Exhibit 10.3

 

Execution Version

 

GUARANTY

 

This GUARANTY AGREEMENT (as amended, supplemented, amended and restated or
otherwise modified from time to time, this “Guaranty”) is made as of October 31,
2012 by Natural Grocers by Vitamin Cottage, Inc., a Delaware corporation
(“Guarantor”), in favor of JPMorgan Chase Bank, N.A., as administrative agent
(together with its successor(s) thereto in such capacity, the “Administrative
Agent”) for the ratable benefit of the Secured Parties (as defined in the Credit
Agreement referenced below).

 

Recitals

 

A.            Vitamin Cottage Natural Food Markets, Inc., a Colorado corporation
(“Borrower”), the Lenders (as defined in the Credit Agreement referenced below)
and the Administrative Agent are parties to that certain Credit Agreement, dated
as of September 29, 2006 (together with any amendments, modifications,
replacements or substitutions thereof, the “Credit Agreement”), providing for a
revolving line of credit in the maximum principal amount, as of the date hereof,
of $15,000,000.

 

B.            Guarantor was incorporated on April 9, 2012 and, as a result of
the Reorganization (as defined in the Credit Agreement), Borrower has become a
wholly-owned subsidiary of the Guarantor.

 

C.            Pursuant to Section 5.09(d) of the Credit Agreement, Guarantor is
required to execute and deliver this Guaranty.

 

D.            Guarantor has determined that it is in its best interests to
execute this Guaranty inasmuch as Guarantor owns 100% of the Equity Interests in
Borrower and thus will derive substantial direct and indirect benefits from the
credit extensions made to Borrower from time to time pursuant to the Credit
Agreement, and Guarantor understands and agrees that Administrative Agent, the
Lenders and any additional Secured Parties are relying on this representation in
agreeing to continue to make credit extensions to Borrower under the Credit
Agreement.

 

Agreement

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Guarantor agrees, for the ratable benefit of
the Secured Parties, as follows:

 

Section 1.        Definitions.  Unless otherwise defined herein or the context
otherwise requires, defined terms used in this Guaranty, including its preamble
and recitals, have the meanings provided in the Credit Agreement.  The following
words shall have the following meanings when used in this Guaranty:

 

“Administrative Agent” is defined in the preamble.

 

“Borrower” is defined in Recital A.

 

“Credit Agreement” is defined in Recital A.

 

“Guaranteed Indebtedness” means all “Obligations” under and defined in the
Credit Agreement.

 

“Guarantor” is defined in the preamble.

 

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“Guaranty” is defined in the preamble.

 

“Lender” and “Lenders” are defined in Recital A.

 

Section 2.       Continuing Unlimited Guaranty.

 

(a)     Guarantor irrevocably, absolutely and unconditionally guarantees to
Administrative Agent and each of the other Secured Parties the prompt, complete
and full payment when due, and no matter how the same shall become due, of all
Guaranteed Indebtedness.  Without limiting the generality of the foregoing,
Guarantor’s liability hereunder shall extend to and include all post-petition
interest, expenses, and other duties and liabilities of Borrower described above
in this subsection (a), or below in the following subsection (b), which would be
owed by Borrower but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving Borrower.

 

(b)     Guarantor hereby irrevocably, absolutely and unconditionally guarantees
to Administrative Agent and each of the other Secured Parties the prompt,
complete and full performance, when due, and no matter how the same shall become
due, of all obligations and undertakings of Borrower to Administrative Agent or
such Secured Party under, by reason of, or pursuant to the Guaranteed
Indebtedness or any of the Loan Documents.

 

Section 3.       Nature of Guaranty.  This Guaranty is a guaranty of payment and
performance and not of collection.  Neither Administrative Agent nor any other
Secured Party shall be required to exhaust any right or remedy or take any
action against Borrower or any other Person or entity or any collateral. 
Guarantor agrees that, as between Guarantor, on the one hand, and Administrative
Agent and the other Secured Parties, on the other hand, the Guaranteed
Indebtedness may be declared to be due and payable for the purposes of this
Guaranty notwithstanding any stay, injunction or other prohibition which may
prevent, delay or vitiate any declaration as regards Borrower and that in the
event of a declaration or attempted declaration, the Guaranteed Indebtedness
shall immediately become due and payable by Guarantor for the purposes of this
Guaranty.  Guarantor’s liability under this Guaranty is unlimited and shall be
open and continuous for so long as this Guaranty remains in force.  Accordingly,
no payments made upon the Guaranteed Indebtedness will discharge or diminish the
continuing liability of Guarantor in connection with any remaining portions of
the Guaranteed Indebtedness or any Guaranteed Indebtedness which subsequently
arises or is thereafter incurred or contracted.  Guarantor’s liability hereunder
is as a primary obligor and not merely as a surety.

 

Section 4.       Duration of Guaranty.  This Guaranty will take effect when
received by Administrative Agent without the necessity of any acceptance by
Administrative Agent or any other Secured Party, or any notice to Guarantor or
to Borrower, and will continue in full force with respect to Guarantor until
none of the Guaranteed Indebtedness remains outstanding (other than contingent
indemnification obligations not yet due and payable) and the Commitments have
been terminated.  This Guaranty is not revocable.  If, notwithstanding the
foregoing, any notice of revocation by Guarantor is given effect by a court of
competent jurisdiction, no such notice of revocation hereof shall be effective
as to any Guaranteed Indebtedness: (a) existing at the date of receipt of such
notice; (b) incurred or contracted by Borrower, or acquired or committed to by
Administrative Agent or any other Secured Party, prior to receipt of such
notice; (c) now existing or hereafter created pursuant to or evidenced by a loan
agreement or commitment in existence prior to receipt of such notice under which
Borrower is or may become obligated to Administrative Agent or any other Secured
Party; or (d) renewals, extensions, consolidations, substitutions, and
refinancings of the foregoing.  Guarantor waives notice of revocation given by
any other guarantor of the Guaranteed Indebtedness.  Guarantor shall be liable,
jointly and

 

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severally, with Borrower and any other guarantor of all or any part of the
Guaranteed Indebtedness and release of any other guarantor of the Guaranteed
Indebtedness, or termination or revocation of any other guaranty of the
Guaranteed Indebtedness, shall not affect the liability of Guarantor under this
Guaranty. It is anticipated that fluctuations may occur in the aggregate amount
of Guaranteed Indebtedness covered by this Guaranty, and it is specifically
acknowledged and agreed by Guarantor that reductions in the amount of Guaranteed
Indebtedness, even to zero dollars ($0.00), shall not constitute a termination
of this Guaranty.

 

Section 5.      Guaranty Absolute.  Guarantor authorizes Administrative Agent or
any other Secured Party, either before or after any revocation hereof, without
notice or demand and without lessening Guarantor’s liability under this
Guaranty, from time to time:  (a) to make one or more additional secured or
unsecured loans to Borrower, to issue letters of credit and/or bankers
acceptance drafts to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (b) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Guaranteed Indebtedness or any part of the
Guaranteed Indebtedness, including increases and decreases of the rate of
interest on the Guaranteed Indebtedness; extensions may be repeated and may be
for longer than the original loan term; (c) to take and hold security for the
payment of this Guaranty or the Guaranteed Indebtedness, and exchange, enforce,
waive, fail or decide not to perfect, and release any such security, with or
without the substitution of new collateral; (d) to release, substitute, agree
not to sue, or deal with any one or more of the sureties of Borrower, endorsers,
or other guarantors on any terms or in any manner Administrative Agent or any
other Secured Party may choose; (e) to determine how, when and what application
of payments and credits shall be made on the Guaranteed Indebtedness; (f) to
apply any proceeds it receives as a result of the foreclosure or other
realization on any collateral for the Guaranteed Indebtedness to that portion,
if any, of the Guaranteed Indebtedness not guaranteed hereunder or to any other
indebtedness secured by such collateral, as Administrative Agent or any other
Secured Party in its discretion may determine; (g) to sell, transfer, assign, or
grant participations in all or any part of the Guaranteed Indebtedness; and
(h) to assign or transfer this Guaranty in whole or in part.  Guarantor further
agrees that the liability of Guarantor under this Guaranty is absolute and
unconditional irrespective of: (i) any present or future law, regulation or
order of any jurisdiction (whether of right or in fact) or of any agency thereof
purporting to reduce, amend, restructure or otherwise affect any term of any
Loan Document or the Guaranteed Indebtedness; (ii) without being limited by the
foregoing, any lack of validity, legality or enforceability of any Loan Document
or all or any part of the Guaranteed Indebtedness; (iii) the failure of the
Administrative Agent or any other Secured Party (A) to assert any claim or
demand or to enforce any right or remedy against any party under the provisions
of any of the Loan Documents or otherwise or (B) to exercise any right or remedy
against any guarantor (including Guarantor) of, or collateral securing, any
obligations of Borrower or any other Person; (iv) any reduction, limitation,
impairment or termination of all or any part of the Guaranteed Indebtedness or
the obligations of any guarantor (including Guarantor) for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to (and Guarantor hereby waives any right to or claim of) any defense
or setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, all or any part
of the Guaranteed Indebtedness or the obligations of any guarantor (including
Guarantor) or otherwise, and (v) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable discharge of,
Borrower or any surety or guarantor, than actual payment, performance and
satisfaction in full of the Guaranteed Indebtedness.

 

Section 6.      Guarantor’ Representations, Warranties and Covenants.  Guarantor
represents, warrants and covenants to Administrative Agent and each other
Secured Party that (a) no representations or agreements of any kind have been
made to Guarantor which would limit or qualify in any way the

 

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terms of this Guaranty; (b) this Guaranty is executed at the request of Borrower
and not at the request of Administrative Agent or any other Secured Party;
(c) Guarantor has the requisite power and authority to execute and deliver this
Guaranty and the other Loan Documents to which Guarantor is a party and to
perform its respective obligations hereunder and thereunder; (d) the execution
and delivery by Guarantor of this Guaranty and the other Loan Documents to which
Guarantor is a party and the performance of its obligations hereunder and
thereunder have been duly authorized by all necessary corporate proceedings, and
this Guaranty and the other Loan Documents to which Guarantor is a party
constitute legal, valid and binding obligations of Guarantor enforceable against
Guarantor in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally; (e) neither the execution and delivery by Guarantor
of this Guaranty and the other Loan Documents to which Guarantor is a party, nor
the consummation of the transactions herein or therein contemplated, nor
compliance with the provisions hereof or thereof, will violate (i) any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
Guarantor or (ii) Guarantor’s articles of organization, operating or other
management agreement, or other constitutive or organizing document, as the case
may be, or (iii) the provisions of any material indenture, instrument or
agreement to which Guarantor is a party or is subject, or by which it, or its
property, is bound, or conflict with or constitute a default hereunder or
thereunder, or result in, or require, the creation or imposition of any lien in,
of or on the property of Guarantor pursuant to the terms of any such indenture,
instrument or agreement; (f) neither Administrative Agent nor any other Secured
Party has made any representation to Guarantor as to the creditworthiness of
Borrower; (g) Guarantor is familiar with the current financial condition of
Borrower and has established adequate means of obtaining from Borrower on a
continuing basis information regarding the future financial condition of
Borrower and is not relying on Administrative Agent or any other Secured Party
to provide such information to Guarantor; and (h) Guarantor was formed as and
shall remain a single purpose entity whose sole purpose is and shall be to hold
the equity interests of the Borrower and shall have no other business or
operations, except with respect to its obligations in connection with the
initial public offering of its common stock.  Guarantor agrees to keep
adequately informed from such means of any facts, events, or circumstances which
might in any way affect Guarantor’s risks under this Guaranty, and Guarantor
further agrees that Administrative Agent shall have no obligation to disclose to
Guarantor any information or documents acquired by Administrative Agent or any
other Secured Party in the course of its relationship with Borrower.  Without
limiting the foregoing, the Guarantor agrees that so long as all or any portion
of the Commitments are in effect or any of the Guaranteed Obligations remain
outstanding, (i) all of the representations, covenants and Events of Default
that relate to Guarantor set forth in the Credit Agreement (including without
limitation, restrictions therein relating to liens, dividends and other
distributions), and all related definitions, are incorporated herein by
reference, mutatis mutandis, for the benefit of the Administrative Agent and
shall remain in full force and effect until the Guaranteed Obligations have been
fully and indefeasibly paid and the Commitments are no longer in effect,
(ii) the Guarantor shall observe such representations and covenants in
accordance with the terms thereof, and (iii) an Event of Default under and as
defined in the Credit Agreement, shall constitute an event of default under this
Guaranty.

 

Section 7.      Guarantor Waivers.  Guarantor waives any right to require
Administrative Agent or any other Secured Party (a) to continue lending money or
to extend other credit to Borrower; (b) to make any presentment, protest,
demand, or notice of any kind, including notice of any nonpayment of the
Guaranteed Indebtedness or of any nonpayment related to any collateral, or
notice of any action or nonaction on the part of Borrower, Administrative Agent
or any other Secured Party, any surety, endorser, or other guarantor in
connection with the Guaranteed Indebtedness or in connection with the creation
of new or additional loans or obligations; (c) to notify Guarantor of any change
in the manner, place, time or terms of payment of any of the Guaranteed
Indebtedness (including, without limitation,

 

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any renewal, extension or other modification of any of the Guaranteed
Indebtedness); or (d) to notify Guarantor of any change in the interest rate
accruing on any of the Guaranteed Indebtedness (including, without limitation,
any periodic change in such interest rate that occurs because such Guaranteed
Indebtedness accrues interest at a variable rate which may fluctuate from time
to time).  Should Administrative Agent seek to enforce the obligations of
Guarantor hereunder, Guarantor waives any right to require Administrative Agent
to first (i) resort for payment or to proceed directly or at once against any
Person, including Borrower or any other guarantor of the Guaranteed
Indebtedness; (ii) to proceed directly against, marshall, enforce, or exhaust
any collateral held by any Secured Party from Borrower, Guarantor, any other
guarantor, or any other Person; or (iii) to pursue any other remedy within the
power of any Secured Party.

 

Guarantor also waives any and all rights or defenses arising by reason of
(a) any election of remedies by Administrative Agent which destroys or otherwise
adversely affects Guarantor’s subrogation rights or Guarantor’s rights to
proceed against Borrower for reimbursement, including without limitation, any
loss of rights Guarantor may suffer by reason of any law limiting, qualifying,
or discharging the Guaranteed Indebtedness; (b) any disability or other defense
of Borrower, of any other guarantor, or of any other Person, or by reason of the
cessation of the liability of Borrower from any cause whatsoever, other than
actual payment, performance and satisfaction in full of the Guaranteed
Indebtedness; (c) any right to claim discharge of the Guaranteed Indebtedness on
the basis of unjustified impairment of any collateral for the Guaranteed
Indebtedness; or (d) any defenses given to guarantors at law or in equity other
than actual payment, performance and satisfaction in full of the Guaranteed
Indebtedness.

 

Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by Borrower, Guarantor, or both.

 

Section 8.      Guarantor’s Understanding with Respect to Waivers.  Guarantor
warrants and agrees that each of the waivers set forth above is made with
Guarantor’s full knowledge of its significance and consequences and that, under
the circumstances, the waivers are reasonable and not contrary to public policy
or law.  If any such waiver is determined to be contrary to any applicable law
or public policy, such waiver shall be effective only to the extent permitted by
law or public policy.

 

Section 9.      Reinstatement.  This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of all or any part
of the Guaranteed Indebtedness is rescinded or must otherwise be returned by
Administrative Agent or any other Secured Party for any reason, including,
without limitation, upon the insolvency, bankruptcy or reorganization of
Borrower, Guarantor or any other guarantor of all or any part of the Guaranteed
Indebtedness, all as though such payment had not been made.

 

Section 10.    Right of Setoff.  In addition to, and without limitation of, any
rights of Administrative Agent or any of the other Secured Parties under this
Agreement, any of the other Loan Documents and applicable law, if Guarantor
becomes insolvent, however evidenced, or any Event of Default occurs, any and
all deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other Guaranteed Indebtedness at
any time held or owing by any Secured Party or any Affiliate of any Secured
Party to or for the credit or account of Guarantor may, without prior notice to
Guarantor, be offset and applied toward the payment of the Guaranteed
Indebtedness owing to such Secured Party, whether or not the Guaranteed
Indebtedness, or any part thereof, shall then be due.  This right of setoff may
be enforced or exercised by any Secured Party (or the

 

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Administrative Agent on behalf of the Secured Parties) regardless of whether or
not a Secured Party has made any demand under this Section 10.  Any delay,
neglect or conduct by any Secured Party (or the Administrative Agent on behalf
of the Secured Parties) in exercising its rights under this Section 10 will not
be a waiver of the right to exercise this right of setoff.

 

Section 11.        Actions Against and Payments By Guarantor.  The exercise by
Administrative Agent or any other Secured Party of any right or remedy under
this Guaranty or under any other agreement or instrument, at law, in equity or
otherwise, shall not preclude concurrent or subsequent exercise of any other
right or remedy. Whenever Guarantor pays any sum which is or may become due
under this Guaranty, written notice must be delivered to Administrative Agent
contemporaneously with such payment.  In the absence of such notice to
Administrative Agent by Guarantor, any sum received by Administrative Agent on
account of the Guaranteed Indebtedness shall be conclusively deemed paid by
Borrower.  Guarantor hereby guarantees that payments hereunder will be paid to
Administrative Agent without set-off or counterclaim, in U.S. Dollars, at
Administrative Agent’s office specified in the Credit Agreement or such other
address as may be designated in writing by Administrative Agent to Guarantor
from time to time.  Notwithstanding any provision of this Guaranty, none of the
terms or provisions hereof relating to the obligations of Borrower hereunder
shall limit or affect Borrower’s obligations under the Credit Agreement or any
of the other Loan Documents.

 

Section 12.    Extent of Liability; Fraudulent Transfer.  Guarantor represents
and warrants to Administrative Agent that Guarantor expects to derive
substantial benefits from any loans, credit transactions, financial
accommodations, discounts, purchases of property and other transactions and
events resulting in the creation of the Guaranteed Indebtedness and that this
Guaranty is given for a corporate purpose.  Anything herein or in any other Loan
Document to the contrary notwithstanding, the maximum liability of Guarantor
hereunder shall in no event exceed the amount that can be guaranteed by
Guarantor under applicable law, including applicable federal and state laws
relating to the insolvency of debtors and fraudulent transfers.  Guarantor
agrees that the Guaranteed Indebtedness guaranteed by it hereunder may at any
time and from time to time exceed the amount of the liability of Guarantor
hereunder without impairing the guarantee contained herein or affecting the
rights and remedies of Administrative Agent or any other Secured Party
hereunder.  Without limiting the generality of the foregoing, the Guarantor, and
by its acceptance of this Guaranty, the Administrative Agent, hereby confirm
that the parties intend that this Guaranty not constitute a fraudulent transfer
or conveyance for purposes of the Bankruptcy Law (as defined below), the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal, state or foreign law to the extent applicable to this Guaranty.  In
furtherance of that intention, the Guaranteed Indebtedness under this Guaranty
shall be limited to the greater of (A) the net benefit realized by the Guarantor
from the proceeds of the advances made from time to time by the Borrower to the
Guarantor or any of its subsidiaries and (B) the maximum amount that will, after
giving effect to such maximum amount and all other contingent and fixed
liabilities of the Guarantor that are relevant under such laws, and after giving
effect to any collections from, rights to receive contribution from or payments
made by or on behalf of any other person with respect to the Guaranteed
Indebtedness, result in the Guaranteed Indebtedness under this Guaranty not
constituting a fraudulent transfer or conveyance.  For purposes hereof,
“Bankruptcy Law” means Title 11, U.S. Code, or any similar federal,  state or
foreign law for the relief of debtors.   This paragraph with respect to the
maximum liability of the Guarantor is intended solely to preserve the rights of
the Administrative Agent to the maximum extent not subject to avoidance under
applicable law, and neither the Guarantor nor any other person or entity shall
have any right or claim under this paragraph with respect to such maximum
liability, except to the extent necessary so that the obligations of the
Guarantor hereunder shall not be rendered voidable under applicable law.

 

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Section 13.    No Subrogation.  Notwithstanding any payment made by Guarantor
hereunder or any set-off or application of funds of Guarantor by Administrative
Agent or any other Secured Party, Guarantor shall not be entitled to be
subrogated to any of the rights of Administrative Agent or any other Secured
Party against Borrower or any collateral security or guarantee or right of
offset held by Administrative Agent or any other Secured Party for the payment
of the Guaranteed Indebtedness, nor shall Guarantor seek or be entitled to seek
any contribution or reimbursement from Borrower in respect of payments made by
Guarantor hereunder, until no amount owing to Administrative Agent and the other
Secured Parties on account of the Guaranteed Indebtedness remains outstanding
(other than contingent indemnification obligations not yet due and payable) and
the Commitments have been terminated.  If any amount shall be paid to Guarantor
on account of such subrogation rights at any time when all of the Guaranteed
Indebtedness shall not have been paid in full or any of the Commitments under
the Credit Agreement shall remain in effect, such amount shall be held by
Guarantor in trust for Administrative Agent and the other Secured Parties,
segregated from other funds of Guarantor, and shall, forthwith upon receipt by
Guarantor, be turned over to Administrative Agent in the exact form received by
Guarantor (duly indorsed by Guarantor to Administrative Agent, if required), to
be applied against the Guaranteed Indebtedness, whether matured or unmatured, in
such order as Administrative Agent may determine.

 

Section 14.    Miscellaneous Provisions.

 

(a)           Amendments.  This Guaranty, together with any Loan Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Guaranty and supersedes all prior written and oral
agreements and understandings, if any, regarding same.  No alteration of or
amendment to this Guaranty shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration or
amendment.

 

(b)           Applicable Law.  THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF
THE STATE OF COLORADO, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.

 

(c)           Jury Waiver.  GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY).  GUARANTOR CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER.  THIS PROVISION IS A MATERIAL INDUCEMENT TO ADMINISTRATIVE AGENT AND THE
OTHER SECURED PARTIES TO CONTINUE TO PROVIDE THE FINANCING DESCRIBED HEREIN OR
IN THE OTHER LOAN DOCUMENTS.

 

(d)           Consent to Jurisdiction.

 

(i)        GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON
EXCLUSIVE JURISDICTION OF (I) ANY UNITED STATES FEDERAL OR COLORADO STATE COURT
SITTING IN DENVER, COLORADO AND (II) THE SUPREME COURT OF THE STATE OF NEW YORK
SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT

 

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COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY, AND GUARANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY OTHER SECURED PARTY TO BRING PROCEEDINGS AGAINST
GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.  GUARANTOR HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY
DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY IN
ANY COURT REFERRED TO IN THIS PARAGRAPH.  GUARANTOR HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(ii)       GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN
ANY SUIT, ACTION OR PROCEEDING IN ANY OF THE ABOVE-MENTIONED COURTS BY THE
MAILING THEREOF BY THE ADMINISTRATIVE AGENT OR ANY LENDER BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE
STATE OF COLORADO, AT ITS ADDRESS SPECIFIED IN CLAUSE (f) BELOW. NOTHING IN THIS
GUARANTY WILL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY OF THE OTHER
SECURED PARTIES TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

(e)           Costs and Expenses.  Guarantor shall also pay on written demand by
Administrative Agent all costs and expenses, including, without limitation, all
reasonable attorneys’ fees, incurred by Administrative Agent in connection with
the enforcement and/or collection of this Guaranty and with the collection
and/or sale of any collateral securing this Guaranty.  This covenant shall
survive the payment of the Guaranteed Indebtedness.

 

(f)            Notices.  All notices and other communications provided for
hereunder shall be in writing or by facsimile and addressed, delivered or
transmitted to the appropriate party at the address or facsimile number of such
party (a) in the case of Borrower, as specified in the Credit Agreement, (b) in
the case of Administrative Agent, as specified in the Credit Agreement, (c) in
the case of Guarantor, as specified below, and (d) in the case of any party, at
such other address or facsimile number as such party may hereafter specify for
such purpose by notice to the other parties to this Guaranty in accordance with
the provisions of this Section 14(f).

 

If to Guarantor:

 

Natural Grocers by Vitamin Cottage, Inc.

12612 W. Alameda Parkway

Lakewood, CO  80228

 

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Attention:  Kemper Isely

FAX:  303-986-1891

 

Each such notice or other communication shall be effective (x) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section 14(f) and confirmation of receipt is received, (y) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, or (z) if given by any other
means, when delivered (or, in the case of electronic transmission, received) at
the address specified in this Section 14(f).  The Administrative Agent or
Guarantor may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

For notice purposes, Guarantor agrees to keep Administrative Agent informed at
all times of Guarantor’s current address.  In the event that Guarantor is
entitled to receive any notice under the Uniform Commercial Code, as it exists
in the state governing any such notice, of the sale or other disposition of any
collateral securing all or any part of the Guaranteed Indebtedness or this
Guaranty, reasonable notice shall be deemed given when such notice is given
pursuant to the terms of this Subsection ten (10) days prior to the date any
public sale, or after which any private sale, of any such collateral is to be
held.

 

(g)           Interpretation.  The provisions of this Guaranty shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that Guarantor may not assign or transfer any of
its rights or obligations under this Guaranty without the prior written consent
of the Administrative Agent and the Required Lenders.  Caption headings in this
Guaranty are for convenience purposes only and are not to be used to interpret
or define the provisions of this Guaranty.  If a court of competent jurisdiction
finds any provision of this Guaranty to be invalid or unenforceable as to any
Person or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other Persons or circumstances, and all provisions of
this Guaranty in all other respects shall remain valid and enforceable.  It is
not necessary for Administrative Agent to inquire into the powers of Borrower or
Guarantor or of the officers, directors, partners, or agents acting or
purporting to act on their behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed under
this Guaranty.

 

(h)           Waiver.  Neither Administrative Agent nor any other Secured Party
shall be deemed to have waived any rights under this Guaranty unless such waiver
is given in writing and signed by Administrative Agent and/or the relevant
Secured Parties, and then only in the specific instance and for the purpose
given.  No delay or omission on the part of Administrative Agent in exercising
any right shall operate as a waiver of such right or any other right.  A waiver
by Administrative Agent or any other Secured Party of a provision of this
Guaranty shall not prejudice or constitute a waiver of Administrative Agent’s
right to thereafter demand strict compliance with that provision or any other
provision of this Guaranty.  No prior waiver by Administrative Agent or any
other Secured Party, nor any course of dealing between Administrative Agent or
any other Secured Party and Guarantor, shall constitute a waiver of any of the
rights of Administrative Agent or any other Secured Party of any of Guarantor’s
obligations as to any future transactions.  Whenever the consent of
Administrative Agent or any other Secured Party is required under this Guaranty,
the granting of such consent by Administrative Agent and/or the relevant Secured
Parties in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may be
granted or withheld in the sole discretion of Administrative Agent and/or the
relevant Secured Parties.

 

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(i)            Taxes.  Section 2.16 of the Credit Agreement is hereby
incorporated by reference, mutatis, mutandis, with references to the Borrower
therein being deemed to be references to the Guarantor herein.

 

(j)            Assignment.  This Guaranty shall be binding on, and shall inure
to the benefit of the Guarantor, the Administrative Agent and their respective
successors and assigns; provided that the Guarantor may not assign or transfer
its rights or obligations under this Guaranty.

 

EXECUTION PAGE FOLLOWS

 

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THE UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS.  IN ADDITION, GUARANTOR UNDERSTANDS THAT THIS
GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTION AND DELIVERY OF THIS GUARANTY
TO ADMINISTRATIVE AGENT AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN
THE MANNER SET FORTH IN THE SECTION TITLED “DURATION OF GUARANTY”.  NO FORMAL
ACCEPTANCE BY ADMINISTRATIVE AGENT OR ANY OTHER SECURED PARTY IS NECESSARY TO
MAKE THIS GUARANTY EFFECTIVE.  THIS GUARANTY IS DATED AS OF THE DAY AND YEAR
FIRST ABOVE WRITTEN.

 

 

 

GUARANTOR:

 

 

 

NATURAL GROCERS BY VITAMIN COTTAGE, INC.,

 

a Delaware corporation

 

 

 

 

 

 

By:

/s/ Kemper Isely

 

 

Kemper Isely, Co-President

 

 

Acknowledged and Agreed:

 

 

 

JP MORGAN CHASE BANK, N.A.,

 

as Administrative Agent

 

 

 

 

 

By:

/s/ Nancy Broome

 

 

Nancy Broome, Senior Vice President

 

 

 

 

EXECUTION PAGE—NATURAL GROCERS BY VITAMIN COTTAGE, INC. GUARANTY

 

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