GUARANTY
EXHIBIT
10.2
GUARANTY,
dated July 30, 2010, made by Xxxxxxxxxx.xxx, Inc., a Nevada corporation (“Guarantor”), in favor
of each of the Lenders (as hereinafter defined) and Hilco Brands, LLC, as agent
for the Lenders (the “Agent”) pursuant to
the Financing Agreement referred to below.
WITNESSETH:
WHEREAS,
Xxxxxxxxxx of Hollywood Group Inc., a New York corporation (“Group”), FOH
Holdings, Inc., a Delaware corporation (the “Parent”), Frederick’s
of Hollywood, Inc., a Delaware corporation (“Frederick’s”),
Frederick’s of Hollywood Stores, Inc., a Nevada corporation (“Stores”), Hollywood
Mail Order LLC, a Nevada limited liability company (“Mail Order”; together
with the Group, Parent, Frederick’s and Stores, each, a “Borrower” and
collectively, the “Borrowers”), the
lending parties from time to time a party thereto (each individually a “Lender” and
collectively, the “Lenders”), and the
Agent are parties to a Financing Agreement, dated as of July 30, 2010 (such
Agreement, as amended, restated or otherwise modified from time to time, being
hereinafter referred to as the “Financing
Agreement”);
WHEREAS,
pursuant to the Financing Agreement, the Lenders have agreed to make a certain
secured term loan to the Borrowers;
WHEREAS,
Group directly or indirectly owns all of the issued and outstanding shares of
capital stock of Guarantor;
WHEREAS,
it is a condition precedent to the making of the Loan pursuant to the Financing
Agreement that Guarantor shall have executed and delivered to the Agent and the
Lenders a guaranty guaranteeing the obligations of the Borrowers under the Loan
Documents (as defined in the Financing Agreement);
WHEREAS,
the Borrowers and the Guarantor 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 Guarantor often being provided through
financing obtained by the Borrowers and the ability of the Borrowers to obtain
such financing being dependent on the successful operations of the Guarantor;
and
WHEREAS,
Guarantor has determined that its execution, delivery and performance of this
Guaranty directly benefit, and are within the purposes and in the best interests
of, Guarantor;
NOW,
THEREFORE, in consideration of the premises and the agreements herein and in
order to induce the Lenders to make the Loan pursuant to the Financing
Agreement, Guarantor hereby agrees with the Lenders and the Agent as
follows:
SECTION
1. Definitions. Reference
is hereby made to the Financing 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 in the Financing
Agreement.
SECTION
2. Guaranty. Guarantor
hereby (i) irrevocably, absolutely and unconditionally guarantees and becomes
surety for the prompt payment by the Borrowers, 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 Note, the
Financing Agreement and the other Loan Documents, whether for principal,
interest (including, without limitation, interest accruing on or after the
commencement of any Insolvency Proceeding relating to a Borrower), premiums,
indemnities, fees, costs, expenses (including, without limitation, fees, costs
and expenses arising or accruing on or after the commencement of any Insolvency
Proceeding relating to a Borrower), or otherwise, and whether accruing before or
subsequent to the commencement of any Insolvency Proceeding relating to a
Borrower (notwithstanding the operation of the automatic stay under Section
362(a) of the Bankruptcy Code), and the due performance and observance by each
Borrower of its other obligations now or hereafter existing in respect of the
Loan Documents (collectively, the “Obligations”); and
(ii) agrees to pay any and all expenses (including counsel fees, costs and
expenses) incurred by the Agent and the Lenders in enforcing any of their rights
under this Guaranty. Without limiting the generality of the foregoing,
Guarantor’s liability shall extend to all amounts that constitute part of the
Obligations and would be owed by a Borrower under the Financing Agreement or
other Loan Documents but for the fact that such document is unenforceable or not
allowable due to the existence of an Insolvency Proceeding involving a
Borrower.
SECTION
3. Guarantor’s Obligations
Unconditional.
(a) Guarantor
hereby guarantees that the Obligations will be paid strictly in accordance with
the terms of the Loan Documents, 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. Guarantor agrees that
its guarantee and suretyship 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 the Lenders to any Collateral. The obligations of Guarantor under this
Guaranty are independent of the obligations under the Financing Agreement and
the other Loan Documents, and a separate action or actions may be brought and
prosecuted against Guarantor to enforce this Guaranty, irrespective of whether
any action is brought against any Borrower or any other Loan Party or whether
any Borrower or any other Loan Party is joined in any such action. The liability
of Guarantor hereunder shall be absolute, unlimited and unconditional
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 provision of any Loan Document (including the creation or existence of
any Obligations in excess of the amount evidenced by the Loan Documents); (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 Guarantor
may have at any time against any Person, including, without limitation, the
Agent or any of the Lenders, or (v) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any Borrower or any Loan
Party in respect of the Obligations or Guarantor in respect
hereof.
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(b) This
Guaranty (i) is a continuing guaranty and suretyship and shall remain in full
force and effect until such date on which all of the Obligations and all other
expenses to be paid by the Guarantor pursuant hereto shall have been Paid in
Full 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, in connection with an
Insolvency Proceeding with respect to a Borrower or otherwise, all as though
such payment had not been made. As used herein, “Paid in Full” means
the indefeasible, full and final payment in cash, in immediately available
funds, of all the Obligations (whether or not any of the Obligations shall have
been voided, disallowed or subordinated pursuant to any provision of the
Bankruptcy Code, any applicable state fraudulent conveyance law, any other law
in connection with an Insolvency Proceeding or otherwise). The
expressions “prior payment in full”, “payment in full”, “paid or satisfied in
full” and “paid in full” (whether or not such expressions are capitalized) and
other similar phrases shall have correlative meanings.
SECTION
4. Waivers.
(a) Guarantor
hereby waives: (i) promptness and diligence; (ii) notice of acceptance and
notice of the incurrence of any Obligation by the Borrowers; (iii) notice of any
actions taken by the Agent, the Borrowers, any Loan Party or any Lender 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
Guarantor hereunder, the omission of or delay in which, but for the provisions
of this Section 4, might constitute grounds for relieving Guarantor of its
obligations hereunder; (v) any right to compel or direct the Agent or the
Lenders to seek payment or recovery of any amounts owed under this Guaranty from
any one particular fund or source; (vi) any requirement that the Agent protect,
secure, perfect or insure any security interest or Lien or any property subject
thereto or exhaust any right or take any action against any Borrower, any Loan
Party or any other Person or any Collateral; and (vii) any other defense
available to Guarantor. Guarantor agrees that the Agent and the Lenders shall
have no obligation to xxxxxxxx any assets in favor of Guarantor or against or in
payment of any or all of the Obligations.
(b) To
the fullest extent permitted by applicable law, Guarantor hereby waives: (i) any
rights to assert against any of the Agent or a Lender any defense (legal or
equitable), set-off, counterclaim, or claim which Guarantor may now or at any
time hereafter have against the Borrowers or any other party liable to any of
the Agent or a Lender; (ii) any defense, set-off, counterclaim, or claim, of any
kind or nature, arising directly or indirectly from the present or future lack
of perfection, sufficiency, validity, enforceability of the guarantied
Obligations or any security therefor, or any defense based on suretyship or
impairment of collateral; (iii) any defense arising by reason of any claim or
defense based upon an election of remedies by any of the Agent or a Lender,
including any defense based upon an election of remedies by any of the Agent or
a Lender under the laws of any jurisdiction; and (iv) the benefit of any statute
of limitations affecting Guarantor’s liability hereunder or the enforcement
thereof, and any act which shall defer or delay the operation of any statute of
limitations applicable to the Obligations shall similarly operate to defer or
delay the operation of such statute of limitations applicable to Guarantor’s
liability hereunder.
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(c) If
any of the Obligations at any time are secured by a mortgage or deed of trust
upon real property, the Agent or a Lender may elect, in their sole discretion,
upon a default with respect to the Obligations, to foreclose such mortgage or
deed of trust judicially or nonjudicially in any manner permitted by law, before
or after enforcing this Guaranty, without diminishing or affecting the liability
of Guarantor hereunder. Guarantor understands that (i) by virtue of the
operation of any antideficiency law applicable to nonjudicial foreclosures or
any similar laws of any jurisdiction, an election by the Agent or a Lender
nonjudicially to foreclose such a mortgage or deed of trust probably would have
the effect of impairing or destroying rights of subrogation, reimbursement,
contribution, or indemnity of Guarantor against the Borrowers or other
guarantors or sureties, and (ii) absent the waiver given by Guarantor herein,
such an election would estop the Agent and the Lenders from enforcing this
Guaranty against Guarantor. Understanding the foregoing, and understanding that
the Guarantor hereby is relinquishing a defense to the enforceability of this
Guaranty, Guarantor hereby waives any right to assert against the Lenders any
defense to the enforcement of this Guaranty, whether denominated “estoppel” or
otherwise, based on or arising from an election by the Agent or a Lender
nonjudicially to foreclose any such mortgage or deed of
trust. Guarantor understands that the effect of the foregoing waiver
may be that Guarantor may have liability hereunder for amounts with respect to
which Guarantor may be left without rights of subrogation, reimbursement,
contribution, or indemnity against the Borrowers or other guarantors or
sureties. Guarantor also agrees that the “fair market value” provisions of the
laws of any jurisdiction shall have no applicability with respect to the
determination of Guarantor’s liability under this Guaranty.
(d) Without
limiting the generality of any other waiver or other provision set forth in this
Guaranty, Guarantor waives all rights and defenses that Guarantor may have if
the Borrowers’ debt is secured by real property. This means, among other
things:
(i) The
Agent and the Lenders may collect from Guarantor without first foreclosing on
any real or personal property collateral that may be pledged by the
Borrowers.
(ii) If
the Agent and the Lenders foreclose on any real property collateral that may be
pledged by the Borrowers:
(1) the
amount of the debt may be reduced only by the price for which that collateral is
sold at the foreclosure sale, even if the collateral is worth more than the sale
price.
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(2) the
Agent and the Lenders may collect from Guarantor even if the Agent and the
Lenders, by foreclosing on the real property collateral, have destroyed any
right Guarantor may have to collect from the Borrowers.
This is
an unconditional and irrevocable waiver of any rights and defenses Guarantor may
have if the Borrowers’ debt is secured by real property.
(e) WITHOUT
LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS
GUARANTY, GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN ELECTION OF
REMEDIES BY THE AGENT AND THE LENDERS, EVEN THOUGH THAT ELECTION OF REMEDIES,
SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR A GUARANTIED
OBLIGATION, HAS DESTROYED GUARANTOR’S RIGHTS OF SUBROGATION AND REIMBURSEMENT
AGAINST THE BORROWERS BY THE LAWS OF ANY JURISDICTION.
SECTION
5. Subrogation. Guarantor
agrees not to exercise any rights which it may acquire by way of subrogation
hereunder, by any payment made by it hereunder or otherwise, until such date
after the Maturity Date on which all of the Obligations and all other fees,
costs and expenses to be paid by the Guarantor pursuant hereto shall have been
Paid in Full. If any amount shall be paid to 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 the 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, and all such other expenses in accordance with the terms
of the Financing Agreement. If (i) Guarantor shall make payment to the Agent of
all or any portion of the Obligations and (ii) all of the Obligations and all
such other fees, costs and expenses shall be paid in full, the Agent will, at
Guarantor’s request, execute and deliver to Guarantor (without recourse,
representation or warranty) appropriate documents necessary to evidence the
transfer by subrogation to Guarantor of an interest in the Obligations resulting
from such payment by 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 Agent and the Lenders by the Borrowers and each other
Loan Party under the Financing Agreement and the other Loan
Documents.
SECTION
6. Representations and
Warranties. Guarantor hereby represents and warrants as
follows:
(a) Guarantor
(i) is a corporation, limited liability company or partnership duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization as set forth on the first page hereof, (ii) has all requisite power
and authority to execute, deliver and perform this Agreement and each other Loan
Document to be executed and delivered by it pursuant hereto and to consummate
the transactions contemplated hereby and thereby, and (iii) is duly qualified to
do business and is in good standing in each jurisdiction in which the character
of the properties owned or leased by it or in which the transaction of its
business makes such qualification necessary.
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(b) The
execution, delivery and performance by Guarantor of this Guaranty and each other
Loan Document to which Guarantor is a party (i) have been duly authorized by all
necessary action, (ii) do not and will not contravene its charter or by-laws,
its limited liability company or operating agreement or its certificate of
partnership or partnership agreement, as applicable, or any applicable law or
any contractual restriction binding on or affecting it or any of its properties,
(iii) do not and will not result in or require the creation of any Lien,
security interest or other charge or encumbrance upon or with respect to any of
its properties other than pursuant to any Loan Document, and (iv) do not and
will not result in any default, noncompliance, suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to it or its operations or any of its
properties.
(c) No
authorization, approval or other action by, and no notice to or filing with, any
Governmental Authority or other regulatory body is required in connection with
the due execution, delivery and performance by Guarantor of this Guaranty or any
of the other Loan Documents to which Guarantor is a party.
(d) Each
of this Guaranty and the other Loan Documents to which Guarantor is a party is a
legal, valid and binding obligation of Guarantor, enforceable against Guarantor
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws.
(e) There
is no pending or, to the best knowledge of Guarantor, threatened action, suit or
proceeding against Guarantor or to which any of the properties of Guarantor is
subject, before any court or other Governmental Authority or any arbitrator that
(i) could have a Material Adverse Effect or (ii) relates to the Financing
Agreement or any other Loan Document or any of the transactions contemplated
hereby or thereby.
(f)
Guarantor now has and will continue to have independent means of obtaining
information concerning the affairs, financial condition and business of the
Borrowers and the other Loan Parties, and has no need of, or right to obtain
from, the Agent or any Lender any credit or other information concerning the
affairs, financial condition or business of any of the Borrowers or the other
Loan Parties that may come under the control of the Agent or any
Lender.
SECTION
7. Right of
Set-off. Upon the occurrence and during the continuance of any
Event of Default, the Agent and the Lenders may, and are hereby authorized to,
at any time and from time to time, without notice to Guarantor (any such notice
being expressly waived by Guarantor) 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 any Lender to or for the credit of the account of Guarantor
against any and all obligations of the Guarantor now or hereafter existing under
this Guaranty, irrespective of whether or not the Agent or any Lender shall have
made any demand under this Guaranty and although such obligations may be
contingent or unmatured. The Agent and the Lenders agree to notify the Guarantor
promptly 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 the Lenders under this Section 7 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Agent and the Lenders may have.
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SECTION
8. Notices,
Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied or delivered, if to Guarantor,
to it c/o Frederick’s at its address set forth in the Financing Agreement; if to
the Agent, to it at its address set forth in the Financing Agreement; or, as to
any such Person, at such other address as shall be designated by such Person in
a written notice to such other Persons complying as to delivery with the terms
of this Section 8. All such notices and other communications shall be effective
(i) if mailed, when received or three days after deposited in the mails,
whichever occurs first, (ii) if telecopied, when transmitted and a confirmation
is received, or (iii) if delivered, upon delivery.
SECTION
9. Consent to Jurisdiction;
Waiver of Immunities.
(a) Guarantor
hereby irrevocably submits to the jurisdiction of the courts of the State of New
York, the courts of the United States of America for the Southern District of
the State of New York in any action, suit or proceeding arising out of or
relating to this Guaranty, and Guarantor hereby irrevocably agrees that all
claims in respect of such action, suit or proceeding may be heard and determined
in the State of New York or such federal court. Guarantor consents to the
service of any and all process in any such action, suit or proceeding by mailing
(by certified or registered mail, postage prepaid and return receipt requested)
or delivering a copy of such process to Guarantor at its address set forth in
Section 8 hereof or at such other address of which the Agent shall have been
notified pursuant thereto. Guarantor agrees that a final judgment in any such
action, suit 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.
(b) Nothing
in this Section 9 shall affect the right of the Agent to serve legal process in
any other manner permitted by law or affect the right of the Agent to bring any
action, suit or proceeding against Guarantor or its property in the courts of
any other jurisdictions.
(c) Guarantor
hereby expressly and irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of any
such action, suit or proceeding brought in any such court referred to above and
any claim that any such action, suit or proceeding has been brought in an
inconvenient forum. To the extent that Guarantor has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its property, Guarantor hereby
irrevocably waives such immunity in respect of its obligations under this
Guaranty and the other Loan Documents.
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(d) To
the extent that Guarantor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property, Guarantor hereby
irrevocably waives such immunity in respect of its obligations under this
Guaranty
(e) Guarantor
hereby expressly and irrevocably waives any right it may have to claim or
recover in any action, suit or proceeding referred to in this Section 9 any
special, exemplary, punitive or consequential damages.
SECTION
10. WAIVER OF JURY
TRIAL. GUARANTOR AND, BY ACCEPTANCE HEREOF, THE AGENT AND EACH
LENDER WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS GUARANTY, THE LOAN DOCUMENTS OR
UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT
DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR
ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, AND
AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
SECTION
11. Miscellaneous.
(a) Guarantor
will make each payment hereunder in lawful money of the United States of America
and in immediately available funds to the Agent, for the benefit of the Lenders,
at such address specified by the Agent from time to time by notice to the
Guarantor.
(b) No
amendment of any provision of this Guaranty shall be effective unless it is in
writing and signed by Guarantor and the Agent, and no waiver of any provision of
this Guaranty, and no consent to any departure by Guarantor therefrom, shall be
effective unless it is in writing and signed by the Agent, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
(c) No
failure on the part of the Agent 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 and the Lenders
under any Loan Document against any party thereto are not conditional or
contingent on any attempt by the Agent and the Lenders to exercise any of their
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.
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(e) This
Guaranty shall (i) be binding on 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, to the extent permitted by Section
9.07 of the Financing Agreement, any Lender may assign or otherwise transfer its
rights under any Loan Document, to any other Person, and such other Person shall
thereupon become vested with all of the benefits in respect thereof granted to
the Lenders herein or otherwise. None of the rights or obligations of Guarantor
hereunder may be assigned or otherwise transferred without the prior written
consent of the Agent.
(f) This
Guaranty and the other Loan Documents represent the entire agreement of the
Guarantor, the Agent and the other Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Agent or any of the other Lenders relative to the subject matter thereof
not expressly set forth or referred to herein or in the other Loan
Documents.
(g) Section
headings herein are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
(h) This Guaranty shall be governed by
and construed in accordance with the law of the State of New
York.
IN WITNESS WHEREOF, Guarantor has
caused this Guaranty to be executed by an officer thereunto duly authorized, as
of the date first above written.
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GUARANTOR:
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Xxxxxxxxxx.xxx,
Inc.
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By:
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/s/ Xxxxxx Xxxxx
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Name:
Xxxxxx Xxxxx
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Title:
Chief Financial
Officer
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