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Exhibit 10.6

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GUARANTY
 
dated as of
 
January 13, 2012
 
among
 
NUMBER HOLDINGS, INC.,
as Holdings,
 
THE OTHER GUARANTORS PARTY HERETO FROM TIME TO TIME,
 
and
 
ROYAL BANK OF CANADA,
as Administrative Agent and Collateral Agent
 

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TABLE OF CONTENTS
 

 
Page
   
ARTICLE I Definitions
1
Section 1.01
 
Credit Agreement Definitions
1
Section 1.02
 
Other Defined Terms
2
ARTICLE II Guarantee
2
Section 2.01
 
Guarantee
2
Section 2.02
 
Guarantee of Payment
3
Section 2.03
 
No Limitations
3
Section 2.04
 
Reinstatement
5
Section 2.05
 
Agreement To Pay; Subrogation
5
Section 2.06
 
Information
5
ARTICLE III Indemnity, Subrogation and Subordination
5
ARTICLE IV Miscellaneous
6
Section 4.01
 
Notices
6
Section 4.02
 
Waivers; Amendment
6
Section 4.03
 
Administrative Agent’s and Collateral Agent’s Fees and Expenses; Indemnification
7
Section 4.04
 
Successors and Assigns
8
Section 4.05
 
Survival of Agreement
9
Section 4.06
 
Counterparts; Effectiveness; Several Agreement
9
Section 4.07
 
Severability
9
Section 4.08
 
GOVERNING LAW, ETC
9
Section 4.09
 
WAIVER OF RIGHT TO TRIAL BY JURY
10
Section 4.10
 
Headings
11
Section 4.11
 
Obligations Absolute
11
Section 4.12
 
Termination or Release
11
Section 4.13
 
Additional Restricted Subsidiaries
12
Section 4.14
 
Recourse; Limited Obligations
12
Section 4.15
 
Intercreditor Agreement
13

 
 
 

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SCHEDULES
         
Schedule I
 
Guarantors
     
EXHIBITS
         
Exhibit I
 
Form of Guaranty Supplement

 
 
 

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This GUARANTY, dated as of January 13, 2012 (this “Guaranty”), is among NUMBER
HOLDINGS, INC., a Delaware corporation (“Holdings”), and the other Guarantors
set forth on Schedule I hereto and ROYAL BANK OF CANADA, as Administrative Agent
and Collateral Agent for the Secured Parties (as defined below).
 
Reference is made to the Credit Agreement, dated as of January 13, 2012 (as
amended, restated, amended and restated, supplemented and/or otherwise modified
from time to time, the “Credit Agreement”), among NUMBER MERGER SUB, INC., a
California corporation (which on the Closing Date shall be merged with and into
99¢ ONLY STORES, a California corporation (the “Company”), with the Company
surviving such merger as the borrower under the Credit Agreement referred to
below (the “Borrower”)), Holdings, the Lenders party thereto from time to time,
and Royal Bank of Canada, as Administrative Agent and Collateral Agent for the
Lenders.
 
The Lenders have agreed to extend credit to the Borrower subject to the terms
and conditions set forth in the Credit Agreement.  The obligations of the
Lenders to extend such credit are conditioned upon, among other things, the
execution and delivery of this Guaranty by each Guarantor (as defined
below).  The Guarantors are affiliates of one another, will derive substantial
direct and indirect benefits from the extensions of credit to the Borrower
pursuant to the Credit Agreement and are willing to execute and deliver this
Guaranty in order to induce the Lenders to extend such credit.  The
Intercreditor Agreement governs the relative rights and priorities of the Term
Secured Parties (as defined in the Intercreditor Agreement) and the ABL Secured
Parties (as defined in the Intercreditor Agreement) in respect of the Term
Priority Collateral and the ABL Priority Collateral (and with respect to certain
other matters as described therein).  Accordingly, the parties hereto agree as
follows:
 
ARTICLE I
 
Definitions
 
Section 1.01  Credit Agreement Definitions.
 
(a)           Capitalized terms used in this Guaranty, including the preamble
and introductory paragraphs hereto, and not otherwise defined herein have the
meanings specified in the Credit Agreement.
 
(b)           The rules of construction specified in Article I of the Credit
Agreement also apply to this Guaranty.
 
Section 1.02  Other Defined Terms.  As used in this Guaranty, the following
terms have the meanings specified below:
 
“Accommodation Payment” has the meaning assigned to such term in Article III
hereof.
 
“Allocable Amount” has the meaning assigned to such term in Article III hereof.
 
“Credit Agreement” has the meaning assigned to such term in the preliminary
statement of this Guaranty.
 
 
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“Guaranteed Obligations” mean the “Obligations” as defined in the Credit
Agreement.
 
“Guarantors” means, collectively, Holdings, each other Guarantor listed on
Schedule I hereto and any other Person that becomes a party to this Guaranty
after the Effective Date pursuant to Section 4.13 hereof; provided that if any
such Guarantor is released from its obligations hereunder as provided in Section
4.12(b) hereof, such Person shall cease to be a Guarantor hereunder effective
upon such release.
 
“Guaranty Supplement” means an instrument substantially in the form of Exhibit I
hereto.
 
“Secured Parties” has the meaning provided in the Credit Agreement.
 
“UFCA” has the meaning assigned to such term in Article III hereof.
 
“UFTA” has the meaning assigned to such term in Article III hereof.
 
ARTICLE II
 
Guarantee
 
Section 2.01  Guarantee.
 
Each Guarantor irrevocably, absolutely and unconditionally guarantees, jointly
with the other Guarantors and severally, as a primary obligor and not merely as
a surety, the due and punctual payment and performance of the Guaranteed
Obligations, in each case, whether such Guaranteed Obligations are now existing
or hereafter incurred under, arising out of or in connection with any Loan
Document, Secured Hedge Agreements or Cash Management Services, and whether at
maturity, by acceleration or otherwise.  Each of the Guarantors further agrees
that the Guaranteed Obligations may be extended, increased or renewed, amended
or modified, in whole or in part, without notice to, or further assent from,
such Guarantor and that such Guarantor will remain bound upon its guarantee
hereunder notwithstanding any such extension, increase, renewal, amendment or
modification of any Guaranteed Obligation.  Each of the Guarantors waives
promptness, presentment to, demand of payment from, and protest to, any
Guarantor or any other Loan Party of any of the Guaranteed Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment.
 
Section 2.02  Guarantee of Payment.
 
Each of the Guarantors further agrees that its guarantee hereunder constitutes a
guarantee of payment when due (whether or not any bankruptcy or similar
proceeding under any Debtor Relief Law shall have stayed the accrual of
collection of any of the Guaranteed Obligations or operated as a discharge
thereof) and not of collection, and waives any right to require that any resort
be had by the Administrative Agent or any other Secured Party to any Collateral
or other security held for the payment of any of the Guaranteed Obligations, or
to any balance of any deposit account or credit on the books of the
Administrative Agent or any other Secured Party in favor of any other Guarantor
or any other Person.  The obligations of each Guarantor hereunder are
independent of the obligations of any other Guarantor or the Borrower, and a
separate action or actions may be brought and prosecuted against each Guarantor
whether or not action is brought against any other Guarantor or the Borrower and
whether or not any other Guarantor or the Borrower be joined in any such action
or actions.  Any payment required to be made by a Guarantor hereunder may be
required by the Administrative Agent or any other Secured Party on any number of
occasions.
 
 
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Section 2.03  No Limitations.
 
(a)           Except for termination or release of a Guarantor’s obligations
hereunder as expressly provided in Section 4.12 hereof, to the fullest extent
permitted by applicable Law, the obligations of each Guarantor hereunder shall
not be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Guaranteed Obligations, any impossibility in the
performance of any of the Guaranteed Obligations, or otherwise.  Without
limiting the generality of the foregoing, to the fullest extent permitted by
applicable Law and except for termination or release of a Guarantor’s
obligations hereunder in accordance with the terms of Section 4.12 hereof (but
without prejudice to Section 2.04 hereof), the obligations of each Guarantor
hereunder shall not be discharged, impaired or otherwise affected by (i) the
failure of the Administrative Agent, any other Secured Party or any other Person
to assert any claim or demand or to enforce any right or remedy under the
provisions of any Loan Document or otherwise; (ii) any rescission, waiver,
amendment or modification of, or any release from any of the terms or provisions
of, any Loan Document or any other agreement, including with respect to any
other Guarantor under this Guaranty; (iii) the release of, or any impairment of
any security held by the Collateral Agent or any other Secured Party for the
Guaranteed Obligations; (iv) any default, failure or delay, willful or
otherwise, in the performance of the Guaranteed Obligations; (v) the failure to
perfect any security interest in, or the release of, any of the Collateral held
by or on behalf of the Collateral Agent or any other Secured Party; (vi) any
change in the corporate existence, structure or ownership of any Loan Party, the
lack of legal existence of the Borrower or any other Guarantor or legal
obligation to discharge any of the Guaranteed Obligations by the Borrower or any
other Guarantor for any reason whatsoever, including, without limitation, in any
insolvency, bankruptcy or reorganization of any Loan Party; (vii) the existence
of any claim, set-off or other rights that any Guarantor may have at any time
against the Borrower, the Administrative Agent, any other Secured Party or any
other Person, whether in connection with the Credit Agreement, the other Loan
Documents or any unrelated transaction; (viii) this Guaranty having been
determined (on whatsoever grounds) to be invalid, non-binding or unenforceable
against any other Guarantor ab initio or at any time after the Effective Date or
(ix) any other circumstance (including statute of limitations), any act or
omission that may in any manner or to any extent vary the risk of any Guarantor
or otherwise operate as a defense to, or discharge of, the Borrower, any
Guarantor or any other guarantor or surety as a matter of law or equity (in each
case, other than the Discharge of Obligations).  Each Guarantor expressly
authorizes the applicable Secured Parties, to the extent permitted by the
Security Agreement, to take and hold security for the payment and performance of
the Guaranteed Obligations, to exchange, waive or release any or all such
security (with or without consideration), to enforce or apply such security and
direct the order and manner of any sale thereof in their sole discretion or to
release or substitute any one or more other guarantors or obligors upon or in
respect of the Guaranteed Obligations all without affecting the obligations of
any Guarantor hereunder.  Anything contained in this Guaranty to the contrary
notwithstanding, the obligations of each Guarantor under this Guaranty shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations under this Guaranty subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of the Bankruptcy Code of the United
States or any comparable provisions of any similar federal or state law.
 
 
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(b)           To the fullest extent permitted by applicable Law and except for
termination or release of a Guarantor’s obligations hereunder in accordance with
the terms of Section 4.12 hereof (but without prejudice to Section 2.04 hereof),
each Guarantor waives any defense based on or arising out of any defense of the
Borrower or any other Guarantor or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower or any other Guarantor, other than the
Discharge of Obligations.  The Administrative Agent and the other Secured
Parties may in accordance with the terms of the Collateral Documents, at their
election, foreclose on any security held by one or more of them by one or more
judicial or nonjudicial sales, accept an assignment of any such security in lieu
of foreclosure, compromise or adjust any part of the Guaranteed Obligations,
make any other accommodation with the Borrower or any other Guarantor or
exercise any other right or remedy available to them against any Guarantor,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the Discharge of Obligations has occurred.  To
the fullest extent permitted by applicable Law, each Guarantor waives any
defense arising out of any such election even though such election operates,
pursuant to applicable Law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
the Borrower or any other Guarantor, as the case may be, or any security.  To
the fullest extent permitted by applicable Law, each Guarantor waives any and
all suretyship defenses.
 
Section 2.04  Reinstatement.
 
Notwithstanding anything to the contrary contained in this Guaranty, each of the
Guarantors agrees that (a) its guarantee hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Guaranteed Obligation is rescinded or must otherwise be
restored by the Administrative Agent or any other Secured Party upon the
bankruptcy or reorganization (or any analogous proceeding in any jurisdiction)
of the Borrower or any other Guarantor or otherwise and (b) the provisions of
this Section 2.04 shall survive the termination of this Guaranty.
 
Section 2.05  Agreement To Pay; Subrogation.
 
In furtherance of the foregoing and not in limitation of any other right that
the Administrative Agent or any other Secured Party has at law or in equity
against any Guarantor by virtue hereof, upon the failure of the Borrower or any
other Guarantor to pay any Guaranteed Obligation when and as the same shall
become due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to
be paid, to the Administrative Agent for distribution to the applicable Secured
Parties in cash the amount of such unpaid Guaranteed Obligation.  Upon payment
by any Guarantor of any sums to the Administrative Agent as provided above, all
rights of such Guarantor against the Borrower or any other Guarantor arising as
a result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subject to Article III hereof.
 
 
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Section 2.06  Information.
 
Each Guarantor assumes all responsibility for being and keeping itself informed
of the Borrower’s and each other Guarantor’s financial condition and assets, and
of all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks that such Guarantor
assumes and incurs hereunder, and agrees that none of the Administrative Agent
or the other Secured Parties will have any duty to advise such Guarantor of
information known to it or any of them regarding such circumstances or risks.
 
ARTICLE III
 
Indemnity, Subrogation and Subordination
 
Upon payment by any Guarantor of any Guaranteed Obligations, all rights of such
Guarantor against the Borrower or any other Guarantor arising as a result
thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subordinate and junior in right of payment
to the Discharge of Obligations.  If any amount shall be paid to the Borrower or
any other Guarantor in violation of the foregoing restrictions on account of (i)
such subrogation, contribution, reimbursement, indemnity or similar right or
(ii) any such indebtedness of the Borrower or any other Guarantor, such amount
shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Administrative Agent to be credited against the payment
of the Guaranteed Obligations, whether matured or unmatured, in accordance with
the terms of the Credit Agreement and the other Loan Documents.  Subject to the
foregoing, to the extent that any Guarantor shall, under this Guaranty or the
Credit Agreement as a joint and several obligor, repay any of the Guaranteed
Obligations constituting Loans or other advances made to or Reimbursement
Obligations owed by to another Loan Party under the Credit Agreement (an
“Accommodation Payment”), then the Guarantor making such Accommodation Payment
shall be entitled to contribution and indemnification from, and be reimbursed
by, each of the other Guarantors in an amount equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Guarantor’s
Allocable Amount and the denominator of which is the sum of the Allocable
Amounts of all of the Guarantors; provided that such rights of contribution and
indemnification shall be subordinated to the Discharge of Obligations.  As of
any date of determination, the “Allocable Amount” of each Guarantor shall be
equal to the maximum amount of liability for Accommodation Payments which could
be asserted against such Guarantor hereunder and under the Credit Agreement
without (a) rendering such Guarantor “insolvent” within the meaning of Section
101 (31) of the Bankruptcy Code of the United States, Section 2 of the Uniform
Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent
Conveyance Act (“UFCA”), (b) leaving such Guarantor with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code of
the United States, Section 4 of the UFTA, or Section 5 of the UFCA, or (c)
leaving such Guarantor unable to pay its debts as they become due within the
meaning of Section 548 of the Bankruptcy Code of the United States or Section 4
of the UFTA, or Section 5 of the UFCA.
 
 
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ARTICLE IV

 
Miscellaneous
 
Section 4.01  Notices.
 
All communications and notices hereunder shall (except as otherwise expressly
permitted herein) be in writing and given as provided in Section 12.8 of the
Credit Agreement.  All communications and notice hereunder to a Guarantor other
than Holdings shall be given in care of the Borrower.
 
Section 4.02  Waivers; Amendment.
 
(a)           No failure by any Secured Party to exercise, and no delay by any
such Person in exercising, any right, remedy, power or privilege hereunder or
under any other Loan Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided, and provided under each other Loan Document, are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by
Law.  No waiver of any provision of any Loan Document or consent to any
departure by any Loan Party therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) of this Section 4.02, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.  Without limiting the generality of the foregoing, the
making of an Incremental Loan, Extended Loan, Refinanced Loan or Replacement
Loan in accordance with the terms and conditions of the Credit Agreement shall
not be construed as a waiver of any Default or Event of Default, regardless of
whether any Loan Party may have had notice or knowledge of such Default or Event
of Default at the time.
 
(b)           Subject to the Intercreditor Agreement, neither this Guaranty nor
any provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Administrative Agent and
the Loan Party or Loan Parties with respect to which such waiver, amendment or
modification is to apply, subject to any consent required in accordance with
Section 12.1 of the Credit Agreement.
 
 
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Section 4.03  Administrative Agent’s and Collateral Agent’s Fees and Expenses;
Indemnification.
 
(a)           Each Guarantor, jointly with the other Guarantors and severally,
agrees to reimburse the Administrative Agent and the Collateral Agent for its
fees and expenses incurred hereunder as and to the extent provided in Section
12.3 of the Credit Agreement; provided that each reference therein to the
“Borrower” shall be deemed to be a reference to “each Guarantor”.
 
(b)           Without limitation of its indemnification obligations under the
other Loan Documents, each Guarantor jointly and severally agrees to indemnify
the Administrative Agent, the Collateral Agent and the other Indemnitees (as
defined in Section 12.4 of the Credit Agreement) against, and hold each
Indemnitee harmless from, any and all liabilities, losses, damages, claims and
reasonable, documented and invoiced out-of-pocket fees and expenses (including
Attorney Costs) of any kind or nature whatsoever which may at any time be
imposed on, incurred by or asserted against any such Indemnitee in any way
relating to or arising out of or in connection with (but limited, in the case of
Attorney Costs, to the reasonable, documented and invoiced out-of-pocket fees,
disbursements and other charges of a single firm of counsel to all Indemnitees
taken as a whole and, if necessary, a single firm of local counsel for all
Indemnitees taken as a whole in each appropriate jurisdiction (which may include
a single firm of special counsel acting in multiple jurisdictions), and solely
in the case of an actual or perceived conflict of interest, where the Indemnitee
affected by such conflict informs the Borrower and thereafter retains its own
counsel, one additional firm of counsel for each group of affected Indemnitees
similarly situated taken as a whole) (i) the execution, delivery, enforcement,
performance or administration of this Guaranty or any other agreement, letter or
instrument delivered in connection with the transactions contemplated hereby or
the consummation of the transactions contemplated hereby, (ii) any actual or
alleged presence or release of Hazardous Materials on or from any property
currently or formerly owned or operated by any Guarantor, or any Environmental
Liabilities, in each case arising out of the activities or operations of a
Guarantor, or, (iii) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory (including any investigation of, preparation for, or defense
of any pending or threatened claim, investigation, litigation or proceeding) and
regardless of whether any Indemnitee is a party thereto (all of the foregoing,
collectively, the “Indemnified Liabilities”); provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such liabilities,
losses, damages, claims, costs, expenses or disbursements resulted from (A)(x)
the gross negligence, bad faith or willful misconduct of such Indemnitee or of
any Related Indemnified Person or (y) a breach of any obligations under this
Guaranty by such Indemnitee or of any Related Indemnified Person, in each case,,
as determined by a final, non-appealable judgment of a court of competent
jurisdiction or (B) any dispute solely between or among Indemnitees other than
any claims against an Indemnitee in its capacity or in fulfilling its role as an
administrative agent or arranger or any similar role under the Facility
(excluding their role as a Lender) and other than any claims arising out of any
act or omission of the Borrower or any of its Affiliates. To the extent that
undertakings to indemnify and hold harmless set forth in this Section 4.03(b)
may be unenforceable in whole or in part because they are violative of any
applicable law or public policy, each Guarantor shall contribute the maximum
portion that such Guarantor is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.  No Indemnitee shall be liable for any damages
arising from the use by others of any information or other materials obtained
through IntraLinks or other similar information transmission systems in
connection with this Guaranty, nor shall any Indemnitee or any Loan Party have
any liability for any special, punitive, indirect or consequential damages
relating to this Guaranty or arising out of its activities in connection
herewith (whether before or after the Effective Date) (other than, in the case
of any Guarantor, in respect of any such damages incurred or paid by an
Indemnitee to a third party).  In the case of an investigation, litigation or
other proceeding to which the indemnity in this Section 4.03(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by any Guarantor, its directors, stockholders or creditors
or an Indemnitee or any other Person, whether or not any Indemnitee is otherwise
a party thereto and whether or not any of the transactions contemplated
hereunder or under any of the other Loan Documents is consummated.  All amounts
due under this Section 4.03(b) shall be paid within twenty (20) Business Days
after written demand thereof from the Administrative Agent or the Indemnitee
entitled thereto.  The agreements in this Section 4.03(b) shall survive the
resignation of the Administrative Agent or the Collateral Agent, the replacement
of any Lender, the termination of the Aggregate Commitments and the repayment,
satisfaction or discharge of all other Obligations.  This Section 4.03(b) shall
not apply to Taxes, or amounts excluded from the definitions of Taxes pursuant
to clauses (i) through (viii) of the first sentence of Section 3.1(a) of the
Credit Agreement, that are imposed with respect to payments to or for account of
any Agent or any Lender under any Loan Document, which shall be governed by
Section 3.1 of the Credit Agreement.  This Section 4.03(b) also shall not apply
to Other Taxes or to taxes covered by Section 3.4 of the Credit Agreement.
 
 
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(c)           Any such amounts payable as provided hereunder shall be additional
Guaranteed Obligations guaranteed hereby and secured by the Collateral
Documents.  The provisions of this Section 4.03 shall remain operative and in
full force and effect regardless of the termination of this Guaranty, any other
Loan Document or any Secured Hedge Agreement or any Cash Management Services
agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Guaranteed Obligations, the invalidity or
unenforceability of any term or provision of this Guaranty or any other Loan
Document, any resignation of the Administrative Agent or Collateral Agent or any
document governing any of the Obligations arising under any Secured Hedge
Agreements or any Cash Management Obligations, or any investigation made by or
on behalf of the Administrative Agent or any other Secured Party.  All amounts
due under this Section 4.03 shall be payable within twenty (20) Business Days
following receipt by the Guarantors and the Borrower from the Administrative
Agent of written demand therefor.
 
Section 4.04  Successors and Assigns.
 
Whenever in this Guaranty any of the parties hereto is referred to, such
reference shall be deemed to include the permitted successors and assigns of
such party; and all covenants, promises and agreements by or on behalf of any
Guarantor or any Secured Party that are contained in this Guaranty shall bind
and inure to the benefit of their respective permitted successors and
assigns.  Except as provided in Section 12.2 of the Credit Agreement, no
Guarantor may assign any of its rights or obligations hereunder without the
written consent of the Administrative Agent.
 
 
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Section 4.05  Survival of Agreement.
 
All covenants, agreements, indemnities, representations and warranties made by
the Guarantors in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Guaranty or any
other Loan Document shall be considered to have been relied upon by the Secured
Parties and shall survive the execution and delivery of the Loan Documents and
the making of any Loans, regardless of any investigation made by any Secured
Party or on its behalf and notwithstanding that any Secured Party may have had
notice or knowledge of any Default or Event of Default or incorrect
representation or warranty at the time any credit is extended under the Credit
Agreement or any other Loan Document, and shall continue in full force and
effect until this Guaranty is terminated as provided in Section 4.12 hereof, or
with respect to any individual Guarantor until such Guarantor is otherwise
released from its obligations under this Guaranty in accordance with the terms
hereof.
 
Section 4.06  Counterparts; Effectiveness; Several Agreement.
 
This Guaranty may be executed in counterparts (and by different parties hereto
in different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract.  This Guaranty
shall become effective when it shall have been executed by the Guarantors, the
Administrative Agent and the Collateral Agent and thereafter shall be binding
upon and inure to the benefit of each Guarantor, the Administrative Agent, the
Collateral Agent, the other Secured Parties and their respective permitted
successors and assigns, subject to Section 4.04 hereof.  Delivery of an executed
counterpart of a signature page of this Guaranty by telecopy or other electronic
imaging means (including in .pdf format via electronic mail) shall be effective
as delivery of a manually executed counterpart of this Guaranty.  This Guaranty
shall be construed as a separate agreement with respect to each Guarantor and
may be amended, restated, modified, supplemented, waived or released with
respect to any Guarantor without the approval of any other Guarantor and without
affecting the obligations of any other Guarantor hereunder.
 
Section 4.07  Severability.
 
If any provision of this Guaranty is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining
provisions of this Guaranty shall not be affected or impaired thereby and (b)
the parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions.  The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
 
 
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Section 4.08  GOVERNING LAW, ETC.
 
(a)           THIS GUARANTY AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF
ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR
RELATING TO THIS GUARANTY AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
 
(b)           THE GUARANTORS, THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
EACH IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR FEDERAL
COURTS OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,
AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION 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.  EACH PARTY HERETO AGREES THAT THE ADMINISTRATIVE AGENT AND THE
OTHER SECURED PARTIES RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY GUARANTOR IN THE COURTS OF
ANY OTHER JURISDICTION SOLELY IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS
UNDER THIS GUARANTY OR THE ENFORCEMENT OF ANY JUDGMENT.
 
(c)           EACH OF THE GUARANTORS, THE ADMINISTRATIVE AGENT AND THE
COLLATERAL AGENT EACH IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS
SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
 
 
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Section 4.09  WAIVER OF RIGHT TO TRIAL BY JURY.
 
EACH PARTY HERETO HEREBY IRREVOCABLY 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).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS GUARANTY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
Section 4.10  Headings.
 
Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Guaranty and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Guaranty.
 
Section 4.11  Obligations Absolute.
 
All rights of the Collateral Agent, the Administrative Agent and the other
Secured Parties hereunder and all obligations of each Guarantor hereunder shall
be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any agreement
with respect to any of the Guaranteed Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document, or any other agreement or
instrument, (c) any release or amendment or waiver of or consent under or
departure from any guarantee guaranteeing all or any of the Guaranteed
Obligations or (d) subject only to termination or release of a Guarantor’s
obligations hereunder in accordance with the terms of Section 4.12 hereof, but
without prejudice to reinstatement rights under Section 2.04 hereof, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Guarantor in respect of the Guaranteed Obligations or this
Guaranty.
 
Section 4.12  Termination or Release.
 
(a)           This Guaranty and the Guarantees made herein shall terminate with
respect to all Guaranteed Obligations upon the Discharge of Obligations.
 
(b)           A Guarantor that is Holdings or a Restricted Subsidiary shall
automatically be released in the circumstances set forth in Section 11.11 of the
Credit Agreement.
 
 
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(c)           In connection with any termination or release pursuant to clauses
(a) or (b) above, the Administrative Agent and the Collateral Agent shall
promptly execute and deliver to any Guarantor, at such Guarantor’s expense, all
documents that such Guarantor shall reasonably request to evidence such
termination or release.  Any execution and delivery of documents pursuant to
this Section 4.12 shall be without recourse to or warranty by the Administrative
Agent or the Collateral Agent.
 
(d)           At any time that the respective Guarantor desires that the
Administrative Agent or the Collateral Agent take any of the actions described
in immediately preceding clause (c), it shall, upon request of the
Administrative Agent or the Collateral Agent, deliver to the Administrative
Agent an officer’s certificate certifying that the release of the respective
Guarantor is permitted pursuant to clause (a) or (b) above.  The Administrative
Agent and the Collateral Agent shall have no liability whatsoever to any Secured
Party as a result of any release of any Guarantor by it as permitted (or which
the Administrative Agent in good faith believes to be permitted) by this Section
4.12.
 
Section 4.13  Additional Restricted Subsidiaries.
 
Pursuant to Section 8.11 of the Credit Agreement, certain Restricted
Subsidiaries of the Loan Parties that are wholly owned Material Domestic
Subsidiaries and not Excluded Subsidiaries and that were not in existence or not
Restricted Subsidiaries on the date of the Credit Agreement are required to
enter in this Guaranty as Guarantors upon becoming Restricted Subsidiaries (for
avoidance of doubt, the Borrower may cause any Restricted Subsidiary that is not
a Guarantor to Guarantee the Obligations by causing such Restricted Subsidiary
to execute a Guaranty Supplement in accordance with the provisions of this
Section 4.13 and any such Restricted Subsidiary shall be a Guarantor hereunder
with the same force and effect as if originally named as a Guarantor
herein).  Upon execution and delivery by the Administrative Agent and a
Restricted Subsidiary of a Guaranty Supplement, such Restricted Subsidiary 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 such instrument
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.
 
Section 4.14  Recourse; Limited Obligations.
 
This Guaranty is made with full recourse to each Guarantor and pursuant to and
upon all the warranties, representations, covenants and agreements on the part
of such Guarantor contained herein, in the Credit Agreement and the other Loan
Documents and otherwise in writing in connection herewith or therewith.  It is
the desire and intent of each Guarantor and each applicable Secured Party that
this Guaranty shall be enforced against each Guarantor to the fullest extent
permissible under applicable Law applied in each jurisdiction in which
enforcement is sought.
 
 
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Section 4.15  Intercreditor Agreement.
 
The Guarantors, the Collateral Agent and the Administrative Agent acknowledge
that the exercise of certain of the Collateral Agent’s and the Administrative
Agent’s rights and remedies hereunder may be subject to, and restricted by, the
provisions of the Intercreditor Agreement.  Except as specified herein, nothing
contained in the Intercreditor Agreement shall be deemed to modify any of the
provisions of this Guaranty, which, as among the Guarantors, the Collateral
Agent and the Administrative Agent shall remain in full force and effect.
 
[Signature Pages Follow]
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly
executed by their respective authorized officers as of the day and year first
above written.
 

 
GUARANTORS:
     
NUMBER HOLDINGS, INC., as a Guarantor
     
By:
/s/Eric Schiffer
 
Name: 
Eric Schiffer
 
Title:
Chief Executive Officer

 
 
 

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99 CENTS ONLY STORES TEXAS, INC., as a Guarantor
     
By:
/s/Eric Schiffer
 
Name: 
Eric Schiffer
 
Title:
Senior Vice President and Secretary

 
 
 

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99 CENTS ONLY STORES, as a Guarantor
     
By:
/s/Eric Schiffer
 
Name: 
Eric Schiffer
 
Title:
Secretary and Treasurer

 
 
 

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ADMINISTRATIVE AGENT AND COLLATERAL AGENT:
     
ROYAL BANK OF CANADA, as
 
Administrative Agent and as Collateral Agent
     
By:
/s/Susan Khokher
 
Name: 
Susan Khokher
 
Title:
Manager, Agency

 
 
 

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SCHEDULE I TO GUARANTY

 
GUARANTORS
 
Number Holdings, Inc.
 
99 Cents Only Stores Texas, Inc.
 
99 Cents Only Stores
 
 

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