Document:

Exhibit 10.3

 

THIRD AMENDMENT TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

 

THIS THIRD AMENDMENT TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT (this “Amendment”), dated as of July 19, 2005,
is entered into by and among the lenders signatory hereto (the “Lenders”),
WACHOVIA BANK, NATIONAL ASSOCIATION, as successor by merger to Congress
Financial Corporation, as agent for the Lenders (in such capacity, “Agent”),
THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, as documentation
agent (“Documentation Agent”), and LERNER NEW YORK, INC., a Delaware
corporation (“Lerner”) and LERNCO, INC., a Delaware corporation (“Lernco”
and together with Lerner, “Borrowers” and each a “Borrower”).

 

RECITALS

 

A.            Borrowers,
Agent, Documentation Agent and the Lenders have previously entered into that
certain Amended and Restated Loan and Security Agreement, dated March 16,
2004, as amended by that certain First Amendment to Amended and Restated Loan
and Security Agreement dated May 19, 2004, and that certain Second
Amendment to Amended and Restated Loan and Security Agreement dated December 17,
2004 (as amended, the “Loan Agreement”), pursuant to which the Lenders
have made certain loans and financial accommodations available to
Borrowers.  Terms used herein without
definition shall have the meanings ascribed to them in the Loan Agreement.

 

B.            Borrowers,
Agent, Documentation Agent and the Lenders now wish to further amend the Loan
Agreement on the terms and conditions set forth herein.

 

C.            Borrowers
are entering into this Amendment with the understanding and agreement that,
except as specifically provided herein, none of Agent’s, Documentation Agent’s
or any Lender’s rights or remedies as set forth in the Loan Agreement is being
waived or modified by the terms of this Amendment.

 

AGREEMENT

 

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

 

1.             Amendment
to Loan Agreement.

 

(a)           Section 9.10(b)(viii) of
the Loan Agreement is hereby amended and restated in its entirety to read as
follows:

 

“(viii)      investments
made by such Borrower in connection with the purchase of assets or Capital
Stock of a Person engaged in substantially the same or a related business as
such Borrower in an amount not to exceed $10,000,000 in the aggregate for all
Borrowers, so long as (A) no

 

 

Event of Default
has occurred and is continuing, (B) Borrowers have Excess Availability of
at least $15,000,000 after giving effect to such investment, and (C) such
Person shall have executed and delivered a Guaranty to Agent, for itself and
the ratable benefit of the Lenders and the Bank Product Providers, and the assets
of such Person shall not be included in the calculation of the Borrowing Base; provided,
however, that in addition to the foregoing permitted investments of
$10,000,000 in the aggregate for all Borrowers, Borrowers may make additional
investments as provided herein in an amount not to exceed $20,000,000 in the
aggregate for all Borrowers so long as (A) no Event of Default has
occurred and is continuing, (B) Borrowers have Excess Availability plus
Qualified Cash of at least $40,000,000 after giving effect to such investment,
and (C) such Person shall have executed and delivered a Guaranty to Agent,
for itself and the ratable benefit of the Lenders and the Bank Product
Providers, and the assets of such Person shall not be included in the
calculation of the Borrowing Base; and

 

2.             Effectiveness
of this Amendment.  Agent must have
received the following items, each in form and content acceptable to Agent, and
be satisfied that the following conditions have been met, before this Agreement
is effective:

 

(a)           this
Amendment and the attached Acknowledgement by Guarantors, each fully executed
in a sufficient number of counterparts for distribution to all parties;

 

(b)           no
Default or Event of Default shall exist;

 

(c)           the
representations and warranties set forth herein and in the Loan Agreement must
be true and correct;

 

(d)           all
other documents and legal matters in connection with the transactions
contemplated by this Amendment shall have been delivered or executed or
recorded and shall be in form and substance satisfactory to Agent.

 

3.             Representations
and Warranties.  Each Borrower
represents and warrants as follows:

 

(a)           Authority.  Each Borrower has the requisite corporate
power and authority to execute and deliver this Amendment, and to perform its
obligations hereunder and under the Financing Agreements (as amended or
modified hereby) to which it is a party. 
The execution, delivery and performance by each Borrower of this
Amendment have been duly approved by all necessary corporate action and no
other corporate proceedings are necessary to consummate such transactions.

 

(b)           Enforceability.  This Amendment has been duly executed and
delivered by each Borrower.  This
Amendment and each Financing Agreement (as amended or modified hereby) is the
legal, valid and binding obligation of each Borrower, enforceable against each
Borrower in accordance with its terms, and is in full force and effect.

 

2

 

(c)           Due
Execution.  The execution, delivery
and performance of this Amendment are within the power of each Borrower, have
been duly authorized by all necessary corporate action, have received all
necessary governmental approval, if any, and do not contravene any law or any
contractual restrictions binding on any Borrower.

 

4.             Choice
of Law.  The validity of this
Amendment, its construction, interpretation and enforcement, the rights of the
parties hereunder, shall be governed by the internal laws of the State of New
York but excluding any principles of conflicts of law or other rule of law
that would cause the application of the law of any jurisdiction other than the
laws of the State of New York.

 

5.             Counterparts.  This Amendment may be executed in any number
of counterparts and by different parties and separate counterparts, each of
which when so executed and delivered, shall be deemed an original, and all of
which, when taken together, shall constitute one and the same instrument.  Delivery of an executed counterpart of a
signature page to this Amendment by telefacsimile shall be effective as
delivery of a manually executed counterpart of this Amendment.

 

6.             Reference
to and Effect on the Financing Agreements.

 

(a)           Upon
and after the effectiveness of this Amendment, each reference in the Loan
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import
referring to the Loan Agreement, and each reference in the other Financing
Agreements to “the Loan Agreement”, “thereof” or words of like import referring
to the Loan Agreement, shall mean and be a reference to the Loan Agreement as
modified and amended hereby.

 

(b)           Except
as specifically amended above, the Loan Agreement and all other Financing
Agreements, are and shall continue to be in full force and effect and are
hereby in all respects ratified and confirmed and shall constitute the legal,
valid, binding and enforceable obligations of Borrowers to Agent, Documentation
Agent and the Lenders.

 

(c)           The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
Agent, Documentation Agent or any Lender under any of the Financing Agreements,
nor constitute a waiver of any provision of any of the Financing Agreements.

 

(d)           To
the extent that any terms and conditions in any of the Financing Agreements
shall contradict or be in conflict with any terms or conditions of the Loan
Agreement, after giving effect to this Amendment, such terms and conditions are
hereby deemed modified or amended accordingly to reflect the terms and conditions
of the Loan Agreement as modified or amended hereby.

 

7.             Ratification.  Each Borrower hereby restates, ratifies and
reaffirms each and every term and condition set forth in the Loan Agreement, as
amended hereby, and the Financing Agreements effective as of the date hereof.

 

3

 

8.             Integration.  This Amendment, together with the other
Financing Agreements, incorporates all negotiations of the parties hereto with
respect to the subject matter hereof and is the final expression and agreement
of the parties hereto with respect to the subject matter hereof.

 

9.             Severability.  In case any provision in this Amendment shall
be invalid, illegal or unenforceable, such provision shall be severable from
the remainder of this Amendment and the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

 

[Remainder of Page Left
Intentionally Blank]

 

4

 

IN WITNESS WHEREOF, the parties have entered into this
Amendment as of the date first above written.

 

	
   

  	
  LERNER NEW YORK,
  INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald W.
  Ristau

  	
   

  
	
   

  	
  Name:

  	
  Ronald W. Ristau

  
	
   

  	
  Title:

  	
  Chief Operating
  Officer,

  
	
   

  	
   

  	
  Chief Financial
  Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LERNCO, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald W.
  Ristau

  	
   

  
	
   

  	
  Name:

  	
  Ronald W. Ristau

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WACHOVIA BANK,
  NATIONAL

  ASSOCIATION,

  
	
   

  	
  as successor by
  merger to Congress Financial

  Corporation,

  
	
   

  	
  as Agent and as
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ John
  Williammee, Jr.

  	
   

  
	
   

  	
  Name:

  	
  John
  Williammee, Jr.

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE CIT
  GROUP/BUSINESS CREDIT, INC.,

  
	
   

  	
  as Documentation
  Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Manuel
  Borges

  	
   

  
	
   

  	
  Name:

  	
  Manuel Borges

  
	
   

  	
  Title:

  	
  Vice President

  

 

5

 

	
   

  	
  LASALLE RETAIL
  FINANCE,

  
	
   

  	
  a division of
  LaSalle Business Credit, Inc.,

  
	
   

  	
  as agent for
  Standard Federal Bank, National

  
	
   

  	
  Association,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Mark D.
  Twomey

  	
   

  
	
   

  	
  Name:

  	
  Mark D. Twomey

  
	
   

  	
  Title:

  	
  Assistant Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ABLECO FINANCE
  LLC,

  
	
   

  	
  on its behalf
  and on behalf of its Affiliate assigns,

  
	
   

  	
  as Lenders

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Kevin P.
  Genda

  	
   

  
	
   

  	
  Name:

  	
  Kevin P. Genda

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AZURE FUNDING,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Susanne
  Smith

  	
   

  
	
   

  	
  Name:

  	
  Suzanne Smith

  
	
   

  	
  Title:

  	
  As
  Attorney-In-Fact

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BERNARD NATIONAL
  LOAN INVESTORS,

  
	
   

  	
  LTD.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Perry A.
  Gruss

  	
   

  
	
   

  	
  Name:

  	
  Perry A. Gruss

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FORTRESS CREDIT
  OPPORTUNITIES I LP,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Constantine
  Dakolias

  	
   

  
	
   

  	
  Name:

  	
  Constantine
  Dakolias

  
	
   

  	
  Title:

  	
  Chief Credit
  Officer

  

 

6

 

	
   

  	
  OAK HILL CREDIT
  PARTNERS I, LIMITED,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Oak Hill CLO
  Management I, LLC, as

  
	
   

  	
   

  	
  Investment
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Scott D.
  Krase

  	
   

  
	
   

  	
   

  	
  Name:  Scott
  D. Krase

  
	
   

  	
   

  	
  Title:  Authorized
  Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OAK HILL CREDIT
  PARTNERS II, LIMITED,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Oak Hill CLO
  Management II, LLC, as

  
	
   

  	
   

  	
  Investment
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Scott D.
  Krase

  	
   

  
	
   

  	
   

  	
  Name:  Scott
  D. Krase

  
	
   

  	
   

  	
  Title:  Authorized
  Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OAK HILL CREDIT
  PARTNERS III, LIMITED,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Oak Hill CLO
  Management III, LLC, as

  
	
   

  	
   

  	
  Investment
  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Scott D.
  Krase

  	
   

  
	
   

  	
   

  	
  Name:  Scott
  D. Krase

  
	
   

  	
   

  	
  Title:  Authorized
  Signatory

  

 

7

 

ACKNOWLEDGEMENT BY GUARANTORS

 

Dated as of July 19,
2005

 

Each of the undersigned, being a Guarantor (each a “Guarantor”
and collectively, the “Guarantors”) under their respective Amended and
Restated Guaranty and Security Agreements, each dated as of March 16,
2004, made in favor of Agent (as amended, modified or supplemented, each a “Guaranty”
and collectively, the “Guaranties”), hereby (a) acknowledges and
agrees to the foregoing Third Amendment to Amended and Restated Loan and
Security Agreement (the “Amendment”), (b) agrees to the amendment
to each Guaranty set forth in Section 2(b) of the Amendment, and (c) confirms
and agrees that its Guaranty is and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects except that upon
the effectiveness of, and on and after the date of the Amendment, each reference
in such Guaranty to the Loan Agreement (as defined in the Amendment), “thereunder”,
“thereof” or words of like import referring to the “Loan Agreement”, shall mean
and be a reference to the Loan Agreement as amended or modified by the
Amendment.  Although Agent has informed
Guarantors of the amendments to the Loan Agreement as set forth above, and
Guarantors have acknowledged the same, each Guarantor understands and agrees
that none of Agent, Documentation Agent or any Lender has any duty under the Loan
Agreement, the Guaranties or any other agreement with any Guarantor to so
notify any Guarantor or to seek such an acknowledgement, and nothing contained
herein is intended to or shall create such a duty as to any advances or
transaction hereafter.

 

	
   

  	
  NEW YORK &
  COMPANY, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald W.
  Ristau

  	
   

  
	
   

  	
  Name:

  	
  Ronald W. Ristau

  
	
   

  	
  Title:

  	
  Chief Operating
  Officer

  
	
   

  	
   

  	
  and Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LERNER NEW YORK
  HOLDING, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald W.
  Ristau

  	
   

  
	
   

  	
  Name:

  	
  Ronald W. Ristau

  
	
   

  	
  Title:

  	
  Chief Operating
  Officer

  
	
   

  	
   

  	
  and Secretary

  

 

8

 

	
   

  	
  NEVADA
  RECEIVABLE FACTORING, INC.,

  
	
   

  	
  a Nevada
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald W.
  Ristau

  	
   

  
	
   

  	
  Name:

  	
  Ronald W. Ristau

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  ASSOCIATED
  LERNER SHOPS OF AMERICA,

  INC.,

  
	
   

  	
  a New York
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald W.
  Ristau

  	
   

  
	
   

  	
  Name:

  	
  Ronald W. Ristau

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LERNER NEW YORK
  GC, LLC,

  
	
   

  	
  an Ohio limited
  liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald W.
  Ristau

  	
   

  
	
   

  	
  Name:

  	
  Ronald W. Ristau

  
	
   

  	
  Title:

  	
  President

  

 

9Exhibit 10.4

 

GUARANTY

 

July 19, 2005

 

Wachovia Bank, National Association

1133 Avenue of the Americas

New York, New York 10036

 

Re:                               Lerner
New York, Inc. and Lernco, Inc.

 

Ladies and Gentlemen:

 

Wachovia Bank, National Association (“Wachovia”),
successor by merger to Congress Financial Corporation, as agent (in such
capacity “Agent”) for the Lenders (as defined below) and the Bank
Product Providers (as defined in the Loan Agreement (as defined below)), Lerner
New York, Inc., a Delaware corporation (“Lerner”) and Lernco, Inc.,
a Delaware corporation (“Lernco” and together with Lerner and any other
person now or hereafter made a party to the Loan Agreement as a ‘Borrower’,
collectively referred to as “Borrowers” and individually each a “Borrower”)
have entered into certain financing arrangements pursuant to which Lenders may
make loans and advances and provide other financial accommodations to Borrowers
as set forth in that certain Amended and Restated Loan and Security Agreement,
dated as of March 16, 2004, by and among Agent, Borrowers, the persons
from time to time party thereto as lenders (the “Lenders”), The CIT
Group/Business Credit, Inc., in its capacity as documentation agent for
the Lenders, and Wachovia, in its capacity as the arranger for the Lenders (as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced, the “Loan Agreement”), and
other agreements, documents and instruments referred to therein or at any time
executed and/or delivered in connection therewith or related thereto,
including, but not limited to, this Guaranty (all of the foregoing, together
with the Loan Agreement, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the “Financing Agreements”).

 

Due to the close business and financial relationships
between Borrowers and the undersigned (“Guarantor”), in consideration of
the benefits which will accrue to Guarantor and as an inducement for and in
consideration of Agent and the Lenders making or continuing to make loans and
advances and providing or continuing to provide other financial accommodations
to Borrowers pursuant to the Loan Agreement and the other Financing Agreements,
Guarantor hereby agrees in favor of Agent and the Lenders as follows:

 

1.             Guaranty.

 

(a)           Guarantor
absolutely, unconditionally and irrevocably guarantees and agrees to be liable
for the full and indefeasible payment and performance when due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise, of the following (all of which are collectively referred to herein
as the “Guaranteed Obligations”):

 

 

(i) the
Obligations (as defined in the Loan Agreement) and (ii) all costs and
expenses (including, without limitation, attorneys’ fees and legal expenses)
incurred by Agent or any Lender in connection with the preparation, execution,
delivery, recording, administration, collection, liquidation, enforcement and
defense of any Borrower’s obligations, liabilities and indebtedness as
aforesaid to Agent or any Lender, the rights of Agent or any Lender in any
collateral or under this Guaranty and all other Financing Agreements or in any
way involving claims by or against Agent or any Lender directly or indirectly
arising out of or related to the relationships between any Borrower, Guarantor
or any other Obligor (as hereinafter defined) and Agent or any Lender, whether
such expenses are incurred before, during or after the initial or any renewal
term of the Loan Agreement and the other Financing Agreements or after the
commencement of any case with respect to any Borrower or Guarantor under the
United States Bankruptcy Code or any similar statute; provided, however,
that Guarantor shall only be liable under this Guaranty for the maximum amount
of such liability that can be hereby incurred without rendering this Guaranty,
as it relates to Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer, and not for any greater amount.

 

(b)           This
Guaranty is a guaranty of payment and not of collection.  Guarantor agrees that Agent need not attempt
to collect any Guaranteed Obligations from any Borrower, Guarantor or any other
Obligor or to realize upon any collateral, but may require Guarantor to make
immediate payment of all of the Guaranteed Obligations to Agent, for itself and
for the benefit of the Lenders and the Bank Product Providers, when due,
whether by maturity, acceleration or otherwise, or at any time thereafter.  Agent may apply any amounts received in
respect of the Guaranteed Obligations to any of the Guaranteed Obligations, in
whole or in part (including attorneys’ fees and legal expenses incurred by
Agent or any Lender with respect thereto or otherwise chargeable to any
Borrower, Guarantor or any other Obligor) and in such order as Agent may elect.

 

(c)           Payment
by Guarantor shall be made in U.S. dollars to Agent at the office of Agent from
time to time on demand as Guaranteed Obligations become due.  Guarantor shall make all payments to Agent on
the Guaranteed Obligations free and clear of, and without deduction or
withholding for or on account of, any setoff, counterclaim, defense, duties,
taxes, levies, imposts, fees, deductions, withholding, restrictions or
conditions of any kind.  One or more
successive or concurrent actions may be brought hereon against Guarantor either
in the same action in which any Borrower or any other Obligor is sued or in separate
actions.  In the event any claim or
action, or action on any judgment, based on this Guaranty is brought against
Guarantor, Guarantor agrees not to deduct, set-off, or seek any counterclaim
for or recoup any amounts which are or may be owed by Agent or any Lender to
Guarantor.

 

2.             Waivers
and Consents.

 

(a)           Notice
of acceptance of this Guaranty, the making of loans and advances and providing
other financial accommodations to Borrowers and presentment, demand, protest,
notice of protest, notice of nonpayment or default and all other notices to
which any Borrower or Guarantor is entitled are hereby waived by
Guarantor.  Guarantor also waives notice
of and hereby consents to, (i) any amendment, modification, supplement,
waiver, extension, renewal, or restatement of the Loan Agreement and any of the
other Financing Agreements, including, without limitation, extensions of time
of payment of or increase or decrease in the amount of any

 

 

of the Guaranteed Obligations, the interest rate,
fees, other charges, or any collateral, and the guaranty made herein shall
apply to the Loan Agreement and the other Financing Agreements and the
Guaranteed Obligations as so amended, modified, supplemented, renewed, restated
or extended, increased or decreased, (ii) the taking, exchange, surrender
and releasing of collateral or guarantees now or at any time held by or
available to Agent or any Lender for the obligations of any Borrower or any
other party at any time liable on or in respect of the Guaranteed Obligations
or who is the owner of any property which is security for the Guaranteed
Obligations (individually, an “Obligor” and collectively, the “Obligors”),
(iii) the exercise of, or refraining from the exercise of any rights
against any Borrower or any other Obligor or any collateral, (iv) the
settlement, compromise or release of, or the waiver of any default with respect
to, any of the Guaranteed Obligations and (v) any financing by Agent or
any Lender of any Borrower under Section 364 of the United States
Bankruptcy Code or consent to the use of cash collateral by Agent or any Lender
under Section 363 of the United States Bankruptcy Code.  Guarantor agrees that the amount of the
Guaranteed Obligations shall not be diminished and the liability of Guarantor
hereunder shall not be otherwise impaired or affected by any of the foregoing.

 

(b)           No
invalidity, irregularity or unenforceability of all or any part of the
Guaranteed Obligations shall affect, impair or be a defense to this Guaranty,
nor shall any other circumstance which might otherwise constitute a defense
available to or legal or equitable discharge of any Borrower in respect of any
of the Guaranteed Obligations, or Guarantor in respect of this Guaranty,
affect, impair or be a defense to this Guaranty.  Without limitation of the foregoing, the
liability of Guarantor hereunder shall not be discharged or impaired in any
respect by reason of any failure by Agent to perfect or continue perfection of
any lien or security interest in any collateral or any delay by Agent in
perfecting any such lien or security interest. 
As to interest, fees and expenses, whether arising before or after the
commencement of any case with respect to any Borrower under the United States
Bankruptcy Code or any similar statute, Guarantor shall be liable therefor,
even if such Borrower’s liability for such amounts does not, or ceases to,
exist by operation of law.  Guarantor
acknowledges that neither Agent nor any Lender has not made any representations
to Guarantor with respect to any Borrower, any other Obligor or otherwise in
connection with the execution and delivery by Guarantor of this Guaranty and
Guarantor is not in any respect relying upon Agent or any Lender or any
statements by Agent or any Lender in connection with this Guaranty.

 

(c)           To
the fullest extent permitted by law, Guarantor hereby irrevocably and
unconditionally waives and relinquishes all statutory, contractual, common law,
equitable and all other claims against all Borrowers, any collateral for the
Guaranteed Obligations or other assets of any Borrower or any other Obligor,
for subrogation, reimbursement, exoneration, contribution, indemnification,
setoff or other recourse in respect to sums paid or payable to Agent or any
Lender by Guarantor hereunder and Guarantor hereby further irrevocably and
unconditionally waives and relinquishes any and all other benefits which
Guarantor might otherwise directly or indirectly receive or be entitled to
receive by reason of any amounts paid by or collected or due from Guarantor,
any Borrower or any other Obligor upon the Guaranteed Obligations or realized
from their property.  The foregoing
waiver of rights is made in favor of Agent and the Lenders only and shall not
be deemed a waiver of such rights for the benefit of any other creditors of any
Borrower, Guarantor or any other Obligor.

 

 

(d)           Guarantor
hereby irrevocably and unconditionally waives and relinquishes any right to
revoke this Guaranty that Guarantor may now have or hereafter acquire.

 

(e)           Without
limiting the generality of any other waiver or other provision set forth in
this Guaranty, Guarantor hereby irrevocably and unconditionally waives all
rights and defenses arising out of an election of remedies by Agent, even
though that election of remedies, such as a nonjudicial foreclosure with
respect to security for a Guaranteed Obligation, has destroyed Guarantor’s
rights of subrogation and reimbursement against any Borrower.

 

(f)            Without
limiting the generality of any other waiver or other provision set forth in
this Guaranty, Guarantor waives all rights and defenses that Guarantor may have
because the Guaranteed Obligations are secured by real property.  This means, among other things: (i) Agent
may collect from Guarantor without first foreclosing on any real or personal
property collateral pledged by any Borrower; and (ii) if Agent forecloses
on any real property collateral pledged by any Borrower: (A) the amount of
the Guaranteed Obligations may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price and (B) Agent may collect from Guarantor even if
Agent, by foreclosing on the real property collateral, has destroyed any right
Guarantor may have to collect from such Borrower.  This is an unconditional and irrevocable waiver
of any rights and defenses Guarantor may have because the Guaranteed
Obligations are secured by real property.

 

(g)           Without
limiting the generality of any other waiver or other provision set forth in
this Guaranty, Guarantor hereby irrevocably and unconditionally waives and
relinquishes, to the maximum extent such waiver or relinquishment is permitted
by applicable law, all rights to interpose claims, deductions, setoffs or
counterclaims of any nature (other than compulsory counterclaims) in any action
or proceeding with respect to this Guaranty, Guarantor’s obligations hereunder,
or any matter arising from or related to the foregoing.

 

3.             Subordination.  Payment of all amounts now or hereafter owed
to Guarantor by any Borrower or any other Obligor is hereby subordinated in
right of payment to the indefeasible payment in full to Agent, for itself and
for the benefit of the Lenders and the Bank Product Providers, of the
Guaranteed Obligations and all such amounts and any security and guarantees
therefor are hereby assigned to Agent, for itself and for the ratable benefit
of the Lenders and Bank Product Providers, as security for the Guaranteed
Obligations.

 

4.             Acceleration.  Notwithstanding anything to the contrary
contained herein or any of the terms of any of the other Financing Agreements,
the liability of Guarantor for the entirety of the Guaranteed Obligations shall
mature and become immediately due and payable upon the acceleration of the
Guaranteed Obligations.

 

5.             Account
Stated.  The books and records of
Agent showing the account between Agent, the Lenders and Borrowers shall be
admissible in evidence in any action or proceeding against or involving
Guarantor as prima  facie proof of the items therein set forth,
and the monthly statements of Agent rendered to Borrowers, to the extent to
which no written objection is made within thirty (30) days from the date of
sending thereof to Borrowers, shall be deemed conclusively correct and
constitute an account stated between Agent, the Lenders and Borrowers and be
binding on Guarantor.

 

 

6.             Termination.  This Guaranty is continuing, unlimited,
absolute and unconditional.  All
Guaranteed Obligations shall be conclusively presumed to have been created in
reliance on this Guaranty.  This Guaranty
may not be terminated and shall continue so long as either (a) the Loan
Agreement shall be in effect (whether during its original term or any renewal,
substitution or extension thereof) or (b) any non-contingent Guaranteed
Obligations shall be outstanding.

 

7.             Reinstatement.  If any payment of any Guaranteed Obligations
is invalidated, declared to be fraudulent or preferential, set aside,
rescinded, or if after receipt of any payment of, or proceeds of collateral
applied to the payment of, any of the Guaranteed Obligations, Agent or any
Lender is required to surrender, return or otherwise restore such payment or
proceeds to any Person for any reason, then the Guaranteed Obligations intended
to be satisfied by such payment or proceeds shall be reinstated and continue
and this Guaranty shall continue in full force and effect as if such payment or
proceeds had not been received by Agent or such Lender.  Guarantor shall be liable to pay to Agent and
the Lender, and does indemnify and hold Agent and the Lenders harmless for the
amount of any payments or proceeds rescinded, invalidated, surrendered or
returned.  This Section 7 shall
remain effective notwithstanding any contrary action which may be taken by
Agent or any Lender in reliance upon such payment or proceeds.  This Section 7 shall survive the
termination of this Guaranty.

 

8.             Amendments
and Waivers.  Neither this Guaranty
nor any provision hereof shall be amended, modified, waived or discharged
orally or by course of conduct, but only by a written agreement signed by an
authorized officer of Agent and otherwise in accordance with the terms of the
Loan Agreement, and as to any amendments, as also signed by an authorized
officer of Guarantor.  Agent shall not by
any act, delay, omission or otherwise be deemed to have expressly or impliedly
waived any of its or any Lender’s rights, powers and/or remedies unless such
waiver shall be in writing and signed by an authorized officer of Agent.  Any such waiver shall be enforceable only to
the extent specifically set forth therein. 
A waiver by Agent of any right, power and/or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right, power and/or
remedy which Agent or any Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.

 

9.             Corporate
Existence, Power and Authority. 
Guarantor is a corporation duly organized and in good standing under the
laws of its state or other jurisdiction of incorporation and is duly qualified
as a foreign corporation and in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by it or
the ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a material
adverse effect on the financial condition, results of operation or businesses
of Guarantor or the rights of Agent or any Lender hereunder or under any of the
other Financing Agreements.  The
execution, delivery and performance of this Guaranty is within the corporate
powers of Guarantor, have been duly authorized and are not in contravention of
law or the terms of the certificates of incorporation, by-laws, or other
organizational documentation of Guarantor, or any indenture, agreement or
undertaking to which Guarantor is a party or by which Guarantor or its property
are bound.  This Guaranty constitutes the
legal, valid and binding obligation of Guarantor enforceable in accordance with
its terms.

 

 

10.           Governing
Law; Choice of Forum; Service of Process; Jury Trial Waiver.

 

(a)           The
validity, interpretation and enforcement of this Guaranty and any dispute
arising out of the relationship between Guarantor, Agent and the Lenders,
whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of New York (including for such purpose, Sections 5-14-1
and 5-1402 of the General Obligations Law of the State of New York) but
excluding any principles of conflicts of law or other rule of law that
would cause the application of the law of any jurisdiction other than the laws
of the State of New York.

 

(b)           Guarantor
hereby irrevocably consents and submits to the non-exclusive jurisdiction of
the state and federal courts located in the State of New York, New York Country
or in the United States District Court for the Southern District of New York,
whichever Agent may elect, and waives any objection based on venue or forum
non  conveniens with respect to any action instituted therein
arising under this Guaranty or any of the other Financing Agreements or in any
way connected with or related or incidental to the dealings of Guarantor, Agent
and the Lenders in respect of this Guaranty or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising and whether in contract, tort, equity or
otherwise, and agrees that any dispute arising out of the relationship between
Guarantor or Borrowers and Agent and the Lenders or the conduct of any such
persons in connection with this Guaranty, the other Financing Agreements or
otherwise shall be heard only in the courts described above (except that Agent
shall have the right to bring any action or proceeding against Guarantor or its
property in the courts of any other jurisdiction which Agent deems necessary or
appropriate in order to realize on any collateral at any time granted by any
Borrower or Guarantor to Agent or to otherwise enforce its rights against
Guarantor or its property).

 

(c)           Guarantor
hereby waives personal service of any and all process upon it and consents that
all such service of process may be made by certified mail (return receipt
requested) directed to its address set forth on the signature pages hereof
and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Agent’s option,
by service upon Guarantor in any other manner provided under the rules of
any such courts.  Within thirty (30) days
after such service, Guarantor shall appear in answer to such process, failing
which Guarantor shall be deemed in default and judgment may be entered by Agent
against Guarantor for the amount of the claim and other relief requested.

 

(d)           GUARANTOR
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION (i) ARISING UNDER THIS GUARANTY OR ANY OF THE OTHER FINANCING
AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO
THE DEALINGS OF GUARANTOR, AGENT AND THE LENDERS IN RESPECT OF THIS GUARANTY OR
ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. 
GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT
GUARANTOR OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN

 

 

EVIDENCE OF THE
CONSENT OF GUARANTOR AND LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

(e)           Neither
the Agent nor any Lender shall have any liability to Guarantor (whether in
tort, contract, equity or otherwise) for losses suffered by Guarantor in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Guaranty, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on such person that the losses
were the result of acts or omissions constituting gross negligence or willful
misconduct of such person (as determined pursuant to a final, non-appealable
order of a court of competent jurisdiction). 
In any such litigation, Agent and each Lender shall be entitled to the
benefit of the rebuttable presumption that it acted in good faith and with the
exercise of ordinary care in the performance by it of the terms of the Loan
Agreement and the other Financing Agreements. 
Except as prohibited by law, Guarantor waives any right which it may
have to claim or recover in any litigation with Agent or any Lender any
special, exemplary, punitive or consequential damages or any damages other
than, or in addition to, actual damages. 
Guarantor:  (i) certifies
that none of Agent, any Lender or any of their respective representatives,
agents or attorneys acting for or on behalf of such person has represented,
expressly or otherwise, that such person would not, in the event of litigation,
seek to enforce any of the waivers provided for in this Guaranty and (ii) acknowledges
that in entering into this Guaranty and the other Financing Agreements, Agent
and the Lenders are relying upon, among other things, the waivers and
certifications set forth in this Section 10 and elsewhere herein and
therein.

 

11.           Notices.  All notices, requests and demands hereunder
shall be in writing and (a) made to Agent at its address set forth above
and to Guarantor at its chief executive office set forth below, or to such
other address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made:
if delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing.

 

12.           Partial
Invalidity.  If any provision of this
Guaranty is held to be invalid or unenforceable, such invalidity or
unenforceability shall not invalidate this Guaranty as a whole, but this
Guaranty shall be construed as though it did not contain the particular
provision held to be invalid or unenforceable and the rights and obligations of
the parties shall be construed and enforced only to such extent as shall be
permitted by applicable law.

 

13.           Entire
Agreement.  This Guaranty represents
the entire agreement and understanding of this parties concerning the subject
matter hereof, and supersedes all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written.

 

14.           Successors
and Assigns.  This Guaranty shall be
binding upon Guarantor and its successors and assigns and shall inure to the
benefit of Agent, each Lender and Bank Product Providers and their respective
successors, endorsees, transferees and assigns. 
The liquidation,

 

 

dissolution or
termination of Guarantor shall not terminate this Guaranty as to such entity or
as to Guarantor.

 

15.           Agreement
to be Bound by Loan Agreement. 
Guarantor hereby agrees to be bound by and to comply with the terms of
each provision of the Loan Agreement that references or purports to bind a “Guarantor”,
an “Obligor” or a “Subsidiary” of any Borrower (each as defined in the Loan
Agreement).

 

16.           Construction.  All references to the term “Guarantor”
wherever used herein shall mean Guarantor and its successors and assigns
(including, without limitation, any receiver, trustee or custodian for
Guarantor or any of its assets or Guarantor in its capacity as debtor or
debtor-in-possession under the United States Bankruptcy Code).  All references to the term “Agent” or any “Lender”
wherever used herein shall include their respective successors and assigns and
all references to the term any “Borrower” wherever used herein shall include
its respective successors and assigns (including, without limitation, any
receiver, trustee or custodian for such Borrower or any of its assets or such
Borrower in its capacity as debtor or debtor-in-possession under the United
States Bankruptcy Code).  All references
to the term “Person” or “person” wherever used herein shall mean any
individual, sole proprietorship, partnership, corporation (including, without
limitation, any corporation which elects subchapter S status under the Internal
Revenue Code of 1986, as amended), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.  All references to the plural shall also mean
the singular and to the singular shall also mean the plural.

 

[Remainder of Page Left
Intentionally Blank]

 

 

IN WITNESS WHEREOF, Guarantor has executed and
delivered this Guaranty as of the day and year first above written.

 

	
   

  	
  JASMINE COMPANY, INC.,

  
	
   

  	
  a Massachusetts corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald W. Ristau

  
	
   

  	
  Name:

  	
  Ronald W. Ristau

  
	
   

  	
  Title:

  	
  Chief Operating Officer,

  	
   

  
	
   

  	
   

  	
  Chief Financial Officer and Secretary

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