GUARANTY
Exhibit 10.2
GUARANTY dated December 31, 2007 (this “Guaranty”), made by The Talbots Group, Limited
Partnership, a Massachusetts limited partnership (“TGLP”), and each other entity that
becomes a party to this Guaranty (together with TGLP, each a “Guarantor” and collectively,
jointly and severally, the “Guarantors”), in favor of each of the Lenders (as hereinafter
defined) and MIZUHO CORPORATE BANK, LTD., a corporation organized and existing under the laws of
Japan (“Mizuho”), as arranger and administrative agent for the Lenders (in such capacities,
the “Agent”).
W I T N E S S E T H :
WHEREAS, The Talbots, Inc., a Delaware corporation that owns directly or indirectly all or a
majority of the issued and outstanding equity of each Guarantor (the “Borrower”), the
lenders from time to time party to the Credit Agreement referred to below (each a “Lender”
and collectively, the “Lenders”) and the Agent are parties to a Term Loan Agreement dated
as of July 24, 2006 (such Agreement, as amended, supplemented, restated or otherwise modified from
time to time, being hereinafter referred to as the “Credit Agreement”);
WHEREAS, pursuant to the Credit Agreement the Lenders have made certain term loans (the
“Loans”) to the Borrower in an aggregate principal amount equal to the amount of the Total
Term Loan Commitment (as defined in the Credit Agreement) set forth therein;
WHEREAS, the Borrower has requested that the Lenders amend the Credit Agreement to permit,
among other things, the Borrower to transfer certain assets to certain of its Subsidiaries (the
“Asset Transfer”) and waive any Event of Default that may arise as a result of such Asset
Transfer;
WHEREAS, it is a condition precedent to the consent by the Lenders to the Asset Transfer that
the Guarantors shall have executed and delivered to the Agent this Guaranty guaranteeing the
obligations of the Borrower under the Credit Agreement and the other Loan Documents (as defined in
the Credit Agreement);
WHEREAS, the Borrower, each Guarantor and the other direct and indirect subsidiaries of the
Borrower are mutually dependent on each other in the conduct of their respective businesses as an
integrated operation, with the credit needed from time to time by the Guarantors and such other
subsidiaries often being provided through financing obtained by the Borrower and the Borrower’s
ability to obtain such financing being dependent on the successful operations of the Guarantors and
such other subsidiaries; and
WHEREAS, each Guarantor has determined that its execution, delivery and performance of this
Guaranty directly benefit, and are within the organizational purposes and in the best interests of,
such Guarantor;
NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to
induce the Lenders to permit the Asset Transfer and maintain the Loans pursuant to the Credit
Agreement, each Guarantor, jointly and severally with the other Guarantors, hereby agrees with the
Lenders and the Agent as follows:
SECTION 1. Definitions. Reference is hereby made to the Credit Agreement for a
statement of the terms thereof. All terms used in this Guaranty which are defined therein and not
otherwise defined herein shall have the same meanings herein as set forth therein.
SECTION 2. Guaranty. Each Guarantor, jointly and severally, hereby (i) irrevocably,
absolutely and unconditionally guarantees the prompt payment by the Borrower, as and when due and
payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), of
all amounts now or hereafter owing in respect of the Notes, the Credit Agreement and the other Loan
Documents, whether for principal, interest (including interest accruing on or after the filing of
any petition in bankruptcy or for reorganization relating to the Borrower), reimbursement of
drawings, cash collateral for letters of credit, premiums, indemnities, fees, expenses or
otherwise, and whether accruing before or subsequent to the filing of a petition initiating a
bankruptcy, reorganization, liquidation or similar proceeding affecting the Borrower
(notwithstanding the operation of the automatic stay under Section 362(a) of the U.S. Bankruptcy
Code), and the due performance and observance by the Borrower of its other obligations now or
hereafter existing in respect of the Loan Documents; and (ii) agrees to pay any and all expenses
(including legal fees, costs and expenses) incurred by the Agent or any of the Lenders in enforcing
its rights under this Guaranty (the foregoing obligations described in clauses (i) and (ii) above
are hereinafter referred to as the “Obligations”). Without limiting the generality of the
foregoing, the Guarantors’ liability shall extend to all amounts that constitute part of the
Obligations and would be owed by the Borrower under the Credit Agreement or the other Loan
Documents but for the fact that such document is unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the Borrower.
SECTION 3. Guarantors’ Obligations Unconditional.
(a) Each Guarantor hereby, jointly and severally, guarantees that the Obligations will be paid
strictly in accordance with the terms of the Loan Documents to which the Borrower is a party,
regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Agent or the Lenders with respect thereto. Each Guarantor
agrees that this Guaranty constitutes a guaranty of payment when due and not of collection and
waives any right to require that any resort be made by the Agent or any Lender to any collateral.
The joint and several liability of the Guarantors hereunder shall be absolute, unconditional and
irrevocable irrespective of: (i) any lack of validity or enforceability of any Loan Document or
any agreement or instrument relating thereto; (ii) any change in the time, manner or place of
payment of, or in any other term in respect of, all or any of the Obligations, or any other
amendment or waiver of or consent to any departure from any Loan Document (including, without
limitation, any increase in the obligations of the Borrower resulting from the extension of
additional credit to the Borrower or otherwise); (iii) any exchange or release of, or
non-perfection of any lien on or security interest in, any collateral, or any release or amendment
or waiver of or consent to any departure from any other guaranty, for all or any of the
Obligations; (iv) the existence of any claim, set off, defense or other right that the Guarantors
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may have at any time against any Person, including, without limitation, the Agent and Lenders;
or (v) any other circumstance which might otherwise constitute a defense available to, or a
discharge of, the Borrower or any other Guarantor in respect of the Obligations or any Guarantor in
respect hereof, other than payment thereof in full.
(b) This Guaranty (i) is a continuing guaranty and shall remain in full force and effect until
the satisfaction in full of the Obligations and the payment of the other expenses to be paid by the
Guarantors pursuant hereto; and (ii) shall continue to be effective or shall be reinstated, as the
case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be
returned by the Agent or any Lender upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, all as though such payment had not been made.
SECTION 4. Waivers. Each Guarantor hereby waives (i) promptness and diligence; (ii)
notice of acceptance and notice of the incurrence of any Obligation by the Borrower; (iii) notice
of any actions taken by the Agent or any Lender or the Borrower or any other Loan Party under any
Loan Document or any other agreement or instrument relating thereto; (iv) all other notices,
demands and protests, and all other formalities of every kind in connection with the enforcement of
the Obligations or of the obligations of any Guarantor hereunder, the omission of or delay in
which, but for the provisions of this Section 4, might constitute grounds for relieving such
Guarantor of its obligations hereunder; (v) any right to compel or direct the Agent or any Lender
to seek payment or recovery of any amounts owed under this Guaranty from any one particular fund or
source; and (vi) any requirement that the Agent or any Lender protect, secure, perfect or insure
any security interest or lien or any property subject thereto or exhaust any right or take any
action against the Borrower or any other Person or any collateral. Each Guarantor agrees that the
Agent and the Lenders shall have no obligation to xxxxxxxx any assets in favor of any Guarantor or
against or in payment of any or all of the Obligations.
SECTION 5. Subrogation. No Guarantor will exercise any rights which it may acquire
by way of subrogation hereunder, by any payment made by it hereunder or otherwise, until such date
on which all of the Obligations and all other expenses to be paid by the Guarantors pursuant hereto
shall have been satisfied in full. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Obligations and all such other expenses shall not
have been paid in full, such amount shall be held in trust for the benefit of the Agent and the
Lenders, shall be segregated from the other funds of such Guarantor and shall forthwith be paid
over to the Agent to be applied in whole or in part by the Agent against the Obligations, whether
matured or unmatured, in accordance with the terms of the Credit Agreement. If (i) any Guarantor
shall make payment to the Agent or any Lender of all or any portion of the Obligations and (ii) all
of the Obligations shall be paid in full, the Agent and the Lenders will, at such Guarantor’s
request, execute and deliver to such Guarantor (without recourse, representation or warranty)
appropriate documents necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Obligations resulting from such payment by such Guarantor, such subrogation to be
fully subject and subordinate, however, to the collection by the Agent and the Lenders of all other
amounts due to the Lenders by the Borrower and each other Loan Party under the Credit Agreement and
the other Loan Documents.
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SECTION 6. Representations and Warranties. Each Guarantor hereby represents and
warrants as follows:
(a) Organization of Guarantors. Each Guarantor is a corporation, limited liability
company or limited partnership, as applicable, duly organized, validly existing and in good
standing under the laws of the State of its organization.
(b) Power and Authority. Each Guarantor has all requisite corporate, limited
liability company or limited partnership, as applicable, power and authority to carry on its
present business, to own its property and assets and to execute, deliver and perform this Guaranty
and each other Loan Document to which it is a party. Each Guarantor is duly qualified or licensed
as a foreign entity authorized to conduct its activities and is in good standing in all
jurisdictions in which the character of the properties owned or leased by it or the nature of the
activities conducted makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed would not be reasonably likely to result in a Material Adverse Effect.
TGLP is a wholly-owned Subsidiary of the Borrower.
(c) Authorization. All appropriate and necessary actions and approvals have been
taken or obtained by each Guarantor to authorize the execution and delivery of this Guaranty and
the other Loan Documents to which such Guarantor is a party and to authorize the performance and
observance of the terms of this Guaranty and each such Loan Document.
(d) Agreement Binding; No Conflicts. This Guaranty constitutes, and each other Loan
Document when executed and delivered by such Guarantor will constitute, the legal, valid and
binding obligations of such Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors’ rights generally, and by
general principles of equity (regardless of whether enforcement is considered in a proceeding at
law or equity). The execution, delivery and performance of this Guaranty and the other Loan
Documents which such Guarantor is a party do not and will not (i) violate or conflict with (A) any
provisions of law or any order, rule, directive or regulation of any court or other Governmental
Authority, (B) the organizational documents of such Guarantor or (C) except as would not be
reasonably likely to result in a Material Adverse Effect, any agreement, document or instrument to
which such Guarantor is a party or by which its respective assets or properties are bound, (ii)
except as would not be reasonably likely to result in a Material Adverse Effect, constitute a
default or an event or circumstance that with the giving of notice or the passing of time, or both,
would constitute a default under any such agreement, document or instrument, (iii) except as would
not be reasonably likely to result in a Material Adverse Effect, result in the creation or
imposition of any Lien, charge or encumbrance of any nature whatsoever upon any assets or
properties of such Guarantor, or (iv) except as would not be reasonably likely to result in a
Material Adverse Effect, result in any suspension, revocation, impairment, forfeiture or nonrenewal
of any permit, license, authorization or approval applicable to its respective operations or any of
its properties.
(e) Compliance with Law. There does not exist any conflict with, or violation, or
breach of, any law or any regulation, order, writ, injunction or decree of any court or
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Governmental Authority, which conflict, violation or breach could reasonably be expected to
result in a Material Adverse Effect.
(f) Taxes. Each Guarantor has filed all Tax returns required to be filed and has paid
all taxes, assessments, fees and other governmental charges due upon such Guarantor with respect to
the conduct of its operations or otherwise the failure of which to file or to pay could reasonably
be expected to result in a Material Adverse Effect, except to the extent that such Guarantor is
contesting in good faith its obligation to pay such taxes or charges and such Guarantor has
adequately accrued for such payments in accordance with and to the extent required by GAAP. There
are no tax audits presently being conducted in respect of any Guarantor or any of its Subsidiaries
that could reasonably be expected to result in a Material Adverse Effect.
(g) Governmental Consents. No consent, approval, authorization or order of, notice to
or declaration or filing with, any administrative body or agency or other Governmental Authority on
the part of any Guarantor is required for the valid execution, delivery and performance by such
Guarantor of this Guaranty or the other Loan Documents, except for such as have been obtained or
made and are in full force and effect.
(h) Litigation. There are no pending or, to the knowledge of any Guarantor,
threatened legal actions, suits, claims or administrative, arbitration or other proceedings against
any Guarantor or its Subsidiaries that if adversely determined could reasonably be expected to
result in a Material Adverse Effect.
(i) Other Obligations. No Guarantor is in default in any material respect in the
performance, observance or fulfillment of any obligation, covenant or condition in any agreement,
document or instrument to which it is a party or by which it is bound which is reasonably likely to
result in a Material Adverse Effect.
(j) Accuracy of Information. All factual information heretofore or contemporaneously
furnished by or on behalf of any Guarantor to the Agent and the Lenders for purposes of or in
connection with this Guaranty, any other Loan Document or any transaction contemplated hereby or
thereby (true and complete copies of which were furnished to the Agent and the Lenders in
connection with its execution and delivery hereof) is, and all other factual information hereafter
furnished by or on behalf of each Guarantor to the Agent and the Lenders will be, true and accurate
in every material respect on the date as of which such information is dated or certified and, in
respect of such information heretofore or contemporaneously furnished to the Agent or the Lenders,
as of the date of the execution and delivery of this Guaranty by the Agent and the Lenders and such
information is not, or shall not be, as the case may be, incomplete by omitting to state any
material fact necessary to make such information not misleading. With respect to any such factual
information pertaining to Persons other than a Guarantor, its Subsidiaries or its Affiliates, the
foregoing representation is made to the best knowledge of the Guarantors.
(k) Seniority. The obligations of each Guarantor under this Guaranty and the other
Loan Documents to which such Guarantor is a party rank at least pari passu in priority of payment
and in all other respects with all other unsecured Indebtedness of such Guarantor.
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(l) Investment Company Act. No Guarantor or any of its Subsidiaries is an “investment
company” or an “affiliated person” or “promoter” of, or “principal underwriter” of or for, an
“investment company”, as such terms are defined in the Investment Company Act of 1940, as amended.
(m) Permits, Etc. Each Guarantor has all permits, consents, licenses, authorizations,
approvals, entitlements and accreditations required for it lawfully to own, lease, manage or
operate, or to acquire each business currently owned, leased, managed or operated, or to be
acquired, by it, except for failures which are not reasonably likely to result in an Material
Adverse Effect. No condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture
or non-renewal of any such permit, consent, license, authorization, approval, entitlement or
accreditation and which is reasonably likely to result in a Material Adverse Effect, a Default or
an Event of Default and there is no written claim that any such permit, consent, license,
authorization, approval, entitlement or accreditation is not in full force and effect.
(n) Environmental Matters. Except to the extent not reasonably likely to result in a
Material Adverse Effect, (i) none of the operations of any Guarantor or any of its Subsidiaries
violate any Environmental Law, (ii) no Environmental Actions have been asserted against such
Guarantor or any of its Subsidiaries in writing nor does such Guarantor have any knowledge of any
threatened or pending Environmental Action against any Guarantor, any of its Subsidiaries or any
predecessor in interest, (iii) none of the Guarantors or any of its Subsidiaries has incurred any
Environmental Liabilities and Costs and (iv) to any Guarantor’s knowledge, no Guarantor or any of
its Subsidiaries has any contingent liability in connection with any release of any Hazardous
Material into the environment.
(o) Solvency. Each Guarantor is Solvent and will be Solvent after giving effect to
the transactions contemplated by this Guaranty and the other Loan Documents.
(p) ERISA; Margin Regulations. (i) No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.
The present value of all accumulated benefit obligations under each Plan (based on the assumptions
used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts, exceed the fair market value of the
assets of such Plan by an amount that would reasonably be expected to have a Material Adverse
Effect, and the present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87)
did not, as of the date of the most recent financial statements reflecting such amounts, exceed the
fair market value of the assets of all such underfunded Plans by an amount that would reasonably be
expected to have a Material Adverse Effect.
(ii) None of the Guarantors or any of its Subsidiaries is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of buying or carrying
Margin Stock.
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(q) Properties; Intellectual Property. (i) Each of the Guarantors and each of its
Subsidiaries has good title to, or valid leasehold interests in, all its material real and personal
property free and clear of all Liens, except for Permitted Liens and defects in title, in each case
that do not interfere with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes.
(ii) Each of the Guarantors and its Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property material to its business, and the
use thereof by such Guarantor or such Subsidiary does not infringe upon the rights of any other
Person, except, in each case, for any matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 7. Covenants. Each Guarantor hereby covenants to the Agent and the Lenders
that, unless the Agent and the Required Lenders shall otherwise consent in writing, so long as (a)
any amounts owed under the Credit Agreement, hereunder or under any other Loan Document are
outstanding, or (b) this Guaranty and the other Loan Documents have not been terminated, each
Guarantor shall (unless the prior written consent of the Agent and the Required Lenders has been
obtained) perform the following obligations:
(a) Proxy Statements, etc. Promptly after the sending or filing thereof, such
Guarantor will provide to the Agent copies of all proxy statements and financial statements, and
copies of all regular, periodic, and special reports, and all registration statements which such
Guarantor files with the Securities and Exchange Commission or any governmental authority which may
be substituted therefor, or with any national securities exchange.
(b) Additional Information. Each Guarantor shall make available and provide to the
Agent and the Lenders such further information and documents concerning such Guarantor’s business
and affairs including, without limitation, the budgets and business plans of such Guarantor and its
Subsidiaries and using commercially reasonable efforts to provide to the Agent and the Lenders
information with respect to accountant’s letters, in each case as the Agent or any Lender may from
time to time reasonably request.
(c) Notices. Each Guarantor shall promptly notify the Agent of:
(i) any investigation by or proceeding in or before any court, arbitrator, administrative body
or agency or other Governmental Authority relating to such Guarantor (other than routine inquiries
by a governmental agency), including, without limitation, any Environmental Action, which
investigation, proceeding or action is reasonably likely to result in a Material Adverse Effect,
Default or Event of Default and, upon request, provide the Agent with all material documents and
information furnished by such Guarantor in connection therewith;
(ii) the occurrence of any Default or Event of Default or any other development which is
reasonably likely to result in a Material Adverse Effect, which notice shall be provided to the
Agent as soon as possible, but in no event later than five (5) days after such Guarantor becomes
aware of the same and shall include a statement as to what action such Guarantor has taken and/or
proposes to take with respect thereto; and
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(iii) the occurrence of any ERISA Event that, alone or together with any other ERISA Events
that have occurred, could reasonably be expected to result in a Material Adverse Effect.
(d) Compliance with Laws, Etc. Each Guarantor shall comply in all material respects
with the requirements of all applicable laws (including, without limitation, any Environmental Law)
and maintain and preserve its corporate limited liability or partnership, as the case may be,
existence and, except to the extent that the failure to do so could not reasonably be expected to
have a Material Adverse Effect, rights and privileges.
(e) Books and Records. Each Guarantor shall keep and maintain adequate records and
books of account, with complete entries made in accordance with GAAP, consistently applied.
(f) Inspection Rights. Each Guarantor shall permit the Agent and any Lender or any of
their respective agents and representatives at any time and from time to time during reasonable
business hours and, provided no Default or Event of Default has occurred and is continuing, on
reasonable prior notice to such Guarantor, to examine and make copies of and abstracts from its
records and books of account, to visit and inspect its properties, to conduct audits and make
examinations and discuss its affairs, finances and accounts with any of its directors, officers,
employees, accountants or other representatives.
(g) Insurance. Each Guarantor shall maintain or cause to be maintained, and cause
each of its Subsidiaries to maintain or cause to be maintained (in each case in the such
Guarantor’s name or in the name of such Subsidiary, as the case may be), with responsible,
financially sound and reputable insurance companies insurance with respect to its properties and
business against such casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses.
(h) Taxes. Each Guarantor shall timely pay and discharge all material taxes,
assessments, levies and governmental charges upon it or against any of its properties, assets or
income except to the extent that such Guarantor shall be contesting in good faith its obligation to
pay such taxes or charges and such Guarantor has adequately accrued for such payments in accordance
with and to the extent required by GAAP.
(i) Further Assurances. Each Guarantor shall do, execute, acknowledge and deliver at
the sole cost and expense of such Guarantor, all documents, instruments and agreements and take
such further acts and deeds as the Agent may reasonably require from time to time to carry out the
intention or facilitate the performance of the terms of this Guaranty or any other Loan Document.
(j) Merger, Consolidation, etc. No Guarantor shall:
(i) merge, consolidate or amalgamate with or into any other Person unless: (A) the Borrower
or another Loan Party is the surviving entity, (B) such Guarantor provides the Agent with at least
30 (or such shorter period of time as the Agent may agree to) days’ prior written notice thereof,
and (C) the documentation in connection therewith is reasonably satisfactory in form and substance
to the Agent and the Required Lenders and (D) no
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Material Adverse Effect or any Default or Event of Default shall occur and be continuing both
immediately before and immediately after such merger, consolidation or amalgamation;
(ii) dissolve, wind-up or liquidate;
(iii) purchase or otherwise acquire all or substantially all of the assets, liabilities or
properties of any other Person to the extent a Material Adverse Effect or any Default or Event of
Default may result therefrom; or
(iv) sell, lease, transfer or otherwise dispose of all or substantially all of its non-“Margin
Stock” (as defined in Regulation U of the Board) assets or properties whether in any single
transaction or one or more transactions in the aggregate.
(k) Change in Nature of Business. No Guarantor shall make any material changes in the
nature of its business activities as presently conducted to the extent reasonably likely to result
in a Material Adverse Effect.
(l) Transactions with Affiliates. No Guarantor shall enter into any transaction with
any of its Affiliates unless such transaction is otherwise permitted hereunder or is in the
ordinary course of business of such Guarantor and upon fair and reasonable terms no less favorable
to such Guarantor than it would obtain in a comparable arm’s length transaction with a Person which
is not an Affiliate.
(m) Corporate Documents. No Guarantor shall amend its organizational documents in any
manner which is reasonably likely to materially adversely affect the Agent’s or any Lender’s rights
under any of the Loan Documents or the Agent’s or any Lender’s ability to enforce any such rights.
(n) USA PATRIOT Act Compliance. Each Guarantor shall provide, and shall cause each of
its Subsidiaries and Affiliates to provide, such information and take such actions as are
reasonably requested by the Agent or any Lender in order to assist the Agent or such Lender in
maintaining compliance with the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (as amended, the “USA Patriot
Act”) or similar laws and the rules and regulations promulgated thereunder, in each case, as
the same may be in effect from time to time.
(o) Seniority. The obligations of each Guarantor under this Guaranty and the other
Loan Documents to which such Guarantor is a party shall at all times rank at least pari passu in
priority of payment and in all other respects with all other unsecured senior Indebtedness of such
Guarantor.
(p) Liens, Etc. No Guarantor shall, nor shall it permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Lien upon or with respect to any of its properties,
whether now owned or hereafter acquired; file or suffer to exist under the Uniform Commercial Code
or any similar law or statute of any jurisdiction, a financing statement (or the equivalent
thereof) that names such Guarantor or any of its Subsidiaries as debtor; sign or suffer to exist
any security agreement authorizing any secured party thereunder to file such financing statement
(or the equivalent thereof); sell any of its property or assets subject to an understanding or
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agreement, contingent or otherwise, to repurchase such property or assets (including sales of
accounts receivable other than in connection with collection of defaulted accounts receivable) with
recourse to such Guarantor or any of its Subsidiaries or assign or otherwise transfer; or permit
any of its Subsidiaries to assign or otherwise transfer, any account or other right to receive
income, other than, as to all of the above, Permitted Liens.
(q) Indebtedness. No Guarantor shall, nor shall it permit its Subsidiaries to,
create, incur, assume, guarantee or suffer to exist, or otherwise become or remain liable with
respect to, or permit any of its Subsidiaries to create, incur, assume, guarantee or suffer to
exist or otherwise become or remain liable with respect to, any Indebtedness other than Permitted
Indebtedness.
(r) Restricted Payments. No Guarantor shall make, declare or make, or agree to pay or
make, nor shall it permit any of its Subsidiaries to make, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except for Restricted Payments expressly
permitted under the Credit Agreement.
(s) Loans, Advances, Investments, Etc. No Guarantor shall make, commit or agree to
make, nor shall it permit any of its Subsidiaries to make or commit or agree to make, any loan,
advance, guarantee of obligations, other extension of credit or capital contributions to, or hold
or invest in or commit or agree to hold or invest in, or purchase or otherwise acquire or commit or
agree to purchase or otherwise acquire any shares of the Capital Stock, bonds, notes, debentures or
other securities of, or make or commit or agree to make any other investment in, any other Person,
or purchase or own any futures contract or otherwise become liable for the purchase or sale of
currency or other commodities at a future date in the nature of a futures contract, in each case
except as otherwise expressly permitted under the Credit Agreement.
(t) Sale/Leaseback Transactions. Except as otherwise expressly permitted under the
Credit Agreement, no Guarantor will, nor will it permit any of its subsidiaries to, enter into any
arrangement, directly or indirectly, whereby such Guarantor or such Subsidiary shall sell or
transfer any property, real or personal, used in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property that it intends to use for
substantially the same purpose or purposes as the property sold or transferred.
(u) Asset Dispositions. Except as otherwise expressly permitted under the Credit
Agreement, no Guarantor will, nor will it permit any or its Subsidiaries to, sell, transfer,
license, lease or otherwise dispose of any asset, including any Capital Stock owned by it, nor will
such Guarantor permit any of its Subsidiaries to issue any additional Capital Stock in such
Subsidiary.
(v) Subordinated Debt. No Guarantor will, nor will it permit any Subsidiary to, make
or agree to make, directly or indirectly, any payment or other distribution (whether in cash,
securities or other property) of or in respect of principal of or interest on any Subordinated Debt
or other Indebtedness expressly subordinated in right of payment to the Obligations, including any
sinking fund or similar deposit with respect to any of them, or any prepayment, purchase,
redemption, retirement, acquisition, cancellation or termination of any such
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Subordinated Debt or other Indebtedness prior to its scheduled maturity, except as otherwise
expressly permitted under the Credit Agreement.
SECTION 8. Events of Default.
(a) Events of Default. Each of the following events and occurrences shall constitute
an “Event of Default” under this Guaranty:
(i) Any Event of Default under the Credit Agreement or any other Loan Document shall have
occurred and is continuing; or
(ii) Any representation or warranty made or deemed made by a Guarantor in this Guaranty or any
other Loan Document or any certificate, report or other document delivered to the Agent or the
Lenders pursuant to any Loan Document shall have been incorrect or misleading in any material
respect when made or deemed made; or
(iii) Any Guarantor shall fail to perform or shall violate any provision, covenant, condition
or agreement in Section 7 of this Guaranty (other than Sections 7(b), 7(c), 7(d), 7(e), 7(f), 7(g),
7(h) and 7(i)); or
(iv) Any Guarantor shall fail to perform or shall violate any provision, covenant, condition
or agreement of this Guaranty or any other Loan Document on its part to be performed or observed
(other than those set forth in subsections (a)(i), (a)(ii) and (a)(iii) of this Section 8) and such
failure or violation is not remediable or, if remediable, continues unremedied for a period of
thirty (30) days after the earlier of (i) notice from the Agent or (ii) such time as any Guarantor
becomes aware of the same; or
(v) Any event or condition shall occur that results in the acceleration of the maturity of any
Indebtedness of any Loan Party under any agreement, document or instrument with respect to an
aggregate amount of Indebtedness equal to or greater than the Threshold Amount (or the equivalent
thereof in any foreign currency), or that enables the holder of such Indebtedness or any Person
acting on such holder’s behalf to accelerate the maturity thereof; or
(vi) Any Guarantor is adjudicated a bankrupt or insolvent, or admits in writing its inability
to pay its debts as they become due or makes an assignment for the benefit of creditors, or ceases
doing business as a going concern or applies for or consents to the appointment of any receiver or
trustee, or such receiver, trustee or similar officer is appointed with the application or consent
of such Guarantor, or bankruptcy, dissolution, liquidation or reorganization proceedings (or
proceedings similar in purpose and effect) are instituted by such Guarantor or are instituted
against (and not vacated or discharged within 60 days) such Guarantor; or
(vii) Any money judgment or warrant of attachment or similar process involving, individually
or in the aggregate, in excess of the Threshold Amount (or the equivalent thereof in any foreign
currency) shall be entered or filed against any Loan Party and shall remain undischarged, unvacated
or unbonded for a period of 30 days; or
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(viii) The validity or enforceability of this Guaranty or any other Loan Document shall be
contested by or on behalf of any Guarantor or any of its Subsidiaries; or a proceeding shall be
commenced by a Governmental Authority having jurisdiction over such Guarantor or such Subsidiary
seeking to establish the invalidity thereof; or any Loan Party or any of its Subsidiaries shall
deny that it has any further liability or obligation under any Loan Document to which it is a
party; or
(ix) The occurrence of any ERISA Event that, alone or together with any other ERISA Events
that have occurred, could reasonably be expected to result in a Material Adverse Effect.
(b) Consequence of Default. Upon the occurrence of any Event of Default (i) described
in subsection (a)(vi) of this Section 8, the Obligations and all other amounts payable hereunder,
shall automatically become immediately due and payable, without presentment, demand, protest or
other requirement of any kind, all of which are hereby expressly waived by the Guarantors or (ii)
described in any other subsection of this Section 8(a) and during the continuance thereof, the
Agent may, and upon direction of the Required Lenders shall, by notice of default given to the
Borrower, declare all of the Obligations and all other amounts payable hereunder, under any Note
and under any other Loan Document to be immediately due and payable, whereupon all the Obligations
shall be immediately due and payable without presentment, protest, demand or other requirement of
any kind, each of which is hereby expressly waived by the Guarantors. It is understood and agreed
that an Event of Default hereunder shall constitute an Event of Default under the Credit Agreement.
SECTION 9. Right of Set-off. Upon (i) the occurrence and during the continuance of
any Event of Default and (ii) the making of the request or the granting of the consent specified in
Section 6.2 of the Credit Agreement to authorize the Agent to declare the Loans due and payable,
each of the Agent and the Lenders may, and is hereby authorized to, at any time and from time to
time, without notice to the Guarantors (any such notice being expressly waived by the Guarantors)
and to the fullest extent permitted by law, set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other indebtedness at any time
owing by the Agent or such Lender to or for the credit or the account of any Guarantor against any
and all obligations of the Guarantors now or hereafter existing under this Guaranty, irrespective
of whether or not the Agent or such Lender shall have made any demand under this Guaranty and
although such obligations may be contingent or unmatured. Each of the Agent and the Lenders agrees
promptly to notify the applicable Guarantor after any such set-off and application made by the
Agent or such Lender, provided that the failure to give such notice shall not affect the validity
of such set-off and application. The rights of the Agent and Lenders under this Section 9 are in
addition to other rights and remedies (including, without limitation, other rights of set-off)
which the Agent and the Lenders may have.
SECTION 10. Notices, Etc. All notices and other communications provided for hereunder
shall be delivered or transmitted in the manner set forth in Section 9.6 of the Credit Agreement,
if to a Guarantor, to the Borrower at the Borrower’s address set forth in Section 9.6 of the Credit
Agreement; and if to the Agent, to it at its set forth in Section 9.6 of the Credit Agreement.
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SECTION 11. Payments Free and Clear of Taxes, Etc.
(a) Any and all payments made by the Guarantors hereunder shall be made free and clear of and
without deduction for any present or future Taxes, except as otherwise required by law. If and to
the extent that Taxes, other than Excluded Taxes, are required to be withheld from any payment, (i)
except to the extent provided in Section 11(f), the amount of such payment shall be increased to
the extent necessary to cause the Agent or such Lender to receive (after the withholding of such
Taxes) an amount equal to the amount it would have received had the withholding of such Taxes not
been required, and (ii) the applicable Guarantor shall withhold such Taxes from such increased
payment and pay such Taxes to the relevant taxation authority or other authority for the account of
the Agent or any Lender in accordance with applicable law.
(b) In addition, each Guarantor agrees to pay any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies which arise from any payment made
hereunder or under any other Loan Document or from the execution, delivery or registration of, or
otherwise with respect to, this Guaranty or any other Loan Document, excluding Other Taxes and
except to the extent provided in Section 11(f).
(c) Each Guarantor shall, jointly and severally, indemnify and agrees to hold harmless the
Agent and the Lenders for the full amount of Taxes or Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 11),
other than Excluded Taxes and except to the extent provided in Section 11(f), paid by the Agent or
any Lender or any liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within five (5) days after the date the Agent or any Lender makes
written demand therefor, specifying in reasonable detail the basis, calculation and amount of such
Taxes or Other Taxes and any liabilities arising therefrom.
(d) Within 30 days after the date of a Guarantor’s payment or a payment on behalf of a
Guarantor of any Taxes with respect to any payment due hereunder or under any other Loan Document,
such Guarantor will furnish to the Agent or the applicable Lender, as applicable, at its address
referred to in Section 9.6 of the Credit Agreement, the original or a certified copy of a receipt
evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of the Guarantors hereunder, the
agreements and obligations contained in this Section 11 shall survive the payment in full of the
Obligations and the termination of this Guaranty and each other Loan Document until the expiration
of the statute of limitations applicable to the subject Taxes.
(f) The Guarantors shall not be required to indemnify the Agent or any Lender, or pay any
additional amounts to the Agent or such Lender, in respect of Taxes and liabilities arising
therefrom pursuant to this Section 11 to the extent that the obligation to withhold or pay amounts
with respect to such Tax existed on the date the Agent or such Lender became a party to the Credit
Agreement (or, in the case of a Transferee that is a participation holder, on the date such
participation holder became a Transferee hereunder) or, with respect to
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payments to a New Lending Office, the date such Lender designated such New Lending Office with
respect to a Term Loan; provided, however, that this clause (f) shall not apply to
the extent (i) the indemnity payment or additional amounts any Transferee, or Lender (or
Transferee) through a New Lending Office, would be entitled to receive (without regard to this
clause (f)) do not exceed the indemnity payment or additional amounts that the Person making the
assignment, participation or transfer to such Transferee, or Lender (or Transferee) making the
designation of such New Lending Office, would have been entitled to receive in the absence of such
assignment, participation, transfer or designation or (ii) the obligation to pay such additional
amounts would not have arisen but for the failure by the Agent or such Lender to comply with the
provisions of Section 7.2(f) of the Credit Agreement.
(g) If the Agent or any Lender determines, in its sole discretion, that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by a Guarantor or with
respect to which a Guarantor has paid additional amounts, in either case pursuant to this Section
11 it shall pay to the Borrower an amount equal to such refund recovered (but only to the extent of
indemnity payments made, or additional amounts paid, by such Guarantor under this Section with
respect to the Taxes or Other Taxes giving rise to such refund or recovery), net of all
out-of-pocket expenses of the Agent or any such Lender, as the case may be, and without interest
(other than any interest paid by the relevant Governmental Authority with respect to such refund or
recovery); provided, however, that the Guarantors shall promptly repay the amount
paid over to any Guarantor to the Agent or such Lender in the event the Agent or such Lender is
required to repay such refund to the relevant Governmental Authority. This Section 11(g) shall not
be construed to require the Agent or any Lender to make available its tax returns (or any other
information that it deems confidential) to any Guarantor or any other Person.
SECTION 12. Judgment. The specification under this Guaranty of United States Dollars
and payment in New York City is of the essence. If, for the purposes of obtaining or enforcing
judgment in any court, it is necessary to convert a sum due hereunder in United States Dollars into
another currency (the “Other Currency”), the rate of exchange used shall be that at which
the Agent could, in accordance with normal banking procedures, purchase United States Dollars with
the Other Currency on the business day preceding that on which final judgment is given. The
obligation of the Guarantors in respect of any such sum due from it to the Agent and the Lenders
hereunder shall, notwithstanding any judgment in such Other Currency, be discharged only to the
extent that, on the business day immediately following the date on which the Agent receives any sum
adjudged to be so due in the Other Currency, the Agent may, in accordance with normal banking
procedures, purchase United States Dollars with the Other Currency. If the United States Dollars
so purchased are less than the sum originally due to the Agent and the Lenders in United States
Dollars, the Guarantors agree, as a separate obligation and notwithstanding any such judgment, to
indemnify the Agent and the Lenders against such loss, and if the United States Dollars so
purchased exceed the sum originally due to the Agent and the Lenders in United States Dollars, the
Agent and the Lenders agree to remit to the Guarantors such excess.
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SECTION 13. Governing Law; Consent to Jurisdiction; Waiver of Immunities; Waiver of
Jury.
(a) THIS GUARANTY SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF. EACH GUARANTOR HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY ACTION RELATED TO THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT.
(b) Each Guarantor hereby irrevocably agrees that any legal action or proceedings against such
Guarantor with respect to this Guaranty or any other Loan Document may be brought in (and each
Guarantor hereby submits to the jurisdiction of) any court of the State of New York or any Federal
Court of the United States of America located in the City or State of New York, or both, as the
Agent may elect, and by execution and delivery of this Guaranty, each Guarantor hereby submits to
and accepts with regard to any such action or proceeding service of process by the mailing of
copies thereof by registered or certified airmail, postage prepaid, to such Guarantor at its
address set forth in Section 10 hereof. Each Guarantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(c) Each Guarantor that is not incorporated or organized under the laws of the United States
of America, any state thereof, or the District of Columbia (a “Foreign Guarantor”) hereby
irrevocably appoints United States Corporation Company (the “Process Agent”), with an office on the
date hereof at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Xxxxxx Xxxxxx, as its agent to receive on
behalf of such Guarantor and its property service of copies of the summons and complaint and any
other process which may be served in any such action or proceeding. Such service may be made by
mailing or delivering a copy of such process to such Foreign Guarantor in care of the Process Agent
at the Process Agent’s above address, and such Guarantor hereby irrevocably authorizes and directs
the Process Agent to accept such service on its behalf. As an alternative method of service, each
Foreign Guarantor also irrevocably consents to the service of any and all process in any such
action or proceeding by the mailing of copies of such process to such Guarantor at its address
specified in Section 10 hereof.
(d) Nothing in this Section 13 shall affect the right of the Agent or any Lender to serve
legal process in any other manner permitted by law or affect the right of the Agent or any Lender
to bring any action or proceeding against any Guarantor or its property in the courts of any other
jurisdictions.
(e) Each Guarantor hereby irrevocably waives any objection which it may now or hereafter have
to the laying of the venue of any suit, action or proceeding arising out of or relating to this
Guaranty or any other Loan Document in the State of New York and hereby further irrevocably waives
any claim that the State of New York is not a convenient forum for any such suit, action or
proceeding.
(f) To the extent that any Guarantor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or
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notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise)
with respect to itself or its property, such Guarantor hereby irrevocably waives such immunity in
respect of its obligations under this Guaranty and any other Loan Document to which it is a party.
SECTION 14. Miscellaneous.
(a) Each Guarantor will make each payment hereunder in lawful money of the United States of
America and in immediately available funds to the Agent at its address specified in Section 10
hereof or, to the Agent’s Account or to such other account in New York City as the Agent may from
time to time designate by notice to the Guarantors.
(b) No amendment or waiver of any provision of this Guaranty, and no consent to any departure
by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and
signed by the Required Lenders or by the Agent with the consent of the Required Lenders, and then
such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given Notwithstanding the foregoing, no amendment, waiver or consent shall,
unless in writing and signed by the Agent, affect the rights or duties of the Agent (but not in its
capacity as a Lender) under this Guaranty or the other Loan Documents.
(c) No failure on the part of the Agent or any Lender to exercise, and no delay in exercising,
any right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any right preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies of the Agent and the Lenders provided herein
and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights of the Agent or any Lender under any Loan Document
against any party thereto are not conditional or contingent on any attempt by the Agent or any
Lender to exercise any of its rights under any other Loan Document against such party or against
any other Person.
(d) Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
(e) This Guaranty shall (i) be binding on each Guarantor and its successors and assigns, and
(ii) inure, together with all rights and remedies of the Agent and the Lenders hereunder, to the
benefit of the Agent and the Lenders and their respective successors, transferees and assigns.
Without limiting the generality of clause (ii) of the immediately preceding sentence, any Lender
may assign or otherwise transfer any Loan held by it, and the Agent and any Lender may assign or
otherwise transfer its rights under any other Loan Document, to any other Person, in accordance
with the terms of the Credit Agreement. None of the rights or obligations of the Guarantors
hereunder may be assigned or otherwise transferred without the prior written consent of the
Required Lenders].
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(f) This Guaranty may be signed in any number of counterparts. Either a single counterpart or
a set of counterparts when signed by all the parties hereto shall constitute a full and original
agreement for all purposes. Delivery of any executed signature page hereof or of any amendment,
waiver or consent to this Guaranty by facsimile transmission shall be as effective as delivery of a
manually executed counterpart thereof.
(g) The Guarantors, the Agent and the Lenders agree that no party hereto shall be deemed to be
the drafter of this Guaranty.
(h) This Guaranty shall be governed by and construed in accordance with the law of the State
of New York.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed by an officer
thereunto duly authorized, as of the date first above written.
| THE TALBOTS GROUP, | ||||||
| LIMITED PARTNERSHIP | ||||||
| By The Talbots, Inc., its sole general partner | ||||||
| By: | ||||||
| Title: | ||||||
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