EXECUTION VERSION

 

LIMITED GUARANTY OF PAYMENT
(Up to $1,000,000)

 

THIS LIMITED GUARANTY OF PAYMENT (this “Guaranty”) is made as of the 7th day of
December, 2012, by Steven Leber, Joseph Bernstein and Dr. Robert Cohen (each, a
“Guarantor” and together, the “Guarantors”), in favor of the holders (“Lenders”)
of the Secured Convertible Promissory Notes (the “Notes”) issued pursuant to
that certain Note Purchase Agreement, dated as of December 7, 2012, by and among
Grandparents.com, Inc., a Delaware corporation (the “Borrower”) and the Lenders
(together with all extensions, renewals, modifications, substitutions and
amendments thereof, the “Note Purchase Agreement”).

 

RECITALS:

 

WHEREAS, the Lenders are making loans to the Borrower in the principal amount of
up to Three Million Five Hundred Thousand Dollars ($3,500,000) (“Loan”);

 

WHEREAS, the Loan is secured by, among other things, that certain Security
Agreement (together with all extensions, renewals, modifications, substitutions
and amendments thereof, the “Security Agreement”), dated as December 7, 2012,
made by Borrower in favor of John Thomas Financial, Inc., as the collateral
agent (the “Collateral Agent”), and granting the Lenders a first priority lien
on all of the assets of the Borrower; and

 

WHEREAS, the Lenders require as a condition to the making of the Loan that
Guarantor shall have executed and delivered this Guaranty for the benefit of the
Lenders.

 

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged, and in order to
induce Lenders to make the Loan to Borrower, Guarantor hereby represents,
warrants and covenants to Lenders as follows:

 

1.  Guaranty of Obligations.  Subject to the limitations contained herein, the
Guarantors hereby, jointly and severally, unconditionally guarantee the prompt
payment of the Obligations, as hereinafter defined, and become surety for, the
prompt payment and performance thereof (including any interest accruing thereon
after maturity, or after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether direct or indirect (including those
acquired by assignment or participation), absolute or contingent, joint or
several, due or to become due, now existing or hereafter arising; which arise
out of or in connection with the Loan from the Lenders to the Borrower; provided
that notwithstanding anything to the contrary contained herein or elsewhere, and
for the avoidance of doubt, the Guarantors guarantee, and liability pursuant
hereto with respect to the Obligations, shall not in any event exceed the amount
of One Million Dollars ($1,000,000) (the “Guaranteed Amount”); and any
amendments, extensions, renewals or increases and all costs and expenses of the
Lenders (including reasonable attorneys' fees and expenses) incurred in the
documentation, negotiation, modification, enforcement, collection or otherwise
in connection with any of the foregoing, including the Notes, as more fully set
forth herein (collectively, the “Obligations”). If the Borrower defaults under
any such Obligations, the Guarantors will pay the amount due to the Lenders.

 

 

 

 

If the Borrower defaults under any such Obligations, the Guarantors will pay the
Guaranteed Amount to the Lenders. The Guaranteed Amount shall be reduced by any
amounts which the Lenders may realize before or after maturity of the
Obligations, by acceleration or otherwise, as a result of payments made by or on
behalf of the Borrower or by or on behalf of any other person or entity, other
than the Guarantors primarily or secondarily liable for the Obligations or any
part thereof, or otherwise credited to the Borrower or such person or entity, or
as a result of the exercise of the Lenders’ rights with respect to any
collateral for the Obligations or any part thereof, on a pro rata basis in
proportion to amounts realized by the Lenders with respect to amounts due under
the Notes. Solely for purposes of illustration, if the aggregate amount
outstanding under the Notes is $3,500,000 and the Borrower repays $1,400,000 of
such amount, the Guaranteed Amount shall be reduced by $400,000 to $600,000.
Payments made to the Lenders by the Guarantor (other than, directly or
indirectly, from collateral or other persons or entities liable for any portion
of the Obligations) after maturity of the Obligations, by acceleration or
otherwise, shall reduce the Guaranteed Amount.

 

2.  Nature of Guaranty; Waivers.  This is a guaranty of payment and not of
collection and the Lenders shall not be required or obligated, as a condition of
the Guarantors’ liability, to make any demand upon or to pursue any of its
rights against the Borrower, or to pursue any rights which may be available to
it with respect to any other person who may be liable for the payment of the
Obligations.

 

This is an absolute, unconditional, irrevocable and continuing guaranty and will
remain in full force and effect until all of the Obligations have been
indefeasibly paid in full, and the Lenders has terminated this Guaranty. This
Guaranty will remain in full force and effect even if there is no principal
balance outstanding under the Obligations at a particular time or from time to
time. This Guaranty will not be affected by any surrender, exchange, acceptance,
compromise or release by the Lenders of any other party, or any other guaranty
or any security held by it for any of the Obligations, by any failure of the
Lenders to take any steps to perfect or maintain its lien or security interest
in or to preserve its rights to any security or other collateral for any of the
Obligations or any guaranty, or by any irregularity, unenforceability or
invalidity of any of the Obligations or any part thereof or any security or
other guaranty thereof. The Guarantors’ obligations hereunder shall not be
affected, modified or impaired by any counterclaim, set-off recoupment,
deduction or defense based upon any claim the Guarantors, or any of them, may
have (directly or indirectly) against the Borrower or the Lenders, except
payment or performance of the Obligations.

 

Notice of acceptance of this Guaranty, notice of extensions of credit to the
Borrower from time to time, notice of default, diligence, presentment, notice of
dishonor, protest, demand for payment, and any defense based upon the Lenders’
failure to comply with the notice requirements under Sections 9-611 and 9-612 of
the Uniform Commercial Code as in effect from time to time are hereby waived.
The Guarantor waives all defenses based on suretyship or impairment of
collateral.

 

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The Lenders at any time and from time to time, without notice to or the consent
of the Guarantor, and without impairing or releasing, discharging or modifying
the Guarantor’s liabilities hereunder, may (a) change the manner, place, time or
terms of payment or performance of or interest rates on, or other terms relating
to, any of the Obligations; (b) renew, substitute, modify, amend or alter, or
grant consents or waivers relating to any of the Obligations, any other
guaranties, or any security for any Obligations or guaranties; (c) apply any and
all payments by whomever paid or however realized including any proceeds of any
collateral, to any Obligations of the Borrower in such order, manner and amount
as the Lenders may determine in its sole discretion; (d) settle, compromise or
deal with any other person, including the Borrower or the Guarantor, with
respect to any Obligations in such manner as the Lenders deems appropriate in
its sole discretion; (e) substitute, exchange or release any security or
guaranty; or (f) take such actions and exercise such remedies hereunder as
provided herein.

 

3.  Repayments or Recovery from the Lenders.  If any demand is made at any time
upon the Lenders for the repayment or recovery of any amount received by it in
payment or on account of any of the Obligations and if the Lenders repays all or
any part of such amount by reason of any judgment, decree or order of any court
or administrative body or by reason of any settlement or compromise of any such
demand, the Guarantor will be and remain liable hereunder for the amount so
repaid or recovered up to the Guaranteed Amount to the same extent as if such
amount had never been received originally by the Lenders. The provisions of this
Section will be and remain effective notwithstanding any contrary action which
may have been taken by the Guarantor in reliance upon such payment, and any such
contrary action so taken will be without prejudice to the Lenders’ rights
hereunder and will be deemed to have been conditioned upon such payment having
become final and irrevocable.

 

4.  Enforceability of Obligations.  No modification, limitation or discharge of
the Obligations arising out of or by virtue of any bankruptcy, reorganization or
similar proceeding for relief of debtors under federal or state law will affect,
modify, limit or discharge the Guarantor’s liability in any manner whatsoever
and this Guaranty will remain and continue in full force and effect and will be
enforceable against the Guarantor to the same extent and with the same force and
effect as if any such proceeding had not been instituted. The Guarantor waives
all rights and benefits which might accrue to it by reason of any such
proceeding and will be liable to the full extent hereunder, irrespective of any
modification, limitation or discharge of the liability of the Borrower that may
result from any such proceeding.

 

The Guarantor expressly waives the effect of any statute of limitations or other
limitations on any actions under this Guaranty.

 

5.  Events of Default.  The occurrence of any of the following shall be an
“Event of Default”: (i) any Event of Default (as defined in the Note Purchase
Agreement); (ii) any default under any of the Obligations that does not have a
defined set of “Events of Default” and the lapse of any notice or cure period
provided in such Obligations with respect to such default; (iii) any Guarantor’s
failure to perform any of his obligations hereunder; (iv) the falsity,
inaccuracy or material breach by any Guarantor of any written warranty,
representation or statement made or furnished to the Lenders by or on behalf of
any Guarantor; or (v) the termination or attempted termination of this Guaranty.
Upon the occurrence of any Event of Default, (a) the Guarantors shall pay to the
Lenders the Guaranteed Amount; or (b) on demand of the Lenders, the Guarantors
shall immediately deposit with the Agents (as defined in the Note Purchase
Agreement) on behalf of the Lenders, in U.S. dollars, the Guaranteed Amount, and
the Lenders may at any time use such funds to repay the Obligations; or (c) the
Lenders in their discretion may exercise with respect to any collateral any one
or more of the rights and remedies provided a secured party under the applicable
version of the Uniform Commercial Code; or (d) the Lenders in their discretion
may exercise from time to time any other rights and remedies available to it at
law, in equity or otherwise.

 

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6.  Costs.  To the extent that the Lenders incur any costs or expenses in
protecting or enforcing its rights under the Obligations or this Guaranty,
including reasonable attorneys’ fees and the costs and expenses of litigation,
such costs and expenses will be due on demand, will be included in the
Guaranteed Amount and will bear interest from the incurring or payment thereof
at the default rate (as contemplated in any of the Obligations).

 

7.  Postponement of Subrogation.  Until the Obligations are indefeasibly paid in
full, expire, are terminated and are not subject to any right of revocation or
rescission, the Guarantors postpone and subordinate in favor of the Lenders or
its designee (and any assignee or potential assignee), any and all rights which
the Guarantors or any of them may have to (a) assert any claim whatsoever
against the Borrower based on subrogation, exoneration, reimbursement, or
indemnity or any right of recourse to security for the Obligations with respect
to payments made hereunder, and (b) any realization on any property of the
Borrower, including participation in any marshalling of the Borrower’s assets.

 

8.  Notices.  All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder (“Notices”) must be in writing
and will be effective upon receipt. Notices may be given in any manner to which
the Lenders and the Guarantor may separately agree, including electronic mail as
contemplated in the Note Purchase Agreement. Regardless of the manner in which
provided, Notices may be sent to addresses for the Lenders and the Guarantors as
set forth above or to such other address as either may give to the other for
such purpose in accordance with this Section.

 

9.  Preservation of Rights.  No delay or omission on the Lenders’ part to
exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power, nor will the
Lenders’ action or inaction impair any such right or power. The Lenders’ rights
and remedies hereunder are cumulative and not exclusive of any other rights or
remedies which the Lenders may have under other agreements, at law or in equity.
The Lenders may proceed in any order against the Borrower, any Guarantor or any
other obligor of, or any collateral securing, the Obligations.

 

10.  Illegality.  If any provision contained in this Guaranty should be invalid,
illegal or unenforceable in any respect, it shall not affect or impair the
validity, legality and enforceability of the remaining provisions of this
Guaranty.

 

11.  Changes in Writing.  No modification, amendment or waiver of, or consent to
any departure by the Guarantor from, any provision of this Guaranty, will be
effective unless made in a writing signed by the Required Investors (as defined
in the Note Purchase Agreement) or by the Collateral Agent, who hereby is
empowered and authorized to act on behalf of the Lenders, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on the Guarantor will entitle the
Guarantor to any other or further notice or demand in the same, similar or other
circumstance.

 

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12.  Entire Agreement.  This Guaranty, the Note Purchase Agreement, the Notes
and the Security Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, between the Guarantors and
the Lenders with respect to the subject matter hereof. Unless otherwise defined
herein, all capitalized terms used herein shall have the meanings ascribed
thereto in the Note Purchase Agreement.

 

13.  Successors and Assigns.  This Guaranty will be binding upon and inure to
the benefit of the Guarantor and the Lenders and their respective heirs,
executors, administrators, successors and assigns; provided, however, that the
Guarantor may not assign this Guaranty in whole or in part without the Lenders’
prior written consent and the Lenders at any time may assign this Guaranty in
whole or in part.

 

14.  Interpretation.  In this Guaranty, unless the Lenders and the Guarantors
otherwise agree in writing, the singular includes the plural and the plural the
singular; references to statutes are to be construed as including all statutory
provisions consolidating, amending or replacing the statute referred to; the
word “or” shall be deemed to include “and/or”, the words “including”, “includes”
and “include” shall be deemed to be followed by the words “without limitation”;
and references to sections or exhibits are to those of this Guaranty. Section
headings in this Guaranty are included for convenience of reference only and
shall not constitute a part of this Guaranty for any other purpose.

 

15.  Indemnity.  The Guarantors agree to indemnify each of the Lenders, each
legal entity, if any, who controls the Lenders and each of their respective
directors, officers and employees (the “Indemnified Parties”), and to hold each
Indemnified Party harmless from and against, any and all claims, damages,
losses, liabilities and expenses (including all fees and charges of internal and
external counsel with whom any Indemnified Party may consult and all expenses of
litigation and preparation therefor) which any Indemnified Party may incur or
which may be asserted against any Indemnified Party by any person, entity or
governmental authority (including any person or entity claiming derivatively on
behalf of any Guarantor, in connection with or arising out of or relating to the
matters referred to in this Guaranty, whether (a) arising from or incurred in
connection with any breach of a representation, warranty or covenant by any
Guarantor, or (b) arising out of or resulting from any suit, action, claim,
proceeding or governmental investigation, pending or threatened, whether based
on statute, regulation or order, or tort, or contract or otherwise, before any
court or governmental authority; provided, however, that the foregoing indemnity
agreement shall not apply to any claims, damages, losses, liabilities and
expenses solely attributable to an Indemnified Party’s gross negligence or
willful misconduct. The indemnity agreement contained in this Section shall
survive the termination of this Guaranty and assignment of any rights hereunder.
Each Guarantor may participate at its expense in the defense of any such claim.

 

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16.  Governing Law and Jurisdiction.  This Guaranty has been delivered to and
accepted by the Lenders and will be deemed to be made in the State of New York.
This Guaranty will be interpreted and the rights and liabilities of the Lenders
and the Guarantor determined in accordance with the laws of the State of New
York, excluding its conflict of laws rules. Each Guarantor hereby irrevocably
consents to the exclusive jurisdiction of any state or federal court in the
County of New York; provided that nothing contained in this Guaranty will
prevent the Lenders from bringing any action, enforcing any award or judgment or
exercising any rights against such Guarantor individually, against any security
or against any property of such Guarantor within any other county, state or
other foreign or domestic jurisdiction. Each Guarantor acknowledges and agrees
that the venue provided above is the most convenient forum for both the Lenders
and such Guarantor. Each Guarantor waives any objection to venue and any
objection based on a more convenient forum in any action instituted under this
Guaranty.

 

17.  WAIVER OF JURY TRIAL.  EACH GUARANTOR IRREVOCABLY WAIVES ANY AND ALL RIGHT
SUCH GUARANTOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF
ANY NATURE RELATING TO THIS GUARANTY, ANY DOCUMENTS EXECUTED IN CONNECTION WITH
THIS GUARANTY OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE
GUARANTOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

 

The Guarantor acknowledges that it has read and understood all the provisions of
this Guaranty, including the waiver of jury trial, and has been advised by
counsel as necessary or appropriate.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Guaranty, as of
the date first above written.

 

  /s/ Steven Leber   Steven Leber       /s/ Joseph Bernstein   Joseph Bernstein
      /s/ Robert Cohen   Dr. Robert Cohen

 

[Signature Page to Limited Guaranty of Payment]