EXHIBIT 10.2

 

 

GUARANTY AGREEMENT

 

By

 

HELEN OF TROY L.P., A TEXAS LIMITED PARTNERSHIP,
HELEN OF TROY LIMITED, A BERMUDA COMPANY,
HELEN OF TROY LIMITED, A BARBADOS CORPORATION,
HOT NEVADA, INC., A NEVADA CORPORATION,
HELEN OF TROY NEVADA CORPORATION, A NEVADA CORPORATION,
HELEN OF TROY TEXAS CORPORATION, A TEXAS CORPORATION,
IDELLE LABS LTD., A TEXAS LIMITED PARTNERSHIP, OXO INTERNATIONAL LTD., A TEXAS
LIMITED PARTNERSHIP,
HELEN OF TROY MACAO COMMERCIAL OFFSHORE LIMITED,
A MACAU CORPORATION,
KAZ, INC., A NEW YORK CORPORATION,
KAZ CANADA, INC., A MASSACHUSETTS CORPORATION, AND
PUR WATER PURIFICATION PRODUCTS, INC., A NEVADA CORPORATION,
GUARANTORS

 

In Favor of

 

BANK OF AMERICA, N.A.,
GUARANTIED PARTY

 

Dated as of March 1, 2013

 

 

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TABLE OF CONTENTS

 

 

 

Page No.

 

 

 

SECTION 1.

Defined Terms

2

 

 

 

SECTION 2.

Other Interpretive Provisions

16

 

 

 

SECTION 3.

Accounting Terms

17

 

 

 

SECTION 4.

Rounding

18

 

 

 

SECTION 5.

Times of Day

18

 

 

 

SECTION 6.

Representations and Warranties

18

 

 

 

SECTION 7.

Affirmative Covenants

23

 

 

 

SECTION 8.

Negative Covenants

27

 

 

 

SECTION 9.

Guaranty

35

 

 

 

SECTION 10.

Guaranty Absolute

36

 

 

 

SECTION 11.

Waiver

37

 

 

 

SECTION 12.

Events of Default

38

 

 

 

SECTION 13.

Remedies Upon Event of Default

40

 

 

 

SECTION 14.

Application of Funds

40

 

 

 

SECTION 15.

Treatment of Certain Information; Confidentiality

41

 

 

 

SECTION 16.

Amendments, Etc.

42

 

 

 

SECTION 17.

Addresses for Notices

42

 

 

 

SECTION 18.

No Waiver; Remedies

42

 

 

 

SECTION 19.

Right of Set-off

42

 

 

 

SECTION 20.

Continuing Guaranty; Transfer of Note

43

 

 

 

SECTION 21.

Reimbursement

43

 

 

 

SECTION 22.

Reinstatement

43

 

 

 

SECTION 23.

Governing Law

44

 

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SECTION 24.

Waiver of Jury Trial

44

 

 

 

SECTION 25.

Section Titles

45

 

 

 

SECTION 26.

Execution in Counterparts

45

 

 

 

SECTION 27.

Miscellaneous

45

 

 

 

SECTION 28.

Subrogation and Subordination

45

 

 

 

SECTION 29.

Guarantor Insolvency

46

 

 

 

SECTION 30.

Rate Provision

46

 

 

 

SECTION 31.

Severability

47

 

 

 

SECTION 32.

Taxes

47

 

 

 

SECTION 33.

Additional Guarantors

48

 

 

 

SECTION 34.

Entire Agreement

48

 

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GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT (this “Guaranty Agreement”), dated as of March 1, 2013,
made by each of the parties listed on the signature pages hereof (collectively,
the “Guarantors”, and each, a “Guarantor”), in favor of the Guarantied Parties
referred to below.

 

W I T N E S S E T H:

 

WHEREAS, the Issuer pursuant to laws of the State of Mississippi (the “State”)
intends to issue its Taxable Industrial Development Revenue Bonds, Series 2013
(Helen of Troy Olive Branch, MS Project), in the maximum principal amount of
Thirty-Eight Million Dollars ($38,000,000) (the “Bonds”); and

 

WHEREAS, the proceeds of the sale of the Bonds will be loaned by the Issuer to
Kaz USA, Inc., a Massachusetts corporation (the “Borrower”), pursuant to a Loan
Agreement between the Issuer and the Borrower of even date herewith (the “Loan
Agreement”), to finance the cost of acquiring constructing and equipping its
warehouse and distribution facility to be located in Olive Branch, De Soto
County, Mississippi (the “Project”); and

 

WHEREAS, the Borrower will execute and deliver that certain Promissory Note (the
“Note”) of even date herewith payable to the Issuer in the maximum principal
amount of $38,000,000 in the form of Exhibit C to the Loan Agreement; and

 

WHEREAS, the Issuer, the Borrower and Bank of America, N.A., a national banking
association (the “Purchaser”), have entered into that certain bond purchase
agreement (the “Bond Purchase Agreement”) pursuant to which the Purchaser has
agreed to acquire one hundred percent (100%) of the Bonds; and

 

WHEREAS, the Guarantors desire that the Issuer issue the Bonds and apply the
proceeds as aforesaid and are willing to enter into this Guaranty Agreement in
order to enhance the marketability of the Bonds and as an inducement to purchase
the Bonds by all who shall at any time become the owner of the Bonds; and

 

WHEREAS, the Borrower and each of the Guarantors are members of the same
consolidated group of companies and are engaged in operations which require
financing on a basis in which credit can be made available from time to time to
the Borrower and the Guarantors, and the Guarantors will derive direct and
indirect economic benefit from the Loan; and

 

WHEREAS, it is a condition precedent to the obligation of the Purchaser to
purchase the Bonds that the Guarantors shall have executed and delivered this
Guaranty Agreement; and

 

WHEREAS, the Purchaser and any Affiliate of the Purchaser are herein referred to
as the “Guarantied Parties”; and

 

NOW, THEREFORE, in consideration of the premises and other good and valuable
considerations, the Guarantors hereby covenant and agree as follows:

 

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SECTION 1.  Defined Terms.  As used in this Guaranty Agreement, the following
terms shall have the meanings set forth below:

 

“Acquisition” means the acquisition by any Person of (a) a majority of the
Equity Interests of another Person, (b) all or substantially all of the assets
of another Person or (c) all or substantially all of a line of business of
another Person, in each case (i) whether or not involving a merger or
consolidation with such other Person and (ii) whether in one transaction or a
series of related transactions.

 

“Acquisition Consideration” means the consideration given by Limited or any of
its Subsidiaries for an Acquisition, including but not limited to the sum of
(without duplication) (a) the fair market value of any cash, property (excluding
Equity Interests) or services given, plus (b) the amount of any Indebtedness
assumed, incurred or guaranteed (to the extent not otherwise included) in
connection with such Acquisition by Limited or any of its Subsidiaries.

 

“Affiliate” means, at any time, and with respect to any Person, (a) any other
Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of the total voting power of voting Equity Interests
of such first Person or any Subsidiary or such first Person or any corporation
of which such first Person and its Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 10% or more of the total voting power of
voting Equity Interests.  As used in this definition, “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and “Controlled” has
the meaning correlative thereto.  Unless the context otherwise clearly requires,
any reference to an “Affiliate” is a reference to an Affiliate of Limited.

 

“Applicable Law” means (a) in respect of any Person, all provisions of Laws
applicable to such Person, and all orders and decrees of all courts and
determinations of arbitrators applicable to such Person and (b) in respect of
contracts made or performed in the State of Texas, “Applicable Law” shall also
mean the laws of the United States of America, including, without limitation in
addition to the foregoing, 12 USC Sections 85 and 86, and any other statute of
the United States of America now or at any time hereafter prescribing the
maximum rates of interest on loans and extensions of credit, and the laws of the
State of Texas.

 

“Attributable Indebtedness” means, on any date, (a) in respect of any Capital
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

 

“Audited Financial Statements” means the audited consolidated balance sheet of
Limited and its Subsidiaries for the fiscal year ended February 29, 2012, and
the related consolidated statements of income or operations, shareholders’
equity, and cash flows for such fiscal year of Limited and its Subsidiaries,
including the notes thereto.

 

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“Bank of America” means Bank of America, N.A. and its successors.

 

“Borrower” means Kaz USA, Inc., a Massachusetts corporation.

 

“Borrowing” means the Loan of the Issuer to the Borrower pursuant to the Loan
Agreement and evidenced by the Note.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of Texas, or are in fact
closed in, the state where the Purchaser’s Office is located.

 

“Capital Expenditures” means, with respect to any Person for any period, the sum
of the aggregate of any expenditures by such Person during such period for an
asset which is properly classifiable in relevant financial statements of such
Person as property, equipment or improvement, fixed assets or a similar type of
tangible capital asset in accordance with GAAP; provided, however, the aggregate
amount of Capital Expenditures during any period shall be reduced by the cash
proceeds received by such Person from the Disposition of such assets during such
period, and, provided,  further, however, Capital Expenditures incurred in
connection with an Acquisition will not be considered Capital Expenditures for
purposes of this Guaranty Agreement.

 

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the incurring
of a liability in accordance with GAAP.

 

“Change in Law” means the occurrence, after the date of this Guaranty Agreement,
of any of the following:  (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or treaty or
in the administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority; provided
that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (y) all requests,
rules, guidelines or directives promulgated by the Bank for International
settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law”, regardless of the date enacted, adopted or issued.

 

“Change of Control” means an event or series of events by which any “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee,
agent or other fiduciary or administrator of any such plan) becomes the ultimate
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934)), directly or indirectly, of 50% or more of the total
voting power of Voting Equity Interests of Limited, HOT-L.P. or HOT-Nevada, as
the case may be, provided that in determining whether such beneficial ownership
has been acquired by any such

 

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“person” or “group”, all members of, or Affiliates of any of, the Current
Control Group, shall be deemed not to be persons or members of such acquiring
group.

 

“Code” means the Internal Revenue Code of 1986.

 

“Compliance Certificate” means a certificate substantially in the form of
Exhibit A.

 

“Consolidated EBIT” means for any period the sum of Consolidated Net Earnings
for such period, plus to the extent deducted in calculating Consolidated Net
Earnings for such period: the total of (a) interest expense, (b) federal and
state income and franchise tax expense, (c) to the extent non-cash, any
impairment charges incurred during such period, and (d) to the extent non-cash,
any write-downs of goodwill or other intangibles during such period, in each
case for Limited and its Subsidiaries, all determined in accordance with GAAP.

 

“Consolidated EBITDA” means for any period the sum of Consolidated Net Earnings
for such period, plus to the extent deducted in calculating Consolidated Net
Earnings for such period:  the total of (a) depreciation and amortization
expenses, (b) interest expense, (c) federal and state income and franchise tax
expenses, and (d) non-cash charges for such period, minus to the extent added in
calculating Consolidated Net Earnings for such period, non-cash credits for such
period, in each case for Limited and its Subsidiaries, all determined in
accordance with GAAP.

 

“Consolidated Funded Indebtedness” means, as of any date of determination, for
Limited and its Subsidiaries on a consolidated basis (eliminating intercompany
Indebtedness), the sum of

 

(a)                                 all obligations for borrowed money and all
obligations evidenced by bonds, debentures, notes, loan agreements or similar
instruments;

 

(b)                                 all redemption obligations in respect of
Redeemable Stock;

 

(c)                                  all liabilities for the deferred purchase
price of property acquired (excluding accounts payable arising in the ordinary
course of business but including all liabilities created or arising under any
conditional sale or other title retention agreement with respect to any such
property);

 

(d)                                 all liabilities appearing on its balance
sheet in accordance with GAAP in respect of Capital Leases;

 

(e)                                  all liabilities for borrowed money secured
by any Lien with respect to any property owned (whether or not it has assumed or
otherwise become liable for such liabilities);

 

(f)                                   all outstanding reimbursement obligations
in respect of letters of credit or instruments serving a similar function issued
or accepted for its account by banks and other financial institutions (whether
or not representing obligations for borrowed money); and

 

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(g)                                  without duplication, all Guarantees with
respect to liabilities of a type described in any of clauses (a) through
(f) hereof.

 

“Consolidated Net Earnings” means for any period, net earnings (or loss) after
income taxes of Limited and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP, but not including in such net
earnings (or loss) the following:

 

(a)                                 any extraordinary gain or loss arising from
the sale of capital assets;

 

(b)                                 any extraordinary gain or loss arising from
any write-up or write-down of assets;

 

(c)                                  net earnings of any Person in which Limited
or any Subsidiary shall have an ownership interest other than a Subsidiary
unless such net earnings (or any portion thereof)  shall have actually been
received by Limited or such Subsidiary in the form of cash distributions;

 

(d)                                 earnings or losses of any Subsidiary accrued
prior to the date it became a Subsidiary;

 

(e)                                  any portion of the net earnings of any
Subsidiary that is not a Loan Party that by reason of any contract or charter
restriction or Applicable Law or regulation (or in the good faith judgment of
the Board of Directors of Limited for any reason) is unavailable for payment of
dividends to Limited or any of its Subsidiaries, provided that the aggregate
amount of such net earnings that could be paid to Limited or a Subsidiary by
loans or advances or repayment of loans or advances that are due beyond the
Maturity Date, intercompany transfer or otherwise will be included in
Consolidated Net Earnings;

 

(f)                                   the earnings or losses of any Person
acquired by Limited or any Subsidiary through purchase, merger, consolidation or
otherwise, or the earnings or losses of any Person substantially all of whose
assets have been acquired by Limited or any of its Subsidiaries, for any period
prior to the date of such acquisition;

 

(g)                                  any gain arising from the acquisition of
any securities of Limited or any of its Subsidiaries;

 

(h)                                 the earnings or losses attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses Disposed of prior to the date of determination, shall be excluded;
and

 

(i)                                     any other extraordinary gains or losses
or any other gain or loss arising from any event or transaction that is unusual
in nature and infrequent in occurrence (but which otherwise does not constitute
an extraordinary item under GAAP) and which GAAP requires to be reported as a
separate component of revenues and expenses from continuing operations.

 

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“Consolidated Net Worth” means, as of any date of determination, for Limited and
its Subsidiaries on a consolidated basis, Shareholders’ Equity for Limited and
its Subsidiaries as of such date.

 

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

 

“Credit Facility” means that certain credit facility governed by that certain
Credit Agreement, dated December 10, 2010, among the parties thereto, including
HOT-L.P., as the borrower thereunder.

 

“Current Control Group” means (a) Gerald J. Rubin, (b) the spouse, children and
lineal descendants of Gerald J. Rubin or (c) the estate of, any trust or
partnership for the benefit of Gerald J. Rubin or any of the persons described
in clause (b).

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

 

“Dividend” means, with respect to any Person, any dividend or other distribution
(whether in cash, securities or other property) with respect to any capital
stock or other Equity Interests of such Person.

 

“Dollar” and “$” mean lawful money of the United States.

 

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure

 

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to any Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

 

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with Limited within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by Limited or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a “substantial
employer” (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by HOT-L.P. or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Pension Plan amendment as a termination under Sections 4041 or 4041A of
ERISA or the institution by the PBGC of proceedings to terminate a Pension Plan;
(e) any event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan; (f) the determination that any Pension Plan is considered an
at-risk plan or a plan in endangered or critical status within the meaning of
Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or
(g) the imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon HOT-L.P. or
any ERISA Affiliate.

 

“Event of Default” has the meaning specified in Section 12.

 

“Excluded Taxes” has the meaning specified in the Indenture.

 

“Financial Projections” has the meaning specified in Section 6(e)(3).

 

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

 

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute

 

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of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or such other principles as may be approved
by a significant segment of the accounting profession in the United States, that
are applicable to the circumstances as of the date of determination,
consistently applied.

 

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

 

“Guarantee” means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien); provided that a
Guarantee shall exclude (A) the endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of such
Person’s business, and (B) obligations under indemnities incurred in the
ordinary course of business or under stock purchase or asset purchase or sale
agreements, or which do not cover Indebtedness of the type described in
clauses (a) through (i) of the definition of Indebtedness.  The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith.  The term “Guarantee” as a verb has a
corresponding meaning.

 

“Guarantied Parties” has the meaning given to such term in the Recitals to this
Guaranty Agreement.

 

“Guarantors” means, collectively, HOT-L.P., Limited, HOT-Barbados, HOT-Nevada,
HOT Nevada, Inc., a Nevada corporation, Helen of Troy Texas Corporation, a Texas
corporation, Idelle Labs, Ltd., a Texas limited partnership, OXO
International, Ltd., a Texas limited partnership, Helen of Troy Macao Commercial
Offshore Limited, a Macau company, Kaz, Inc., a New York corporation, Kaz
USA, Inc., a Massachusetts corporation, Kaz Canada,

 

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Inc., a Massachusetts corporation, Pur Water Purification Products, Inc., a
Nevada corporation, and each other Subsidiary that executes a supplement to this
Guaranty Agreement.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“HOT-Barbados” means Helen of Troy Limited, a Barbados company.

 

“HOT-L.P.” means Helen of Troy L.P., a Texas limited partnership.

 

“HOT-Nevada” means Helen of Troy Nevada Corporation, a Nevada corporation and
general partner of HOT-L.P.

 

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

 

(a)                                 all obligations of such Person for borrowed
money and all obligations of such Person evidenced by bonds, debentures, notes,
loan agreements or other similar instruments;

 

(b)                                 all direct or contingent obligations of such
Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments (but
for purposes of Section 7.03 only, such obligations shall only be Indebtedness
to the extent drawn upon or a claim is made in respect thereof);

 

(c)                                  net obligations of such Person under any
Swap Contract;

 

(d)                                 all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business and, in each case, not past due for
more than 60 days after the date on which such trade account payable was
created);

 

(e)                                  indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;

 

(f)                                   Capital Leases and Synthetic Lease
Obligations;

 

(g)                                  all obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any Equity
Interest in such Person or any other Person, valued, in the case of a redeemable
preferred interest, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends;

 

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(h)                                 any “withdrawal liability” of such Person as
such term is defined under Part I of Subtitle E of Title IV of ERISA; and

 

(i)                                     all Guarantees of such Person in respect
of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation, a limited liability company or similar entity) in
which such Person is a general partner or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person.  The amount of any
net obligation under any Swap Contract on any date shall be deemed to be the
Swap Termination Value thereof as of such date.  The amount of any Capital Lease
or Synthetic Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Interest Coverage Ratio” means, as of any date of determination, the ratio of
(a) Consolidated EBIT to (b) interest expense of Limited and its Subsidiaries,
in each case for the items set forth in clauses (a) and (b) for the period of
four consecutive fiscal quarters ending on such date.

 

“Investment” or “Invest” means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of capital stock or other securities of another Person,
(b) a loan, advance or capital contribution to, Guarantee or assumption of debt
of, or purchase or other acquisition of any other debt or equity participation
or interest in, another Person, including any partnership or joint venture
interest in such other Person and any arrangement pursuant to which the investor
Guarantees Indebtedness of such other Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit.  For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.

 

“IP Rights” has the meaning specified in Section 6(q).

 

“IRS” means the United States Internal Revenue Service.

 

“Kaz” means Kaz, Inc., a New York corporation.

 

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

“Leverage Ratio” means, as of any date of determination, the ratio of
(a) Consolidated Funded Indebtedness on such date to (b) Consolidated EBITDA for
the period of the four

 

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consecutive fiscal quarters most recently ended for which Limited has delivered
financial statements pursuant to Section 7(a).  For purposes of calculating the
Leverage Ratio as of any date, Consolidated EBITDA shall be calculated on a pro
forma basis (as certified by a Responsible Officer of Limited to the Purchaser
and as approved by the Purchaser) assuming that all Acquisitions made, and all
Dispositions completed, during the four consecutive fiscal quarters most
recently ended had been made on the first day of such period (but without any
adjustment for projected cost savings or other synergies).

 

“Licenses” means, collectively, (a) the Scheduled Licenses and (b) any other
license or similar agreement the loss of which could be reasonably expected to
have a Material Adverse Effect, and all rights under any of those items
described in clauses (a) and (b) immediately preceding.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).

 

“Limited” means Helen of Troy Limited, a Bermuda company.

 

“Litigation” means any proceeding, claim, lawsuit, arbitration and/or
investigation by or before any Governmental Authority or arbitrator, including,
without limitation, proceedings, claims, lawsuits, and/or such investigations
conducted by or before any Governmental Authority or arbitrator or pursuant to
any environmental, occupational, safety and health, antitrust, unfair
competition, securities, tax or other Law, or under or pursuant to any contract,
agreement or other instrument.

 

“Loan” means the advances (one or more) provided by the Issuer to the Borrower
pursuant to the terms of the Loan Agreement from the proceeds of the Bonds.

 

“Loan Agreement” means the Loan Agreement between the Borrower and the Issuer
dated as of March 1, 2013.

 

“Loan Documents” means the Loan Agreement, the Indenture, the Bond Purchase
Agreement, the Note, the Bond, the Assignment of the Loan Agreement, the
Assignment of the Note and this Guaranty Agreement, and all other agreements,
documents, instruments, certificates and agreements executed and/or delivered by
the Borrower in connection with the Loan Agreement, the Indenture, and the Bond
Purchase Agreement.

 

“Loan Parties” means, collectively, the Borrower and each Guarantor.

 

“London Banking Day” means any day on which dealings in Dollar deposits are
conducted by and between banks in the London interbank eurodollar market.

 

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent), condition

 

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(financial or otherwise) of the Borrower, or Limited and its Subsidiaries, taken
as a whole; (b) an impairment of the ability of the Loan Parties, taken as a
whole, to perform their obligations under any Loan Document to which a Loan
Party is a party; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against any Loan Party of any Loan Document to
which it is a party.

 

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which HOT-L.P. or any ERISA Affiliate makes or
is obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.

 

“Multiple Employer Plan” means a Plan which has two or more contributing
sponsors (including HOT-L.P. or any ERISA Affiliate) at least two of whom are
not under common control, as such a plan is described in Section 4064 of ERISA.

 

“Note” means the promissory note of the Borrower to the Issuer in accordance
with Section 4.1 of the Loan Agreement the form of which is attached thereto as
Exhibit C.

 

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to the Loan, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Loan Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.

 

“Off-Balance Sheet Liabilities” means, with respect to any Person as of any date
of determination thereof, without duplication and to the extent not included as
a liability on the consolidated balance sheet of such Person and its
Subsidiaries in accordance with GAAP:  (a) with respect to any asset
securitization transaction (including any accounts receivable purchase facility)
(i) the unrecovered investment of purchasers or transferees of assets so
transferred, and (ii) any other payment, recourse, repurchase, hold harmless,
indemnity or similar obligation of such Person or any of its Subsidiaries in
respect of assets transferred or payments made in respect thereof, other than
limited recourse provisions that are customary for transactions of such type and
that neither (x) have the effect of limiting the loss or credit risk of such
purchasers or transferees with respect to payment or performance by the obligors
of the assets so transferred nor (y) impair the characterization of the
transaction as a true sale under Applicable Laws (including Debtor Relief Laws);
(b) the monetary obligations under any financing lease or so-called “synthetic,”
tax retention or off-balance sheet lease transaction which, upon the application
of any Debtor Relief Law to such Person or any of its Subsidiaries, would be
characterized as indebtedness; (c) the monetary obligations under any sale and
leaseback transaction which does not create a liability on the consolidated
balance sheet of such Person and its Subsidiaries; or (d) any other monetary
obligation arising with respect to any other transaction which (i) is
characterized as indebtedness for tax purposes but not for accounting purposes
in accordance with GAAP or (ii) is the functional equivalent of or takes the
place of borrowing but which does not constitute a liability on the consolidated
balance sheet of such Person and its Subsidiaries (for purposes of this
clause (d), any transaction structured to provide

 

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tax deductibility as interest expense of any dividend, coupon or other periodic
payment will be deemed to be the functional equivalent of a borrowing).

 

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

 

“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Guaranty
Agreement or any other Loan Document, but not including Excluded Taxes.

 

“Outstanding Amount” means with respect to the Loan on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of the Loan, as the case may be, occurring on such
date.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Act” means the Pension Protection Act of 2006.

 

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and set forth in, with respect to plan years ending prior to the effective
date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each
as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431,
432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

 

“Pension Plan” means any employee pension benefit plan (including a Multiple
Employer Plan or a Multiemployer Plan) that is maintained or is contributed to
by HOT-L.P. and any ERISA Affiliate and is either covered by Title IV of ERISA
or is subject to the minimum funding standards under Section 412 of the Code.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Plan” means any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Plan), maintained for employees of HOT-L.P. or any
ERISA Affiliate or any such Plan to which HOT-L.P. or any ERISA Affiliate is
required to contribute on behalf of any of its employees.

 

“Purchaser” means Bank of America.

 

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“Purchaser’s Office” means, as to the Purchaser, the office or offices of the
Purchaser as the Purchaser may from time to time notify the Borrower.

 

“Redeemable Stock” means any Equity Interest of Limited or any of its
Subsidiaries which prior to the Maturity Date may be (a) mandatorily redeemable,
(b) redeemable at the option of the holder thereof or (c) convertible into
Indebtedness.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

 

“Responsible Officer” means the chief executive officer, president, chief
financial officer, executive vice president, controller, treasurer or assistant
treasurer of a Loan Party, or if such Loan Party does not have such officers, a
director of such Loan Party, or if the Loan Party is a limited partnership, an
officer of the general partner of the Loan Party.  Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.

 

“Restricted Payment” means, collectively, (a) any Dividend, (b) any Treasury
Stock Purchase and (c) any payment or prepayment of principal, interest, premium
or penalty of or in respect of any Subordinated Indebtedness or any defeasance,
redemption, purchase, repurchase or other acquisition or retirement for value,
in whole or in part, of any Subordinated Indebtedness.

 

“Scheduled Licenses” means those Licenses set forth on Schedule 1.

 

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

 

“Senior Debt” means, as of any date of determination, for Limited and its
Subsidiaries on a consolidated basis, an amount equal to the sum of
(a) Consolidated Funded Indebtedness as of such date minus (b) Subordinated
Indebtedness as of such date.

 

“Senior Leverage Ratio” means, as of any date of determination, the ratio of
(a) Senior Debt on such date to (b) Consolidated EBITDA for the period of four
fiscal consecutive quarters most recently ended for which Limited has delivered
financial statements pursuant to Section 7(a).  For purposes of calculating the
Senior Leverage Ratio as of any date, Consolidated EBITDA shall be calculated on
a pro forma basis (as certified by a Responsible Officer of Limited to the
Purchaser and as approved by the Purchaser) assuming that all Acquisitions made,
and all Dispositions completed, during the four consecutive fiscal quarters the
most recently ended has been made on the first day of such period (but without
any adjustment for projected cost savings or other synergies).

 

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“Senior Notes” means, collectively, the 2004 Senior Notes and the 2011 Senior
Notes.

 

“Senior Note Agreements” means, collectively, the 2004 Senior Note Agreement and
the 2011 Senior Note Agreement.

 

“Shareholders’ Equity” means, as of any date of determination, consolidated
shareholders’ equity of Limited and its Subsidiaries as of that date determined
in accordance with GAAP.

 

“Subordinated Indebtedness” means any Indebtedness of Limited or any Subsidiary
which is expressly subordinated to the Obligations at all times pursuant to
terms satisfactory to the Required Lenders.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person.  Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
Limited.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

 

“Swap Obligations” means any and all obligations owed by any Loan Party to the
Purchaser or an Affiliate of the Purchaser in respect of a Swap Contract.

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or

 

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other readily available quotations provided by any recognized dealer in such
Swap Contracts (which may include the Purchaser or any Affiliate of the
Purchaser).

 

“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

 

“Treasury Stock Purchase” means, with respect to any Person, any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any capital stock or other Equity
Interests of such Person or on account of any returns of Capital to such
Person’s stockholders, partners or members (or the equivalent Person thereof).

 

“2004 Senior Notes” means those senior notes of HOT-L.P. issued pursuant to the
2004 Senior Note Agreement in the aggregate principal amount of $225,000,000.

 

“2011 Senior Notes” means those senior notes of HOT-L.P. issued pursuant to the
2011 Senior Note Agreement in an aggregate principal amount of $100,000,000.

 

“2004 Senior Note Agreement” means that certain Note Purchase Agreement, dated
June 29, 2004, among the parties thereto, including Limited and HOT-L.P.,
pursuant to which the 2004 Senior Notes were issued, as amended, modified or
supplemented from time to time.

 

“2011 Senior Note Agreement” means that certain Note Purchase Agreement dated
January 12, 2011, among the parties thereto pursuant to which the 2011 Senior
Notes were issued, as amended, modified or supplemented from time to time.

 

“United States” and “U.S.” mean the United States of America.

 

“Voting Equity Interests” of any Person means Equity Interests of any class or
classes having ordinary voting power for the election of at least a majority of
the members of the board of directors, managing general partners or the
equivalent governing body of such Person, irrespective of whether, at the time,
Equity Interests of any other class or classes or such entity shall have or
might have voting power by reason of the happening of any contingency.

 

SECTION 2.  Other Interpretive Provisions.  With reference to this Guaranty
Agreement:

 

(a)                                 The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation.” The word
“will”

 

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shall be construed to have the same meaning and effect as the word “shall.” 
Unless the context requires otherwise, (i) any definition of or reference to any
agreement, instrument or other document (including any Organization Document)
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or in any other Loan Document), (ii) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (iii) the words
“herein,” “hereof” and “hereunder” and words of similar import when used in any
Loan Document, shall be construed to refer to such Loan Document in its entirety
and not to any particular provision thereof, (iv) all references in a Loan
Document to Articles, Sections, Exhibits and Schedules shall be construed to
refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending,
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

 

(b)                                 In the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and
including;” the words “to” and “until” each mean “to but excluding;” and the
word “through” means “to and including.”

 

(c)                                  Section headings herein and in the other
Loan Documents are included for convenience of reference only and shall not
affect the interpretation of this Guaranty Agreement or any other Loan Document.

 

(d)                                 Capitalized terms used herein and not
defined herein shall have the meaning given to them in the other Loan Documents.

 

SECTION 3.  Accounting Terms.

 

(a)                                 Generally.  All accounting terms not
specifically or completely defined herein shall be construed in conformity with,
and all financial data (including financial ratios and other financial
calculations) required to be submitted pursuant to this Guaranty Agreement shall
be prepared in conformity with, GAAP applied on a consistent basis, as in effect
from time to time, applied in a manner consistent with that used in preparing
the Audited Financial Statements, except as otherwise specifically prescribed
herein.

 

(b)                                 Changes in GAAP.  If at any time any change
in GAAP would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and the Borrower shall so request, the Purchaser and
the Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP (subject to
the approval of the Purchaser and the Borrower); provided that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Purchaser financial statements and other documents required under
this Guaranty Agreement or as reasonably requested hereunder

 

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setting forth a reconciliation between calculations of such ratio or requirement
made before and after giving effect to such change in GAAP.

 

SECTION 4.  Rounding.  Any financial ratios required to be maintained pursuant
to this Guaranty Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

 

SECTION 5.  Times of Day.  Unless otherwise specified, all references herein to
times of day shall be references to Central time (daylight or standard, as
applicable).

 

SECTION 6.  Representations and Warranties.  Limited represents and warrants to
the Purchaser that:

 

(a)                                 Existence, Qualification and Power;
Compliance with Laws.  Each Loan Party and each Subsidiary thereof (a) is duly
organized or formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority and all requisite governmental licenses, authorizations, consents
and approvals to (i) own its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, (c) is duly qualified and is licensed and in good standing under the Laws
of each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires such qualification or license, and (d) is
in compliance with all Laws; except in each case referred to in clause (b)(i),
(c) or (d), to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect.

 

(b)                                 Authorization; No Contravention.  The
execution, delivery and performance by each Loan Party of each Loan Document to
which such Person is party, have been duly authorized by all necessary corporate
or other organizational action, and do not and will not (a) contravene the terms
of any of such Person’s Organization Documents; (b) conflict with or result in
any breach or contravention of, or the creation of any Lien under, or require
any payment to be made under (i) any Contractual Obligation to which such Person
is a party or affecting such Person or the properties of such Person or any of
its Subsidiaries or (ii) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject; or (c) violate any Law.  Each Loan Party and each of its
Subsidiaries is in compliance with all Contractual Obligations referred to in
clause (b)(i), except to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect.

 

(c)                                  Governmental Authorization; Other
Consents.  No approval, consent, exemption, authorization, or other action by,
or notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, any Loan Party of this Guaranty Agreement or any
other Loan Document.

 

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(d)                                 Binding Effect.  This Guaranty Agreement has
been, and each other Loan Document, when delivered hereunder or under the other
Loan Documents, will have been, duly executed and delivered by each Loan Party
that is party thereto.  This Guaranty Agreement constitutes, and each other Loan
Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms, subject as to enforcement to any Debtor
Relief Laws and general equitable principles.

 

(e)                                  Financial Statements; No Material Adverse
Effect.

 

(1)                                 The Audited Financial Statements (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein; (ii) fairly
present in all material respects the financial condition of Limited and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein; and
(iii) show all material indebtedness and other liabilities, direct or
contingent, of Limited and its Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Indebtedness.

 

(2)                                 Since the date of the Audited Financial
Statements, there has been no event or circumstance, either individually or in
the aggregate, that has had, and continues to have, or could reasonably be
expected to have a Material Adverse Effect.

 

(3)                                 The consolidated forecasted balance sheet
and statements of income and cash flows of Limited and its Subsidiaries
(collectively, the “Financial Projections”) delivered prior to the Closing Date
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were fair in light of the conditions existing at the time of
delivery of such forecasts, and represented, at the time of delivery, in all
material respects Limited’s best estimate of its future financial performance. 
Nothing in this clause (3) shall be deemed to constitute an assurance by Limited
or its Subsidiaries that they will meet the results contained in the Financial
Projections.

 

(4)                                 As of the Closing Date, neither Limited nor
any of its Subsidiaries has any Off-Balance Sheet Liabilities.

 

(f)                                   Litigation.  There are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of Limited after
due and diligent investigation prior to the Closing Date, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against Limited or any of its Subsidiaries or against any of
their properties or revenues that (a) could reasonably affect or pertain to this
Guaranty Agreement or any other Loan Document, or any of the transactions
contemplated hereby, or (b) either individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect.

 

(g)                                  No Default.  Neither Limited nor any of its
Subsidiaries is in default under or with respect to any Contractual Obligation
that could, either individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.  No Default has occurred and is

 

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continuing or would result from the consummation of the transactions
contemplated by this Guaranty Agreement or any other Loan Document.

 

(h)                                 Ownership of Property; Liens.  Limited and
each of its Subsidiaries has good record and marketable title in fee simple to,
or valid leasehold interests in, all real property necessary or used in the
ordinary conduct of its business, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  The property of Limited and its Subsidiaries is subject to no
Liens, other than Liens permitted by Section 8(a).

 

(i)                                     Environmental Compliance.  Limited and
its Subsidiaries conduct in the ordinary course of business a review of the
effect of existing Environmental Laws and claims alleging potential liability or
responsibility for violation of any Environmental Law on their respective
businesses, operations and properties, and as a result thereof Limited has
reasonably concluded that such Environmental Laws and claims could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(j)                                    Insurance.  The properties of Limited and
its Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of Limited, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where Limited or the
applicable Subsidiary operates.

 

(k)                                 Taxes.  Limited and its Subsidiaries have
filed all Federal, state and other material tax returns and reports required to
be filed, and have paid all material amounts with respect to Federal and
material state and other taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable, except those which are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been
provided in accordance with GAAP.  There is no proposed tax assessment against
Limited or any of its Subsidiaries that would, if made, have a Material Adverse
Effect.  Neither Limited nor any of its Subsidiaries thereof is party to any tax
sharing agreement.  As of the Closing Date, the Federal Income tax liabilities
of Limited and its Subsidiaries have been determined by the IRS and paid for all
fiscal years up to and including the fiscal year 2006.

 

(l)                                     ERISA Compliance.

 

(1)                                 Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal or
state Laws.  Each Pension Plan that is intended to be a qualified plan under
Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service to the effect that the form of such Plan is
qualified under Section 401(a) of the Code and the trust related thereto has
been determined by the Internal Revenue Service to be exempt from federal income
tax under Section 501(a) of the Code, or an application for such a letter is
currently being processed by the Internal Revenue Service.  To the best
knowledge of Limited and HOT-L.P., nothing has occurred that would prevent or
cause the loss of such tax-qualified status.

 

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(2)                                 There are no pending or, to the best
knowledge of Limited and HOT-L.P., threatened claims, actions or lawsuits, or
action by any Governmental Authority, with respect to any Plan that could
reasonably be expected to have a Material Adverse Effect.  There has been no
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan that has resulted or could reasonably be expected to result
in a Material Adverse Effect.

 

(3)                                 (i) No ERISA Event has occurred, and neither
HOT-L.P. nor any ERISA Affiliate is aware of any fact, event or circumstance
that could reasonably be expected to constitute or result in an ERISA Event with
respect to any Pension Plan; (ii) HOT-L.P. and each ERISA Affiliate has met all
applicable requirements under the Pension Funding Rules in respect of each
Pension Plan, and no waiver of the minimum funding standards under the Pension
Funding Rules has been applied for or obtained; (iii) as of the most recent
valuation date for any Pension Plan, the funding target attainment percentage
(as defined in Section 430(d)(2) of the Code) is 60% or higher and neither
HOT-L.P. nor any ERISA Affiliate knows of any facts or circumstances that could
reasonably be expected to cause the funding target attainment percentage for any
such plan to drop below 60% as of the most recent valuation date; (iv) neither
HOT-L.P. nor any ERISA Affiliate has incurred any liability to the PBGC other
than for the payment of premiums, and there are no premium payments which have
become due that are unpaid; (v) neither HOT-L.P. nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or
Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the
plan administrator thereof nor by the PBGC, and no event or circumstance has
occurred or exists that could reasonably be expected to cause the PBGC to
institute proceedings under Title IV of ERISA to terminate any Pension Plan,
except in each case with respect to clauses (i) through (vi) above where the
occurrence or existence thereof could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

(4)                                 Neither HOT-L.P. nor any ERISA Affiliate
maintains or contributes to, or has any unsatisfied obligation to contribute to,
or liability under, any active or terminated Pension Plan other than (A) on the
Closing Date, those listed on Schedule 6(1) and (B) thereafter, Pension Plans
not otherwise prohibited by this Guaranty Agreement.

 

(m)                             Subsidiaries; Equity Interests.  As of the
Closing Date, Limited has no Subsidiaries other than those specifically
disclosed in Part (a) of Schedule 6(m), and all of the outstanding Equity
Interests in such Subsidiaries have been validly issued, are fully paid and
non-assessable and are owned by a Loan Party in the amounts specified on
Part (a) of Schedule 6(m) free and clear of all Liens.  As of the Closing Date,
Limited and its Subsidiaries have no equity investments in any other corporation
or entity (other than a Subsidiary) other than those specifically disclosed in
Part (b) of Schedule 6(m).  All of the outstanding Equity Interests in the
Borrower has been validly issued and are fully paid and non-assessable.  As of
the Closing Date, Part (a) of Schedule 6(m) sets forth as to each Subsidiary of
Limited the percentage of shares or interests of each class of its Equity
Interests owned by Limited and each other Subsidiary.

 

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(n)                                 Margin Regulations; Investment Company Act

 

(1)                                 The Borrower is not engaged and will not
engage, principally or as one of its important activities, in the business of
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the FRB), or extending credit for the purpose of purchasing or carrying
margin stock.  Following the application of the proceeds of the Loan, not more
than 25% of the value of the assets (either of Limited only or of Limited and
its Subsidiaries on a consolidated basis) subject to the provisions of
Section 8(a) or Section 8(e) or subject to any restriction contained in any
agreement or instrument between Limited and the Purchaser or any Affiliate of
the Purchaser relating to Indebtedness and within the scope of
Section 12(e) will be margin stock.

 

(2)                                 Neither Limited, the Borrower or any of
their respective Subsidiaries is or is required to be registered as an
“investment company” under the Investment Company Act of 1940.

 

(o)                                 Disclosure.  Limited and HOT-L.P. have
disclosed to the Purchaser all agreements, instruments and corporate or other
restrictions to which they or any of their Subsidiaries is subject, and all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.  No report,
financial statement, certificate or other information furnished (whether in
writing or orally) by or on behalf of any Loan Party to the Purchaser in
connection with the transactions contemplated hereby and the negotiation of this
Guaranty Agreement or delivered hereunder or under any other Loan Document (in
each case, as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
projected financial information, Limited and the Borrower represent only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time of delivery thereof.

 

(p)                                 Compliance with Laws.  Each of Limited and
each Subsidiary is in compliance in all material respects with the requirements
of all Laws and all orders, writs, injunctions and decrees applicable to it or
to its properties, except in such instances in which (a) such requirement of Law
or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

 

(q)                                 Intellectual Property; Licenses, Etc. 
Limited and its Subsidiaries own, or possess the right to use, all of the
trademarks, service marks, trade names, copyrights, patents, patent rights,
franchises, licenses and other intellectual property rights (collectively, “IP
Rights”) that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person, except to the
extent that the failure to do so could not reasonably be expected to have a
Material Adverse Effect.  No slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by Limited or any Subsidiary infringes upon any
rights held by any other Person, except to the extent that such infringement
could not reasonably be expected to have a Material

 

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Adverse Effect.  No claim or litigation regarding any of the foregoing is
pending or, to the best knowledge of Limited, threatened, which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

(r)                                    Foreign Assets Control Regulations, Etc. 
Use of the proceeds of the Loan will not violate the Trading with the Enemy Act,
as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating thereto, or is in violation of
any federal statute or Presidential Executive Order, including without
limitation Executive Order 13224 66 Fed. Reg. 49079 (September 25, 2001)
(Blocking Property and Prohibiting Transactions with Persons who Commit,
Threaten to Commit or Support Terrorism), or the USA Patriot Act (Title III of
Pub. L. 107-56).

 

SECTION 7.  Affirmative Covenants.  So long as the Loan or other Obligation
thereunder and hereunder shall remain unpaid or unsatisfied, Limited shall, and
shall (except in the case of the covenants set forth in Sections 7(a), 7(b), and
7(c)) cause each Subsidiary to:

 

(a)                                 Financial Statements.  Deliver to the
Purchaser:

 

(1)                                 as soon as available, but in any event
within 90 days after the end of each fiscal year of Limited (commencing with the
fiscal year ended February 28, 2013), a consolidated balance sheet of Limited
and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, and consolidated statements of
shareholders’ equity, and cash flows for such fiscal year, setting forth in each
case in comparative consolidated form the figures for the previous fiscal year,
all in reasonable detail and prepared in accordance with GAAP, such consolidated
statements to be audited and accompanied by a report and opinion of Grant
Thornton LLP or such other independent certified public accountant of nationally
recognized standing reasonably acceptable to the Purchaser, which report and
opinion shall be prepared in accordance with generally accepted auditing
standards and shall not be subject to any “going concern” or like qualification
or exception or any qualification or exception as to the scope of such audit and
such consolidated statements to be certified by a Responsible Officer of Limited
to the effect that such statements are fairly stated in all material respects
when considered in relation to the consolidated financial statements of Limited
and its Subsidiaries; and

 

(2)                                 as soon as available, but in any event
within 45 days after the end of each of the first three fiscal quarters of each
fiscal year of Limited (commencing with the fiscal quarter ended May 31, 2013),
a consolidated balance sheet of Limited and its Subsidiaries as at the end of
such fiscal quarter, and the related consolidated statements of income or
operations, and consolidated statements of shareholders’ equity, and cash flows
for such fiscal quarter and for the portion of Limited’s fiscal year then ended,
setting forth in each case in comparative consolidated form the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail, such consolidated
statements to be certified by a Responsible Officer of Limited as fairly
presenting the financial condition, results of operations, shareholders’ equity,
partners’ capital and cash flows of Limited

 

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and its Subsidiaries in accordance with GAAP, subject only to normal year-end
audit adjustments and the absence of footnotes and such consolidating statements
to be certified by a Responsible Officer of Limited to the effect that such
statements are fairly stated in all material respects when considered in
relation to the consolidated financial statements of Limited and its
Subsidiaries.

 

As to any information contained in materials furnished pursuant to
Section 7(b)(3), Limited shall not be separately required to furnish such
information under clause (1) or (2) above, but the foregoing shall not be in
derogation of the obligation of Limited to furnish the information and materials
described in clauses (1) and (2) above at the times specified therein.

 

(b)                                 Certificates; Other Information.  Deliver to
the Purchaser, in form and detail satisfactory to the Purchaser:

 

(1)                                 concurrently with the delivery of the
financial statements referred to in Sections 7(a)(1) and (2) (commencing with
the delivery of the financial statements for the fiscal quarter ended May 31,
2013), a duly completed Compliance Certificate signed by a Responsible Officer
of Limited;

 

(2)                                 promptly after any request by the Purchaser,
copies of any detailed audit reports, management letters or recommendations
submitted to the board of directors (or the audit committee of the board of
directors) of Limited by independent accountants in connection with the accounts
or books of Limited or any Subsidiary, or any audit of any of them;

 

(3)                                 promptly after the same are available,
copies of each annual report, proxy or financial statement or other report or
communication sent to the stockholders of Limited, and copies of all annual,
regular, periodic and special reports and registration statements which Limited
may file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to
the Purchaser pursuant hereto; provided that any documents required to be
delivered pursuant to this Section 7(b)(3) shall be deemed to have been
delivered on the date on which HOT-L.P. posts such documents, or provides a link
thereto on HOT-L.P.’s website;

 

(4)                                 promptly, and in any event within five
Business Days after receipt thereof by any Loan Party or any Subsidiary thereof,
copies of each notice or other correspondence received from the SEC (or
comparable agency in any applicable non-U.S. jurisdiction) concerning any
investigation or possible investigation or other inquiry by such agency, in each
case that are material to HOT-L.P. or any other Loan Party, regarding financial
or other operational results of any Loan Party or any Subsidiary thereof; and

 

(5)                                 promptly, such additional information
regarding the business, financial or corporate affairs of Limited or any
Subsidiary, or compliance with the terms of the Loan Documents, as the Purchaser
may from time to time reasonably request.

 

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Documents required to be delivered pursuant to Section 7(a)(1) or (2) or
Section 7(b)(3) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which
Limited posts such documents, or provides a link thereto on Limited’s website on
the Internet; or (ii) on which such documents are posted on Limited’s behalf on
an Internet or intranet website, if any, to which the Purchaser has access
(whether a commercial, third-party website or whether sponsored by the
Purchaser); provided that: (i) Limited shall deliver paper copies of such
documents to the Purchaser until a written request to cease delivering paper
copies is given by the Purchaser and (ii) Limited shall notify the Purchaser (by
telecopier or electronic mail) of the posting of any such documents and provide
to the Purchaser by electronic mail electronic versions (i.e., soft copies) of
such documents.  Notwithstanding anything contained herein, in every instance
Limited shall be required to provide paper copies of the Compliance Certificates
required by Section 7(b)(1) to the Purchaser.

 

(c)                                  Notices.  Promptly notify the Purchaser:

 

(1)                                 of the occurrence of any Default;

 

(2)                                 of any matter that has resulted or could
reasonably be expected to result in a Material Adverse Effect, including
(i) breach or non-performance of, or any default under, a Contractual Obligation
of Limited or any Subsidiary, except to the extent that breach, non-performance
or default could not reasonably be expected to have a Material Adverse Effect or
result in a Default; (ii) any material dispute, litigation, investigation,
proceeding or suspension between Limited or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting Limited or any Subsidiary, including pursuant
to any applicable Environmental Laws, in which the amount involved is
$10,000,000 or more, which involve the probability of any judgment or liability
not adequately covered by insurance or (ii) in which injunctive or similar
relief is sought, and which could reasonably be expected to have a Material
Adverse Effect;

 

(3)                                 of the occurrence of any ERISA Event; and

 

(4)                                 of any material change in accounting
policies or financial reporting practices by Limited or any Subsidiary.

 

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of Limited setting forth details of the occurrence referred
to therein and stating what action Limited has taken and proposes to take with
respect thereto.  Each notice pursuant to Section 7(c)(1) shall describe with
particularity any and all provisions of this Guaranty Agreement and any other
Loan Document that have been breached.

 

(d)                                 Payment of Obligations.  Pay and discharge
as the same shall become due and payable, all its obligations and liabilities,
except to the extent that failure to pay or discharge obligations and
liabilities could not reasonably be expected to have a Material Adverse Effect,
and such obligations and liabilities shall include (a) all tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, unless the same are being

 

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contested in good faith by appropriate proceedings diligently conducted and
adequate reserves in accordance with GAAP are being maintained by Limited or
such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a
Lien upon its property; and (c) all Indebtedness, as and when due and payable,
but subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness.

 

(e)                                  Preservation of Existence, Etc. 
(a) Preserve, renew and maintain in full force and effect its legal existence
and good standing under the Laws of the jurisdiction of its organization except
in a transaction permitted by Section 8(d) or (e); (b) take all reasonable
action to maintain all rights, privileges, permits, licenses and franchises
necessary or desirable in the normal conduct of its business, except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect; and (c) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.

 

(f)                                   Maintenance of Properties.  (a) Maintain,
preserve and protect all of its material properties and equipment necessary in
the operation of its business in good working order and condition, ordinary wear
and tear excepted; (b) make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (c) use the standard of care
typical in the industry in the operation and maintenance of its facilities.

 

(g)                                  Maintenance of Insurance.  Maintain with
financially sound and reputable insurance companies not Affiliates of Limited,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.

 

(h)                                 Compliance with Laws.  Comply in all
material respects with the requirements of all Laws and all injunctions and
decrees applicable to it or to its business or property, except in such
instances in which (a) such requirement of Law or order, writ, injunction or
decree is being contested in good faith by appropriate proceedings diligently
conducted; or (b) the failure to comply therewith could not reasonably be
expected to have a Material Adverse Effect.

 

(i)                                     Books and Records.  Maintain proper
books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of Limited or such
Subsidiary, as the case may be.

 

(j)                                    Inspection Rights.  Permit
representatives and independent contractors of the Purchaser to visit and
inspect any of its properties, to examine its corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to discuss its
affairs, finances and accounts with its directors, officers, and independent
public accountants.  Before an Event of Default exists, (a) such visits and
inspections shall be at such reasonable times during business hours and as often
as may be reasonably desired, upon reasonable advance notice to Limited and the
Borrower and (b) the Borrower shall pay for the reasonable costs and expenses of
the Purchaser with respect to no more than one such visit and inspection by the
Purchaser

 

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during any twelve-month period.  After an Event of Default exists and is
continuing, (a) such visits and inspections may be at any time during normal
business hours and without advance notice and (b) the Borrower shall pay the
reasonable costs and expenses of all such visits and inspections.

 

(k)                                 Use of Proceeds.  Use the proceeds of the
Loan for the Cost of Construction of the Project, not in contravention of any
Law or of any Loan Document.

 

SECTION 8.  Negative Covenants.  So long as the Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, Limited shall not, nor shall it
permit any Subsidiary to, directly or indirectly:

 

(a)                                 Liens.  Create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, other than the following:

 

(1)                                 Liens pursuant to any Loan Document;

 

(2)                                 Liens existing on the date hereof and listed
on Schedule 8(a) and any renewals or extensions thereof, provided that (i) the
property covered thereby is not changed, (ii) the amount secured or benefited
thereby is not increased, (iii) the direct or any contingent obligor with
respect thereto is not changed, and (iv) any renewal or extension of the
obligations secured or benefited thereby is permitted by Section 8(c)(2);

 

(3)                                 Liens for taxes not yet due or which are
being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books
of the applicable Person in accordance with GAAP;

 

(4)                                 carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or which are
being contested in good faith and by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the books
of the applicable Person;

 

(5)                                 pledges or deposits in the ordinary course
of business in connection with workers’ compensation, unemployment insurance,
other social security legislation and similar obligations, other than any Lien
imposed by ERISA;

 

(6)                                 deposits to secure the performance of bids,
trade contracts and leases (other than Indebtedness), statutory obligations,
surety bonds, performance bonds, customs bonds and other obligations of a like
nature incurred in the ordinary course of business;

 

(7)                                 easements, rights-of-way, restrictions and
other similar encumbrances affecting real property which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract from
the value of the property subject thereto or materially interfere with the
ordinary conduct of the business of the applicable Person;

 

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(8)                                 Liens, or an existing pledge of a deposit,
securing payment of senior debt by an Affiliate or Subsidiary to a foreign
financial institution as described in the financial statements delivered
pursuant to Section 7(a) or which may be disclosed from time to time by any such
party; provided the Indebtedness secured by such Liens does not exceed
$20,000,000 in aggregate principal amount;

 

(9)                                 Liens securing Indebtedness permitted under
Section 8(c)(5); provided that (i) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of acquisition;

 

(10)                          Liens in favor of a Loan Party;

 

(11)                          Liens on property of a Person existing at the time
such Person is acquired by, merged with or into or consolidated with Limited or
a Subsidiary; provided, that such Liens were in existence prior to the
contemplation of such acquisition, merger or consolidation and do not extend to
any assets other than those of the Person acquired by, merged into or
consolidated with Limited or a Subsidiary;

 

(12)                          Liens on property existing at the time of
acquisition thereof by Limited or a Subsidiary; provided, that such Liens were
in existence prior to the contemplation of such acquisition;

 

(13)                          Liens securing Indebtedness permitted by
Section 8(c)(8); and

 

(14)                          Liens existing on the Closing Date against the
Investments described in Section 8(b(10).

 

(b)                                 Investments.  Make any Investments, except:

 

(1)                                 Investments in the form of direct
obligations of the United States of America or any agency thereof or obligations
guaranteed by the United States of America or any agency thereof, in any case
maturing within three years after the acquisition thereof;

 

(2)                                 Investments in bankers’ acceptance,
certificates of deposits, eurodollar deposits or time deposits issued or
accepted by the Purchaser or any other commercial bank organized under the laws
of the United States of America, any state thereof, or the District of Columbia,
and having combined capital, surplus and undivided profits of at least
$1,000,000,000 and having (or having a parent holding company that has)
outstanding short term debt rated P-1 by Moody’s Investor Service, Inc. or A-1
by Standard and Poor’s Rating Group and long-term debt rated at least A by
Moody’s Investor Service, Inc. or Standard and Poor’s Rating Group;

 

(3)                                 Investments in commercial paper rated in one
of the two highest rating categories by Moody’s Investor Service, Inc. or by
Standard and Poor’s Rating Group and maturing not more than 270 days from the
date of creation thereof;

 

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(4)                                 repurchase obligations with a term of not
more than seven days for underlying securities of the types described in
clauses (1) and (2) above entered into with any financial institution meeting
the qualifications specified in clause (b) above;

 

(5)                                 Investments in money market mutual funds
that are classified as current assets in accordance with GAAP and that invest at
least 95% of its assets in Investments described in clauses (1) through (2) and
of this definition maturing not more than one year after the acquisition
thereof, which funds are managed by Persons having, or who are members of
holding companies having, capital and surplus in excess of $100,000,000;

 

(6)                                 advances to officers, directors and
employees of the Borrower and Guarantors in an aggregate amount not to exceed
$1,000,000 at any time outstanding, for travel, entertainment, relocation and
analogous ordinary business purposes;

 

(7)                                 Investments of the Borrower in any Guarantor
and Investments of any Guarantor in the Borrower or in another Guarantor;

 

(8)                                 Investments consisting of extensions of
credit in the nature of accounts receivable or notes receivable arising from the
grant of trade credit in the ordinary course of business, and Investments
received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss;

 

(9)                                 Investments as a result of Acquisitions, if
each of the following conditions has been satisfied:  (i) immediately before and
after giving effect to such Acquisition, no Default shall have occurred and be
continuing, (ii) if the Senior Leverage Ratio at the end of the fiscal quarter
immediately preceding such Acquisition is greater than 2.00 to 1.00, the
aggregate Acquisition Consideration for all Acquisitions during the fiscal year
in which such proposed Acquisition is to occur shall not exceed 100% of the
Consolidated EBITDA for the fiscal year immediately preceding such fiscal year,
(iii) such Acquisition shall not be opposed by the board of directors or similar
governing body of the Person or assets being acquired and (iv) if the
Acquisition results in a Domestic Subsidiary being acquired having a net worth
at the time of such Acquisition of more than $1,000,000 (or within ten Business
Days after any such Domestic Subsidiary thereafter attains a net worth of more
than $1,000,000), such Subsidiary shall execute and deliver to the Purchaser
(x) a supplement to this Guaranty Agreement, (y) incumbency certificates,
Organization Documents and documents evidencing due organization, valid
existence, good standing and qualification to do business and (z) a favorable
opinion of counsel to such Person located in the jurisdiction of organization of
such Person, in form, content and scope reasonable satisfactory to the
Purchaser;

 

(10)                          Investments that are otherwise permitted by this
Guaranty Agreement, including Section 8(c)(9) and Guaranties permitted pursuant
to Section 8(c)(3);

 

(11)                          Investments by a Subsidiary (other than a Loan
Party) in any other Subsidiary (other than a Loan Party);

 

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(12)                          Investments existing on the Closing Date and
described on Schedule 6(m) or Schedule 8(b); and

 

(13)                          so long as no Default exists or would result
therefrom, Investments not otherwise permitted to be made pursuant to
clauses (1) through (12) above, which, as of the date of any such Investment, do
not exceed 15% of Consolidated Net Worth.

 

(c)                                  Indebtedness.  Create, incur, assume or
suffer to exist any Indebtedness, except:

 

(1)                                 Indebtedness under the Loan Documents;

 

(2)                                 Indebtedness outstanding on the date hereof
and listed on Schedule 8(c) or permitted hereunder, and any refinancings,
refundings, renewals or extensions thereof; provided that (i) the amount of such
Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable premium or other
reasonable amount paid, and fees and expenses reasonably incurred, in connection
with such refinancing and by an amount equal to any existing commitments
unutilized thereunder and (ii) the terms relating to amortization, maturity,
collateral (if any) and subordination (if any), and other material terms taken
as a whole, of any such refinancing, refunding, renewing or extending
Indebtedness, are no less favorable in any material respect to the Loan Parties
or the Purchaser than the terms of any agreement or instrument governing the
Indebtedness being refinanced, refunded, renewed or extended and the interest
rate applicable to any such refinancing, refunding, renewing or extending
Indebtedness does not exceed the then applicable market interest rate;

 

(3)                                 Guarantees by Limited or any Subsidiary in
respect of Indebtedness otherwise permitted hereunder of the Borrower or any
Guarantor;

 

(4)                                 obligations (contingent or otherwise) of
Limited or any Subsidiary existing or arising under any Swap Contract, provided
that (i) such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Person, or changes in the value of securities
issued by such Person, and not for purposes of speculation or taking a “market
view;” and (ii) such Swap Contract does not contain any provision exonerating
the non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party;

 

(5)                                 Indebtedness in respect of Capital Leases,
Synthetic Lease Obligations, purchase money obligations for fixed or capital
assets and obligations for the construction and improvement of fixed or capital
assets within the limitations set forth in Section 8(a)(9); provided, however,
that the aggregate amount of all such Indebtedness at any one time outstanding
shall not exceed $50,000,000;

 

(6)                                 Indebtedness in respect of the Senior Notes,
the Senior Note Agreements, the Credit Facility; and any refinancings,
refundings, renewals or extensions thereof; provided that (i) the amount of such
Indebtedness is not increased at the time of such refinancing, refunding,
renewal or extension except by an amount equal to a reasonable

 

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premium or other reasonable amount paid, and fees and expenses reasonably
incurred, in connection with such refinancing and by an amount equal to any
existing commitments unutilized thereunder and (ii) the terms relating to
amortization, maturity, collateral (if any) and subordination (if any), and
other material terms taken as a whole, of any such refinancing, refunding,
renewing or extending Indebtedness, are no less favorable in any material
respect to the Purchaser than the terms of any agreement or instrument governing
the Indebtedness being refinanced, refunded, renewed or extended and the
interest rate applicable to any such refinancing, refunding, renewing or
extending Indebtedness does not exceed the then applicable market interest rate;

 

(7)                                 unsecured Indebtedness not otherwise
permitted to be incurred pursuant to any of clauses (1) through (6) above
provided that (i) the final maturity of such Indebtedness is beyond the Maturity
Date and (ii) no Default exists at the time of incurrence of any such
Indebtedness or would result therefrom;

 

(8)                                 Indebtedness not to exceed $20,000,000 at
any one time outstanding; provided that at the time of, and after giving effect
to, the incurrence of such Indebtedness no Default shall exist; and

 

(9)                                 intercompany Indebtedness (i) between Loan
Parties, (ii) between Subsidiaries that are not Loan Parties, or (iii) between a
Loan Party and a Subsidiary that is not a Loan Party in which the net principal
amount thereof, together with all other such Indebtedness between Loan Parties
and Subsidiaries that are not Loan Parties (excluding for purposes of this
calculation any Indebtedness owed by a Loan Party to a Subsidiary that is not a
Loan Party if such Indebtedness is subject to a subordination agreement in form
and substance acceptable to the Purchaser), shall not exceed $100,000,000 in
aggregate amount at any time outstanding.

 

(d)                                 Fundamental Changes.  Merge, dissolve,
liquidate, consolidate with or into another Person, or Dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person,
except that, so long as no Default exists or would result therefrom:

 

(1)                                 any Subsidiary (other than HOT-L.P.) may
merge with (i) one of the Loan Parties, provided such Loan Party shall be the
continuing or surviving Person, or (ii) any one or more other Subsidiaries,
provided that when any Guarantor is merging with another Subsidiary, the
Guarantor shall be the continuing or surviving Person;

 

(2)                                 HOT-L.P. may merge with one of the Loan
Parties or a Subsidiary, provided (i) HOT-L.P. shall be the continuing or
surviving Person or (ii) a Domestic Subsidiary shall be the continuing or
surviving Person and shall become the Borrower, subject to the consent of the
Purchaser;

 

(3)                                 any Subsidiary may Dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to
Limited or any Subsidiary; provided that (i) if the transferor in such a
transaction is a Guarantor, then the transferee must either be HOT-L.P. or a
Guarantor and (ii) if the transferor in such a transaction is HOT-L.P., then the

 

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transferee must be a Domestic Subsidiary that becomes the Borrower, subject to
the consent of the Purchaser; and

 

(4)                                 Limited or any Subsidiary may make any
Acquisition or Disposition permitted by Section 8(b) or 8(e).

 

(e)                                  Dispositions.  Make any Disposition or
enter into any agreement to make any Disposition, except:

 

(1)                                 Dispositions of obsolete or worn out
property, whether now owned or hereafter acquired, in the ordinary course of
business;

 

(2)                                 Dispositions of inventory in the ordinary
course of business;

 

(3)                                 Dispositions of equipment or real property
to the extent that (i) such property is exchanged for credit against the
purchase price of similar replacement property or (ii) the proceeds of such
Disposition are reasonably promptly applied to the purchase price of such
replacement property;

 

(4)                                 Dispositions of property by Limited or any
Subsidiary to one of HOT-L.P. or to a wholly-owned Subsidiary; provided that if
the transferor of such property is a Guarantor, the transferee thereof must
either be the Borrower or a Guarantor;

 

(5)                                 Dispositions permitted by Section 8(d); and

 

(6)                                 Dispositions of assets (including Equity
Interests of a Subsidiary) not otherwise permitted in clauses (1) through
(5) above provided (i) there exists no Default both before and after giving
effect to any such Disposition and (ii) the assets being Disposed of, together
with all other assets Disposed of during the period of 12 consecutive months
ending on the date of such Disposition generated less than 15% of Consolidated
EBITDA determined as of the end of the fiscal year immediately preceding such
Disposition;

 

provided, however, that any Disposition pursuant to clauses (1) through
(6) shall be for fair market value.

 

(f)                                   Restricted Payments.  Declare or make,
directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, except that, so long as no Default shall
have occurred and be continuing at the time of any action described below or
would result therefrom:

 

(1)                                 each Subsidiary may make Dividends to
Limited, the Guarantors and any other Person that owns an Equity Interest in
such Subsidiary, ratably according to their respective holdings of the type of
Equity Interest in respect of which such Dividend is being made;

 

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(2)                                 Limited and each Subsidiary may declare and
make Dividends payable solely in the common stock or other Equity Interests of
such Person (other than Redeemable Stock);

 

(3)                                 Limited and each Subsidiary may pay,
purchase, redeem or otherwise acquire Equity Interests or Indebtedness issued or
incurred by it with the proceeds received from the substantially concurrent
issue of new shares of its common stock or other Equity Interests (other than
Redeemable Stock) or Subordinated Indebtedness;

 

(4)                                 Limited may (i) declare or pay cash
Dividends to its stockholders and (ii) make Treasury Stock Purchases not to
exceed in aggregate amount during any fiscal year in the case of both
subclauses (i) and (ii) immediately preceding 35% of Consolidated Net Earnings
for the immediately preceding fiscal year; provided, however, nothing in this
clause (4) shall prohibit or restrict Treasury Stock Purchases made pursuant to
Limited’s employee stock option repurchase programs; and

 

(5)                                 Limited and each Subsidiary may make
regularly scheduled payments of interest on any Subordinated Indebtedness.

 

(g)                                  Change in Nature of Business.  Engage in
any material line of business substantially different from those lines of
business conducted by Limited and its Subsidiaries on the date hereof or any
business reasonably related or incidental thereto.

 

(h)                                 Transactions with Affiliates.  Enter into
any transaction of any kind with any Affiliate of Limited, whether or not in the
ordinary course of business, other than on fair and reasonable terms
substantially as favorable to Limited or such Subsidiary as would be obtainable
by Limited or such Subsidiary at the time in a comparable arm’s length
transaction with a Person other than an Affiliate, provided that the foregoing
restriction shall not apply to transactions between or among the Borrower and
any Guarantor or between and among any Guarantors.

 

(i)                                     Burdensome Agreements.  Enter into or be
a party to any Contractual Obligation (other than this Guaranty Agreement and
any other Loan Document) that limits the ability (a) of any Subsidiary to make
Restricted Payments to the Borrower or any Guarantor or to otherwise transfer
property to the Borrower or any Guarantor, (b) of any Subsidiary to Guarantee
the Indebtedness of the Borrower or (c) of Limited or any Subsidiary to create,
incur, assume or suffer to exist Liens on property of such Person.  The
provisions of this Section 8(i) will not apply to encumbrances or restrictions
existing under or by reason of (i) the Credit Facility, the Senior Notes, the
Senior Note Agreements, or agreements, instruments and documents entered into in
connection with Indebtedness permitted under Section 8(c)(2), (5), (6) or
(7) and any restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such restatements, renewals,
increases, supplements, refundings, replacements or refinancings are not
materially more restrictive, taken as a whole, with respect to such dividend and
other payment restrictions than those contained in such Contractual Obligations,
(ii) Applicable Law, and (iii) customary non-assignment provisions in
Contractual Obligations entered into in the ordinary course of business and
consistent with past practices, (iv) purchase money obligations permitted under
this Guaranty Agreement that impose restrictions on the property so acquired,
(v) any agreement for the Disposition of a Subsidiary or assets of a

 

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Subsidiary that restricts distributions, the transfer of, or encumbrances on
such assets by that Subsidiary pending its Disposition or any agreement entered
into with respect to assets acquired or disposed of in connection with an
Acquisition or a Disposition, and (vi) Liens securing Indebtedness that limit
the right of the debtor to dispose of the assets subject to such Lien.

 

(j)                                    Use of Proceeds.  Use the proceeds of the
Loan, whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry margin stock (within the meaning of
Regulation U of the FRB) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally
incurred for such purpose.

 

(k)                                 Financial Covenants.

 

(1)                                 Consolidated Net Worth.  Permit Consolidated
Net Worth at any time to be less than the sum of (i) 530,000,000, (ii) an amount
equal to 40% of the Consolidated Net Earnings of each full fiscal quarter ending
after August 31, 2010 (with no deduction for a net loss in any such fiscal
quarter), (iii) an amount equal to 100% of the aggregate increases in
Shareholders’ Equity of Limited and its Subsidiaries after August 31, 2010 by
reason of the issuance and sale of Equity Interests of Limited or any Subsidiary
(other than issuances to Limited or a wholly-owned Subsidiary), including upon
any conversion of debt securities of Limited into such Equity Interests, and
(iv) 100% of the net worth of any Person (other than Kaz) that becomes a
Subsidiary or substantially all of the assets of which are acquired by Limited
or any Subsidiary after August 31, 2010 to the extent the purchase price
therefor is paid in Equity Interests of Limited or any Subsidiary or pursuant to
the conversion or exchange of any convertible subordinated debt or redeemable
preferred stock into Equity Interests of Limited or any Subsidiary.

 

(2)                                 Interest Coverage Ratio.  Permit the
Interest Charge Coverage Ratio as of the end of any fiscal quarter of Limited to
be less than 3.00 to 1.00.

 

(3)                                 Leverage Ratio.  Permit the Leverage Ratio
at any time during any period of four fiscal quarters of Limited to be greater
than 3.00 to 1.00.

 

(l)                                     Amendments of Subordinated
Indebtedness.  Change or permit any Subsidiary to change or amend (or take any
action or fail to take any action the result of which is an effective amendment
or change) or accept any waiver or consent with respect to, any document,
instrument or agreement relating to any Subordinated Indebtedness that would
result in (a) an increase in the principal, interest, overdue interest, fees or
other amounts payable under any Subordinated Indebtedness, (b) an acceleration
of any date fixed for payment or prepayment of principal, interest, fees or
other amounts payable under any Subordinated Indebtedness (including, without
limitation, as a result of any redemption), in each case where such date fixed
would result in a payment prior to the Maturity Date, (c) a change in any of the
subordination provisions of any Subordinated Indebtedness, or (d) any other
change in any term, provision or covenant of any Subordinated Indebtedness that
could reasonably be expected to have an adverse effect on the interest of the
Purchaser.

 

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(m)                             Licenses.  Assign or otherwise transfer any of
the Licenses, in whole or in part, except that Licenses may be transferred to
HOT-Barbados or another Guarantor if, and only if, (a) at the time of such
transfer no Default exists or would result therefrom and (b) at the time of such
transfer, HOT-L.P. is a Subsidiary of HOT-Barbados.

 

(n)                                 Capital Expenditures.  Make or become
legally obligated to make Capital Expenditures, except for Capital Expenditures
not exceeding $30,000,000 in the aggregate to Limited and its Subsidiaries
during any fiscal year; provided, however, that so long as no default has
occurred and is continuing or would result from such Capital Expenditure, 50% of
any portion of such amount not expended in a fiscal year may be carried over for
expenditure in the next following fiscal year; and provided, further, if any
such amount is so carried over, it will be deemed used in the applicable
subsequent fiscal year before the $30,000,000 permitted for such fiscal year.

 

SECTION 9.  Guaranty.  The Guarantors hereby jointly and severally
unconditionally and irrevocably guarantee the full and prompt payment when due,
whether at stated maturity, by acceleration or otherwise, of, and the
performance of, (a) the Obligations, whether now or hereafter existing and
whether for principal, interest, fees, expenses or otherwise, (b) all Swap
Obligations owed to the Purchaser or any Affiliate of the Purchaser, (c) any and
all reasonable out-of-pocket expenses (including, without limitation, reasonable
expenses and reasonable counsel fees and expenses of the Purchaser) incurred by
any of the Guarantied Parties in enforcing any rights under this Guaranty
Agreement and (d) all present and future amounts that would become due but for
the operation of any provision of Debtor Relief Laws, and all present and future
accrued and unpaid interest, including, without limitation, all post-petition
interest if the Borrower or any Guarantor voluntarily or involuntarily becomes
subject to any Debtor Relief Laws (the items set forth in clauses (a), (b),
(c) and (d) immediately above being herein referred to as the “Guarantied
Obligations”).  Upon failure of the Borrower to pay any of the Guarantied
Obligations when due after the giving by the Purchaser of any notice and the
expiration of any applicable cure period in each case provided for in the Loan
Agreement and other Loan Documents (whether at stated maturity, by acceleration
or otherwise), the Guarantors hereby further jointly and severally agree to
promptly pay the same after the Guarantors’ receipt of notice from the Purchaser
of the Borrower’s failure to pay the same, without any other demand or notice
whatsoever, including without limitation, any notice having been given to any
Guarantor of either the acceptance by the Guarantied Parties of this Guaranty
Agreement or the creation or incurrence of any of the Guarantied Obligations. 
This Guaranty Agreement is an absolute guaranty of payment and performance of
the Guarantied Obligations and not a guaranty of collection, meaning that it is
not necessary for the Guarantied Parties, in order to enforce payment by the
Guarantors, first or contemporaneously to accelerate payment of any of the
Guarantied Obligations, to institute suit or exhaust any rights against any Loan
Party, or to enforce any rights against any Collateral.  Notwithstanding
anything herein or in any other Loan Document to the contrary, in any action or
proceeding involving any state corporate law, or any state or federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if, as a result of applicable law relating to fraudulent
conveyance or fraudulent transfer, including Section 548 of Bankruptcy Code or
any applicable provisions of comparable state law (collectively, “Fraudulent
Transfer Laws”), the obligations of any Guarantor under this Section 9 would
otherwise, after giving effect to (a) all other liabilities of such Guarantor,
contingent or otherwise, that are relevant under such Fraudulent Transfer Laws

 

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(specifically excluding, however, any liabilities of such Guarantor in respect
of intercompany Indebtedness to the Borrower to the extent that such
Indebtedness would be discharged in an amount equal to the amount paid by such
Guarantor hereunder) and (b) to the value as assets of such Guarantor (as
determined under the applicable provisions of such Fraudulent Transfer Laws) of
any rights of subrogation, contribution, reimbursement, indemnity or similar
rights held by such Guarantor pursuant to (i) applicable requirements of Law,
(ii) Section 21 hereof or (iii) any other contractual obligations providing for
an equitable allocation among such Guarantor and other Subsidiaries or
Affiliates of the Borrower of obligations arising under this Guaranty Agreement
or other guaranties of the Guarantied Obligations by such parties, be held or
determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability under this
Section 9, then the amount of such liability shall, without any further action
by such Guarantor, the Purchaser, or any other Person, be automatically limited
and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.

 

SECTION 10.  Guaranty Absolute.  Each Guarantor guarantees that the Guarantied
Obligations will be paid strictly in accordance with the terms of the Loan
Agreement, the Note and the other Loan Documents, without set-off or
counterclaim, and regardless of any Applicable Law now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of the Guarantied
Parties with respect thereto.  The liability of each Guarantor under this
Guaranty Agreement shall be absolute and unconditional irrespective of:

 

(a)                                 any lack of validity or enforceability of
any provision of any other Loan Document or any other agreement or instrument
relating to any Loan Document, or avoidance or subordination of any of the
Guarantied Obligations;

 

(b)                                 any change in the time, manner or place of
payment of, or in any other term of, or any increase in the amount of, all or
any of the Guarantied Obligations, or any other amendment or waiver of any term
of, or any consent to departure from any requirement of, the Loan Agreement, the
Note or any of the other Loan Documents;

 

(c)                                  any exchange, release or non-perfection of
any Lien on any collateral for, or any release of any Loan Party or amendment or
waiver of any term of any other guaranty of, or any consent to departure from
any requirement of any other guaranty of, all or any of the Guarantied
Obligations;

 

(d)                                 the absence of any attempt to collect any of
the Guarantied Obligations from the Borrower or from any other Loan Party or any
other action to enforce the same or the election of any remedy by any of the
Guarantied Parties;

 

(e)                                  any waiver, consent, extension, forbearance
or granting of any indulgence by any of the Guarantied Parties with respect to
any provision of any other Loan Document;

 

(f)                                   the election by any of the Guarantied
Parties in any proceeding under any Debtor Relief Law;

 

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(g)                                  any borrowing or grant of a security
interest by the Borrower, as debtor-in-possession, under any Debtor Relief Law;
or

 

(h)                                 any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of the Borrower or any
Guarantor other than payment or performance of the Guarantied Obligations.

 

SECTION 11.  Waiver.  Each Guarantor hereby (i) waives (A) promptness,
diligence, and, except as otherwise provided herein, notice of acceptance and
any and all other notices, including, without limitation, notice of intent to
accelerate and notice of acceleration, with respect to any of the Guarantied
Obligations or this Guaranty Agreement, (B) any requirement that any of the
Guarantied Parties protect, secure, perfect or insure any security interest in
or other Lien on any property subject thereto or exhaust any right or take any
action against the Borrower or any other Person or any collateral, (C) the
filing of any claim with a court in the event of receivership or bankruptcy of
the Borrower or any other Person, (D) except as otherwise provided herein,
protest or notice with respect to nonpayment of all or any of the Guarantied
Obligations, (E) the benefit of any statute of limitation, (F) except as
otherwise provided herein, all demands whatsoever (and any requirement that
demand be made on the Borrower or any other Person as a condition precedent to
such Guarantor’s obligations hereunder), (G) all rights by which any Guarantor
might be entitled to require suit on an accrued right of action in respect of
any of the Guarantied Obligations or require suit against the Borrower or any
other Guarantor or Person, whether arising pursuant to Chapter 43 of the Texas
Civil Practice and Remedies Code, as amended, Section 17.001 of the Texas Civil
Practice and Remedies Code, as amended, Rule 31 of the Texas Rules of Civil
Procedure, as amended, or otherwise, (H) any defense based upon an election of
remedies by any Guarantied Party, or (I) notice of any events or circumstances
set forth in clauses (a) through (h) of Section 10 hereof; and (ii) covenants
and agrees that, except as otherwise agreed by the parties, this Guaranty
Agreement will not be discharged except by complete payment and performance of
the Guarantied Obligations and any other obligations of such Guarantor contained
herein.

 

If, in the exercise of any of its rights and remedies in accordance with the
provisions of Applicable Law, any of the Guarantied Parties shall forfeit any of
its rights or remedies, including, without limitation, its right to enter a
deficiency judgment against the Borrower or any other Person, whether because of
any Applicable Law pertaining to “election of remedies” or the like, each
Guarantor hereby consents to such action by such Guarantied Party and waives any
claim based upon such action.  Any election of remedies which, by reason of such
election, results in the denial or impairment of the right of such Guarantied
Party to seek a deficiency judgment against the Borrower shall not impair the
obligation of such Guarantor to pay the full amount of the Guarantied
Obligations or any other obligation of such Guarantor contained herein.

 

In the event any of the Guarantied Parties shall bid at any foreclosure or
trustee’s sale or at any private sale permitted by Law or under any of the Loan
Documents, to the extent not prohibited by Applicable Law, such Guarantied Party
may bid all or less than the amount of the Guarantied Obligations and the amount
of such bid, if successful, need not be paid by such Guarantied Party but shall
be credited against the Guarantied Obligations.

 

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Each Guarantor agrees that notwithstanding the foregoing and without limiting
the generality of the foregoing if, after the occurrence and during the
continuance of an Event of Default, the Guarantied Parties are prevented by
Applicable Law from exercising their respective rights to accelerate the
maturity of the Guarantied Obligations, to collect interest on the Guarantied
Obligations, or to enforce or exercise any other right or remedy with respect to
the Guarantied Obligations, or the Purchaser is prevented from taking any action
to realize on the collateral, such Guarantor agrees to pay to the Purchaser for
the account of the Guarantied Parties, upon demand therefor, for application to
the Guarantied Obligations, the amount that would otherwise have been due and
payable had such rights and remedies been permitted to be exercised by the
Guarantied Parties.

 

Each Guarantor hereby assumes responsibility for keeping itself informed of the
financial condition of the Borrower and of each other Loan Party, and of all
other circumstances bearing upon the risk of nonpayment of the Guarantied
Obligations or any part thereof, that diligent inquiry would reveal.  Each
Guarantor hereby agrees that the Guarantied Parties shall have no duty to advise
any Guarantor of information known to any of the Guarantied Parties regarding
such condition or any such circumstance.  In the event that any of the
Guarantied Parties in its sole discretion undertakes at any time or from time to
time to provide any such information to any Guarantor, such Guarantied Party
shall be under no obligation (i) to undertake any investigation not a part of
its regular business routine, (ii) to disclose any information which, pursuant
to accepted or reasonable banking or commercial finance practices, such
Guarantied Party wishes to maintain as confidential, or (iii) to make any other
or future disclosures of such information or any other information to such
Guarantor.

 

Each Guarantor consents and agrees that the Guarantied Parties shall be under no
obligation to marshal any assets in favor of any Guarantor or otherwise in
connection with obtaining payment of any or all of the Guarantied Obligations
from any Person or source.

 

SECTION 12.  Events of Default.  Any of the following shall constitute an Event
of Default:

 

(a)                                 Non-Payment.  The failure to pay any amount
payable by the Guarantor hereunder; or

 

(b)                                 Specific Covenants.  Any Guarantor fails to
perform or observe any term, covenant or agreement contained in any of
Section 7(c)(1) — (4), 7(e), 7(j) or 7(k) or Section 8(d), (e), (f), (g), (j),
(k), (l), (m) or (n); or

 

(c)                                  Other Defaults.  Any Guarantor fails to
perform or observe (i) any of Section 8(a), (b), (c), (h) or (i) and such
failure continues for 15 days or (ii) any other covenant or agreement (not
specified in subsection (a) or (b) above) contained in this Guaranty Agreement
on its part to be performed or observed and such failure continues for 30 days;
or

 

(d)                                 Representations and Warranties.  Any
representation, warranty, certification or statement of fact made or deemed made
by or on behalf of the Borrower or any other Loan Party herein, in any other
Loan Document, or in any document delivered in connection herewith or therewith
shall be incorrect or misleading when made or deemed made; or

 

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(e)                                  Cross-Default.  (i) Any Loan Party or any
Subsidiary (A) fails to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) in respect of
any Indebtedness or Guarantee (other than Indebtedness hereunder and
Indebtedness under Swap Contracts) having an aggregate principal amount
(including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $10,000,000 or (B) fails to observe or perform
any other agreement or condition relating to any such Indebtedness or Guarantee
or contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event occurs, the effect of which default or other event
is to cause, or to permit the holder or holders of such Indebtedness or the
beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf
of such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to be demanded or to become due
or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded; or
(ii) there occurs under any Swap Contract an Early Termination Date (as defined
in such Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which any Loan Party or any Subsidiary is the Defaulting Party
(as defined in such Swap Contract) or (B) any Termination Event (as so defined)
under such Swap Contract as to which any Loan Party is an Affected Party (as so
defined) and, in either event, the Swap Termination Value owed by such Loan
Party as a result thereof is greater than $10,000,000; or

 

(f)                                   Insolvency Proceedings, Etc.  Any Loan
Party or any Subsidiary institutes or consents to the institution of any
proceeding under any Debtor Relief Law, or makes an assignment for the benefit
of creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of such Person and the appointment
continues undischarged or unstayed for 60 calendar days; or any proceeding under
any Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

 

(g)                                  Inability to Pay Debts; Attachment. 
(i) Any Loan Party or any Subsidiary becomes unable or admits in writing its
inability or fails generally to pay its debts as they become due, or (ii) any
writ or warrant of attachment or execution or similar process is issued or
levied against all or any material part of the property of any such Person and
is not released, vacated or fully bonded within 30 days after its issue or levy;
or

 

(h)                                 Judgments.  There is entered against any
Loan Party or any Subsidiary (i) a final judgment or order for the payment of
money in an aggregate amount exceeding $10,000,000 not stayed, discharged or
paid 30 days after entry thereof (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any one or more non-monetary final judgments that have, or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
and, in either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of

 

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30 consecutive days during which a stay of enforcement of such judgment, by
reason of a pending appeal or otherwise, is not in effect; or

 

(i)                                     ERISA.  (i) An ERISA Event occurs with
respect to a Pension Plan or Multiemployer Plan which has resulted or could
reasonably be expected to result in liability of any Loan Party or any
Subsidiary under Title IV of ERISA to the Pension Plan, Multiemployer Plan or
the PBGC in an aggregate amount in excess of $5,000,000, or (ii) Limited or any
ERISA Affiliate fails to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of $10,000,000; or

 

(j)                                    Invalidity of Loan Documents.  Any
provision of any Loan Document, at any time after its execution and delivery and
for any reason other than as expressly permitted hereunder or thereunder or
satisfaction in full of all the Obligations, ceases to be in full force and
effect; or any Loan Party or any other Person contests in any manner the
validity or enforceability of any provision of any Loan Document; or any Loan
Party denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any provision of any Loan
Document; or

 

(k)                                 Change of Control.  There occurs any Change
of Control; or

 

(l)                                     Licenses.  Any License shall expire and
not be renewed or shall be otherwise terminated and such expiration, non-renewal
or termination could reasonably be expected to have a Material Adverse Effect.

 

SECTION 13.  Remedies Upon Event of Default.  If any Event of Default occurs and
is continuing, the Purchaser shall take any or all of the following actions:

 

(a)                                 declare the unpaid principal amount of the
Loan and the Note, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, including notice of intent to accelerate and notice of
acceleration, all of which are hereby expressly waived by the Borrower; and

 

(b)                                 exercise all rights and remedies available
to it under the Loan Documents;

 

provided, however, that upon the occurrence of any event specified in
subsection (f) of Section 12, the unpaid principal amount of the Loan and the
Note and all interest and other amounts as aforesaid shall automatically become
due and payable, without further act of the Purchaser.

 

SECTION 14.  Application of Funds.  After the exercise of remedies provided for
in Section 13 (or after the Loan has automatically become immediately due and
payable), any amounts received on account of the Obligations shall be applied by
the Purchaser in the following order:

 

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First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Purchaser and taxes, increased costs and
compensation for losses due to Purchaser);

 

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal and interest) payable to the
Purchaser (including fees, charges and disbursements of counsel to the Purchaser
and taxes, increased costs and compensation for losses due to Purchaser),
ratably among them in proportion to the amounts described in this clause Second
payable to it;

 

Third, to payment of that portion of the Obligations constituting accrued and
unpaid interest on the Loan;

 

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loan, and to the extent payments under any Guaranty, to the
Guarantied Parties, in proportion to the respective amounts described in this
clause Fourth held by them;

 

Fifth, to any remaining outstanding unpaid Obligations, and to the extent that
any amounts are payments under any Guaranty, Swap Obligations in respect of Swap
Contracts, ratably among the Purchaser and the Guarantied Parties in proportion
to the respective amounts described in this clause Fifth held by them; and

 

Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Borrower or as otherwise required by Law.

 

SECTION 15.  Treatment of Certain Information; Confidentiality.  The Purchaser
agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its Affiliates and to its and
its Affiliates’ respective partners, directors, officers, employees, agents,
advisors and representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process,
(d) to any other party hereto, (e) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Guaranty Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower and its obligations, (g) with the consent
of the Borrower or (h) to the extent such Information (x) becomes publicly
available other than as a result of a breach of this Section or (y) becomes
available to the Purchaser or any of its Affiliates on a non-confidential basis
from a source other than the Borrower.

 

For purposes of this Section, “Information” means all information received from
Limited or any Subsidiary relating to Limited or any Subsidiary or any of their
respective businesses, other than any such information that is available to the
Purchaser on a non-confidential basis

 

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prior to disclosure by Limited or any Subsidiary.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

SECTION 16.  Amendments, Etc.  No amendment or waiver of any provision of this
Guaranty Agreement nor consent to any departure by any Guarantor herefrom shall
in any event be effective unless the same shall be in writing, approved and
signed by the Purchaser, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.

 

SECTION 17.  Addresses for Notices.  All notices and other communications
provided for hereunder shall be effectuated in the manner provided for in
Section 9.1 of the Loan Agreement, provided that if a notice or communication
hereunder is sent to a Guarantor, said notice shall be addressed to such
Guarantor, in care of the Borrower at the Borrower’s then current address (or
facsimile number) for notice under the Loan Agreement.

 

SECTION 18.  No Waiver; Remedies.

 

(a)                                 No failure on the part of any Guarantied
Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right.  The remedies herein provided are cumulative and not exclusive of
any remedies provided by Applicable Law or any of the other Loan Documents.

 

(b)                                 No waiver by the Guarantied Parties of any
default shall operate as a waiver of any other default or the same default on a
future occasion, and no action by any of the Guarantied Parties permitted
hereunder shall in way affect or impair any of the rights of the Guarantied
Parties or the obligations of any Guarantor under this Guaranty Agreement or
under any of the other Loan Documents, except as specifically set forth in any
such waiver.  Any determination by a court of competent jurisdiction of the
amount of any principal and/or interest or other amount constituting any of the
Guarantied Obligations shall be conclusive and binding on each Guarantor
irrespective of whether such Guarantor was a party to the suit or action in
which such determination was made.

 

SECTION 19.  Right of Set-off.  Upon the occurrence and during the continuance
of any Event of Default under the Loan Agreement, each of the Guarantied Parties
is hereby authorized at any time and from time to time, to the fullest extent
permitted by Applicable Law, to set-off and apply any and all deposits (general
or special (except trust and escrow accounts), time or demand, provisional or
final, in whatever currency) at any time held and other Indebtedness (in
whatever currency) at any time owing by such Guarantied Party to or for the
credit or the account of each Guarantor against any and all of the obligations
of such Guarantor now or hereafter existing under this Guaranty Agreement,
irrespective of whether or not such Guarantied Party shall have made any demand
under this Guaranty Agreement; provided, however, such Guarantied Party shall
promptly notify such Guarantor and the Borrower after such set-off and the
application made by such Guarantied Party.  The rights of each Guarantied Party
under this

 

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Section 19 are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which such Guarantied Party may have.

 

SECTION 20.  Continuing Guaranty; Transfer of Note.  This Guaranty Agreement
(a)(i) is a continuing guaranty and shall remain in full force and effect until
the date that all Obligations have been paid in full (the “Release Date”) and
(ii) binding upon each Guarantor, its permitted successors and assigns, and
(b) inures to the benefit of and is enforceable by the Guarantied Parties and
their respective successors, permitted transferees, and permitted assigns. 
Without limiting the generality of the foregoing clause (b), each of the
Guarantied Parties may assign or otherwise transfer the Note held by it or the
Guarantied Obligations owed to it to any other Person, and such other Person
shall thereupon become vested with all the rights in respect thereof granted to
such Guarantied Party herein or otherwise with respect to the Note and the
Guarantied Obligations so transferred or assigned, subject, however, to
compliance with the provisions of Section 6.1 of the Loan Agreement in respect
of assignments.  Except as the result of the consummation of a transaction
permitted under Section 8(d) or 8(e) of this Guaranty Agreement, no Guarantor
may assign any of its obligations under this Guaranty Agreement without first
obtaining the written consent of the Purchaser as set forth in the Loan
Agreement.  If upon any merger, dissolution, liquidation or consolidation
permitted under Section 8(d) of this Guaranty Agreement or any Disposition
permitted by Section 8(e) of this Guaranty Agreement, a Guarantor no longer
exists or is no longer a Subsidiary of Limited, such Guarantor shall be released
of its obligations hereunder.

 

SECTION 21.  Reimbursement.  To the extent that any Guarantor shall be required
hereunder to pay a portion of the Guarantied Obligations exceeding the greater
of (a) the amount of the economic benefit actually received by such Guarantor
from the Loan and (b) the amount such Guarantor would otherwise have paid if
such Guarantor had paid the aggregate amount of the Guarantied Obligations
(excluding the amount thereof repaid by the Borrower) in the same proportion as
such Guarantor’s net worth at the date enforcement is sought hereunder bears to
the aggregate net worth of all the Guarantors at the date enforcement is sought
hereunder, then such Guarantor shall be reimbursed by such other Guarantors for
the amount of such excess, pro rata, based on the respective net worths of such
other Guarantors at the date enforcement hereunder is sought.  Notwithstanding
anything to the contrary, each Guarantor agrees that the Guarantied Obligations
may at any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing its guaranty herein or effecting the
rights and remedies of the Guarantied Parties hereunder.  This Section 21 is
intended only to define the relative rights of the Guarantors, and nothing set
forth in this Section 21 is intended to or shall impair the obligations of the
Guarantors, jointly and severally, to pay to the Guarantied Parties the
Guarantied Obligations as and when the same shall become due and payable in
accordance with the terms hereof.

 

SECTION 22.  Reinstatement.  This Guaranty Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Loan Party for liquidation or reorganization, should any Loan Party
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any Loan
Party’s assets, and shall, to the fullest extent permitted by Applicable Law,
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Guarantied Obligations, or any part thereof, is,
pursuant to Applicable Law,

 

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rescinded or reduced in amount, or must otherwise be restored or returned by any
obligees of the Guarantied Obligations or such part thereof, whether as a
“voidable preference,” “fraudulent transfer,” or otherwise, all as though such
payment or performance had not been made.  In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Guarantied
Obligations shall, to the fullest extent permitted by law, be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.

 

SECTION 23.  Governing Law.

 

(a)                                 THIS GUARANTY AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT
EACH PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)                                 ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS GUARANTY AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF TEXAS SITTING IN DALLAS COUNTY, TEXAS OR IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS (DALLAS DIVISION), AND
BY EXECUTION, DELIVERY AND ACCEPTANCE OF THIS GUARANTY AGREEMENT, EACH GUARANTOR
AND THE PURCHASER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  EACH GUARANTOR AND THE PURCHASER
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.  EACH GUARANTOR AND THE
PURCHASER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

 

SECTION 24.  Waiver of Jury Trial.  EACH GUARANTOR AND THE PURCHASER HEREBY (OR
BY ACCEPTANCE HEREOF) EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY ONE OR MORE OF
EACH GUARANTOR, THE BORROWER, OR THE PURCHASER WITH RESPECT TO ANY LOAN
DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND
EACH OF THE GUARANTORS AND THE PURCHASER HEREBY AGREES AND CONSENTS THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY OF THE GUARANTORS AND THE PURCHASER MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF EACH GUARANTOR AND THE PURCHASER TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.

 

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SECTION 25.  Section Titles.  The Section titles contained in this Guaranty
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Guaranty Agreement.

 

SECTION 26.  Execution in Counterparts.  This Guaranty Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
Guaranty.

 

SECTION 27.  Miscellaneous.  All references herein to the Borrower or to any
Guarantor shall include their respective successors and assigns, including,
without limitation, a receiver, trustee or debtor-in-possession of or for the
Borrower or such Guarantor.  All references to the singular shall be deemed to
include the plural where the context so requires.

 

SECTION 28.  Subrogation and Subordination.

 

(a)                                 Subrogation.  Notwithstanding any reference
to subrogation contained herein to the contrary, until the Release Date, each
Guarantor hereby irrevocably waives any claim or other rights which it may have
or hereafter acquire against the Borrower that arise from the existence,
payment, performance or enforcement of such Guarantor’s obligations under this
Guaranty Agreement, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, any right to
participate in any claim or remedy of the Purchaser against the Borrower or any
collateral which the Purchaser now has or hereafter acquires, whether or not
such claim, remedy or right arises in equity, or under contract, statutes or
common law, including without limitation, the right to take or receive from the
Borrower, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights. 
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Guarantied Obligations shall not have been paid in full, such
amount shall be deemed to have been paid to such Guarantor for the benefit of,
and held in trust for the benefit of, the Purchaser, and shall forthwith be paid
to the Purchaser to be credited and applied upon the Guarantied Obligations,
whether matured or unmatured, in accordance with the terms of the Loan
Agreement.  Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Loan Agreement and
that the waiver set forth in this Section 28 is knowingly made in contemplation
of such benefits.

 

(b)                                 Subordination.  All debt and other
liabilities of the Borrower to any Guarantor (“Borrower Debt”) are expressly
subordinate and junior to the Guarantied Obligations and any instruments
evidencing the Borrower Debt to the extent provided below.

 

(i)                                     Until the Release Date, each Guarantor
agrees that it will not request, demand, accept, or receive (by set-off or other
manner) any payment amount, credit or reduction of all or any part of the
amounts owing under the Borrower Debt or any security therefor, except as
specifically allowed pursuant to clause (ii) below;

 

(ii)                                  Notwithstanding the provisions of
clause (i) above, the Borrower may pay to the Guarantors and the Guarantors may
request, demand, accept and receive and retain

 

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from the Borrower payments, credits or reductions of all or any part of the
amounts owing under the Borrower Debt or any security therefor on the Borrower
Debt, provided that the Borrower’s right to pay and the Guarantors’ right to
receive any such amount shall automatically and be immediately suspended and
cease (A) upon the occurrence and during the continuance of an Event of Default
or (B) if; after taking into account the effect of such payment, an Event of
Default would occur and be continuing.  The Guarantors’ right to receive amounts
under this clause (ii) (including any amounts which theretofore may have been
suspended) shall automatically be reinstated at such time as the Event of
Default which was the basis of such suspension has been cured or waived
(provided that no subsequent Event of Default has occurred) or such earlier
date, if any, as the Purchaser gives notice to the Guarantors of reinstatement
by the Purchaser, in the Purchaser’s sole discretion;

 

(iii)                               If any Guarantor receives any payment on the
Borrower Debt in violation of this Guaranty Agreement, such Guarantor will hold
such payment in trust for the Purchaser and will immediately deliver such
payment to the Purchaser; and

 

(iv)                              In the event of the commencement or joinder of
any suit, action or proceeding of any type (judicial or otherwise) or proceeding
under any Debtor Relief Law against the Borrower (an “Insolvency Proceeding”)
and subject to court orders issued pursuant to the Bankruptcy Code, the
Guarantied Obligations shall first be paid, discharged and performed in full
before any payment or performance is made upon the Borrower Debt notwithstanding
any other provisions which may be made in such Insolvency Proceeding.  In the
event of any Insolvency Proceeding, each Guarantor will at any time prior to the
Release Date (A) file, at the request of any Guarantied Party, any claim, proof
of claim or similar instrument necessary to enforce the Borrower’s obligation to
pay the Borrower Debt, and (B) hold in trust for and pay to the Guarantied
Parties any and all monies, obligations, property, stock dividends or other
assets received in any such proceeding on account of the Borrower Debt in order
that the Guarantied Parties may apply such monies or the cash proceeds of such
other assets to the Obligations.

 

SECTION 29.  Guarantor Insolvency.  Should any Guarantor voluntarily seek,
consent to, or acquiesce in the benefits of any Debtor Relief Law or become a
party to or be made the subject of any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the rights of any Guarantied Party granted hereunder,
then, the obligations of such Guarantor under this Guaranty Agreement shall be,
as between such Guarantor and such Guarantied Party, a fully-matured, due, and
payable obligation of such Guarantor to such Guarantied Party (without regard to
whether there is an Event of Default under the Loan Agreement or whether any
part of the Guarantied Obligations is then due and owing by the Borrower to such
Guarantied Party), payable in full by such Guarantor to such Guarantied Party
upon demand, which shall be the estimated amount owing in respect of the
contingent claim created hereunder.

 

SECTION 30.  Rate Provision.  It is not the intention of any Guarantied Party to
make an agreement violative of the laws of any applicable jurisdiction relating
to usury.  Regardless of any provision in this Guaranty Agreement, no Guarantied
Party shall ever be entitled to contract,

 

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charge, receive, collect or apply, as interest on the Guarantied Obligations,
any amount in excess of the Highest Lawful Rate.  In no event shall any
Guarantor be obligated to pay any amount in excess of the Highest Lawful Rate. 
If from any circumstance the Purchaser or any Guarantied Party shall ever
receive, collect or apply anything of value deemed excess interest under
Applicable Law, an amount equal to such excess shall be applied to the reduction
of the principal amount of the outstanding Loan and any remainder shall be
promptly refunded to the payor.  In determining whether or not interest paid or
payable with respect to the Guarantied Obligations, under any specified
contingency, exceeds the Highest Lawful Rate, the Guarantors and the Guarantied
Parties shall, to the maximum extent permitted by Applicable Law,
(a) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (b) exclude voluntary prepayment and the effects thereof,
(c) amortize, prorate, allocate and spread in equal or unequal parts the total
amount of interest throughout the full term of such Guarantied Obligations so
that the interest paid on account of such Guarantied Obligations does not exceed
the Highest Lawful Rate and/or (d) allocate interest between portions of such
Guarantied Obligations; provided that if the Guarantied Obligations are paid and
performed in full prior to the end of the full contemplated term thereof, and if
the interest received for the actual period of existence thereof exceeds the
Highest Lawful Rate, the Guarantied Parties shall refund to the payor the amount
of such excess or credit the amount of such excess against the total principal
amount owing, and, in such event, no Guarantied Party shall be subject to any
penalties provided by any laws for contracting for, charging or receiving
interest in excess of the Highest Lawful Rate.

 

SECTION 31.  Severability.  Any provision of this Guaranty Agreement which is
for any reason prohibited or found or held invalid or unenforceable by any court
or governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability, without invalidating the remaining provisions
hereof in such jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.

 

SECTION 32.  Taxes.

 

(a)                                 Any and all payments by or on account of any
obligations of the Guarantors hereunder shall be made free and clear of and”
without reduction or withholding for any Indemnified Taxes or Other Taxes,
provided that if any Guarantor shall be required by Applicable Law to deduct any
Indemnified Taxes (including any Other Taxes) from such payments, then (i) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the applicable Guarantied Party receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such Guarantor
shall make such deductions and (iii) such Guarantor shall timely pay the full
amount deducted to the relevant Governmental Authority in accordance with
Applicable Law.

 

(b)                                 Without limiting the provisions of
subsection (a) above, the Guarantors shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with Applicable Law.

 

(c)                                  The Guarantors shall indemnify each
Guarantied Party, within 10 days after demand therefor, for the full amount of
any Indemnified Taxes or Other Taxes (including

 

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Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by such Guarantied Party and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  A
certificate as to the amount of such payment or liability delivered to the
Guarantors by such Guarantied Party (with a copy to the Purchaser), or by the
Purchaser on its own behalf or on behalf of any Guarantied Party shall be
conclusive absent manifest error.

 

(d)                                 As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by any Guarantor to a Governmental Authority,
such Guarantor shall deliver to the Purchaser the original or a certified copy
of a receipt issued by such Governmental Authority evidencing such payment, a
copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Purchaser.

 

(e)                                  If any Guarantied Party 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 any Guarantor or with respect to which any
Guarantor has paid additional amounts pursuant to this Section, it shall pay to
such Guarantor an amount equal to such refund (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), net of all out-of-pocket expenses of such Guarantied Party, and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund), provided that such Guarantor, upon the request of
such Guarantied Party, agrees to repay the amount paid over to such Guarantor
(plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to such Guarantied Party in the event such Guarantied
Party is required to repay such refund to such Governmental Authority.  This
subsection shall not be construed to require any Guarantied Party to make
available its tax returns (or any other information relating to its taxes that
it deems confidential) to the Guarantors or any other Person.

 

(f)                                   The obligations of each Guarantor and
Guarantied Party under this Section 32 shall survive repayment of all Guarantied
Obligations.

 

SECTION 33.  Additional Guarantors.  Upon the execution and delivery by any
other Person of a Guaranty Supplement in substantially the form of Exhibit B
(each, a “Guaranty Supplement”), such Person shall become a “Guarantor”
hereunder with the same force and effect as if originally named as a Guarantor
herein.  The execution and delivery of any Guaranty Supplement shall not require
the consent of any other Guarantor hereunder.  The rights and obligations of
each Guarantor hereunder shall remain in full force and effect notwithstanding
the addition of any new Guarantor as a party to this Guaranty Agreement.

 

SECTION 34.  Entire Agreement.  THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
BETWEEN THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

48

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IN WITNESS WHEREOF, each of the parties hereto have caused this Guaranty
Agreement to be duly executed and delivered by its duly authorized officer on
the date first above written.

 

 

HELEN OF TROY L.P.,

 

a Texas limited partnership

 

 

 

 

By:

HELEN OF TROY NEVADA CORPORATION,

 

 

a Nevada corporation, General Partner

 

 

 

 

HELEN OF TROY LIMITED,

 

a Bermuda company

 

 

 

 

HELEN OF TROY LIMITED,

 

a Barbados corporation

 

 

 

 

HOT NEVADA, INC.,

 

a Nevada corporation

 

 

 

 

HELEN OF TROY NEVADA CORPORATION,

 

a Nevada corporation

 

 

 

 

HELEN OF TROY TEXAS CORPORATION,

 

a Texas corporation

 

 

 

 

IDELLE LABS LTD.,

 

a Texas limited partnership

 

 

 

 

By:

HELEN OF TROY NEVADA CORPORATION,

 

 

a Nevada corporation, General Partner

 

 

 

 

OXO INTERNATIONAL LTD.,

 

a Texas limited partnership

 

 

 

 

By:

HELEN OF TROY NEVADA CORPORATION,

 

 

a Nevada corporation, General Partner

 

 

 

 

 

 

 

By:

/s/ Gerald J. Rubin

 

 

Gerald J. Rubin

 

 

Chairman, CEO and President for all

 

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HELEN OF TROY MACAO COMMERCIAL OFFSHORE LIMITED,

 

a Macau corporation

 

 

 

 

 

 

 

By:

/s/ Gerald J. Rubin

 

 

Gerald J. Rubin

 

 

Director

 

 

 

 

KAZ, INC.,

 

a New York corporation

 

 

 

 

 

 

 

By:

/s/ Gerald J. Rubin

 

 

Gerald J. Rubin

 

 

Chairman

 

 

 

 

KAZ CANADA, INC.,

 

a Massachusetts corporation

 

 

 

 

 

 

 

By:

/s/ Gerald J. Rubin

 

 

Gerald J. Rubin

 

 

Chairman

 

 

 

 

PUR WATER PURIFICATION PRODUCTS, INC.,

 

a Nevada corporation

 

 

 

 

 

 

 

By:

/s/ Gerald J. Rubin

 

 

Gerald J. Rubin

 

 

Chairman

 

2

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BANK OF AMERICA, N.A.

 

 

 

 

 

 

 

By:

/s/ Gary L. Mingle

 

 

Gary L. Mingle

 

 

Senior Vice President

 

3

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