Document:

Filed by Bowne Pure Compliance

Exhibit 10.3

EXECUTION COPY

GUARANTY

GUARANTY (this “Guaranty”), dated as of January 15, 2009, by each of the Persons
listed on Schedule I hereto (each such Person, individually, a “Guarantor” and,
collectively, the “Guarantors”) in favor of (a) Wells Fargo Retail Finance, LLC, a Delaware
limited liability company, as administrative agent (in such capacity, the “Administrative
Agent”) and collateral agent (in such capacity, the “Collateral Agent” and,
collectively with the Administrative Agent, the “Agents”) for its own benefit and the
benefit of the other Credit Parties (as defined in the Credit Agreement referred to below), and (b)
the Credit Parties.

W I T N E S S E T H

WHEREAS, reference is made to that certain Credit Agreement, dated as of January 15, 2009 (as
amended, modified, supplemented or restated and in effect from time to time, the “Credit
Agreement”), by and among (i) A.C. Moore Incorporated, a Virginia corporation (the “Lead
Borrower”), as agent for the Borrowers from time to time party thereto (individually, a
“Borrower” and, collectively with the Lead Borrower, the “Borrowers”), (ii) the
Borrowers, (iii) the Guarantors, (iv) the Lenders from time to time party thereto (individually, a
“Lender” and, collectively, the “Lenders”), and (v) Wells Fargo Retail Finance,
LLC, as Administrative Agent, Collateral Agent and Swing Line Lender, pursuant to which the Lenders
have agreed to make Loans to the Borrowers upon the terms and subject to the conditions specified
in the Credit Agreement. Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.

WHEREAS, each Guarantor acknowledges that it will receive direct and indirect benefits from
the availability of the credit facility provided for in the Credit Agreement, from the making of
the Loans by the Lenders.

WHEREAS, the obligations of the Lenders to make Loans is conditioned upon, among other things,
the execution and delivery by the Guarantors of a guaranty in the form hereof. As consideration
therefor, and in order to induce the Lenders to make Loans, the Guarantors are willing to execute
this Guaranty.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guaranty. Each Guarantor irrevocably 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 when due (whether at the stated maturity, by required prepayment, by
acceleration or otherwise) and performance by each of the Borrowers of all Obligations
(collectively, the “Guaranteed Obligations”), including all such Guaranteed Obligations
which shall become due but for the operation of the Debtor Relief Laws. The Guarantor further
agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without
notice to or further assent from it, and that it will remain bound upon this Guaranty
notwithstanding any extension or renewal of any Guaranteed Obligation.

 

 

 

SECTION 2. Guaranteed Obligations Not Affected. To the fullest extent permitted by
applicable Law, each Guarantor waives presentment to, demand of payment from, and protest to, any
Loan Party of any of the Guaranteed Obligations, and also waives notice of acceptance of this
Guaranty, notice of protest for nonpayment and all other notices of any kind. To the fullest
extent permitted by applicable Law, the obligations of each Guarantor hereunder shall not be
affected by (a) the failure of any Agent or any other Credit Party to assert any claim or demand or
to enforce or exercise any right or remedy against any Loan Party under the provisions of the
Credit Agreement, any other Loan Document or otherwise or against any other party with respect to
any of the Guaranteed Obligations, (b) any rescission, waiver, amendment or modification of, or any
release from, any of the terms or provisions of this Guaranty, or of any other Loan Document or any
other agreement, with respect to any Loan Party or with respect to the Guaranteed Obligations
(except as expressly set forth in such recission, waiver, amendment or modification), (c) 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 Credit Party, or (d) the lack of legal existence of any
Loan Party or legal obligation to discharge any of the Guaranteed Obligations by any Loan Party for
any reason whatsoever, including, without limitation, in any insolvency, bankruptcy or
reorganization of any Loan Party.

SECTION 3. Security. Each Guarantor hereby acknowledges and agrees that the
Collateral Agent and each of the other Credit Parties may (a) take and hold security for the
payment of this Guaranty and the Guaranteed Obligations and exchange, enforce, waive and release
any such security, (b) apply such security and direct the order or manner of sale thereof as they
in their sole discretion may determine, and (c) release or substitute any one or more endorsees,
Borrowers, other Loan Parties or other obligors, in each case without affecting or impairing in any
way the liability of any Guarantor hereunder.

SECTION 4. Guaranty of Payment. Each Guarantor further agrees that this Guaranty
constitutes a guarantee of payment and performance when due of all Guaranteed Obligations and not
of collection and, to the fullest extent permitted by applicable Law, waives any right to require
that any resort be had by the Collateral Agent or any other Credit Party to any of the Collateral
or other security held for payment of the Guaranteed Obligations or to any balance of any deposit
account or credit on the books of any Agent or any other Credit Party in favor of any Loan Party or
any other Person or to any other Guarantor of all or part of the Guaranteed Obligations. Any
payment required to be made by any Guarantor hereunder may be required by any Agent or any other
Credit Party on any number of occasions and shall be payable to the Administrative Agent, for the
benefit of the Agents and the other Credit Parties, in the manner provided in the Credit Agreement.

 

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SECTION 5. Indemnification.

(a) Without limiting or duplicating any of their indemnification obligations under the
Credit Agreement or the other Loan Documents, each of the Guarantors shall jointly and
severally indemnify the Agents (and any sub-agent thereof), each other Credit Party, and
each Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities, settlement payments, costs and related expenses (including the
fees, charges and disbursements of any counsel for any Indemnitee) incurred, suffered,
sustained or required to be paid by any Indemnitee or asserted against any Indemnitee by any
third party or by any Guarantor arising out of, in connection with, or as a result of, (i)
the execution or delivery of this Guaranty, the Credit Agreement, any other Loan Document or
any other agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations hereunder or thereunder, or the consummation
of the transactions contemplated hereby or thereby, or, in the case of the Agents (and any
sub-agent thereof) and their Related Parties only, the administration of this Guaranty, the
Credit Agreement and the other Loan Documents, or (ii) any actual or prospective claim,
litigation, investigation or proceeding relating to or arising from any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third party or by
any Guarantor, or any of the Guarantors’ directors, shareholders or creditors, and
regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused
by or arising, in whole or in part, out of the comparative, contributory or sole negligence
of the Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages, liabilities or
related expenses (x) are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee or (y) result from a claim brought by a Borrower or any other Loan Party
against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or
under any other Loan Document, if the Borrowers or such Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of competent
jurisdiction. In connection with any indemnified claim hereunder, the Indemnitee shall be
entitled to select its own counsel and the Guarantors shall promptly pay the reasonable fees
and expenses of such counsel.

(b) To the fullest extent permitted by applicable Law, the Guarantors shall not assert,
and hereby waive, any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual damages) arising
out of, in connection with, or as a result of, this Guaranty, the Credit Agreement, any
other Loan Document or any agreement or instrument contemplated hereby, or the transactions
contemplated hereby or thereby. No Indemnitee referred to in subsection (a) above shall be
liable for any damages arising from the use by unintended recipients of any information or
other materials distributed to such unintended recipients by such Indemnitee through
telecommunications, electronic or other information transmission systems in connection with
this Guaranty, the Credit Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby other than for direct or actual damages resulting from the
gross negligence or willful misconduct of such Indemnitee as determined by a final and
nonappealable judgment of a court of competent jurisdiction.

(c) The agreements in this Section 5 shall survive the resignation of any Agent, the
termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all
the other Guaranteed Obligations.

 

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SECTION 6. No Discharge or Diminishment of Guaranty. The obligations of each
Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination
for any reason (other than upon (i) termination of the Aggregate Commitments, (ii) the indefeasible
payment in full in cash of the Guaranteed Obligations (other than contingent indemnification
obligations for which no claim has been asserted and any Other Liabilities which are not by their
terms then due and payable provided that the Agents shall have received such indemnities
and collateral security as they shall have required in accordance with the terms of Section
10.11 of the Credit Agreement), (iii) the expiration or termination of all Letters of Credit,
except to the extent fully Cash Collateralized or supported by another letter of credit in a manner
reasonably satisfactory to the L/C Issuer and the Administrative Agent, and (iv) termination of the
Administrative Agent’s obligation to endeavor to cause the L/C Issuer to issue Letters of Credit
under the Credit Agreement), including any claim of waiver, release, surrender, alteration or
compromise of any of the Guaranteed Obligations, 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 the Guaranteed Obligations or otherwise. Without limiting the generality of
the foregoing, the Guaranteed Obligations of each Guarantor hereunder shall not be discharged or
impaired or otherwise affected by the failure of any Agent or any other Credit Party to assert any
claim or demand or to enforce any remedy under this Guaranty, the Credit Agreement, any other Loan
Document or any other agreement, by any waiver or modification of any provision of any thereof, by
any default, failure or delay, willful or otherwise, in the performance of the Guaranteed
Obligations, or by any other act or omission that may or might in any manner or to any extent vary
the risk of any Guarantor or that would otherwise operate as a discharge of any Guarantor as a
matter of law or equity (other than the indefeasible payment in full in cash of the Guaranteed
Obligations).

SECTION 7. Defenses of Loan Parties Waived. To the fullest extent permitted by
applicable Law, each Guarantor waives any defense based on or arising out of any defense of any
other Loan Party or the unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any other Loan Party, other than the
indefeasible payment in full in cash of the Guaranteed Obligations. Each Guarantor hereby
acknowledges that the Agents and the other Credit Parties may, 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 any other Loan Party, or exercise any
other right or remedy available to them against any other Loan Party, without affecting or
impairing in any way the liability of each such Guarantor hereunder except to the extent that the
Guaranteed Obligations have been indefeasibly paid in full in cash. Pursuant to, and to the extent
permitted by, applicable Law, each Guarantor waives any defense arising out of any such election
and waives any benefit of and right to participate in any such foreclosure action, even though such
election operates, pursuant to applicable Law, to impair or to extinguish any right of
reimbursement, indemnity, contribution or subrogation or other right or remedy of such Guarantor
against any Loan Party, as the case may be, or any security. Each Guarantor agrees that it shall
not assert any claim in competition with any Agent or any other Credit Party in respect of any
payment made hereunder in connection with any proceedings under any Debtor Relief Laws.

 

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SECTION
8. Agreement to Pay; Subordination. In furtherance of the foregoing and not
in limitation of any other right that the Agents or any other Credit Party has at law or in equity
against any Guarantor by virtue hereof, upon the failure of any Loan Party 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 Agents or such other Credit Party as designated thereby in cash the amount
of such unpaid Guaranteed Obligations. Upon payment by any Guarantor of any sums to any Agent or
any other Credit Party as provided above, all rights of such Guarantor against any Loan Party
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 prior
indefeasible payment in full in cash of all the Guaranteed Obligations. In addition, any
indebtedness of any Borrower or any other Loan Party now or hereafter held by any Guarantor is
hereby subordinated in right of payment to the prior indefeasible payment in full of all of the
Guaranteed Obligations. Notwithstanding the foregoing, as long as no Event of Default exists, any
Borrower or any other Loan Party may make payments to any Guarantor on account of any such
indebtedness. After the occurrence and during the continuance of an Event of Default, none of the
Guarantors will demand, sue for, or otherwise attempt to collect any such indebtedness until (i)
termination of the Aggregate Commitments, (ii) the indefeasible payment in full in cash of the
Guaranteed Obligations (other than contingent indemnification obligations for which no claim has
been asserted and any Other Liabilities which are not by their terms then due and payable
provided that the Agents shall have received such indemnities and collateral security as
they shall have required in accordance with the terms of Section 10.11 of the Credit
Agreement), (iii) the expiration or termination of all Letters of Credit (except to the extent
fully Cash Collateralized or supported by another letter of credit in a manner reasonably
satisfactory to the L/C Issuer and the Administrative Agent), and (iv) the Administrative Agent has
no further obligation to endeavor to cause the L/C Issuer to issue Letters of Credit under the
Credit Agreement. If any amount shall erroneously be paid to any Guarantor on account of (a) such
subrogation, contribution, reimbursement, indemnity or similar right or (b) any such indebtedness
of any Loan Party, such amount shall be held in trust for the benefit of the Credit 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.

SECTION 9. Limitation on Guaranty of Guaranteed Obligations. In any action or
proceeding with respect to any Guarantor involving any state corporate law, the Debtor Relief Laws
or any other state or federal bankruptcy, insolvency, reorganization or other laws affecting the
rights of creditors generally, if the obligations of such Guarantor under this Guaranty would
otherwise be held or determined to be void, invalid or unenforceable, or subordinated to the claims
of any other creditors, on account of the amount of its liability under this Guaranty, then,
notwithstanding any other provision hereof to the contrary, the amount of such liability shall,
without any further action by such Guarantor, any Credit Party, any Agent or any other Person, be
automatically limited and reduced to the highest amount which is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or proceeding.

 

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SECTION
10. Information. Each Guarantor assumes all responsibility for being and
keeping itself informed of each Loan Party’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 Agents or the other Credit Parties will have any duty to advise such Guarantor of
information known to it or any of them regarding such circumstances or risks. The Guarantors have
reviewed and approved copies of the Loan Documents and are fully informed of the remidies the
Collateral Agent may pursue, with or without notice to the Guarantors.

SECTION 11. Termination. This Guaranty (a) shall terminate when (i) the Aggregate
Commitments have terminated, (ii) all of the Guaranteed Obligations (other than contingent
indemnification obligations for which no claim has been asserted and any Other Liabilities which
are not by their terms then due and payable provided that the Agents shall have received
such indemnities and collateral security as they shall have required in accordance with the terms
of Section 10.11 of the Credit Agreement) have been indefeasibly paid in full in cash,
(iii) all L/C Obligations have been reduced to zero (except to the extent fully Cash Collateralized
or supported by another letter of credit in a manner reasonably satisfactory to the L/C Issuer and
the Administrative Agent), and (iv) the Administrative Agent has no further obligation to endeavor
to cause the L/C Issuer to issue Letters of Credit under the Credit Agreement, and (b) 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 any Credit
Party or any Guarantor in connection with Debtor Relief Laws or otherwise.

SECTION 12. Costs of Enforcement. Without limiting or duplicating any of their
obligations under the Credit Agreement or the other Loan Documents, the Guarantors, jointly and
severally, agree to pay on demand all Credit Party Expenses in connection with (i) the
administration, negotiation, documentation or amendment of this Guaranty, and (ii) any Agent’s or
any other Credit Party’s efforts to collect and/or to enforce any of the Guaranteed Obligations of
any Guarantor hereunder and/or to enforce any of the rights, remedies, or powers of any Agent or
any other Credit Party against or in respect of any Guarantor (whether or not suit is instituted by
or against any Agent or any other Credit Party).

SECTION
13. Binding Effect; Assignments. Whenever in this Guaranty any party hereto
is referred to, such reference shall be deemed to include the successors and assigns of such party,
and all covenants, promises and agreements by or on behalf of the Guarantors that are contained in
this Guaranty shall bind and inure to the benefit of each of the Guarantors and its respective
successors and assigns. This Guaranty shall be binding upon each of the Guarantors and their
respective successors and assigns, and shall inure to the benefit of the Agents and the other
Credit Parties, and their respective successors and permitted assigns, except that no Guarantor
shall have the right to assign or transfer its rights or obligations hereunder or any interest
herein (and any such attempted assignment or transfer shall be void), except as expressly permitted
by this Guaranty or the Credit Agreement. This Guaranty shall be construed as a separate agreement
with respect to each Guarantor and may be amended, 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.

 

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SECTION
14. Waivers; Amendment.

(a) The rights, remedies, powers, privileges, and discretions of the Agents hereunder
and under applicable Law (herein, the “Agents’ Rights and Remedies”) shall be
cumulative and not exclusive of any rights or remedies which they would otherwise have. No
delay or omission by the Agents in exercising or enforcing any of the Agents’ Rights and
Remedies shall operate as, or constitute, a waiver thereof. No waiver by the Agents of any
Event of Default or default under any other agreement shall operate as a waiver of any other
Event of Default or default hereunder or under any other agreement. No single or partial
exercise of any of the Agents’ Rights or Remedies, and no express or implied agreement or
transaction of whatever nature entered into between the Agents and any Person, at any time,
shall preclude the other or further exercise of the Agents’ Rights and Remedies. No waiver
by the Agents of any of the Agents’ Rights and Remedies on any one occasion shall be deemed
a waiver on any subsequent occasion, nor shall it be deemed a continuing waiver. The
Agents’ Rights and Remedies may be exercised at such time or times and in such order of
preference as the Agents may determine. The Agents’ Rights and Remedies may be exercised
without resort or regard to any other source of satisfaction of the Guaranteed Obligations.
No waiver of any provisions of this Guaranty or any other Loan Document or consent to any
departure by any Guarantor therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) below, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No notice to or demand on any
Guarantor in any case shall entitle such Guarantor or any other Guarantor to any other or
further notice or demand in the same, similar or other circumstances.

(b) Neither this Guaranty nor any provision hereof may be waived, amended or modified
except pursuant to a written agreement entered into between the Agents and the Guarantor or
Guarantors with respect to whom such waiver, amendment or modification is to apply, subject
to any consent required in accordance with Section 10.01 of the Credit Agreement.

SECTION 15. Copies and Facsimiles. This instrument and all documents which have been
or may be hereinafter furnished by any Guarantor to any of the Agents may be reproduced by such
Agents 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.

SECTION
16. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION
17. Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and given as provided in Section 10.02 of the
Credit Agreement, provided that communications and notices to the Guarantors may be
delivered to the Lead Borrower on behalf of the Guarantors.

 

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SECTION
18. Survival of Agreement; Severability.

(a) All covenants, agreements, indemnities, representations and warranties made by the
Guarantors herein and in the certificates or other instruments delivered in connection with
or pursuant to this Guaranty, the Credit Agreement or any other Loan Document shall be
considered to have been relied upon by the Agents and the other Credit Parties and shall
survive the execution and delivery of this Guaranty, the Credit Agreement and the other Loan
Documents and the making of any Loans by the Lenders and the issuance of any Letters of
Credit by the L/C Issuer, regardless of any investigation made by any Agent or any other
Credit Party or on their behalf and notwithstanding that any Agent or other Credit 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, and shall continue in full force and effect
until (i) the Aggregate Commitments have terminated, (ii) the indefeasible payment in full
in cash of the Guaranteed Obligations (other than contingent indemnification obligations for
which no claim has been asserted and any Other Liabilities which are not by their terms then
due and payable provided that the Agents shall have received such indemnities and
collateral security as they shall have required in accordance with the terms of Section
10.11 of the Credit Agreement), (iii) the expiration or termination of all Letters of
Credit (except to the extent fully Cash Collateralized or supported by another letter of
credit in a manner reasonably satisfactory to the L/C Issuer and the Administrative Agent),
and (iv) the Administrative Agent has no further obligation to endeavor to cause the L/C
Issuer to issue Letters of Credit under the Credit Agreement. The provisions of Section 5
and Section 11 hereof shall survive and remain in full force and effect regardless of the
repayment of the Guaranteed Obligations, the expiration or termination of the Letters of
Credit and the Aggregate Commitments or the termination of this Guaranty or any provision
hereof.

(b) Any provision of this Guaranty held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof, and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

SECTION
19. Counterparts. This Guaranty may be executed in counterparts, each of
which shall constitute an original but all of which, when taken together, shall constitute a single
contract. Delivery of an executed counterpart of a signature page to this Guaranty by facsimile or
electronic transmission shall be as effective as delivery of a manually executed counterpart of
this Guaranty.

SECTION
20. Rules of Interpretation. The rules of interpretation specified in
Section 1.02 through 1.05 of the Credit Agreement shall be applicable to this Guaranty.

 

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SECTION
21. Jurisdiction; Waiver of Venue; Consent to Service of Process.

(a) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN
NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW
YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS
IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.
EACH GUARANTOR 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. NOTHING IN THIS GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT THE AGENTS, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST ANY
GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(b) EACH GUARANTOR 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 OR ANY
OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (A) OF THIS SECTION. EACH
GUARANTOR 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.

(c) EACH GUARANTOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED
FOR NOTICES IN SECTION 17. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

SECTION
22. Waiver of Jury Trial. EACH GUARANTOR, EACH AGENT, AND EACH CREDIT PARTY
(BY ITS ACCEPTANCE HEREOF) 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 ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
GUARANTOR, EACH AGENT, AND EACH CREDIT PARTY (BY ITS ACCEPTANCE HEREOF) (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 HAS BEEN INDUCED TO ENTER INTO (OR ACCEPT) THIS GUARANTY AND THE OTHER
LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
22.

 

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SECTION 23. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Credit Party and each of its respective Affiliates is hereby authorized at any
time and from time to time, after obtaining the prior written consent of the Administrative Agent
or the Required Lenders, to the fullest extent permitted by applicable Law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any time owing by such
Credit Party or any such Affiliate to or for the credit or the account of any Guarantor against any
of and all the Guaranteed Obligations of such Guarantor now or hereafter existing under this
Guaranty or any other Loan Document to such Credit Party, irrespective of whether or not such
Credit Party shall have made any demand under this Guaranty or any other Loan Document and although
such obligations of such Guarantor may be unmatured or are owed to a branch or office of such
Credit Party different from the branch or office holding such deposit or obligated on such
indebtedness. The rights of each Credit Party and its respective Affiliates under this Section 23
are in addition to other rights and remedies (including other rights of setoff) that such Credit
Party or its respective Affiliates may have. Each Credit Party agrees to notify the Guarantors and
the Administrative Agent promptly after any such setoff and application, provided that the failure
to give such notice shall not affect the validity of such setoff and application.

[SIGNATURE PAGE FOLLOWS]

 

-10-

 

IN WITNESS WHEREOF, the Guarantors have duly executed this Guaranty as of the day and year first above written.

	 	 	 	 	 
	 	Guarantors:

A.C. MOORE ARTS & CRAFTS, INC.

 	 
	 	By:  	/s/ Rodney B. Schriver
 	 
	 	 	Name:  	Rodney B. Schriver 	 
	 	 	Title:  	Vice President 	 
	 
	 	MOORESTOWN FINANCE, INC.

 	 
	 	By:  	/s/ Rodney B. Schriver
 	 
	 	 	Name:  	Rodney B. Schriver 	 
	 	 	Title:  	Vice President 	 
	 
	 	BLACKWOOD ASSETS, INC.

 	 
	 	By:  	/s/ Rodney B. Schriver
 	 
	 	 	Name:  	Rodney B. Schriver 	 
	 	 	Title:  	Vice President 	 

Signature Page to Guarantycaahex10-1.htm

     

    
      

      

    

    
 

    TERMINATION AGREEMENT

    

    This Termination Agreement dated as of
this 19th day of
January, 2009 is by and between China America Holdings, Inc., a Florida
corporation formerly known as Sense Holdings, Inc. (the "Corporation"), and Dore
Scott Perler, an individual.

    

    RECITALS

    

    WHEREAS, the Corporation and
Mr. Perler are parties to that certain Employment Agreement effective as of May
1, 2007, a copy of which is attached hereto as Exhibit
A and incorporated herein by such reference (the "Employment Agreement"),
pursuant to which Mr. Perler has served as Chief Executive Officer of the
Corporation.

    

    WHEREAS, the Corporation has
determined to exit all activities related to its biometrics division (the
"Biometrics Operations") which, prior to the acquisition of a controlling
interest in Shanghai AoHong Industry Co., Ltd., in June 2007 represented the
Corporation's primary business and operations.

    

    WHEREAS, Mr. Perler is
desirous of a acquiring all right, title and interest in the Biometrics
Operations from the Corporation.

    

    WHEREAS, the parties have
agreed that Mr. Perler will resign his position of Chief Executive Officer of
the Corporation and terminate the Employment Agreement.

    

    NOW, THEREFORE, in
consideration of the mutual promises set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

    

    1.           Recitals.  The
foregoing recitals are true and correct.

    

    2           Resignation and Termination
of Employment Agreement.

    

    a.           Contemporaneously
with the execution of this Agreement Mr. Perler shall submit his resignation as
an officer and of the Corporation and agrees to take on the role of corporate
secretary through March 31, 2009.

    

    b.           The
parties hereto mutually agree to terminate the Employment Agreement effective as
of the date of this Agreement.  In lieu of any and all salary after
October 31, 2008, severance payments, benefits or other payments, Change of
Control Termination Benefits as defined in the Agreement, the Corporation shall
pay Mr. Perler the sum of $75,000.00 (the “Severance Payment”) no later than 7
days after execution of this Agreement.  In addition, the Corporation
shall sell the assets of the Biometrics Business to Pearl Group Advisors, Inc.,
a company owned by Mr. Perler, pursuant to the terms of the Asset Purchase
Agreement dated as of the Date of this Agreement.

    

    c.           Mr.
Perler shall not be entitled to any other amounts from the Corporation,
including, but not limited to, for any incentive compensation, vacation pay,
paid days off, fringe benefits or any other amounts pursuant to the Employment
Agreement or otherwise.  In accordance with such voluntary termination
of the Employment Agreement by Mr. Perler, the Corporation shall not be
obligated to nor shall Mr. Perler be entitled to any severance or similar
benefits pursuant to any provision of the Employment Agreement.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    3.           Options.  Notwithstanding
the termination of the Employment Agreement, Mr. Perler shall have the full term
set forth in the stock option agreements to exercise any options previously
granted to him by the Corporation and which have vested.

    

    4.           Lasting
Provisions.  Mr. Perler acknowledges he remains subject to the
provisions of Sections 10, 11 and 12 of the Employment Agreement.  The
Corporation acknowledges that Mr. Perler intends to operate the Biometrics
Operations and that such will not constitute a breach of the non-compete
provisions of Section 11 of the Employment Agreement.

    

    5.           Amendment or
Assignment.  No modification, waiver, amendment, discharge or
change of this Agreement shall be valid unless the same is evidenced by a
written instrument, executed by the party against which such modification,
waiver, amendment, discharge, or change is sought.

    

    6.           Notices.  All
notices, demands or other communications given hereunder shall be in writing and
shall be deemed to have been duly given on the day when delivered in person or
transmitted by confirmed facsimile transmission or on the third calendar day
after being mailed by United States registered or certified mail, return receipt
requested, postage prepaid:

    

    
      	
              If
      to the
      Corporation:           James
      M. Schneider, Esq.

            
	
              Schneider Weinberger &
      Beilly LLP

            
	
              2200 Corporate Boulevard,
      N.W.

            
	
              Suite 210

            
	
              Boca Raton,
      Florida  33431

            
	
              Telephone No. (561)
      362-9595

            
	
              Telecopy No. (561)
      362-9612

            
	 
      
	
              If
      to Mr.
      Perler:                     
      9400 SW 49 Place

            
	
              Cooper City,
      Florida  33328

            

    

    

    or to
such other address as either party hereto shall designate to the other for such
purpose in the manner herein set forth.

    

    7.           Entire Agreement.
This Agreement contains all of the understandings and agreements of the
parties with respect to the subject matter discussed herein.  All
prior agreements whether written or oral are merged herein and shall be of no
force or effect.

    

    8.           Severability.  The
invalidity, illegality or unenforceability of any provision or provisions of
this Agreement will not affect any other provision of this Agreement, which will
remain in full force and effect, nor will the invalidity, illegality or
unenforceability of a portion of any provision of this Agreement affect the
balance of such provision.  In the event that any one or more of the
provisions contained in this Agreement or any portion thereof shall for any
reason be held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be reformed, construed and enforced as if such invalid, illegal
or unenforceable provision had never been contained herein.

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    9.           Construction and
Enforcement.  This Agreement shall be construed in accordance
with the laws of the State of Florida, without and application of the principles
of conflicts of laws.  If it becomes necessary for any party to
institute legal action to enforce the terms and conditions of this Agreement,
and such legal action results in a final judgment in favor of such party
("Prevailing Party"), then the party or parties against whom said final judgment
is obtained shall reimburse the Prevailing Party for all direct, indirect or
incidental expenses incurred, including, but not limited to, all attorney's
fees, court costs and other expenses incurred throughout all negotiations,
trials or appeals undertaken in order to enforce the Prevailing Party's rights
hereunder.  Any suit, action or proceeding with respect to this
Agreement shall be brought in the state or federal courts located in Broward
County in the State of Florida.  The parties hereto hereby accept the
exclusive jurisdiction and venue of those courts for the purpose of any such
suit, action or proceeding.  The parties hereto hereby irrevocably
waive, to the fullest extent permitted by law, any objection that any of them
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any judgment entered
by any court in respect thereof brought in Broward County, County Florida, and
hereby further irrevocably waive any claim that any suit, action or proceeding
brought in Broward County, Florida, has been brought in an inconvenient
forum.

    

    10.           Binding Nature, No Third
Party Beneficiary. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of the parties, and their respective
successors and assigns, and is made solely and specifically for their
benefit.  No other person shall have any rights, interest or claims
hereunder or be entitled to any benefits under or on account of this Agreement
as a third-party beneficiary or otherwise.

    

    11.           Counterparts.  This
Agreement may be executed in any number of counterparts, including facsimile
signatures which shall be deemed as original signatures.  All executed
counterparts shall constitute one Agreement, notwithstanding that all
signatories are not signatories to the original or the same
counterpart.

    

    12.           Role of
Counsel.  Mr. Perler acknowledges his understanding that this
Agreement was prepared at the request of the Corporation by Schneider Weinberger
& Beilly, LLP, its counsel, and Lazarus Rothstein, Esq. and that such
attorneys did not represent Mr. Perler in conjunction with this Agreement or any
of the related transactions.  Mr. Perler, as further evidenced by his
signature below, acknowledges that he has had the opportunity to obtain the
advice of independent counsel of his choosing prior to his execution of this
Agreement and that he has availed himself of this opportunity to the extent he
deemed necessary and advisable.  By his signature below, Mr. Perler
represents and warrants that he fully understands the terms and provisions of
this Agreement.

    

    IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first above written.

    

    CHINA
AMERICA HOLDINGS, INC.

    

    

    By: __/s/ Shaoyin
Wang__________________                                                                                                                     __/s/ Dore Scott
Perler____________

          Shaoyin
Wang, Chief Executive
Officer                                                                                                                     Dore
Scott Perler

    

    
      
         

      

      
        - 3
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