Document:

ex10-8.htm

 

 

Exhibit 10.8

 

	
 

AMENDED AND RESTATED EQUITY INTEREST PLEDGE AGREEMENT

 

 

 

This AMENDED AND RESTATED EQUITY INTEREST PLEDGE AGREEMENT (this “Agreement”) is made as of this 13th day of November, 2007 by and between Aeropostale, Inc., a Delaware corporation (the "Borrower"), and Bank of America, N.A. (as assignee of Fleet Retail Finance Inc. (“Fleet”) pursuant to that certain Assignment and Acceptance dated as of even date herewith by and between Fleet, as Assignor, and Bank of America, N.A., as Assignee), a national banking association with offices at 100 Federal Street, 9th Floor, Boston, Massachusetts 02110 (the “Lender”).

WHEREAS, the Borrower and the Lender, among others, are party to that certain Second Amended and Restated Loan and Security Agreement dated as of even date herewith (as such may be amended, restated, supplemented or otherwise modified hereafter, the "Credit Agreement");

WHEREAS, the Borrower and Fleet are party to that certain Stock Pledge Agreement dated February 1, 2002 (as the same may have been amended heretofore, the “Original Pledge Agreement”), pursuant to which the Borrower pledged to Fleet its interest in certain shares of capital stock of Aeropostale West, Inc.;

WHEREAS, the Borrower is the direct legal and beneficial owner of the issued and outstanding shares of each class of the capital stock of the corporations described on Annex A (individually, an “Issuer” and collectively, the “Issuers”);

WHEREAS, the Borrower has entered into the Credit Agreement with the Lender, pursuant to which the Lender, subject to the terms and conditions contained therein, is to make loans or otherwise extend credit to the Borrower;

WHEREAS, it is a condition precedent to the Lender’s continuing to make any loans or otherwise extend credit to the Borrower under the Credit Agreement that the Borrower amend and restate the Original Pledge Agreement in its entirety and to execute and deliver to the Lender this Agreement; and

WHEREAS, the Borrower wishes to grant pledges and security interests in favor of the Lender as herein provided;

NOW, THEREFORE, in consideration of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

§1.           Pledge of Stock, Etc.

(a)           The Borrower hereby pledges, assigns, grants  a security interest in, and delivers to the Lender all of the shares of capital stock, limited liability company membership interests and other equity interests of the Issuers of every class or form, as more fully described on Annex A hereto, to be held by the Lender subject to the terms and conditions hereinafter set forth.  The certifi­cates for such shares and any other “security certificates” (as defined in the UCC) issued by the Issuers, accompanied by stock powers or other appropriate instruments of assignment thereof duly executed in blank by the Borrower, have been delivered to the Lender.

(b)           In case the Borrower shall acquire any additional shares of the capital stock, limited liability company membership interests or other equity interests of any Issuer or corporation or other entity which is the successor of any Issuer, or any securities exchangeable for or convertible into shares of such capital stock, limited liability company membership interest or other equity interest of any Issuer, by purchase or otherwise, then the Borrower shall forthwith deliver to and pledge such stock, limited liability company membership interests or other equity interests to the Lender under this Agreement.  The Borrower agrees that the Lender may from time to time attach as Annex A hereto an updated list of the shares of capital stock, limited liability company membership interests or other equity interests at the time pledged with the Lender hereunder.

 

  

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§2.           Definitions. All capitalized terms used herein without definition shall have the respective meanings provided therefor in the Credit Agreement.  Terms used herein and not defined in the Credit Agreement or otherwise defined herein that are defined in the Uniform Commer­cial Code of Massachusetts have such defined meanings herein, unless the context otherwise indicated or requires, and the following terms shall have the following meanings:

Stock.  All shares of capital stock, limited liability company membership interests or other equity interests described in Annex A attached hereto and any additional shares of capital stock, limited liability company membership interests or other equity interests at any time pledged with the Lender hereunder, together with any membership certificates or other “security certificates” (as such term is defined in the UCC) representing such shares of capital stock, limited liability company membership interests or other equity interests.

Stock Collateral.  The property at any time pledged to the Lender hereunder (whether described herein or not) and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed or distributable, in respect of, or in exchange for any Stock, together with any proceeds of any of the foregoing, but exclud­ing from the definition of "Stock Collateral" any income, in­creases or proceeds received by the Borrower to the extent ex­pressly permitted by §6.

§3.           Security for Liabilities.  This Agreement and the security interest in and pledge of the Stock Collateral hereunder are made with and granted to the Lender as security for the payment and performance in full of all the Liabilities.

§4.           Dividends, Liquidation, Recapitalization, Etc.  Any sums or other property paid or distributed upon or with respect to any of the Stock, whether by dividend or redemption or upon the liquidation or dissolution of the issuer thereof or otherwise, shall, after the occurrence and during the continuation of an Event of Default, be paid over and delivered to the Lender to be applied in reduction of the Liabilities in such order and manner as the Lender determines in its sole discretion. In case, pursuant to the recapitaliza­tion or reclassification of the capital of the issuer thereof or pursuant to the reorganization thereof, any distribution of capital shall be made on or in respect of any of the Stock or any property shall be distributed upon or with respect to any of the Stock, the property so distributed shall be delivered to the Lender to be applied in reduction of the Liabilities in such order and manner as the Lender determines in its sole discretion.  All sums of money and property paid or distributed in respect of the Stock, whether as a divi­dend or upon such a liquidation, dissolution, recapitalization or reclassification or otherwise, that are received by the Borrower shall, until paid or delivered to the Lender, be held in trust for the Lender as security for the payment and performance in full of all of the Liabilities.

§5.  Warranty of Title; Authority.  The Borrower hereby represents and warrants that: (a) the Borrower has good and marketable title to the Stock described in §1, subject to no pledges, liens, security interests, charges, options, restric­tions or other encumbrances except the pledge and security interest created by this Agreement,  (b) the Borrower has full power, authority and legal right to execute, deliver and perform its obligations under this Agreement and to pledge and grant a security interest in all of the Stock Collateral pursuant to this Agreement, and the execution, delivery and performance hereof and the pledge of and granting of a security interest in the Stock Collateral hereunder have been duly authorized by all necessary corporate or other action and do not contravene any law, rule or regulation or any provision of the Borrower's charter documents or by-laws or of any judgment, decree or order of any tribunal or of any agreement or instrument to which the Borrower is a party or by which it or any of its property is bound or affected or con­stitute a default under any of the foregoing, and (c) the information set forth in Annex A  hereto relating to the Stock is true, correct and complete in all respects.  The Borrower covenants that it will defend the Lender's rights and security interest in such Stock against the claims and demands of all persons whomsoever.  The Borrower further covenants that it will have the like title to and right to pledge and grant a security interest in the Stock Collateral hereafter pledged or in which a security interest is granted to the Lender hereunder and will likewise defend the Lender's rights, pledge and security interest thereof and therein.

 

 

  

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§6.           Voting, Etc., Prior to Maturity.  So long as no Event of Default shall have occurred and be con­tinuing, the Borrower shall be entitled to vote the Stock and to give consents, waivers and ratifications in respect of the Stock; provided, however, that no vote shall be cast or consent waiver or ratification given by the Borrower if the effect thereof would impair any of the Stock Collateral or be inconsistent with or result in any violation of any of the provisions of the Credit Agreement or any of the other Loan Documents. All such rights of the Borrower to vote and give consents, waivers and ratifications with respect to the Stock shall, at the Lender's option, as evidenced by the Lender's notifying the Borrower of such election, cease in case an Event of Default shall have occurred and be continuing.

§7.           Remedies

(a)           If an Event of Default shall have occurred and be continuing, the Lender shall thereafter have the following rights and remedies (to the extent permitted by appli­cable law) in addition to the rights and remedies of a secured party under the Uniform Commercial Code of Massachusetts, all such rights and remedies being cumulative, not exclusive, and enforceable  alternatively, successively or concurrently, at such time or times as the Lender deems expedient:

(i) if the Lender so elects and gives notice of such election to the Borrower, the Lender may vote any or all shares of the Stock (whether or not the same shall have been transferred into its name or the name of its nominee or nominees) for any lawful purpose, including, without  limitation, if the Lender so elects, for the liquidation of the assets of the issuer thereof, and give all consents, waivers and ratifications in respect of the Stock and otherwise act with respect thereto as though it were the outright owner thereof (the Borrower hereby irrevocably constituting and appointing the Lender the proxy and attor­ney-in-fact of the Borrower, with full power of substitution, to do so);

 

(ii) the Lender may demand, sue for, collect or make any compromise or settlement the Lender deems suitable in respect of any Stock Collateral;

 

(iii) the Lender may sell, resell, assign and deliv­er, or otherwise dispose of any or all of the Stock Collat­eral, for cash or credit or both and upon such terms at such place or places, at such time or times and to such entities or other persons as the Lender thinks expedient, all without demand for performance by the Borrower or any notice or advertisement whatsoever except as expressly provided herein or as may otherwise be required by law;

 

(iv) the Lender may cause all or any part of the Stock held by it to be transferred into its name or the name of its nominee or nominees; and

 

(v) the Lender may set off against the Liabilities any and all sums deposited with it or held by it.

 

(b)           In the event of any disposition of the Stock Collateral as provided in clause (iii) of §7(a), the Lender shall give to the Borrower at least seven (7) Business Days prior written notice of the time and place of any public sale of the Stock Collateral or of the time after which any private sale or any other intended disposition is to be made.  The Borrower hereby acknowledges that seven (7) Business Days prior written notice of such sale or sales shall be reasonable notice.  The Lender may enforce its rights hereunder without any other notice and without com­pliance with any other condition precedent now or hereunder imposed by statute, rule of law or otherwise (all of which are hereby expressly waived by the Borrower, to the fullest extent permitted by law).  The Lender may buy any part or all of the Stock Collateral at any public sale and if any part or all of the Stock Collateral is of a type customarily sold in a recognized market or is of the type which is the subject of widely-distributed standard price quotations, the Lender may buy at private sale and may make payments thereof by any means.  The Lender may apply the cash proceeds actually received from any sale or other disposi­tion to the reasonable expenses of retaking, holding, preparing for sale, selling and the like, to reasonable attorneys fees, travel and all other expenses which may be incurred by the Lender in attempting to collect the Liabilities or to enforce this Agreement or in the prosecution or defense of any action or proceeding related to the subject matter of this Agreement, and then to the Liabilities in such order or preference as the Lender may determine after proper allowance for Liabilities not then due.  Only after such applications, and after payment by the Lender of any amount required by §9-615 of the Uniform Commercial Code of the Commonwealth of Massachu­setts, need the Lender account to the Borrower for any surplus.  To the extent that any of the Liabilities are to be paid or per­formed by a person other than the Borrower, the Borrower waives and agrees not to assert any rights or privileges which it may have under the Uniform Commercial Code of the Commonwealth of Massachusetts.

 

 

  

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(c)           The Borrower recognizes that the Lender may be unable to effect a public sale of the Stock by reason of certain prohi­bitions contained in the  Securities Act of 1933, as amended (the "Secu­rities Act"), federal banking laws, and other applicable laws, but may be compelled to resort to one or more private sales thereof to a restricted group of purchas­ers.  The Borrower agrees that any such private sales may be at prices and other terms less favorable to the seller than if sold at public sales and that such private sales shall not by reason thereof be deemed not to have been made in a commercially rea­sonable manner.  The Lender shall be under no obligation to delay a sale of any of the Stock for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act, or such other federal banking or other applicable laws, even if the issuer would agree to do so.  Subject to the foregoing, the Lender agrees that any sale of the Stock shall be made in a commercially reasonable manner, and the Borrower agrees to use its best efforts to cause the issuer or issuers of the Stock contemplated to be sold, to execute and deliver, and cause the directors and officers of such issuer to execute and deliver, all at the Borrower's expense, all such instruments and documents, and to do or cause to be done all such other acts and things as may be necessary or, in the reasonable opinion of the Lender, advisable to exempt such Stock from registration under the provisions of the Securities Act, and to make all amendments to such instruments and documents which, in the opinion of the Lender, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto.  The Borrower further agrees to use its best efforts to cause such issuer or issuers to comply with the provisions of the securities or "Blue Sky" laws of any jurisdic­tion which the Lender shall designate and, if required, to cause such issuer or issuers to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which will satisfy the provisions of Section 11(a) of the Securities Act.

(d)           The Borrower further agrees to do or cause to be done all such other acts and things as may be reasonably neces­sary to make any sales of any portion or all of the Stock pursu­ant to this §7 valid and binding and in compliance with any and all applicable laws (including, without limitation, the Securi­ties Act, the Securities Exchange Act of 1934, as amended, the rules and regulations of the Securities and Exchange Commission applicable thereto and all applicable state securities or "Blue Sky" laws), regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at the Borrower's expense.  The Borrower further agrees that a breach of any of the covenants contained in this §7 will cause irreparable injury to the Lender, that the Lender has no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenant contained in this §7 shall be specifically enforceable against the Borrower and the Borrower hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants.

§8.           Marshalling.  The Lender shall not be required to marshal any present or future security for (including but not limited to this Agreement and the Stock Collateral), or other assurances of payment of, the Liabilities or any of them, or to resort to such security or other assurances of payment in any particular order.  All of the Lender's rights hereunder and in respect of such secu­rity and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising.  To the extent that it lawfully may, the Borrower hereby agrees that it will not invoke any law relating to the marshalling of col­lateral that might cause delay in or impede the enforcement of the Lender's rights under this Agreement or under any other in­strument evidencing any of the Liabilities or under which any of the Liabilities is outstanding or by which any of the Liabilities is secured or payment thereof is otherwise assured, and to the extent that it lawfully may the Borrower hereby irrevocably waives the benefits of all such laws.

 

 

  

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§9.           Borrower's Liabilities Not Affected.  The Liabilities of the Borrower shall remain in full force and effect without regard to, and shall not be impaired by (a) any exercise or nonexercise, or any waiver, by the Lender of any right, remedy, power or privilege under or in respect of any of the Liabilities or any security thereof (including this Agreement); (b) any amendment to or modification of the Credit Agreement, the other Loan Documents or any of the Liabilities; (c) any amendment to or modification of any instrument (other than this Agreement) securing any of the Liabilities; or (d) the taking of additional security for, or any other assurances of payment of, any of the Liabilities or the release or discharge or termination of any security or other assurances of payment or performance for any of the Liabilities; whether or not the Borrower shall have notice or knowledge of any of the foregoing.

§10.           Transfer, Etc., by Borrower.  Without the prior written consent of the Lender, the Borrower will not sell, assign, transfer or otherwise dispose of, grant any option with respect to, or pledge or grant any security interest in or otherwise encumber or restrict any of the Stock Collateral or any interest therein, except for the pledge thereof and security interest therein provided for in this Agreement.

§11.           Further Assurances.  The Borrower will do all such acts, and will furnish to the Lender all such financing statements, certificates, legal opinions and other documents and will obtain all such governmental consents and corporate approvals and will do or cause to be done all such other things as the Lender may reasonably request from time to time in order to give full effect to this Agreement and to secure the rights of the Lender hereunder, all without any cost or expense to the Lender.  If the Lender so elects, a photocopy of this Agreement may at any time and from time to time be filed by the Lender as a financing statement in any recording office in any jurisdiction.

§12.           Lender's Exoneration.  Under no circumstances shall the Lender be deemed to assume any responsibility for or obligation or duty with respect to any part or all of the Stock Collateral of any nature or kind or any matter or proceedings arising out of or relating thereto, other than (a) to exercise reasonable care in the physical custody of the Stock Collateral and (b) after an Event of Default shall have occurred and be con­tinuing to act in a commercially  reasonable manner.  The Lender shall not be required to take any action of any kind to collect, preserve or protect its or the Borrower's rights in the Stock Collateral or against other parties thereto.  The Lender's prior recourse to any part or all of the Stock Collateral shall not constitute a condition of any demand, suit or proceeding for payment or collection of any of the Liabilities .

§13.           No Waiver, Etc..  Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated except by a written instrument expressly referring to this Agreement and to the provisions so modified or limited, and executed by the party to be charged.  No act, failure or delay by the Lender shall constitute a waiver of its rights and remedies hereunder or otherwise.  No single or partial waiver by the Lender of any default or right or remedy that it may have shall operate as a waiver of any other default, right or remedy or of the same default, right or remedy on a future occasion.  The Borrower hereby waives presentment, notice of dishonor and protest of all instruments, included in or evidencing any of the Liabilities or the Stock Collateral, and any and all other notices and demands whatsoever (except as expressly provided herein or in the Credit Agreement).

§14.           Notices, Etc.  All notices, requests and other commu­nications hereunder shall be made in the manner set forth in Article 12 of the Credit Agreement.

§15.           Termination.  Upon final payment and performance in full of the Liabilities, this Agreement shall terminate and the Lender shall, at the Borrower's request and expense, return such Stock Collateral in the possession or control of the Lender as has not theretofore been disposed of pursuant to the provisions hereof, together with any moneys and other property at the time held by the Lender hereunder.

 

 

  

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§16.           Interest.  Until paid, all amounts due and payable by the Borrower hereunder shall be a debt secured by the Stock Collateral and shall bear, whether before or after judg­ment, interest at the rate of interest upon default as set forth in the Credit Agreement.

§17.           Governing Law; Consent to Jurisdiction.  THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.  The Borrower agrees that any suit for the enforcement of this Agreement may be brought in the courts of the Commonwealth of Massachusetts or any federal court sitting therein and consents to the non-exclusive jurisdiction of such court and to service of process in any such suit being made upon the Borrower by mail at the address specified in Article 12 of the Credit Agreement.  The Borrower hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit is brought in an inconvenient court.

§18.           Waiver of Jury Trial. THE BORROWER WAIVES ITS RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH THE LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE LENDER OR IN WHICH THE LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN THE BORROWER OR ANY OTHER PERSON AND THE LENDER (AND THE LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH CASE OR CONTROVERSY).

§19.           Miscellaneous.  The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof.  This Agreement and all rights and obligations hereunder shall be binding upon the Borrower and its respective successors and assigns, and shall inure to the benefit of the Lender and its successors and assigns.  If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall be in no way af­fected thereby, and this Agreement shall be construed and be enforceable as if such invalid, illegal or unenforceable term had not been included herein.  The Borrower acknowledges receipt of a copy of this Agreement.

[signature page follows]

  

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IN WITNESS WHEREOF, intending to be legally bound, the Borrower and the Lender have caused this Agreement to be executed as of the date first above written.  This Agreement shall take effect as a sealed instrument.

                 AEROPOSTALE, INC.

	
By:

	
/s/ Edward M. Slezak

	
Name:

	
Edward M. Slezak

	
Title:

	
Senior Vice President, Secretary and

	  	
General Counsel

Signature Page to Amended and Restated Equity Interest Pledge Agreement

  

  

  

 

 

IN WITNESS WHEREOF, intending to be legally bound, the Borrower and the Lender have caused this Agreement to be executed as of the date first above written.  This Agreement shall take effect as a sealed instrument.

                 AEROPOSTALE, INC., as Borrower

	
By:

	
/s/ Michael J. Cunningham

	
Name:

	
Michael J. Cunningham

	
Title:

	
Executive Vice President and

	  	
Chief Financial Officer

                 BANK OF AMERICA, N.A., as Lender

	
By:

	
/s/ Kathleen A. Dimock

	
Name:

	
Kathleen A. Dimock

	
Title:

	
Managing Director

Signature Page to Amended and Restated Equity Interest Pledge Agreement

  

  

  

 

 

Each of the undersigned Issuers hereby joins in the above Agreement for the sole purpose of consenting to and being bound by the provisions of §§4 and 7 thereof, the undersigned hereby agreeing to cooperate fully and in good faith with the Lender and the Borrower in carrying out such provisions.

                 AEROPOSTALE WEST, INC., as an Issuer

	
By:

	
/s/ Michael J. Cunningham

	
Name:

	
Michael J. Cunningham

	
Title:

	
Executive Vice President and

	  	
Chief Financial Officer

                 JIMMY’Z SURF CO., INC., as an Issuer

	
By:

	
/s/ Michael J. Cunningham

	
Name:

	
Michael J. Cunningham

	
Title:

	
Executive Vice President and

	  	
Chief Financial Officer

                 AERO GC MANAGEMENT LLC, as an Issuer

	
By:

	
/s/ Michael J. Cunningham

	
Name:

	
Michael J. Cunningham

	
Title:

	
Executive Vice President and

	  	
Chief Financial Officer

Signature Page to Amended and Restated Equity Interest Pledge Agreement

  

  

  

Annex A

None of the Issuers has any authorized, issued or outstand­ing shares of its capital stock, limited liability company membership interests or other equity interests or any commitments to issue any shares of its capital stock, limited liability company membership interests or other equity interests or any securities convertible into or exchangeable for any shares of its capital stock, limited liability company membership interests or other equity interests except as otherwise stated in this Annex A.

	
Issuer

	
Record

Owner

	
Class of Shares

	
Number of Authorized Shares

	
Number of Issued and Outstanding Shares

	
Par or Liquidation Value

	
Aeropostale West, Inc.

	
Aeropostale, Inc.

	
Common

	
1,000

	
1,000

	
$.01

	
Jimmy’Z Surf Co., Inc.

	
Aeropostale, Inc.

	
Common

	
200

	
100

	
$.01

	
Aero GC Management LLC

	
Aeropostale, Inc.

	
N/A

	
N/A

	
N/A

	
N/A

1043959.2

Annex A to Amended and Restated Equity Interest Pledge Agreementex10-9.htm

 

Exhibit 10.9

 

 

	
 

AMENDED AND RESTATED GUARANTY   

 

	
Bank of America, N.A.

LENDER

 

  

                                                                                                                      

	 November 13, 2007

 

                                                                                                                                                           

FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE ACKNOWLEDGED, each of the undersigned Aeropostale West, Inc., a Delaware corporation (the “Existing Guarantor”), Jimmy’Z Surf Co., Inc., a Delaware corporation, and Aero GC Management LLC, a Virginia limited liability company, each with offices at 112 West 34th Street, New York, New York 10120 (the foregoing, together with the Existing Guarantor, individually a “Guarantor” and collectively, the “Guarantors”) unconditionally guarantees, in accordance with the terms hereof and without any prior written notice, the payment and performance of the Liabilities (defined below) of Aeropostale, Inc. (the “Borrower”), a Delaware corporation with its principal executive offices at 112 West 34th Street, New York, New York 10120 to Bank of America, N.A., a national banking association with offices at 100 Federal Street, 9th Floor, Boston, Massachusetts (the “Lender”).

 

WITNESSETH:

 

WHEREAS, the Borrower, the Guarantors and the Lender (as assignee of Fleet Retail Finance Inc. (“Fleet”) pursuant to that certain Assignment and Acceptance dated as of even date herewith by and between Fleet, as Assignor, and Bank of America, N.A., as Assignee), are party to that certain Second Amended and Restated Loan and Security Agreement dated as of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”); and

 

WHEREAS, the Existing Guarantor is party to that certain Guaranty dated as of February 1, 2002 (the “Existing Guaranty”) in favor of Fleet, pursuant to which the Existing Guarantor agreed to guarantee certain obligations of the Borrower to Fleet; and

 

WHEREAS, it is a condition precedent to the Lender’s continuing to make any loans or otherwise extend credit to the Borrower under the Loan Agreement that the Existing Guaranty be amended and restated in its entirety and that the Guarantors execute and deliver to the Lender this guaranty (this “Guaranty”).

 

 

  

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Accordingly, the parties hereto agree as follows:

 

Definitions: Unless otherwise defined herein, all capitalized terms used herein shall have the meaning given that term in the Loan Agreement.

 

“Liabilities”: (in the singular, “Liability”): Includes, without limitation, all and each of the following, whether now existing or hereafter arising:

 

(a)           Any and all direct and indirect liabilities, debts, and obligations of the Borrower to the Lender, each of every kind, nature, and description under the Loan Documents.

 

(b)           Each obligation to repay any loan, advance, indebtedness, note, obligation, overdraft, or amount now or hereafter owing by the Borrower to the Lender under the Loan Documents (including all future advances whether or not made pursuant to a commitment by the Lender), whether or not any of such are liquidated, unliquidated, primary, secondary, secured, unsecured, direct, indirect, absolute, contingent, or of any other type, nature, or description, or by reason of any cause of action which the Lender may hold against the Borrower under the Loan Documents.

 

(c)           All notes and other obligations of the Borrower now or hereafter assigned to or held by the Lender with respect to the Loan Documents, each of every kind, nature, and description.

 

(d)           All interest, fees, and charges and other amounts which may be charged by the Lender to the Borrower under the Loan Documents and/or which may be due from the Borrower to the Lender under the Loan Documents from time to time.

 

 

  

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(e)           All costs and expenses incurred or paid by the Lender in respect of any of the Loan Documents (including, without limitation, Costs of Collection, reasonable attorneys’ fees, and all court and litigation costs and expenses).

 

(f)           Any and all covenants of the Borrower to or with the Lender and any and all obligations of the Borrower to act or to refrain from acting in accordance with under Loan Documents.

 

(g)           Each of the foregoing as if each reference to the “Lender” therein were to each Affiliate of the Lender.

 

(h)           Any and all direct or indirect liabilities, debts, and obligations of the Borrower to the Lender or any Affiliate of the Lender, each of every kind, nature, and description owing on account of any service or accommodation provided to, or for the account of the Borrower pursuant to this or any other Loan Document, including cash management services and the issuances of L/C’s.

 

Indemnification: FOR GOOD AND VALUABLE CONSIDERATION, each Guarantor shall indemnify, defend, and hold the Lender and any employee, officer, or agent of any of the foregoing (each, an “Indemnified Person”) harmless of and from any claim brought or threatened against any Indemnified Person by the Borrower, each Guarantor or any other guarantor or endorser of the Liabilities, or any other Person (as well as from attorneys’ reasonable fees and expenses in connection therewith) on account of the relationship of the Borrower, any Guarantor or any other guarantor or endorser of the Liabilities with the Lender (each, an “Indemnified Claim”) other than any claim resulting from the gross negligence or willful misconduct of such Indemnified Person.  Each Indemnified Claim may be defended, compromised, settled, or pursued by the Indemnified Person with counsel of the Lender’s selection (and if such Indemnified Claim is brought by a Person other than the Borrower, any Guarantor, or any guarantor or endorser of the Liabilities or any Affiliate of the Borrower, after consultation with (but not approval of) the Guarantors regarding the selection of such counsel), but at the expense of the Guarantors, provided that any Indemnified Claim may not be settled without the consent of the Guarantors (which shall not be unreasonably withheld or delayed) if as the result of any such settlement the Guarantors will be obligated to make any payment (other than reimbursement of the reasonable costs and expenses of  the Indemnified Person). This indemnification shall survive payment of the Liabilities and/or any termination, release, or discharge executed by the Lender in favor of any Guarantor, other than a termination, release, or discharge which makes specific reference to this provision of this Guaranty.

 

 

  

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Interest: Each Guarantor will pay on demand, after the occurrence and during the continuation of an Event of Default,  interest on all amounts due under this Guaranty, or arising under any documents, instruments, or agreements relating to any collateral securing this Guaranty, from the time the Lender first demands payment of this Guaranty at a rate (determined based upon a 360 day year and actual days elapsed) equal to the lesser from time to time of (a) the aggregate of the Prime Rate from time to time announced by Bank of America, N.A. (or, if said bank ceases to announce such a rate, the functional equivalent rate or index selected in good faith by the Lender) plus two percent (2.0 %) per annum or (b) the highest rate of interest which under the circumstances may be charged under applicable law.

 

Obligations Not Affected: The obligations of each Guarantor hereunder shall not be affected by: any fraudulent, illegal, or improper act by the Borrower, any Guarantor, or any other Person liable or obligated to the Lender for or on the Liabilities; any release, discharge, or invalidation, by operation of law or otherwise, of the Liabilities; or the legal incapacity of the Borrower, any Guarantor, or any other Person liable or obligated to the Lender for or on the Liabilities.  Interest and Costs of Collection shall continue to accrue and shall continue to be deemed Liabilities guarantied hereby notwithstanding any stay to the enforcement thereof against the Borrower or any Guarantor or the disallowance of any claim therefor against the Borrower or any Guarantor.

 

Incorporation Of All Discussions: This instrument incorporates all discussions and negotiations between the Guarantors and the Lender concerning the guaranty and indemnification provided by the Guarantors hereby.  No such discussions or negotiations shall limit, modify, or otherwise affect the provisions hereof.  No provision hereof may be altered, amended, waived, canceled or modified, except by a written instrument executed, sealed, and acknowledged by a duly authorized officer of the Lender.

 

 

  

4

  

 

 

General Waivers: Each Guarantor WAIVES: presentment, demand, notice, and protest with respect to the Liabilities and this Guaranty; any delay on the part of the Lender; any right to require the Lender to pursue or to proceed against the Borrower or any collateral which might have been granted to secure the Liabilities or to secure the obligations of the Guarantors hereunder; any benefit of, and any right to participate in, any collateral which may secure the Liabilities; any claim which any Guarantor may have or to which any Guarantor may become entitled to the extent that such claim might otherwise cause any transfer to the Lender by or on behalf of the Borrower to be avoided as having been, or in the nature of, a preference; and notice of acceptance of this Guaranty.

 

Each Guarantor WAIVES any claim, defense, or benefit which is based on any of the following (to the extent applicable notwithstanding the choice of Massachusetts law as governing this Guaranty):

 

Section 580a, 580b, 580c, 580d, and 726, and Chapter 2 of Title 14 of the California Code of Civil Procedure or any similar law of California or of any other jurisdiction.

 

Sections 2787 to 2856 inclusive, and 2899 and 3433 of the California Civil Code or any similar law of California or of any other jurisdiction.

 

California Commercial Code Sections 3116, 3118, 3119, 3419, 3605, 9504 and 9507 or any similar law of California or of any other jurisdiction.

 

Union Bank v. Gradsky and subsequent judicial decisions arising out of or related to Sections 580a, 580b, 580c, 580d, and 726, and Chapter 2 of Title 14 of California Code of Civil Procedure or any similar law of California or of any other jurisdiction.

 

WAIVERS CONCERNING ELECTION OF REMEDIES.  Each Guarantor WAIVES any claim or defense which is based upon an election of remedies.

 

In the event that the Liabilities or this Guaranty are secured by real estate, and in the event that the Lender elects to enforce the Lender’s rights against such real property by way of nonjudicial foreclosure through the exercise of the rights of power of sale, each Guarantor WAIVES any defense which, but for this waiver, might be available to any Guarantor due to such election of remedies by the Lender (including, without limitation, any claim that the Lender, by reason of such election of remedies, has extinguished rights of the Guarantors to proceed against the Borrower).

 

 

  

5

  

 

 

Waiver of Subrogation: No Guarantor shall undertake any of the following:

 

(a)           Exercise of any right against the Borrower, by way of subrogation, reimbursement, indemnity, contribution, or the like unless and until all Liabilities have been irrevocably paid and satisfied in full.

 

(b)           The filing of any proof of any claim in competition with the Lender in respect of any payment hereunder in any bankruptcy or insolvency proceedings of any nature.

 

(c)           The claiming of any set-off or counterclaim against the Borrower in respect of any liability of such Guarantor to the Borrower.

 

Subordination: The payment of any amounts due with respect to any indebtedness of the Borrower now or hereafter held by any Guarantor for borrowed money is hereby subordinated to the prior payment in full of the Liabilities. No Guarantor shall demand, sue for, or otherwise attempt to collect any such indebtedness.  Any amounts which are collected, enforced and received by any Guarantor shall be held by such Guarantor as trustee for the Lender and shall be paid over to the Lender on account of the Liabilities without affecting in any manner the liability of any Guarantor under this Guaranty.

 

Lender’s Books and Records: The books and records of the Lender showing the account between the Lender and the Guarantor shall be admissible in any action or proceeding and constitute prima facie evidence and proof of the items contained therein.

 

Guarantors’ Obligations Primary: The obligations of each Guarantor hereunder are primary, with no recourse necessary by the Lender against the Borrower or any collateral given to secure the Liabilities or to secure the obligations of such Guarantor or any other Guarantor hereunder or against any other Person liable for or on the Liabilities prior to proceeding against such Guarantor or any other Guarantor hereunder.

 

 

  

6

  

 

 

Changes In Liabilities: Each Guarantor assents to any indulgence or waiver which the Lender might grant or give the Borrower and/or any other Person liable or obligated  for or on the Liabilities.  Each Guarantor authorizes the Lender to alter, amend, cancel, waive, or modify any term or condition of the Liabilities and of the obligations of any other Person liable or obligated for or on the Liabilities, without notice to, or consent from, such Guarantor or any other Guarantor.  Each Guarantor authorizes the Lender to complete this Guaranty and any instrument or other document which evidences or relates to the Liabilities, to the extent that this Guaranty or such instrument or other document, upon delivery to the Lender, is incomplete in any respect.  No compromise, settlement, or release by the Lender of the Liabilities or of the obligations of any such other Person (whether or not jointly liable with any Guarantor) and no release of any collateral securing the Liabilities or securing the obligations of any such other Person shall affect the obligations of any Guarantor hereunder.  No action by the Lender which has been assented to herein shall affect the obligations of any Guarantor hereunder.

 

Financial Information: Each Guarantor, from time to time at the request of the Lender, will provide the Lender with such information concerning the financial condition of such Guarantor as the Lender reasonably may request (including but not limited to financial statements in such form as reasonably may be requested by the Lender and copies of the federal and state income tax returns).

 

Costs of Enforcement: Each Guarantor will pay on demand, without limitation, all reasonable attorneys’ fees, out-of-pocket expenses incurred by the Lender’s attorneys and all costs incurred by the Lender (including, without limitation, costs and expenses associated with travel on behalf of the Lender), which fees, expenses and costs are directly or indirectly related to or in respect of the Lender’s administration, negotiation, documentation, and amendment of this Guaranty and in the Lender’s efforts to collect and/or to enforce any of the obligations of any Guarantor hereunder and/or to enforce any of the Lender’s rights, remedies, or powers against or in respect of any Guarantor (whether or not suit is instituted by or against the Lender).

 

 

  

7

  

 

 

Binding Effect: This instrument shall inure to the benefit of the Lender and its successors and assigns; shall be binding upon the respective heirs, successors, representatives, and assigns of each Guarantor; and shall apply to all Liabilities and any successor to the Borrower, including any successor by operation of law.

 

Lender’s Rights and Remedies: The rights, remedies, powers, privileges, and discretions of the Lender hereunder (herein, the “Lender’s Rights and Remedies”) shall be cumulative and not exclusive of any rights or remedies which it would otherwise have.  No delay or omission by the Lender in exercising or enforcing any of the Lender’s Rights and Remedies shall operate as, or constitute a waiver thereof.  No waiver by the Lender of any of the Lender’s Rights and Remedies or of any default or remedies under any other agreement with any Guarantor, or of any default under any agreement with the Borrower or any other Person liable or obligated for or on the Liabilities, shall operate as a waiver of any other of the Lender’s Rights and Remedies or of any default or remedy hereunder or thereunder.  No exercise of any of the Lender’s Rights and Remedies and no other agreement or transaction of whatever nature entered into between the Lender and: any Guarantor; and the Borrower; and/or any such other Person at any time shall preclude any other exercise of the Lender’s Rights and Remedies.  No waiver by the Lender of any of the Lender’s Rights and Remedies on any one occasion shall be deemed a waiver on any subsequent occasion, nor shall it be deemed a continuing waiver.  All of the Lender’s Rights and Remedies, and all of the Lender’s rights, remedies, powers, privileges, and discretions under any other agreement or transaction with any Guarantor, the Borrower, or any such other Person, shall be cumulative and not alternative or exclusive, and may be exercised by the Lender at such time or times and in such order of preference as the Lender in its sole discretion may determine.  The Lender’s Rights and Remedies may be exercised without resort or regard to any other source of satisfaction of the Liabilities.

 

Copies and Facsimiles: This Guaranty and all documents which have been or may be hereinafter furnished by any Guarantor to the Lender may be reproduced by any photographic, microfilm, xerographic, digital imaging, or other process. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made in the regular course of business). Any facsimile which bears proof of transmission shall be binding on the party which or on whose behalf such transmission was initiated and likewise so admissible in evidence as if the original of such facsimile had been delivered to the party which or on whose behalf such transmission was received.

 

 

  

8

  

 

 

Choice of Laws: This Guaranty and all rights and obligations hereunder shall be governed, construed, and interpreted in accordance with the laws of The Commonwealth of Massachusetts.

 

Consent To Jurisdiction: (a) Each Guarantor agrees that any legal action, proceeding, case, or controversy against such Guarantor with respect to this Guaranty or otherwise, may be brought in the Superior Court of Suffolk County Massachusetts or in the United States District Court, District of Massachusetts, sitting in Boston, Massachusetts, as the Lender may elect in the Lender’s sole discretion.  By execution and delivery of this Guaranty, each Guarantor accepts, submits, and consents generally and unconditionally, to the jurisdiction of the aforesaid courts.

 

(b)           Each Guarantor WAIVES personal service of any and all process and irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by certified mail, postage prepaid, to such Guarantor at the last address of such Guarantor of which the Lender then has written notice, such service to become effective ten (10) Business Days after such mailing.

 

(c)           Each Guarantor WAIVES, at the option of the Lender, any objection based on forum non conveniens and any objection to venue of any action or proceeding instituted hereunder or any other Loan Document to which such Guarantor is a party.

 

(d)           Nothing herein shall affect the right of the Lender to bring legal actions or proceedings in any other competent jurisdiction.

 

(e)           Each Guarantor agrees that any action commenced by such Guarantor asserting any claim or counterclaim arising under or in connection with this Guaranty or the Lender’s relationship with the Guarantor shall be brought in the Superior Court of Suffolk County Massachusetts or in the United States District Court, District of Massachusetts, sitting in Boston, Massachusetts, and that such Courts shall have exclusive jurisdiction with respect to any such action.

 

 

  

9

  

 

 

Broad Scope of Guaranty: It is the intention of each Guarantor that the provisions of the within Guaranty and indemnification be liberally construed to the end that the Lender may be put in as good a position as if the Borrower had promptly, punctually, and faithfully performed all Liabilities and that such Guarantor had promptly, punctually, and faithfully performed hereunder.

 

Severability: Any determination that any provision herein is invalid, illegal, or unenforceable in any respect in any instance shall not affect the validity, legality, or enforceability of such provision in any other instance and shall not affect the validity, legality, or enforceability of any other provision contained herein.

 

Right of Set-Off: Any and all deposits or other sums at any time credited by or due from the Lender to any Guarantor or to any participant in the Liabilities (a “Participant”) or from any Affiliate of Lender or any Participant and any cash, securities, instruments or other property of any Guarantor in the possession of the Lender or any Participant or any such Affiliate, whether for safekeeping or otherwise (regardless of the reason the Lender or any Participant or any such Affiliate had received the same) shall at all times constitute security for all Liabilities and for any and all obligations of the Guarantors to the Lender and any Participant, and may be applied or set off against the Liabilities and against the obligations of the Guarantors to the Lender and any Participant including, without limitation, those arising hereunder, at any time, whether or not such are then due and whether or not other collateral is then available to the Lender or any Participant or any such Affiliate.

 

Joint and Several Obligations: Each of the obligations of each and every Guarantor under this Guaranty are joint and several.  This Guaranty may be enforced against any Guarantor without any duty or responsibility to pursue any other Guarantor and such enforcement shall not be a defense to any action brought against any Guarantor hereunder.  The Lender hereby reserves all rights against each Guarantor.

 

Termination: The obligations of each Guarantor hereunder shall remain in full force and effect as to all Liabilities, without regard to any reduction of the Liabilities (other than on account of payments made pursuant to the within Guaranty) until the earlier of (a) ten (10) days following the actual receipt by the Lender, at the address set forth on the first page hereof (or such other address that the Lender indicates in writing to the Guarantors), of written notice signed by each Guarantor of the termination thereof or (b) the delivery of written notice of termination dated and signed by a duly authorized officer of the Lender, which notice of termination includes specific reference to this provision.  No termination hereof shall affect any Liability in existence or outstanding ten (10) days following the date of such actual receipt or delivery (including, without limitation, those which are contingent or not then due and those which arise out of any check, draft, item, or paper which was made, executed, or drawn prior to the expiration of such ten (10) days, even if received by the Lender thereafter) nor any which arises out of any continuing commitment or obligation of the Lender to provide loans, advances, and financial accommodations to or for the account of the Borrower, nor any obligation of any Guarantor hereunder, including, without limitation, any which by its terms includes any of the Liabilities of a contingent nature (including, without limitation, the indemnification provided for herein).  This Guaranty shall continue to be effective or, if previously terminated, shall be automatically reinstated, without any further action, if at any time any payment made or value received with respect to a Liability is rescinded or must otherwise be returned by the Lender upon the insolvency, bankruptcy or reorganization of any Guarantor, or otherwise, all as though such payment had not been made or value received.

 

 

  

10

  

 

 

Miscellaneous: Each Guarantor represents and certifies that, prior to the execution of this Guaranty, such Guarantor had carefully read and reviewed all of the provisions of this Guaranty and had been afforded an opportunity to consult with counsel independently selected by such Guarantor. Each Guarantor further represents and certifies that such Guarantor has freely and willingly executed this Guaranty with full appreciation of the legal effect of this Guaranty. Each Guarantor recognizes that the titles to the paragraphs of the within Guaranty are for ease of reference; are not part of this Guaranty; and do not alter or affect the substantive provisions hereof.

 

 

  

11

  

 

Waiver of Jury Trial: Each Guarantor makes the following waiver knowingly, voluntarily, and intentionally, and understands that the Lender in the establishment and maintenance of its relationship with the Borrower and such Guarantor, is relying thereon. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT OF SUCH GUARANTOR, THE BORROWER OR ANY ENDORSER OR ANY OTHER GUARANTOR OF THE BORROWER, OR ANY OTHER SIMILAR PERSON, TO A TRIAL BY JURY OF ANY CASE OR CONTROVERSY IN WHICH THE LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST THE LENDER OR THE LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF, OR IS IN RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN SUCH GUARANTOR, THE BORROWER, ANY SUCH PERSON, AND THE LENDER.

 

 

[signature page follows]

 

  

12

  

 

 

IN WITNESS WHEREOF, the Guarantors have duly executed this Guaranty as of the day and year first above written.  It is intended that this Guaranty take effect as a sealed instrument.

 

                 AEROPOSTALE WEST, INC., as a Guarantor

 

	
By:

	
/s/ Michael J. Cunningham

	
Name:

	
Michael J. Cunningham

	
Title:

	
Executive Vice President and

	  	
Chief Financial Officer

                  JIMMY’Z SURF CO., INC., as a Guarantor

	
By:

	
/s/ Michael J. Cunningham

	
Name:

	
Michael J. Cunningham

	
Title:

	
Executive Vice President and

	  	
Chief Financial Officer

                  AERO GC MANAGEMENT LLC, as a Guarantor

	
By:

	
/s/ Michael J. Cunningham

	
Name:

	
Michael J. Cunningham

	
Title:

	
Executive Vice President and

	  	
Chief Financial Officer

 

1043974.2

  

13

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