debt" shall mean all obligations, liabilities and indebtedness of every kind, nature and description owing by any Obligor to Junior Creditor arising under the Junior Debt Documents or any other indebtedness for borrowed money or related obligations owing by any Obligor to Junior Creditor that is evidenced by a promissory note, credit agreement or loan agreement, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Junior Debt Documents or after the commencement of any Insolvency Proceeding with respect to any Obligor (and including, without limitation, the payment of interest, fees, expenses and other amounts which accrue and become due after the commencement of such Insolvency Proceeding, whether or not such amounts are allowed or allowable in whole or in part in any such Insolvency Proceeding).  For the avoidance of doubt, Junior Debt shall not include any amount owing from time to time to any Junior Creditor in such Junior Creditor's capacity as an employee, officer, director or stockholder of any Obligor, including, but not limited to, Junior Creditor's rights under the Junior Debt Documents to convert all or any portion of the Junior Debt into capital stock of any Obligor as contemplated by the Junior Loan Agreement ("Excluded Junior Debt").

 

 

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1.14. "Junior Debt Documents" shall mean the Junior Loan Agreement, the Junior Security Documents and all other notes, agreements, documents and instruments at any time entered into, executed or delivered by any Obligor or any other person with, to or in favor of Junior Creditor in connection therewith or related thereto, as all of the foregoing now exist or, in accordance with the terms hereof, may hereafter be amended, modified, supplemented, extended, renewed, restated, replaced or refinanced.

1.15. "Junior Lenders" means, collectively, (a) Robert J. Pallé and Carol M. Pallé, as "Initial Lenders" under and as defined in the Junior Loan Agreement, (b) Steven L. Shea, James H. Williams and each other person who may from time to time become party to the Junior Loan Agreement as a lender thereunder, as "Supplemental Lenders" under and as defined in the Junior Loan Agreement and (c) all successors and assigns of the foregoing.

1.16. "Junior Lien" shall mean, collectively, the Liens and security interests granted by any Obligor in all or any part of the Collateral of such Obligor to or in favor of Junior Creditor under the Junior Security Documents as set forth therein and any and all other Liens of Junior Creditor in any Obligor's assets or properties, or any Obligor's rights, titles or interests therein or in respect thereof whether now existing or hereafter arising or acquired.

1.17. "Junior Loan Agreement" shall mean that certain Amended and Restated Senior Subordinated Convertible Loan and Security Agreement dated March 28, 2016 by and between Borrower, Junior Lenders and Junior Agent, as amended, modified, supplemented, extended, renewed, restated, replaced, refinanced or otherwise modified from time to time.

1.18. "Junior Security Documents" shall mean that certain Amended and Restated Mortgage and Security Agreement, dated as of March 28, 2016, by and between Parent, as mortgagor, and Junior Agent, as mortgagee, under which Parent granted the Junior Liens to Junior Creditor and all other agreements, instruments, financing statements and other documents made or entered into in connection therewith or otherwise executed by Borrower pursuant to which a Lien is granted to or for the benefit of Junior Agent or Junior Lenders, as any of the foregoing may be amended, restated, modified, extended or renewed from time to time.

1.19. "Lien" shall mean any right or interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property or any other arrangement with such Person which provides for the payment of such liabilities out of such property or assets or which allows such Person to have such liabilities satisfied out of such property or assets prior to the general creditors of any owner thereof, whether such interest is based on the common law, statute, or contract, and including a security interest, collateral assignment, charge, claim, or lien arising from a security agreement, mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, conditional sale, trust receipt, lease, consignment or bailment for security purposes or similar agreement, or any contingent or other agreement to provide any of the foregoing, but excluding any right of offset which arises without agreement in the ordinary course of business.

 

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1.20. "Obligors" shall mean, individually and collectively, Borrower, and any other person liable on or in respect of the Senior Debt or the Junior Debt, and each of their successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession on behalf of such Person or on behalf of any such successor or assign.

1.21. "Person" shall mean any individual, sole proprietorship, partnership, corporation (including, without limitation, any corporation which elects Subchapter S status under the Internal Revenue Code of 1986, as amended), limited liability company, limited liability partnership, business or statutory trust, unincorporated association, joint stock company, trust, joint venture, or other entity or any government or any agency or instrumentality or political subdivision thereof.

1.22. "Senior Agent" shall have the meaning set forth in the preamble of this Subordination Agreement.

1.23. "Senior Debt" shall mean any and all obligations, liabilities and indebtedness, however evidenced, of every kind, nature and description owing by any Obligor to the Senior Lenders or the Senior Agent arising under the Senior Loan Documents, whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, including principal, interest, charges, fees, costs, indemnities and expenses (including attorneys fees and other costs and expenses of collection), whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Senior Loan Agreement or after the commencement of any Insolvency Proceeding with respect to any Obligor (and including, without limitation, the payment of interest, fees, expenses and other amounts which accrue after the commencement of such Insolvency Proceeding whether or not such amounts are allowed or allowable in whole or in part in any such Insolvency Proceeding).

1.24. "Senior Lender Party" means, collectively, the Senior Agent and Senior Lender.

1.25. "Senior Lenders" shall mean the lenders from time to time party to the Senior Loan Agreement as lenders thereunder (including any other lender or group of lenders that at any time succeeds to or refinances, replaces or substitutes for all or any portion of the Senior Debt at any time and from time to time).

1.26. "Senior Liens" shall have the meaning set forth in Section 2.1.

1.27. "Senior Loan Agreement" shall mean that certain Loan and Security Agreement dated as of December ___, 2016, among Borrower, Senior Agent and Senior Lenders, as the same may hereafter be amended, modified, supplemented, extended, renewed, restated, replaced or refinanced from time to time.

 

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1.28. "Senior Loan Documents" shall mean the Senior Loan Agreement, the "Loan Documents" (as such term is defined in the Senior Loan Agreement) and all other agreements, documents and instruments at any time executed or delivered by any Obligor with, to or in favor of Senior Agent or any other Senior Lender Party in connection therewith or related thereto, as any of the foregoing may be amended, modified, supplemented, extended, renewed, restated, replaced or refinanced from time to time.

1.29. "Senior Loan Termination Date" shall mean the date that Senior Agent, on account of the Senior Lender, has received indefeasible payment in full in cash, other immediately available funds or other consideration acceptable to Senior Agent of all of the Senior Debt and on which Senior Lenders shall have no further obligation to make any loans or advances under the Senior Loan Documents and such Senior Loan Documents have been terminated.  In the event that any Senior Lender Party is required by a decision of a court of competent jurisdiction (or by another governmental authority in a decision tantamount thereto) to return any payments received by it in respect of the Senior Debt after it had otherwise received payment in full, the Senior Debt to which such payment had been applied shall be reinstated as if it had never been repaid and a Senior Loan Termination Date shall not be deemed to have occurred (in which case, any actions taken hereunder as a result of the occurrence of the Senior Loan Termination Date shall be reversed and unwound retroactively).

1.30. "Subordination Agreement" shall mean this agreement as may from time to time hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.31. "UCC" means the Uniform Commercial Code as in effect in the State of New York from time to time.

All terms used herein and defined in the UCC, unless otherwise defined herein, shall have the meanings ascribed to such terms in the UCC as in effect on the date hereof.  All references to any term in the plural shall include the singular and all references to any term in the singular shall include the plural.

2. SECURITY INTERESTS; PRIORITIES; REMEDIES.

2.1. Liens in Collateral.  Junior Creditor hereby acknowledges that Senior Agent, for the benefit of Senior Lender, has been granted Liens upon the Collateral pursuant to the Senior Loan Documents (the "Senior Liens") to secure the Senior Debt.  Junior Creditor agrees that it will not contest or challenge the validity, perfection, priority or enforceability of the Senior Liens.  Junior Creditor hereby agrees with Senior Agent that Junior Creditor shall not obtain or be granted any Liens in or upon the assets or properties of any Obligor to secure the Junior Debt or other indebtedness or liabilities owing to it by the Obligors other than the Junior Liens.

2.2. Priority of Debt and Liens.

(a) Junior Creditor hereby, expressly and in all respects, subordinates and makes junior and inferior in all respects (i) all Junior Debt to the Senior Debt and (ii) the payment and enforcement of the Junior Debt to the payment and enforcement of the Senior Debt.

 

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(b) Notwithstanding the order or time of attachment, or the order, time or manner of perfection, or the order or time of filing or recordation of any document, financing statement or instrument, or other method of perfecting a Lien in favor of a Creditor in any Collateral, and notwithstanding any conflicting or inconsistent terms or conditions which may be contained in any of the Agreements, the Senior Liens have and shall have priority over all Junior Liens, to the extent of the Senior Debt, and such Junior Liens are and shall be junior and subordinate in right of payment and enforcement to the Senior Liens, in each case, regardless of whether the Senior Liens are heretofore, now or at any time hereafter valid, enforceable or perfected and regardless of the relative priority of the Junior Liens and the Senior Liens under the UCC.

(c) The priorities of the Liens provided in this Section 2.2 shall not be altered or otherwise affected by any amendment, modification, supplement, extension, renewal, restatement, replacement or refinancing of the Senior Debt or the Junior Debt, nor by any action or inaction which any Creditor may take or fail to take in respect of any Collateral.

2.3. Payments on Junior Debt.  Solely for the benefit of Senior Lender Parties, Junior Creditor agrees that it will not demand, accept, hold or retain any payment or prepayment of principal, interest or any other amounts (whether in cash, property or by offset) in respect of the Junior Debt (including, without limitation, any balloon payment at maturity) prior to the Senior Loan Termination Date without the prior written consent of Senior Agent; provided, however, that Borrower may make regularly scheduled interest payments to Junior Creditor that are paid in-kind and added to the principal balance of the Junior Debt.

2.4. Rights of Senior Agent.

(a) If there shall occur any Insolvency Proceeding, in respect of any Obligor, the following provisions shall apply:  (i) the Senior Creditors shall first be entitled to receive payment in full of the Senior Debt, including without limitation, the principal thereof, premium, if any, and interest (including post-petition interest) due thereon before Junior Creditor or the holder of any Junior Debt is entitled to receive any payment on account of the principal of or interest on or any other amount owing in respect of the Junior Debt; (ii) any payment, dividend or distribution of assets of such Obligor of any kind or character whether in cash, property or securities to which Junior Creditor or the holder of the Junior Debt would be entitled except for the provisions of this Agreement, shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to Senior Agent, to the extent necessary to make payment in full of all Senior Debt remaining unpaid; (iii) in any such proceeding, Senior Agent is hereby irrevocably authorized and empowered (in the name of Junior Creditor or otherwise), but shall have no obligation, to demand, sue for, collect and receive every payment or distribution referred to in clauses (i) and (ii) of this subsection (a) and given aquittance therefor and to file claims and proofs of claim and take such other action as it may deem necessary or advisable for the exercise or enforcement of any of the rights or interests of the Senior Creditors hereunder; and (iv) upon the failure of Junior Creditor to do so prior to 15 days before expiration of the time in which to vote, make or prove such claims in any Insolvency Proceeding, make, prove and vote any and all claims for the Junior Debt in such Insolvency Proceeding, regardless of the existence or value of any Collateral held by Senior Agent as security for payment of the Senior Debt, including, without limitation, voting such claims at any meeting of creditors of any Obligor and voting such claims for or against any proposed plan in any such Insolvency Proceeding, all as Senior Agent deems in its sole discretion appropriate to protect its interest.

 

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(b) Junior Creditor authorizes Senior Agent, without notice or demand and without affecting Junior Creditor's obligations hereunder, from time to time:  (i) to renew, extend, increase, accelerate or otherwise change the time for payment of the terms of, or the interest on, the Senior Debt or any portion thereof; (ii) to take from any party and hold Collateral for the payment of the Senior Debt or any portion thereof, and to exchange, enforce or release such collateral or any portion thereof; (iii) to accept and hold any endorsement or guaranty of payment of the Senior Debt or any portion thereof and to release or substitute any such endorser or guarantor, or any party who has given any security interest in any collateral as security for the payment of the Senior Debt or any portion thereof, or any other party in any way obligated to pay the Senior Debt or any portion thereof; (iv) to direct the order or manner of the disposition of any and all other Collateral and the enforcement of any and all endorsements and guaranties relating to the Senior Debt or any portion thereof as Senior Agent, in its sole discretion, may determine; (v) to settle or compromise any of the Senior Debt or any security therefor; (vi) to modify, amend or restate any of the Senior Loan Documents or waive any of the provisions thereto; (vii) to file UCC-3 termination and release statements in connection with a sale of the Collateral, or any portion thereof, permitted under the terms of the Senior Loan Documents, in each case in form suitable for filing in relevant jurisdictions with respect to financing statements filed by Junior Creditor and naming an Obligor as debtor, or (viii) to take any action or inaction with respect to the Senior Debt.

2.5. Enforcement by Junior Creditor.  Notwithstanding any rights or remedies available to Junior Creditor under any of the Junior Debt Documents, applicable law or otherwise, prior to the Senior Loan Termination Date, Junior Creditor, in its capacity as such, shall not, directly or indirectly, take or seek to take any action against or assert any claims or interests in any Collateral or against any Obligor or otherwise take any action which would interfere with or impair the rights of Senior Agent and Senior Lenders against the Collateral or any Obligor (including, without limitation, the right to (i) accelerate the Junior Debt, (ii) take any action to foreclose, repossess, marshal control or exercise any remedies with respect to any assets or property of any Obligor, (iii) contact, communicate with or notify any account debtor or obligor with respect to any account, chattel paper, instrument or general intangible of any Obligor, or (iv) take any other action which would interfere with or impair the rights of Senior Agent and Senior Lenders against any Obligor.  In addition to and not in limitation of the foregoing, Junior Creditor shall not commence, or join with any other Person in commencing, any Insolvency Proceeding prior to the Senior Loan Termination Date.  Concurrently with the giving thereof to any Obligor, Junior Creditor agrees to give Senior Agent a copy of any written notice of a Default or an Event of Default under the Junior Debt Documents, or written notice of demand for payment from any Obligor.

2.6. Actions Not Subject to Limitation.  Nothing in this Subordination Agreement shall be construed to in any way limit or impair the right of Junior Creditor to:  (a) file a claim or statement of interest with respect to the Junior Debt; (b) file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the Junior Creditor, in each case in accordance with the terms of this Subordination Agreement; (c) exercise any rights or remedies available to unsecured creditors or file any pleadings, objections, motions or agreements which assert rights or interests available to unsecured creditors of the Obligors arising under the Junior Debt Documents, any Insolvency Proceeding or applicable non-bankruptcy law; (d) vote on any plan of reorganization, file any proof of claim, make other filings and make any arguments and motions that are, in each case, in accordance with the terms of this Subordination Agreement, with respect to the Junior Debt; (e) pursue its rights pertaining to Excluded Junior Debt; and (f) exercise, in whole or in part, any conversion rights with respect to the Junior Debt.

 

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2.7. Advances by Senior Lenders.  If any Senior Lender Party should honor or fail to honor a request by Borrower for a loan, advance or other financial accommodation under the Senior Loan Documents, whether or not such Senior Lender Party has knowledge that the honoring of such request or the failure to honor such request would result in an Event of Default, or act, condition or event which with notice or passage of time or both would constitute an Event of Default under the Junior Debt Documents, in no event shall any Senior Lender Party have any liability to Junior Creditor as a result of such breach or failure to act, and without limiting the generality of the foregoing, Junior Creditor agrees that no Senior Lender Party shall have any liability, as a result of honoring or failing to honor such request, for tortious interference with contractual relations or for inducement by such Senior Lender Party of Borrower to breach their contracts or otherwise.

1.1 Prior Payment of Senior Debt in Bankruptcy.

(a) The provisions of this Subordination Agreement shall continue in full force and effect notwithstanding the occurrence of an Insolvency Proceeding against Borrower or any other Obligor or any of its or their respective properties or assets.

(b) Upon the commencement and throughout the term of any Insolvency Proceeding, all Senior Debt shall be paid in full and satisfied in cash or other immediately available funds before any payment whatsoever shall be made on account of any Junior Debt.  Any payments or distributions made after the commencement of an Insolvency Proceeding which would, but for the provisions hereof, be payable or deliverable in respect of the Junior Debt, shall be paid or delivered by the liquidating trustee or any other Person making such payment or distribution directly to Senior Agent until all amounts owing upon Senior Debt shall have been indefeasibly paid in full in cash and all commitments under the Senior Loan Documents and the Senior Loan Documents shall have been irrevocably terminated.  If, notwithstanding the foregoing provisions in this Section 2.8(b), in any Insolvency Proceeding Junior Creditor receives a payment or distribution with respect to the Junior Debt, Junior Creditor (i) shall hold any such payment or distribution in trust for the Senior Agent in the same medium in which received, (ii) shall not commingle such payment or distribution with any of the assets or properties of Junior Creditor or any other Person, and (iii) will deliver such payment or distribution to the Senior Agent, in the form received, properly endorsed to permit collection, immediately after receipt thereof by Junior Creditor.

(c) To the extent that Junior Creditor has or acquires any rights under Section 363, Section 364 or Section 1126 of the Bankruptcy Code with respect to the Collateral, Junior Creditor hereby agrees not to assert or attempt to exercise such rights without the prior written consent of Senior Agent.  In the event and during the continuation of any Insolvency Proceeding, Junior Creditor shall not object to or oppose any cash collateral order or plan proposed or approved by Senior Agent.

2.8. Bankruptcy Financing.

(a) If any Obligor shall become subject to a case under the Bankruptcy Code or any similar Bankruptcy Law and if as a debtor-in-possession, such Obligor moves for approval of financing to be provided in good faith by any Senior Lender (in such capacity, the "DIP Lender") under Section 364 of the Bankruptcy Code or the use of cash collateral with the consent of the DIP Lender under Section 363 of the Bankruptcy Code or any similar Bankruptcy Law, Junior Creditor shall not object directly or indirectly to any such financing on the grounds of a failure to provide "adequate protection" for any Liens of Junior Creditor.

(b) Nothing contained herein shall be deemed to limit the rights of Junior Creditor to (i) object to post-petition financing or use of cash collateral on any grounds other than the failure to provide "adequate protection" for the Liens of Junior Creditor or (ii) offer to Obligors a proposal for a financing under Section 364 of the Bankruptcy Code to be provided by the Junior Creditor.

 

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1. MISCELLANEOUS.

1.1. Representations and Warranties.

(a) Junior Creditor represents and warrants to Senior Agent that:

(i) the execution, delivery and performance of this Subordination Agreement by it (A) are within its powers, (B) have been duly authorized by it, and (C) do not contravene any law, any provision of any of the Junior Debt Documents or any agreement to which it is a party or by which it is bound; and

 

(ii) this Subordination Agreement constitutes the legal, valid and binding obligations of Junior Creditor, enforceable against Junior Creditor in accordance with its terms and shall be binding on Junior Creditor, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally or by equitable principles.

(b) Senior Agent hereby represents and warrants to Junior Creditor that:

(i) the execution, delivery and performance of this Subordination Agreement by Senior Agent (A) are within the powers of Senior Agent, (B) have been duly authorized by Senior Agent, and (C) do not contravene any law, any provision of the Senior Loan Documents or any agreement to which Senior Agent is a party or by which it is bound; and

(ii) this Subordination Agreement constitutes the legal, valid and binding obligations of Senior Agent, enforceable against Senior Agent in accordance with its terms and shall be binding on Senior Agent, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally or by equitable principles.

 

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3.2. Amendments.  Any waiver, permit, consent or approval by either of Senior Agent or Junior Creditor of or under any provision, condition or covenant to this Subordination Agreement must be in writing and shall be effective only to the extent it is set forth in writing and as to the specific facts or circumstances covered thereby.  Any amendment of this Subordination Agreement must be in writing and signed by Senior Agent and Junior Creditor and acknowledged by Obligors to the extent such amendment affects the obligations of Obligors under this Subordination Agreement or the Consent and Acknowledgment to this Subordination Agreement.

3.3. Successors and Assigns.

(a) This Subordination Agreement shall be binding upon the Creditors and their respective successors and assigns and shall inure to the benefit of the Creditors and their respective successors, participants and assigns.

(b) In the case of an assignment or transfer, the assignee or transferee acquiring any interest in the Junior Debt or the Senior Debt, as the case may be, shall execute and deliver to the applicable Creditor a written acknowledgment of receipt of a copy of this Subordination Agreement and the written agreement by such person to be bound by the terms of this Subordination Agreement which acknowledgment and agreement may be included in the assignment instrument between the assignor and assignee.  In addition, in the event of an assignment or transfer by Junior Creditor of less than all of the Junior Debt, the Junior Creditor shall agree with the assignee in the assignment instrument effecting such assignment to appoint Junior Creditor as an agent to act on their behalf under this Subordination Agreement for purposes of receiving payments and notices hereunder.

3.4. Notices.  Unless otherwise specifically provided herein, any notice delivered under this Subordination Agreement shall be in writing addressed to the respective party as set forth below and may be personally served, telecopied or sent by overnight courier service or certified or registered United States mail and shall be deemed to have been given (a) if delivered in person, when delivered; (b) if delivered by telecopy, on the date of transmission if transmitted on a Business Day before 4:00 p.m. (Dallas, Texas time) or, if not, on the next succeeding Business Day; (c) if delivered by overnight courier, one business day after delivery to such courier properly addressed; or (d) if by United States mail, four business days after deposit in the United States mail, postage prepaid and properly addressed as provided below:

 

SUBORDINATION AGREEMENT - Page 10

DAL  79806227V2

	
To Senior Agent:

	
Sterling National Bank

8401 N. Central Expressway, Suite 600

Dallas, Texas  75225

Fax No.:  (214) 242-5840

 Attention:  Portfolio Manager, URGENT

	
To Junior Creditor:

	
Robert J. Pallé

21 Desai Court

Freehold, New Jersey  07728

 Fax No.:  [________]

	
To any Obligor:

	
Blonder Tongue Laboratories, Inc.

One Jake Brown Road

Old Bridge, New Jersey  08857

Fax No.:  [________]

 Attention:  Eric Skolnik

 Each of Senior Agent, Junior Creditor and Borrower may change the address(es) to which all notices, requests and other communications are to be sent by giving written notice of such address change to the other parties hereto in conformity with this Section 3.4, but such change shall not be effective until notice of such change has been received by such other parties.

3.5. Counterparts.  This Subordination Agreement may be executed in any number of counterparts, each of which shall be an original with the same force and effect as if the signatures thereto and hereto were upon the same instrument.  Delivery of an executed counterpart of this Subordination Agreement by facsimile or other method of electronic transmission shall have the same force and effect as manual delivery of an original executed counterpart of this Subordination Agreement.

3.6. Governing Law.  THIS SUBORDINATION AGREEMENT HAS BEEN EXECUTED OR COMPLETED AND/OR IS TO BE PERFORMED IN NEW YORK, AND IT AND ALL TRANSACTIONS HEREUNDER OR PURSUANT HERETO SHALL BE GOVERNED AS TO INTERPRETATION, VALIDITY, EFFECT, RIGHTS, DUTIES AND REMEDIES OF THE PARTIES THEREUNDER AND IN ALL OTHER RESPECTS BY THE LAWS OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF, BUT INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW.

3.7. WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS SUBORDINATION AGREEMENT, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY EACH PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE OTHER PARTIES TO ENTER INTO THIS SUBORDINATION AGREEMENT.

 

SUBORDINATION AGREEMENT - Page 11

DAL  79806227V2

3.8. Complete Agreement.  This written Subordination Agreement is intended by the parties as a final expression of their agreement and is intended as a complete statement of the terms and conditions of their agreement with respect to the subject matter hereof.

3.9. No Third Parties Benefited.  This Subordination Agreement is solely for the benefit of the Creditors and their respective successors, participants and assigns, and no other person shall have any right, benefit, priority or interest under, or because of the existence of, this Subordination Agreement.

3.10. Disclosures; Non-Reliance.  Each Creditor has the means to, and shall in the future remain, fully informed as to the financial condition and other affairs of the Obligors and no Creditor shall have any obligation or duty to disclose any such information to the other Creditors.  Except as expressly set forth in this Subordination Agreement, the parties hereto have not otherwise made to each other nor do they hereby make to each other any warranties, express or implied, nor do they assume any liability to each other with respect to:  (a) the enforceability, validity, value or collectability of any of the Junior Debt or the Senior Debt or any guarantee or security which may have been granted to any of them in connection therewith, (b) any Obligor's title to or right to transfer any of the Collateral, or (c) any other matter except as expressly set forth in this Subordination Agreement.

3.11. Term.  This Subordination Agreement is a continuing agreement and shall remain in full force and effect until the Senior Loan Termination Date (subject to the reinstatement provisions set forth in the definition of such term).

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SUBORDINATION AGREEMENT - Page 12

DAL  79806227V2

IN WITNESS WHEREOF, the parties have caused this Subordination Agreement to be duly executed as of the day and year first above written.

SENIOR AGENT:

STERLING NATIONAL BANK

By:________________________________  

Name:______________________________  

Title:_______________________________  

  

	
JUNIOR CREDITOR:

  

	
Robert J. Pallé, in his capacity as Junior Agent

 and a Junior Lender

	 
	
Carol M. Pallé, in her capacity as a Junior Lender

	 
	
Steven L. Shea, in his capacity as a Junior Lender

	 
	
James H. Williams, in his capacity as a Junior Lender

 

SUBORDINATION AGREEMENT - Signature Page

DAL  79806227V2

CONSENT AND ACKNOWLEDGMENT

Each of the undersigned hereby acknowledges and agrees to the terms and provisions of the foregoing Subordination Agreement.  By its signature below, each of the undersigned agrees that it will, together with its successors and assigns, be bound by the provisions of this Consent and Acknowledgment.

Each of the undersigned acknowledges and agrees that:  (i) it is not a party to the Subordination Agreement and does not and will not receive any right, benefit, priority or interest under or because of the existence of the foregoing Subordination Agreement; and (ii) it will execute and deliver such additional documents and take such additional action as may be necessary or desirable in the reasonable opinion of any Creditor to effectuate the provisions and purposes of the foregoing Subordination Agreement.

BLONDER TONGUE LABORATORIES, INC.

By:___________________________________  

Name:_________________________________  

Title:__________________________________  

R.L. DRAKE HOLDINGS, LLC

By:___________________________________  

Name:_________________________________  

Title:__________________________________ 

 

 

 

SUBORDINATION AGREEMENT - Consent and Acknowledement

DAL  79806227V2

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