LIMITED GUARANTEE
Limited Guarantee, dated as of June 18, 2007 (this "LIMITED
GUARANTEE"), by Burlingame Asset Management, LLC, for itself and on behalf of
its funds and managed accounts (the "GUARANTOR"), in favor of Everlast Worldwide
Inc. (the "GUARANTEED PARTY").
1. LIMITED GUARANTEE. In connection with that certain Agreement and
Plan of Merger, dated as of June 1, 2007 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "MERGER AGREEMENT"),
by and among ▇▇▇▇▇▇ Group Acquisitions, LLC, a Delaware limited liability
company ("PARENT"), ▇▇▇▇▇▇ Group Acquisitions, Inc., a Delaware corporation
("MERGER SUB") and the Guaranteed Party, pursuant to which Merger Sub will merge
with and into the Guaranteed Party, the Guarantor hereby absolutely,
unconditionally and irrevocably guarantees to the Guaranteed Party, the due and
punctual performance and discharge of its Pro Rata Share (as defined below) of
the payment obligations of Parent and Merger Sub under Section 9.03(f) of the
Merger Agreement (the "OBLIGATIONS"); PROVIDED THAT in no event shall the
Guarantor's liability under this Guarantee exceed its Pro Rata Share of the
Parent Termination Fee (the "CAP"), it being understood that this Limited
Guarantee may not be enforced without giving effect to the Cap. In furtherance
of the foregoing, the Guarantor acknowledges that its liability hereunder shall
extend to its Pro Rata Share of the Obligations (subject to the Cap), and that
the Guaranteed Party may, in its sole discretion, bring and prosecute a separate
action or actions against the Guarantor for the Guarantor's Pro Rata Share of
the Obligations (subject to the Cap), regardless of whether action is brought
against Parent, Merger Sub or any other guarantor pursuant to a Limited
Guarantee dated as of the date hereof to be entered into between the Guaranteed
Party and such other guarantor (the "OTHER GUARANTORS") or whether Parent,
Merger Sub or any Other Guarantor is joined in any such action or actions. For
purposes of this Guarantee, "PRO RATA SHARE" means the ratio that the
Guarantor's equity commitment to Parent pursuant to that certain letter to
Parent of even date herewith bears to the aggregate equity commitments of all
the investors in Parent.
2. NATURE OF GUARANTEE. The Guaranteed Party shall not be obligated to
file any claim relating to the Obligations in the event that Parent or Merger
Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and
the failure of the Guaranteed Party to so file shall not affect the Guarantor's
obligations hereunder. In the event that any payment to the Guaranteed Party in
respect of the Obligations is rescinded or must otherwise be returned for any
reason whatsoever, the Guarantor shall remain liable hereunder with respect to
the Obligations as if such payment had not been made. This is an unconditional
guarantee of payment and not of collectibility.
3. CHANGES IN OBLIGATIONS, CERTAIN WAIVERS. The Guarantor agrees that
the Guaranteed Party may at any time and from time to time, without notice to or
further consent of the Guarantor, extend the time of payment of any of the
Obligations, and may also make any agreement with Parent, Merger Sub or with any
other person (including any Other Guarantor) interested in the transactions
contemplated by the Merger Agreement, for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any
modification of the terms thereof or of any agreement between the Guaranteed
Party and Parent, Merger Sub or any such other person without in any way
impairing or affecting the Guarantor's obligations under this Limited Guarantee.
The Guarantor agrees that the obligations of the Guarantor hereunder shall not
be released or discharged, in whole or in part, or otherwise
affected by (a) the failure of the Guaranteed Party to assert any claim or
demand or to enforce any right or remedy against Parent, Merger Sub or any other
person interested in the transactions contemplated by the Merger Agreement
(including any Other Guarantor); (b) any change in the time, place or manner of
payment of any of the Obligations or any rescission, waiver, compromise,
consolidation or other amendment or modification of any of the terms or
provisions of the Merger Agreement or any other agreement evidencing, securing
or otherwise executed in connection with any of the Obligations; (c) the
addition, substitution or release of any person interested in the transactions
contemplated by the Merger Agreement (including any Other Guarantor); (d) any
change in the corporate existence, structure or ownership of Parent, Merger Sub
or any other person interested in the transactions contemplated by the Merger
Agreement (including any other Guarantor); (e) any insolvency, bankruptcy,
reorganization or other similar proceeding affecting Parent, Merger Sub or any
other person interested in the transactions contemplated by the Merger Agreement
(including any Other Guarantor); (f) the existence of any claim, set-off or
other right which the Guarantor may have at any time against Parent, Merger Sub
or the Guaranteed Party, whether in connection with the Obligations or
otherwise; or (g) the adequacy of any other means the Guaranteed Party may have
of obtaining repayment of any of the Obligations. To the fullest extent
permitted by law, the Guarantor hereby expressly waives any and all rights or
defenses arising by reason of any law which would otherwise require any election
of remedies by the Guaranteed Party. The Guarantor waives promptness, diligence,
notice of the acceptance of this Limited Guarantee and of the Obligations,
presentment, demand for payment, notice of non-performance, default, dishonor
and protest, notice of any Obligations incurred and all other notices of any
kind (except for notices to be provided to Parent, Merger Sub and Proskauer Rose
LLP in accordance with Section 10.02 of the Merger Agreement), all defenses
which may be available by virtue of any valuation, stay, moratorium law or other
similar law now or hereafter in effect, any right to require the marshalling of
assets of Parent, Merger Sub or any other person interested in the transactions
contemplated by the Merger Agreement (including any Other Guarantor), and all
suretyship defenses generally (other than fraud or willful misconduct by the
Guaranteed Party or any of its Subsidiaries, defenses to the payment of the
Obligations that are available to Parent or Merger Sub under the Merger
Agreement or breach by the Guaranteed Party of this Limited Guarantee). The
Guarantor acknowledges that it will receive substantial direct and indirect
benefits from the transactions contemplated by the Merger Agreement and that the
waivers set forth in this Limited Guarantee are knowingly made in contemplation
of such benefits.
The Guaranteed Party hereby covenants and agrees that it shall not
institute, and shall cause its Affiliates not to institute, any proceeding or
bring any other claim arising under, or in connection with, the Merger Agreement
or the transactions contemplated thereby, against any Guarantor or any of its
former, current or future directors, officers, agents, Affiliates (other than
Parent or Merger Sub) or employees, or against any of the former, current or
future general or limited partners, members, managers or stockholders of the
Guarantor or any Affiliate thereof (other than Parent or Merger Sub) or against
directors, officers, agents, Affiliates, general or limited partners, members,
managers or stockholders of any of the foregoing (other than Parent or Merger
Sub), except for claims against the Guarantor under this Limited Guarantee and
against the Other Guarantors under their written limited guarantees, and the
Guarantor hereby covenants and agrees that it shall not institute, and shall
cause its respective Affiliates not to institute, any proceedings asserting that
this Limited Guarantee is illegal, invalid or unenforceable in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting
creditors'
rights generally, and general equitable principles (whether considered in a
proceeding in equity or at law). The Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against Parent, Merger Sub or any other person interested in the
transactions contemplated by the Merger Agreement (including any Other
Guarantor) that arise from the existence, payment, performance, or enforcement
of the Guarantor's obligations under or in respect of this Limited Guarantee or
any other agreement in connection therewith, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the
Guaranteed Party against Parent, Merger Sub or such other person, whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from
Parent, Merger Sub or such other person, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Obligations
and all other amounts payable under this Limited Guarantee shall have been paid
in full in cash. If any amount shall he paid to the Guarantor in violation of
the immediately preceding sentence at any time prior to the payment in full in
cash of the Obligations and all other amounts payable under this Limited
Guarantee, such amount shall be received and held in trust for the benefit of
the Guaranteed Party, shall be segregated from other property and funds of the
Guarantor and shall forthwith be paid or delivered to the Guaranteed Party in
the same form as so received (with any necessary endorsement or assignment) to
be credited and applied to the Obligations and all other amounts payable under
this Limited Guarantee, in accordance with the terms of the Merger Agreement,
whether matured or unmatured, or to be held as collateral for any Obligations or
other amounts payable under this Limited Guarantee thereafter arising.
Notwithstanding anything to the contrary contained in this Limited Guarantee,
the Guaranteed Party hereby agrees that to the extent Parent and Merger Sub are
relieved of their obligations under Section 9.03(f) of the Merger Agreement, the
Guarantor shall be similarly relieved of its obligations under this Limited
Guarantee.
4. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the
Guaranteed Party to exercise, and no delay in exercising, any right, remedy or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Guaranteed Party of any, right, remedy or power
hereunder preclude any other or future exercise of any right, remedy or power
hereunder. Each and every right, remedy and power hereby granted to the
Guaranteed Party or allowed it by law or other agreement shall be cumulative and
not exclusive of any other, and may be exercised by the Guaranteed Party at any
time or from time to time.
5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and
warrants that:
(a) the execution, delivery and performance of this Limited
Guarantee have been duly authorized by all necessary action and do not
contravene any provision of the Guarantor's charter, partnership
agreement, operating agreement or similar organizational documents or
any Law, Order or contractual restriction binding on the Guarantor or
its assets;
(b) all consents, approvals, authorizations, permits of,
filings with and notifications to, any governmental authority necessary
for the due execution, delivery and performance of this Limited
Guarantee by the Guarantor have been obtained or made and
all conditions thereof have been duly complied with, and no other
action by, and no notice to or filing with, any governmental authority
or regulatory body is required in connection with the execution,
delivery or performance of this Limited Guarantee;
(c) this Limited Guarantee constitutes a legal, valid and
binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms, subject to (i) the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws, affecting creditors' rights generally, and (ii) general
equitable principles (whether considered in a proceeding in equity or
at law); and
(d) the Guarantor has the financial capacity to pay and
perform its obligations under this Limited Guarantee, and all funds
necessary for the Guarantor to fulfill its obligations under this
Limited Guarantee shall be available to the Guarantor (or its assignee
pursuant to SECTION 6) for so long as this Limited Guarantee shall
remain in effect in accordance with SECTION 8.
6. NO ASSIGNMENT. Neither the Guarantor nor the Guaranteed Party may
assign its rights, interests or obligations hereunder to any other person
(except by operation of law) without the prior written consent of the Guaranteed
Party (in the case of an assignment by the Guarantor) or the Guarantor (in the
case of an assignment by the Guaranteed Party) and any assignment without such
consent shall be null and void.
7. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given (a) in person, (b) by a nationally recognized
next-day courier service, (c) by registered or certified mail (postage prepaid,
return receipt requested) or (d) by facsimile transmission, when transmitted and
receipt of transmittal is confirmed. All notices hereunder shall be delivered to
the locations set forth below or to such other person or address or facsimile
number as a party shall specify by notice in writing to the other party. All
such notices shall only be duly given and effective upon receipt (or refusal of
receipt).
(i) if to the Guaranteed Party, to it at:
Everlast Worldwide Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome
▇▇▇▇▇▇▇▇▇▇ & Wolosky LLP
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the Guarantor, to it at:
Burlingame Asset Management, LLC
One Market Street
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Facsimile:
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Syracuse & Hirschtritt LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
8. CONTINUING GUARANTEE. This Limited Guarantee shall remain in full
force and effect and shall be binding on the Guarantor, its successors and
assigns until the Obligations are satisfied in full. Notwithstanding the
foregoing, this Limited Guarantee shall terminate and the Guarantor shall have
no further obligations under this Limited Guarantee as of the earliest of (i)
the Effective Time, (ii) the termination of the Merger Agreement in accordance
with its terms by mutual consent of the parties or under circumstances in which
Parent and Merger Sub would not be obligated to make any payments under Section
9.03(f) of the Merger Agreement and (iii) the first anniversary of any
termination of the Merger Agreement in accordance with its terms under
circumstances in which Parent and Merger Sub would be obligated to make any
payments under Section 9.03(f) of the Merger Agreement if the Guaranteed Party
has not presented a claim for payment of any Obligation of Parent and Merger Sub
or any Guarantor (including the Other Guarantors) by such first anniversary.
Notwithstanding the foregoing, in the event that the Guaranteed Party or any of
its Affiliates asserts in any litigation or other proceeding that the provisions
of SECTION 1 hereof limiting the Guarantor's liability to the Cap or the
provisions of this SECTION 8 or SECTION 9 are illegal, invalid or unenforceable
in whole or in part, or asserting any theory of liability against the Guarantor
or any Affiliates of the Guarantor with respect to the transactions contemplated
by the Merger Agreement other than liability of the Guarantor under this Limited
Guarantee (as limited by the provisions of SECTION 1), then (i) the obligations
of the Guarantor under this Limited Guarantee shall terminate AB INITIO and be
null and void, (ii) if the Guarantor has previously made any payments under this
Limited Guarantee, it shall be entitled to recover such payments, and
(iii) neither the Guarantor nor any Affiliate of any Guarantor shall have any
liability to the Guaranteed Party with respect to the transactions contemplated
by the Merger Agreement or under this Limited Guarantee; PROVIDED, HOWEVER, that
if the Guarantor asserts in any litigation or other proceeding that this Limited
Guarantee is illegal, invalid or unenforceable in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and general equitable principles (whether considered in a proceeding
in equity or at law), then, to the extent the Guaranteed Party prevails in such
litigation or proceeding, the Guarantor shall pay on
demand all reasonable fees and out of pocket expenses of the Guaranteed Party in
connection with such litigation or proceeding.
9. NO RECOURSE. The Guaranteed Party by its acceptance of the benefits
hereof, covenants, agrees and acknowledges that no person other than the
Guarantor shall have any obligation hereunder and that no recourse hereunder or
under any documents or instruments delivered in connection herewith shall be had
against any former, current or future director, officer, agent, Affiliate (other
than Parent or Merger Sub) or employee of the Guarantor, against any former,
current or future general or limited partner, member, manager or stockholder of
the Guarantor or any Affiliate thereof (other than Parent or Merger Sub) or
against any former, current or future director, officer, agent, Affiliate,
employee, general or limited partner, member, manager or stockholder of any of
the foregoing (other than Parent or Merger Sub), whether by the enforcement of
any assessment or by any legal or equitable proceeding, or by virtue of any
statute, regulation or other applicable Law. The Guaranteed Party acknowledges
and agrees that Parent and Merger Sub have no assets and that no funds are
expected to be contributed to Parent or Merger Sub unless the Closing occurs.
The Guaranteed Party further agrees that neither it nor any of its Affiliates
have any right of recovery against the Guarantor or any of its former, current
or future directors, officers, agents, Affiliates (other than Parent or Merger
Sub), general or limited partners, members, managers or stockholders through
Parent or Merger Sub or otherwise, whether by piercing of the corporate veil, by
a claim on behalf of Parent or Merger Sub against the Guarantor or Parent's
members or Affiliates, or otherwise, except for the rights under this Limited
Guarantee and its rights against the Other Guarantors pursuant to the terms of
their written limited guarantees delivered contemporaneously herewith. Recourse
against the Guarantor under this Limited Guarantee shall be the exclusive remedy
of the Guaranteed Party and its Affiliates against the Guarantor and any of its
former, current or future directors, officers, agents, Affiliates, general or
limited partners, members, managers or stockholders in respect of any
liabilities or obligations arising under, or in connection with, the Merger
Agreement or the transactions contemplated thereby. The Guaranteed Party hereby
covenants and agrees that it shall not institute, and it shall cause its
Affiliates not to institute, any proceeding or bring any other claim arising
under, or in connection with, the Merger Agreement or the transactions
contemplated thereby, against the Guarantor or any of its former, current or
future directors, officers, agents, Affiliates (other than Parent or Merger
Sub), general or limited partners, members, managers or stockholders except for
claims against the Guarantor under this Limited Guarantee. Except as
contemplated under SECTION 6, nothing set forth in this Limited Guarantee shall
affect or be construed to confer or give any person other than the Guarantor and
the Guaranteed Party (including any person acting in a representative capacity)
any rights or remedies against any person.
10. INTERPRETATION. Capitalized terms used herein but not defined shall
have the meanings given to them in the Merger Agreement. The headings contained
in this Guarantee are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Guarantee. Whenever the words
"include", "includes" or "including" are used in this Guarantee, they shall be
deemed to be followed by the words "without limitation". The words "hereof",
"herein", "hereby" and "hereunder" and words of similar import when used in this
Guarantee shall refer to this Guarantee as a whole and not to any particular
provision of this Guarantee
11. GOVERNING LAW. This Guarantee and any dispute hereunder shall be
governed by, construed and enforced in accordance with, the laws of the State of
New York without regard
to principles of conflicts of law thereof. Each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any state or
federal court sitting in the Borough of Manhattan of The City of New York in the
event any dispute arises out of this Guarantee or any of the transactions
contemplated by this Guarantee, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction or venue by motion or other request for leave
from any such court and (c) agrees that it will not bring any action relating to
this Guarantee or any of the transactions contemplated by this Guarantee in any
court other than such courts sitting in the Borough of Manhattan of The City of
New York.
12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS LIMITED GUARANTEE OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
13. COUNTERPARTS. This Limited Guarantee may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same instrument.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, each of the parties hereto has caused this Limited
Guarantee to be executed and delivered as of the date first written above by its
officer thereunto duly authorized.
BURLINGAME ASSET MANAGEMENT, LLC,
for itself and on behalf of its funds and managed
accounts
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Member
EVERLAST WORLDWIDE INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and CEO
[Limited Guarantee Signature Page]
