EXHIBIT 10.2
 
GUARANTY
 
GUARANTY, dated July 30, 2010, made by Fredericks.com, Inc., a Nevada
corporation (“Guarantor”), in favor of each of the Lenders (as hereinafter
defined) and Hilco Brands, LLC, as agent for the Lenders (the “Agent”) pursuant
to the Financing Agreement referred to below.
 
WITNESSETH:
 
WHEREAS, Fredericks of Hollywood Group Inc., a New York corporation (“Group”),
FOH Holdings, Inc., a Delaware corporation (the “Parent”), Frederick’s of
Hollywood, Inc., a Delaware corporation (“Frederick’s”), Frederick’s of
Hollywood Stores, Inc., a Nevada corporation (“Stores”), Hollywood Mail Order
LLC, a Nevada limited liability company (“Mail Order”; together with the Group,
Parent, Frederick’s and Stores, each, a “Borrower” and collectively, the
“Borrowers”), the lending parties from time to time a party thereto (each
individually a “Lender” and collectively, the “Lenders”), and the Agent are
parties to a Financing Agreement, dated as of July 30, 2010 (such Agreement, as
amended, restated or otherwise modified from time to time, being hereinafter
referred to as the “Financing Agreement”);
 
WHEREAS, pursuant to the Financing Agreement, the Lenders have agreed to make a
certain secured term loan to the Borrowers;
 
WHEREAS, Group directly or indirectly owns all of the issued and outstanding
shares of capital stock of Guarantor;
 
WHEREAS, it is a condition precedent to the making of the Loan pursuant to the
Financing Agreement that Guarantor shall have executed and delivered to the
Agent and the Lenders a guaranty guaranteeing the obligations of the Borrowers
under the Loan Documents (as defined in the Financing Agreement);
 
WHEREAS, the Borrowers and the Guarantor are mutually dependent on each other in
the conduct of their respective businesses as an integrated operation, with the
credit needed from time to time by the Guarantor often being provided through
financing obtained by the Borrowers and the ability of the Borrowers to obtain
such financing being dependent on the successful operations of the Guarantor;
and
 
WHEREAS, Guarantor has determined that its execution, delivery and performance
of this Guaranty directly benefit, and are within the purposes and in the best
interests of, Guarantor;
 
NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce the Lenders to make the Loan pursuant to the Financing
Agreement, Guarantor hereby agrees with the Lenders and the Agent as follows:

 

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SECTION 1.    Definitions.  Reference is hereby made to the Financing Agreement
for a statement of the terms thereof. All terms used in this Guaranty which are
defined therein and not otherwise defined herein shall have the same meanings
herein as set forth in the Financing Agreement.
 
SECTION 2.    Guaranty.  Guarantor hereby (i) irrevocably, absolutely and
unconditionally guarantees and becomes surety for the prompt payment by the
Borrowers, as and when due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), of all amounts now or hereafter
owing in respect of the Note, the Financing Agreement and the other Loan
Documents, whether for principal, interest (including, without limitation,
interest accruing on or after the commencement of any Insolvency Proceeding
relating to a Borrower), premiums, indemnities, fees, costs, expenses
(including, without limitation, fees, costs and expenses arising or accruing on
or after the commencement of any Insolvency Proceeding relating to a Borrower),
or otherwise, and whether accruing before or subsequent to the commencement of
any Insolvency Proceeding relating to a Borrower (notwithstanding the operation
of the automatic stay under Section 362(a) of the Bankruptcy Code), and the due
performance and observance by each Borrower of its other obligations now or
hereafter existing in respect of the Loan Documents (collectively, the
“Obligations”); and (ii) agrees to pay any and all expenses (including counsel
fees, costs and expenses) incurred by the Agent and the Lenders in enforcing any
of their rights under this Guaranty. Without limiting the generality of the
foregoing, Guarantor’s liability shall extend to all amounts that constitute
part of the Obligations and would be owed by a Borrower under the Financing
Agreement or other Loan Documents but for the fact that such document is
unenforceable or not allowable due to the existence of an Insolvency Proceeding
involving a Borrower.
 
SECTION 3.    Guarantor’s Obligations Unconditional.
 
(a)           Guarantor hereby guarantees that the Obligations will be paid
strictly in accordance with the terms of the Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent or the Lenders with
respect thereto. Guarantor agrees that its guarantee and suretyship constitutes
a guaranty of payment when due and not of collection and waives any right to
require that any resort be made by the Agent or the Lenders to any Collateral.
The obligations of Guarantor under this Guaranty are independent of the
obligations under the Financing Agreement and the other Loan Documents, and a
separate action or actions may be brought and prosecuted against Guarantor to
enforce this Guaranty, irrespective of whether any action is brought against any
Borrower or any other Loan Party or whether any Borrower or any other Loan Party
is joined in any such action. The liability of Guarantor hereunder shall be
absolute, unlimited and unconditional irrespective of: (i) any lack of validity
or enforceability of any Loan Document or any agreement or instrument relating
thereto; (ii) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Obligations, or any other amendment
or waiver of or consent to any departure from any provision of any Loan Document
(including the creation or existence of any Obligations in excess of the amount
evidenced by the Loan Documents); (iii) any exchange or release of, or
non-perfection of any Lien on or security interest in, any Collateral, or any
release or amendment or waiver of or consent to any departure from any other
guaranty, for all or any of the Obligations; (iv) the existence of any claim,
set-off, defense or other right that Guarantor may have at any time against any
Person, including, without limitation, the Agent or any of the Lenders, or (v)
any other circumstance which might otherwise constitute a defense available to,
or a discharge of, any Borrower or any Loan Party in respect of the Obligations
or Guarantor in respect hereof.

 
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(b)           This Guaranty (i) is a continuing guaranty and suretyship and
shall remain in full force and effect until such date on which all of the
Obligations and all other expenses to be paid by the Guarantor pursuant hereto
shall have been Paid in Full and (ii) shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by the Agent or any
Lender, in connection with an Insolvency Proceeding with respect to a Borrower
or otherwise, all as though such payment had not been made. As used herein,
“Paid in Full” means the indefeasible, full and final payment in cash, in
immediately available funds, of all the Obligations (whether or not any of the
Obligations shall have been voided, disallowed or subordinated pursuant to any
provision of the Bankruptcy Code, any applicable state fraudulent conveyance
law, any other law in connection with an Insolvency Proceeding or
otherwise).  The expressions “prior payment in full”, “payment in full”, “paid
or satisfied in full” and “paid in full” (whether or not such expressions are
capitalized) and other similar phrases shall have correlative meanings.
 
SECTION 4.    Waivers.
 
(a)           Guarantor hereby waives: (i) promptness and diligence; (ii) notice
of acceptance and notice of the incurrence of any Obligation by the Borrowers;
(iii) notice of any actions taken by the Agent, the Borrowers, any Loan Party or
any Lender under any Loan Document or any other agreement or instrument relating
thereto; (iv) all other notices, demands and protests, and all other formalities
of every kind in connection with the enforcement of the Obligations or of the
obligations of Guarantor hereunder, the omission of or delay in which, but for
the provisions of this Section 4, might constitute grounds for relieving
Guarantor of its obligations hereunder; (v) any right to compel or direct the
Agent or the Lenders to seek payment or recovery of any amounts owed under this
Guaranty from any one particular fund or source; (vi) any requirement that the
Agent protect, secure, perfect or insure any security interest or Lien or any
property subject thereto or exhaust any right or take any action against any
Borrower, any Loan Party or any other Person or any Collateral; and (vii) any
other defense available to Guarantor. Guarantor agrees that the Agent and the
Lenders shall have no obligation to marshall any assets in favor of Guarantor or
against or in payment of any or all of the Obligations.
 
(b)           To the fullest extent permitted by applicable law, Guarantor
hereby waives: (i) any rights to assert against any of the Agent or a Lender any
defense (legal or equitable), set-off, counterclaim, or claim which Guarantor
may now or at any time hereafter have against the Borrowers or any other party
liable to any of the Agent or a Lender; (ii) any defense, set-off, counterclaim,
or claim, of any kind or nature, arising directly or indirectly from the present
or future lack of perfection, sufficiency, validity, enforceability of the
guarantied Obligations or any security therefor, or any defense based on
suretyship or impairment of collateral; (iii) any defense arising by reason of
any claim or defense based upon an election of remedies by any of the Agent or a
Lender, including any defense based upon an election of remedies by any of the
Agent or a Lender under the laws of any jurisdiction; and (iv) the benefit of
any statute of limitations affecting Guarantor’s liability hereunder or the
enforcement thereof, and any act which shall defer or delay the operation of any
statute of limitations applicable to the Obligations shall similarly operate to
defer or delay the operation of such statute of limitations applicable to
Guarantor’s liability hereunder.

 
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(c)         If any of the Obligations at any time are secured by a mortgage or
deed of trust upon real property, the Agent or a Lender may elect, in their sole
discretion, upon a default with respect to the Obligations, to foreclose such
mortgage or deed of trust judicially or nonjudicially in any manner permitted by
law, before or after enforcing this Guaranty, without diminishing or affecting
the liability of Guarantor hereunder. Guarantor understands that (i) by virtue
of the operation of any antideficiency law applicable to nonjudicial
foreclosures or any similar laws of any jurisdiction, an election by the Agent
or a Lender nonjudicially to foreclose such a mortgage or deed of trust probably
would have the effect of impairing or destroying rights of subrogation,
reimbursement, contribution, or indemnity of Guarantor against the Borrowers or
other guarantors or sureties, and (ii) absent the waiver given by Guarantor
herein, such an election would estop the Agent and the Lenders from enforcing
this Guaranty against Guarantor. Understanding the foregoing, and understanding
that the Guarantor hereby is relinquishing a defense to the enforceability of
this Guaranty, Guarantor hereby waives any right to assert against the Lenders
any defense to the enforcement of this Guaranty, whether denominated “estoppel”
or otherwise, based on or arising from an election by the Agent or a Lender
nonjudicially to foreclose any such mortgage or deed of trust.  Guarantor
understands that the effect of the foregoing waiver may be that Guarantor may
have liability hereunder for amounts with respect to which Guarantor may be left
without rights of subrogation, reimbursement, contribution, or indemnity against
the Borrowers or other guarantors or sureties. Guarantor also agrees that the
“fair market value” provisions of the laws of any jurisdiction shall have no
applicability with respect to the determination of Guarantor’s liability under
this Guaranty.
 
(d)         Without limiting the generality of any other waiver or other
provision set forth in this Guaranty, Guarantor waives all rights and defenses
that Guarantor may have if the Borrowers’ debt is secured by real property. This
means, among other things:
 
(i)           The Agent and the Lenders may collect from Guarantor without first
foreclosing on any real or personal property collateral that may be pledged by
the Borrowers.
 
(ii)          If the Agent and the Lenders foreclose on any real property
collateral that may be pledged by the Borrowers:
 
(1)         the amount of the debt may be reduced only by the price for which
that collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price.

 
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(2)           the Agent and the Lenders may collect from Guarantor even if the
Agent and the Lenders, by foreclosing on the real property collateral, have
destroyed any right Guarantor may have to collect from the Borrowers.
 
This is an unconditional and irrevocable waiver of any rights and defenses
Guarantor may have if the Borrowers’ debt is secured by real property.
 
(e)           WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER
PROVISION SET FORTH IN THIS GUARANTY, GUARANTOR WAIVES ALL RIGHTS AND DEFENSES
ARISING OUT OF AN ELECTION OF REMEDIES BY THE AGENT AND THE LENDERS, EVEN THOUGH
THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO
SECURITY FOR A GUARANTIED OBLIGATION, HAS DESTROYED GUARANTOR’S RIGHTS OF
SUBROGATION AND REIMBURSEMENT AGAINST THE BORROWERS BY THE LAWS OF ANY
JURISDICTION.
 
SECTION 5.    Subrogation.  Guarantor agrees not to exercise any rights which it
may acquire by way of subrogation hereunder, by any payment made by it hereunder
or otherwise, until such date after the Maturity Date on which all of the
Obligations and all other fees, costs and expenses to be paid by the Guarantor
pursuant hereto shall have been Paid in Full. If any amount shall be paid to
Guarantor on account of such subrogation rights at any time when all of the
Obligations and all such other expenses shall not have been paid in full, such
amount shall be held in trust for the benefit of the Agent and the Lenders,
shall be segregated from the other funds of the Guarantor and shall forthwith be
paid over to the Agent to be applied in whole or in part by the Agent against
the Obligations, whether matured or unmatured, and all such other expenses in
accordance with the terms of the Financing Agreement. If (i) Guarantor shall
make payment to the Agent of all or any portion of the Obligations and (ii) all
of the Obligations and all such other fees, costs and expenses shall be paid in
full, the Agent will, at Guarantor’s request, execute and deliver to Guarantor
(without recourse, representation or warranty) appropriate documents necessary
to evidence the transfer by subrogation to Guarantor of an interest in the
Obligations resulting from such payment by Guarantor, such subrogation to be
fully subject and subordinate, however, to the collection by the Agent and the
Lenders of all other amounts due to the Agent and the Lenders by the Borrowers
and each other Loan Party under the Financing Agreement and the other Loan
Documents.
 
SECTION 6.    Representations and Warranties.  Guarantor hereby represents and
warrants as follows:
 
(a)           Guarantor (i) is a corporation, limited liability company or
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization as set forth on the first page hereof,
(ii) has all requisite power and authority to execute, deliver and perform this
Agreement and each other Loan Document to be executed and delivered by it
pursuant hereto and to consummate the transactions contemplated hereby and
thereby, and (iii) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or leased by it
or in which the transaction of its business makes such qualification necessary.

 
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(b)           The execution, delivery and performance by Guarantor of this
Guaranty and each other Loan Document to which Guarantor is a party (i) have
been duly authorized by all necessary action, (ii) do not and will not
contravene its charter or by-laws, its limited liability company or operating
agreement or its certificate of partnership or partnership agreement, as
applicable, or any applicable law or any contractual restriction binding on or
affecting it or any of its properties, (iii) do not and will not result in or
require the creation of any Lien, security interest or other charge or
encumbrance upon or with respect to any of its properties other than pursuant to
any Loan Document, and (iv) do not and will not result in any default,
noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to it or its
operations or any of its properties.
 
(c)           No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or other regulatory body is required in
connection with the due execution, delivery and performance by Guarantor of this
Guaranty or any of the other Loan Documents to which Guarantor is a party.
 
(d)           Each of this Guaranty and the other Loan Documents to which
Guarantor is a party is a legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws.
 
(e)           There is no pending or, to the best knowledge of Guarantor,
threatened action, suit or proceeding against Guarantor or to which any of the
properties of Guarantor is subject, before any court or other Governmental
Authority or any arbitrator that (i) could have a Material Adverse Effect or
(ii) relates to the Financing Agreement or any other Loan Document or any of the
transactions contemplated hereby or thereby.
 
(f)            Guarantor now has and will continue to have independent means of
obtaining information concerning the affairs, financial condition and business
of the Borrowers and the other Loan Parties, and has no need of, or right to
obtain from, the Agent or any Lender any credit or other information concerning
the affairs, financial condition or business of any of the Borrowers or the
other Loan Parties that may come under the control of the Agent or any Lender.
 
SECTION 7.    Right of Set-off.  Upon the occurrence and during the continuance
of any Event of Default, the Agent and the Lenders may, and are hereby
authorized to, at any time and from time to time, without notice to Guarantor
(any such notice being expressly waived by Guarantor) and to the fullest extent
permitted by law, set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Agent or any Lender to or for the credit of the account of
Guarantor against any and all obligations of the Guarantor now or hereafter
existing under this Guaranty, irrespective of whether or not the Agent or any
Lender shall have made any demand under this Guaranty and although such
obligations may be contingent or unmatured. The Agent and the Lenders agree to
notify the Guarantor promptly after any such set-off and application made by the
Agent or such Lender, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Agent and
the Lenders under this Section 7 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Agent and the
Lenders may have.

 
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SECTION 8.    Notices, Etc.  All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied or delivered, if to Guarantor,
to it c/o Frederick’s at its address set forth in the Financing Agreement; if to
the Agent, to it at its address set forth in the Financing Agreement; or, as to
any such Person, at such other address as shall be designated by such Person in
a written notice to such other Persons complying as to delivery with the terms
of this Section 8. All such notices and other communications shall be effective
(i) if mailed, when received or three days after deposited in the mails,
whichever occurs first, (ii) if telecopied, when transmitted and a confirmation
is received, or (iii) if delivered, upon delivery.
 
SECTION 9.    Consent to Jurisdiction; Waiver of Immunities.
 
(a)           Guarantor hereby irrevocably submits to the jurisdiction of the
courts of the State of New York, the courts of the United States of America for
the Southern District of the State of New York in any action, suit or proceeding
arising out of or relating to this Guaranty, and Guarantor hereby irrevocably
agrees that all claims in respect of such action, suit or proceeding may be
heard and determined in the State of New York or such federal court. Guarantor
consents to the service of any and all process in any such action, suit or
proceeding by mailing (by certified or registered mail, postage prepaid and
return receipt requested) or delivering a copy of such process to Guarantor at
its address set forth in Section 8 hereof or at such other address of which the
Agent shall have been notified pursuant thereto. Guarantor agrees that a final
judgment in any such action, suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
 
(b)           Nothing in this Section 9 shall affect the right of the Agent to
serve legal process in any other manner permitted by law or affect the right of
the Agent to bring any action, suit or proceeding against Guarantor or its
property in the courts of any other jurisdictions.
 
(c)           Guarantor hereby expressly and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of venue of any such action, suit or proceeding brought in any such court
referred to above and any claim that any such action, suit or proceeding has
been brought in an inconvenient forum. To the extent that Guarantor has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property, Guarantor hereby irrevocably waives such immunity in respect of its
obligations under this Guaranty and the other Loan Documents.

 
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(d)           To the extent that Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty
 
(e)           Guarantor hereby expressly and irrevocably waives any right it may
have to claim or recover in any action, suit or proceeding referred to in this
Section 9 any special, exemplary, punitive or consequential damages.
 
SECTION 10.  WAIVER OF JURY TRIAL.  GUARANTOR AND, BY ACCEPTANCE HEREOF, THE
AGENT AND EACH LENDER WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS GUARANTY, THE LOAN
DOCUMENTS OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER
AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION
THEREWITH, OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS
GUARANTY, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
 
SECTION 11.  Miscellaneous.
 
(a)           Guarantor will make each payment hereunder in lawful money of the
United States of America and in immediately available funds to the Agent, for
the benefit of the Lenders, at such address specified by the Agent from time to
time by notice to the Guarantor.
 
(b)           No amendment of any provision of this Guaranty shall be effective
unless it is in writing and signed by Guarantor and the Agent, and no waiver of
any provision of this Guaranty, and no consent to any departure by Guarantor
therefrom, shall be effective unless it is in writing and signed by the Agent,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
 
(c)           No failure on the part of the Agent to exercise, and no delay in
exercising, any right hereunder or under any other Loan Document shall operate
as a waiver thereof, nor shall any single or partial exercise of any right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of the Agent and the Lenders provided herein and
in the other Loan Documents are cumulative and are in addition to, and not
exclusive of, any rights or remedies provided by law. The rights of the Agent
and the Lenders under any Loan Document against any party thereto are not
conditional or contingent on any attempt by the Agent and the Lenders to
exercise any of their rights under any other Loan Document against such party or
against any other Person.
 
(d)           Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining portions hereof or thereof or affecting the validity or enforceability
of such provision in any other jurisdiction.

 
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(e)           This Guaranty shall (i) be binding on Guarantor and its successors
and assigns, and (ii) inure, together with all rights and remedies of the Agent
and the Lenders hereunder, to the benefit of the Agent and the Lenders and their
respective successors, transferees and assigns. Without limiting the generality
of clause (ii) of the immediately preceding sentence, to the extent permitted by
Section 9.07 of the Financing Agreement, any Lender may assign or otherwise
transfer its rights under any Loan Document, to any other Person, and such other
Person shall thereupon become vested with all of the benefits in respect thereof
granted to the Lenders herein or otherwise. None of the rights or obligations of
Guarantor hereunder may be assigned or otherwise transferred without the prior
written consent of the Agent.
 
(f)           This Guaranty and the other Loan Documents represent the entire
agreement of the Guarantor, the Agent and the other Lenders with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Agent or any of the other Lenders relative to the subject
matter thereof not expressly set forth or referred to herein or in the other
Loan Documents.
 
(g)           Section headings herein are included for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose.
 
(h)           This Guaranty shall be governed by and construed in accordance
with the law of the State of New York.
 
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed by an
officer thereunto duly authorized, as of the date first above written.
 
GUARANTOR:
 
Fredericks.com, Inc.
 
By:  
/s/ Thomas Rende
 
Name: Thomas Rende
 
Title: Chief Financial Officer

 
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