Document:

exv10w17

 

EXHIBIT 10.17

LOAN AGREEMENT

     THIS LOAN AGREEMENT (this. “Agreement”), is executed as of July 6, 2006, by and among The
Fashion House Holdings, Inc., a Colorado corporation (the “Company”), and Battersea Capital, Tile,
(the “Lender”).

     WHEREAS, the Company is conducting a private placement offering (the “Private
Placement”);

     WHEREAS, in order to fund the Company’s operations until, such Private Placement is completed,
the Company wishes to borrow $300,000 from the Lender as a short term. bridge loan; and

     WHEREAS, the Lender is willing to provide such financing on terms and conditions as set forth
herein.

     NOW, THEREFORE, in consideration of the mutual, covenants and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Lender, intending to be legally bound, agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Defined terms. Certain capitalized terms used in this Agreement shall have the
specific meanings defined below:

     “Business Day” shall mean a day other than a Saturday, Sunday, or other day on which
commercial banks are authorized or required by law to close.

     “Loan Closing Date” shall mean the date upon which the Loan is ‘made to the Company.

     “Interest Rate” shall mean the highest prime rate of interest per annum published in
the Money Rate Table of the Western Edition of The Wall Street Journal, as adjusted on a daily
basis, plus five percent (5%) per annum, compounded annually.

ARTICLE 2

THE LOAN

     2.1 Loan. According to the terms and subject to the conditions of this Agreement, the
Lender shall make a single-installment loan to the Company on the Loan Closing Date in the amount
of $300,000 (the “Loan”). The Loan shall be evidenced by a promissory note in the form
attached hereto as Exhibit A (“Note”), duly executed on behalf of the Company and dated as
of the Loan Closing Date.

     2.2 Interest. The Loan shall bear interest (“Interest”) from the date of
payment by the Lender until the Maturity Date at the interest Rate (calculated on the basis of the
actual number

 

 

of days elapsed over a year of 360 days). Interest is payable by the Company in a. lump sum on the
Maturity Date. Notwithstanding anything to the contrary, in no event shall the Interest Rate be
less than 10.75% per annum, nor shall the Interest Rate be adjusted to exceed the maximum amount
permitted by applicable law.

     2.3 Prepayment of the Loan. The Company may from time to time prepay all or any
portion of the Loan without premium or penalty of any type. The Company shall give the Lender at
least three Business Day prior written notice of its intention to prepay the Loan, specifying the
date of payment and the total amount of the Loan to be paid on such date.

     2.4 Maturity Date. Unless the Loan is earlier accelerated pursuant to the terms
hereof, the Loan and all accrued Interest thereon shall be due and payable in full on the earlier
of (a) the date that is 60 days following the Loan Closing Date or (b) the final closing date of
the Private Placement. In the event that the Private Placement is not consummated within 60 days
after the Loan Closing Date, the Lender may, at the Lender’s option, extend the Maturity Date on
such terms and conditions as determined by the Lender in its sole discretion.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

     3.1 Due Incorporation and Good Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado with full and
adequate power to carry on and conduct its business as presently conducted, and is duly licensed or
qualified in all foreign jurisdictions wherein the failure to be so qualified or licensed would
reasonably be expected to have a material adverse effect on the business of the Company.

     3.2 Due Authorization. The Company has full right, power and authority to enter into
this Agreement, to make the borrowings hereunder and execute and deliver the Note as provided
herein and to perform all of its duties and obligations under this Agreement and the Note. The
execution and delivery of this Agreement will not, nor will the observance or performance of any of
the matters and things herein or therein set forth, violate or contravene any provision of law or
the Company’s bylaws or certificate of incorporation. All and appropriate corporate action on
the part of the Company has been taken to authorize the execution and delivery of this Agreement.

     3.3 Enforceability. This Agreement has been validly executed and delivered by the
Company and constitutes the legal, valid and binding obligations of the Company enforceable against
it in accordance with its respective terms, subject to applicable bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of creditors’ right and to
the availability of the remedy of specific performance.

     3.4 Compliance with Laws. The nature and transaction of the Company’s business and
operations and the use of its properties and assets do not, and during the term of this Agreement
shall not, violate or conflict with in any material respect any applicable law, statute, ordinance,
rule, regulation or order of any kind or nature.

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ARTICLE 4

COVENANTS

ARTICLE 5

DEFAULT

     5.1 Events of Default. The occurrence of any of the following events (each an
“Event of Default”), not cured in the applicable cure period, if any, shall constitute and
Event of Default of the Company:

          (a) the failure to make when due any payment described in this Agreement or the
Note, whether on or after the Maturity Date, by acceleration or otherwise; and

          (b) (i) the application for the appointment of a receiver or custodian for the
Company or the property of the Company, (ii) the entry of an order for relief or the filing of a
petition by or against the Company under the provisions of any bankruptcy or insolvency law, (iii)
any assignment for the benefit of creditors by or against the Company, or (iv) the Company becomes
insolvent.

     5.2 Effect of Default. Upon the occurrence of any Event of Default that is not cured
within any applicable cure period, the Lender may elect, by written notice delivered to the
Company, to take any or all of the following actions: (i) declare this Agreement terminated and the
outstanding amounts under the Note to be forthwith due and payable, whereupon the entire unpaid
Loan, together with accrued and unpaid Interest thereon, and all other cash obligations hereunder,
shall become forthwith due and payable, without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived by the Company, anything contained herein or in
any of the Note to the contrary notwithstanding, and (ii) exercise any and all other remedies
provided hereunder or available at law or in equity upon the occurrence and continuation of an
Event of Default. In addition, during the occurrence of any Event of Default, the Company shall not
pay make any payment on any other outstanding indebtedness of the Company (other than indebtedness
of the Company to which the Lender has agreed in writing to subordinate this Agreement arid the
Note hereunder).

ARTICLE 6

WARRANT

     7.1 Issuance of Warrant. The Company shall issue to the Lender a Common Stock Purchase
Warrant (the “Warrant”) in the form attached hereto as Exhibit B. The Warrant shall
be immediately convertible into 60,000 shares of common stock of the Company and the exercise price
of the Warrant shall be $1.00 per share.

     7.2 Registration of Shares Underlying Warrant.

          (a) The Company shall prepare and, as soon as practicable, but in no event later than 75 days
following the Loan Closing Date of the Loan (the “Filing Deadline”), file with the
Securities and Exchange Commission (the “SEC”) a registration statement on Form SB-2 covering the
resale of all the shares underlying the Warrant (the “Registrable Securities”). In the
event that Form SB-2 is unavailable for such a registration, the Company shall register the resale

3

 

of the Registrable Securities on another appropriate form reasonably acceptable to the holders of
at least a majority of the Registrable Securities and undertake to register the Registrable
Securities on Form SB-2 as soon as such form is available, provided that the Company shall maintain
the effectiveness of the Registration Statement then, in effect until such time as a Registration
Statement on Form SB-2 covering the Registrable Securities has been declared effective by the SEC.
The Company shall use its reasonable best efforts to have such registration statement declared
effective by the SEC as soon as practicable, but in no event later than the date which is 180 days
following closing date of the Merger (the “Effectiveness Deadline”).

          (b) Al] expenses incident to the filing of the registration statement required by Section 7.2,
including without limitation all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public accountants,
underwriters (excluding discounts and commissions) and other professionals retained by the Company
will be borne by the Company. In no event shall the Company be obligated to be pay any discounts or
commissions with respect to the shares sold by any holder of Registrable Securities. In connection
with any registration statement, the Company shall reimburse the holders of Registrable Securities
covered by such registration for the reasonable fees and disbursements of one counsel chosen by the
holders of a majority of the Registrable Securities initially requesting such registration.

          (d) In the event of an underwritten registered offering the managing underwriter(s) advise the
Company in writing that in their opinion the number of Registrable Securities exceeds the number of
Registrable Securities which can be sold therein without adversely affecting the marketability of
the offering, the Company will cause the Company to include in such registration the number of
Registrable Securities requested to be included which in the opinion of such underwriter(s) can be
sold without adversely affecting the marketability of the offering, pro rata among the respective
holders thereof on the basis of the amount of Registrable Securities owned by each such holder. In
the event the number of shares available under a registration statement filed pursuant to Section
7A is insufficient to cover 100% of the Registrable Securities required to be covered by such
registration statement, the Company shall cause the Company to amend the registration statement, or
file a new registration statement (on the short form available therefor, if applicable), or both,
so as to cover 100% of the number of such Registrable Securities as soon as practicable but in any
event not later than 45 days after the necessity therefor arises. The Company shall use its
reasonable best efforts to cause such amendment or new registration statement to become effective
as soon as practicable following the filing thereof.

ARTICLE 7

MISCELLANEOUS

     7.1 Successors and Assigns. Subject to the exceptions specifically set forth in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective executors, administrators, heirs, successors and assigns of the parties. This
Agreement may be assigned solely by the Lender.

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     7.2 Titles and Subtitles. The titles and subtitles of the Sections of this Agreement
are used for convenience only and shall not be considered in construing or interpreting this
agreement.

     7.3 Notices. Any notice, request or other communication required or permitted
hereunder shall be in writing and shall be delivered personally or by facsimile (receipt confirmed
electronically) or shall be sent by a reputable express delivery service or by certified mail,
postage prepaid with return receipt requested, addressed as follows:

if to the Company, to:

The Fashion House Holdings, Inc. 6310 San Vicente Blvd.

Suite 330

Los Angeles, CA 90048

Attn: John Hanna

Fax: (310) 939-3052

if to the Lender, to:

Battersea Capital, Inc.

P.O. Box 153

Santa Monica, CA 90406

Attn: Matt Lepo

     Either party hereto may change the above specified recipient or mailing address by notice to
the other party given in the manner herein prescribed. All notices shall be deemed given on the day
when actually delivered as provided above (if delivered personally or by facsimile, provided that
any such facsimile is received during regular business hours at the recipient’s location) or on the
day shown on the return receipt (if delivered by mail or delivery service).

     7.4 Governing Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of California without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of California or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the State of
California.

     7.5 Waiver and Amendment. Any term of this Agreement may be amended, waived or
modified with the written consent of the Company and the Lender.

     7.6 Remedies. No delay or omission by the Lender in exercising any of its rights,
remedies, powers or privileges hereunder or at law or in equity and no course of dealing between
the Lender and the undersigned or any other person shall be deemed a waiver by the Lender of

5

 

any such rights, remedies, powers or privileges, even if such delay or omission is continuous or
repeated, nor shall any single or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise thereof by the Lender or the exercise of any other right,
remedy, power or privilege by the Lender. The rights and remedies of the Lender described herein
shall be cumulative and not restrictive of any other rights or remedies available under any other
instrument, at law or in equity.

* * * * *

6

 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be signed in its name on the date
first set forth above.

	 	 	 	 	 	 	 
	 	 	THE FASHION HOUSE HOLDING, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	\s\ John Hanna	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John Hanna	 	 
	 

	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	BATTERSEA CAPITAL, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	\s\ Matt Lepo	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Matt Lepo	 	 

1

 

     THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR UNDER THE PROVISIONS OF ANY APPLICABLE
STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR PURPOSES OF
INVESTMENT AND TN RELIANCE ON STATUTORY EXEMPTIONS UNDER THE 1933 ACT, AND UNDER ANY APPLICABLE
STATE SECURITIES LAWS, THESE SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT TN
A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT.

PROMISSORY NOTE

Los Angeles, CA

July 6, 2006

     FOR VALUE RECEIVED, The Fashion House Holdings, Inc., a Colorado corporation
(“Borrower”), hereby promises to pay to the order of Battersea Capital, Inc.
(“Lender”), in lawful money of the United States at the address of Lender set forth herein,
the principal amount of $3,000 (the “Loan”), together with Interest. This Promissory Note
(“Note”) has been executed by Borrower on the date set forth above (the “Effective
Date”) pursuant to the Loan Agreement entered into as of the date hereof between Lender and
Borrower (the “Loan Agreement”). Capitalized terms used herein shall have the meanings
assigned to such terms in the Loan Agreement.

     1. Interest. The Loan shall bear interest at the Interest Rate from the
Effective Date and continuing until payment in full of the Loan.

     2. Maturity Date. All or any portion of the Loan, all accrued Interest
thereon and all other sums due hereunder, shall be due and payable on demand by Lender on the
Maturity Date.

     3. Application of Payments.

          3.1. Except as otherwise expressly provided herein, payments under this Note shall be applied
(i) first to the repayment of any sums incurred by Lender for the payment of any expenses in
enforcing the terms of this Note, (ii) then to the payment of Interest, and (iii) then to the
reduction of the Loan.

          3.2. Upon payment in full of the Loan and applicable accrued and unpaid Interest thereon, this
Note shall be marked “Paid in Full” and returned to Borrower.

     4. Waiver of Notice. Borrower hereby waives diligence, notice, presentment, protest
and notice of dishonor.

     5. Transfer. This Note may be transferred by Lender at any time, provided that such
transfer complies with applicable securities laws.

 

 

     6. Events of Default. The occurrence of any of Following events (each an
“Event of Default”), not cured in any applicable cure period, shall constitute an Event of
Default of Borrower:

     6.1. The failure to make when due any payment described in this Note or the Loan Agreement,
whether on or after the Maturity Date, by acceleration or otherwise;

     6.2. A breach of any representation, warranty, covenant or other provision of this Note or the
Loan Agreement, which, if capable of being cured, is not cured within three days following notice
thereof to the Company; or

     6.3. (i) The application for the appointment of a receiver or custodian for Borrower or the
property of Borrower, (ii) the entry of an order for relief or the filing of a petition by or
against Borrower under the provisions of any bankruptcy or insolvency law, (iii) any assignment for
the benefit of creditors by or against Borrower, or (iv) the insolvency of Borrower.

     Upon the occurrence of any Event of Default that is not cured within any applicable cure
period, if any, Lender may elect, by written notice delivered to Borrower, to take at any time any
or all of the following actions: (i) declare this Note to be forthwith due and payable, whereupon
the entire unpaid Loan, together with all accrued and unpaid Interest thereon, and all other cash
obligations hereunder, shall become forthwith due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by Borrower, anything
contained herein to the contrary notwithstanding, and (ii) exercise any and all other remedies
provided hereunder or available at law or in equity.

     7. Miscellaneous.

          7.1. Successors and Assigns. Subject to the exceptions specifically set forth in this
Note, the terms and conditions of this Note shall inure to the benefit of and be binding upon the
respective executors, administrators, heirs, successors and assigns of the parties.

          7.2. Loss or Mutilation of Note. Upon receipt by Borrower of evidence satisfactory to
Borrower of the loss, theft, destruction or mutilation of this Note, together with indemnity
reasonably satisfactory to Borrower, in the case of loss, theft or destruction, or the surrender
and cancellation of this Note, in the case of mutilation, Borrower shall execute and deliver to
Lender a new promissory note of like tenor and denomination as this Note.

          7.3. Notices. Any notice, demand, offer, request or other communication required or
permitted to be given pursuant to the terms of this Note shall be in writing and shall be deemed
effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one
business day after being delivered by facsimile (with receipt of appropriate confirmation), (iv)
one business day after being deposited with an overnight courier service, or (v) four days after
being deposited in the U.S. mail, First Class with postage prepaid, and addressed to the recipient
at the addresses set forth below unless another address is provided to the other party in writing:

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If to Borrower, to:

The Fashion House Holdings, Inc.

6310 San Vicente Blvd.

Suite 330

Los Angeles, CA 90048

Attn: John Hanna

Fax: (310) 939-3052

If to Lender, to:

Battersea Capital, Inc.

P.O. Box 153

Santa Monica, CA 90406

Attn: Matt Lepo

     8.4 Governing Law. This Note shall be governed in all respects by the laws of the
State of California as applied to agreements entered into and performed entirely within the State
of California by residents thereof, without regard to any provisions thereof relating to conflicts
of laws among different jurisdictions.

     8.5 Waiver and Amendment. Any term of this Note may be amended, waived or modified
only with the written consent of Borrower and Lender.

     8.6 Remedies; Costs of Collection; Attorneys’ Fees. No delay or omission by Lender in
exercising any of its rights, remedies, powers or privileges hereunder or at law or in equity and
no course of dealing between Lender and the undersigned or any other person shall be deemed a
waiver by Lender of any such rights, remedies, powers or privileges, even if such delay or omission
is continuous or repeated, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise thereof by Lender or the exercise of any other
right, remedy, power or privilege by Lender. The rights and remedies of Lender described herein
shall be cumulative and not restrictive of any other rights or remedies available under any other
instrument, at law or in equity. If an Event of Default occurs, Borrower agrees to pay, in addition
to the Loan and Interest payable thereon, reasonable attorneys’ fees and any other reasonable costs
incurred by Lender in connection with its pursuit of its remedies under this Note.

* * * *

3

 

     IN WITNESS WHEREOF, Borrower has caused this Note to be signed on the Effective Date.

	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	THE FASHION HOUSE HOLDING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	\s\ John Hanna	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John Hanna	 	 
	 

	 	 	 	Chief Executive Officerexv10w22

 

Exhibit
10.22

Master Revolving Note

Variable Rate-Demand – Optional Advances (Business and Commercial Loans Only)

	 	 	 	 	 	 	 
	AMOUNT

	 	NOTE DATE
	 	MATURITY DATE
	 	TAX IDENTIFICATION NUMBER
	 
	 	 	 	 	 	 
	$5,000,000

	 	September 18, 2006
	 	ON DEMAND	 	 

For Value Received, the undersigned promise(s) to pay ON DEMAND to the order of Comerica Bank
(“Bank”), at any office of the Bank in the State of Michigan, Five Million Dollars (U.S.) (or that
portion of it advanced by the Bank and not repaid as later provided) with interest until demand or
until Default, as later defined, at a per annum rate equal to the Bank’s prime rate from time to
time in effect plus 1% per annum and after that at a rate equal to the rate of interest otherwise
prevailing under this Note plus 3% per annum (but in no event in excess of the maximum rate
permitted by law). The Bank’s “prime rate” is that annual rate of interest so designated by the
Bank and which is changed by the Bank from time to time. Interest rate changes will be effective
for interest computation purposes as and when the Bank’s prime rate changes. Interest shall be
calculated on the basis of a 360-day year for the actual number of days the principal is
outstanding. Unless sooner demanded, accrued interest on this Note shall be payable on the first
day of each October, January, April and July commencing November 1, 2006. If the frequency of
interest payments is not otherwise specified, accrued interest on this Note shall be payable
monthly on the first day of each month, unless sooner demanded. If any payment of principal or
interest under this Note shall be payable on a day other than a day on which the Bank is open for
business, this payment shall be extended to the next succeeding business day and interest shall be
payable at the rate specified in this Note during this extension. A late payment charge equal to
5% of each late payment may be charged on any payment not received by the Bank within 10 calendar
days after the payment due date, but acceptance of payment of this charge shall not waive any
Default under this Note.

The principal amount payable under this Note shall be the sum of all advances made by the Bank to
or at the request of the undersigned, less principal payments actually received in cash by the
Bank. The books and records of the Bank shall be the best evidence of the principal amount and the
unpaid interest amount owing at any time under this Note and shall be conclusive absent manifest
error. No interest shall accrue under this Note until the date of the first advance made by the
Bank; after that interest on all advances shall accrue and be computed on the principal balance
outstanding from time to time under this Note until the same is paid in full. At no time shall the
Bank be under any obligation to make any advances to the undersigned pursuant to this Note
(notwithstanding anything expressed or implied in this Note or elsewhere to the contrary,
including without limit if the Bank supplies the undersigned with a borrowing formula) and the
Bank, at any time and from time to time, without notice, and in its sole discretion, may refuse to
make advances to the undersigned without incurring any liability due to this refusal and without
affecting the undersigned’s liability under this Note for any and all amounts advanced.

This Note and any other indebtedness and liabilities of any kind of the undersigned (or any of
them) to the Bank, and any and all modifications, renewals or extensions of it, whether joint or
several, contingent or absolute, now existing or later arising, and however evidenced
(collectively “Indebtedness”) are secured by and the Bank is granted a security interest in all
items deposited in any account of any of the undersigned with the Bank and by all proceeds of
these items (cash or otherwise), all account balances of any of the undersigned from time to time
with the Bank, by all property of any of the undersigned from time to time in the possession of
the Bank and by any other collateral, rights and properties described in each and every deed of
trust, mortgage, security agreement, pledge, assignment and other security or collateral agreement
which has been, or will at any time(s) later be, executed by any (or all) of the undersigned to or
for the benefit of the Bank (collectively “Collateral”). Notwithstanding the above, (i) to the
extent that any portion of the Indebtedness is a consumer loan, that portion shall not be secured
by any deed of trust or mortgage on or other security interest in any of the undersigned’s
principal dwelling or in any of the undersigned’s real property which is not a purchase money
security interest as to that portion, unless expressly provided to the contrary in another place,
or (ii) if the undersigned (or any of them) has(have) given or give(s) Bank a deed of trust or
mortgage covering California real property, that deed of trust or mortgage shall not secure this
Note or any other indebtedness of the undersigned (or any of them), unless expressly provided to
the contrary in another place.

If the undersigned (or any of them) or any guarantor under a guaranty of all or part of the
Indebtedness (“guarantor”) (i) fail(s) to pay any of the Indebtedness when due, by maturity,
acceleration or otherwise, or fail(s) to pay any Indebtedness owing on a demand basis upon demand;
or (ii) fail(s) to comply with any of the terms or provisions of any agreement between the
undersigned (or any of them) or any such guarantor and the Bank; or (iii) become(s) insolvent or
the subject of a voluntary or involuntary proceeding in bankruptcy, or a reorganization,
arrangement or creditor composition

 

 

proceeding, (if a business entity) cease(s) doing business as a going concern, (if a natural
person) die(s) or become(s) incompetent, (if a partnership) dissolve(s) or any general partner of
it dies, becomes incompetent or becomes the subject of a bankruptcy proceeding or (if a
corporation or a limited liability company) is the subject of a dissolution, merger or
consolidation; or (a) if any warranty or representation made by any of the undersigned or any
guarantor in connection with this Note or any of the Indebtedness shall be discovered to be untrue
or incomplete; or (b) if there is any termination, notice of termination, or breach of any
guaranty, pledge, collateral assignment or subordination agreement relating to all or any part of
the Indebtedness; or (c) if there is any failure by any of the undersigned or any guarantor to pay
when due any of its indebtedness (other than to the Bank) or in the observance or performance of
any term, covenant or condition in any document evidencing, securing or relating to such
indebtedness; or (d) if the Bank deems itself insecure believing that the prospect of payment of
this Note or any of the Indebtedness is impaired or shall fear deterioration, removal or waste of
any of the Collateral; or (e) if there is filed or issued a levy or writ of attachment or
garnishment or other like judicial process upon the undersigned (or any of them) or any guarantor
or any of the Collateral, including without limit, any accounts of the undersigned (or any of
them) or any guarantor with the Bank, then the Bank, upon the occurrence of any of these events
(each a “Default”), may at its option and without prior notice to the undersigned (or any of
them), declare any or all of the Indebtedness to be immediately due and payable (notwithstanding
any provisions contained in the evidence of it to the contrary), sell or liquidate all or any
portion of the Collateral, set off against the Indebtedness any amounts owing by the Bank to the
undersigned (or any of them), charge interest at the default rate provided in the document
evidencing the relevant Indebtedness and exercise any one or more of the rights and remedies
granted to the Bank by any agreement with the undersigned (or any of them) or given to it under
applicable law.

The undersigned acknowledge(s) that this Note matures upon issuance, and that the Bank, at any
time, without notice, and without reason, may demand that this Note be immediately paid in full.
The demand nature of this Note shall not be deemed modified by reference to a Default in this Note
or in any agreement to a default by the undersigned or to the occurrence of an event of default
(collectively an “Event of Default”). For purposes of this Note, to the extent there is reference
to an Event of Default this reference is for the purpose of permitting the Bank to accelerate
Indebtedness not on a demand basis and to receive interest at the default rate provided in the
document evidencing the relevant Indebtedness. It is expressly agreed that the Bank may exercise
its demand rights under this Note whether or not an Event of Default has occurred. The Bank, with
or without reason and without notice, may from time to time make demand for partial payments under
this Note and these demands shall not preclude the Bank from demanding at any time that this Note
be immediately paid in full. All payments under this Note shall be in immediately available United
States funds, without setoff or counterclaim.

If this Note is signed by two or more parties (whether by all as makers or by one or more as an
accommodation party or otherwise), the obligations and undertakings under this Note shall be that
of all and any two or more jointly and also of each severally. This Note shall bind the
undersigned, and the undersigned’s respective heirs, personal representatives, successors and
assigns. The undersigned waive(s) presentment, demand, protest, notice of dishonor, notice of
demand or intent to demand, notice of acceleration or intent to accelerate, and all other notices
and agree(s) that no extension or indulgence to the undersigned (or any of them) or release,
substitution or nonenforcement of any security, or release or substitution of any of the
undersigned, any guarantor or any other party, whether with or without notice, shall affect the
obligations of any of the undersigned. The undersigned waive(s) all defenses or right to discharge
available under Section 3-605 of the Michigan Uniform Commercial Code and waive(s) all other
suretyship defenses or right to discharge. The undersigned agree(s) that the Bank has the right to
sell, assign, or grant participations or any interest in, any or all of the Indebtedness, and
that, in connection with this right, but without limiting its ability to make other disclosures to
the full extent allowable, the Bank may disclose all documents and information which the Bank now
or later has relating to the undersigned or the Indebtedness. The undersigned agree(s) that the
Bank may provide information relating to this Note or relating to the undersigned to the Bank’s
parent, affiliates, subsidiaries and service providers.

The undersigned agree(s) to reimburse the holder or owner of this Note upon demand for any and all
costs and expenses (including without limit, court costs, legal expenses and reasonable attorney
fees, whether inside or outside counsel is used, whether or not suit is instituted and, if suit is
instituted, whether at the trial court level, appellate level, in a bankruptcy, probate or
administrative proceeding or otherwise) incurred in collecting or attempting to collect this Note
or incurred in any other matter or proceeding relating to this Note.

The undersigned acknowledge(s) and agree(s) that there are no contrary agreements, oral or
written, establishing a term of this Note and agree(s) that the terms and conditions of this Note
may not be amended, waived or modified except in a writing signed by an officer of the Bank
expressly stating that the writing constitutes an amendment, waiver or modification of the terms
of this Note. As used in this Note, the word “undersigned” means, individually and collectively,
each maker, accommodation party, indorser and other party signing this Note in a similar capacity.
If any provision of this Note is unenforceable in

2

 

whole or part for any reason, the remaining provisions shall continue to be effective. THIS NOTE
IS MADE IN THE STATE OF MICHIGAN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF MICHIGAN, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

THE MAXIMUM INTEREST RATE SHALL NOT EXCEED 25% PER ANNUM, OR THE HIGHEST APPLICABLE USURY CEILING,
WHICHEVER IS LESS.

THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE,
BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT)
WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR
IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.

This Note amends, restates, supersedes, replaces and increases that certain Master Revolving Note
dated as of June                    , 2006, made in the principal amount of Two Million Dollars ($2,000,000) and amends, restates
and replaces the Variable Rate-Single Payment Note dated September 8, 2006 in the principal amount
of Five Hundred Thousand Dollars ($500,000) and the Variable Rate-Demand Note dated July 27, 2006
in the principal amount of Three Hundred Fifty Thousand Dollars ($350,000) by undersigned payable
to Bank, and the initial Advance under this Note shall be deemed first applied, to the extent
necessary, to repay the existing indebtedness of undersigned to Bank under said Notes;
provided, however, the execution and delivery by undersigned of this Note
shall not, in any manner or circumstance, be deemed to be a novation of or to have terminated,
extinguished or discharged any of undersigned’s indebtedness evidenced by said Notes, all of which
indebtedness shall continue under and shall hereinafter be evidenced and governed by this Note

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	Its	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	 	SIGNATURE OF
	 	 	 	TITLE (if applicable)	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	Its	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	 	SIGNATURE OF
	 	 	 	TITLE (if applicable)	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	Its	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	 	SIGNATURE OF
	 	 	 	TITLE (if applicable	 	 

	 	 	 	 	 	 	 	 	 	 	 
	6310 San Vicente Blvd, Suite 330

	 	Los Angeles
	 	California
	 	 	     90048	 	 	 
	 	 	 
	STREET ADDRESS

	 	CITY
	 	STATE
	 	ZIP
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 

	 	 	For Bank Use Only
	 	 	 	 	 	 	 	 	CCAR#	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	LOAN OFFICER INITIALS

	 	 	LOAN GROUP NAME
	 	 	OBLIGOR NAME

The Fashion House, Inc.	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	LOAN OFFICER ID. NO.

	 	 	LOAN GROUP NO.
	 	 	OBLIGOR NO.
	 	 	NOTE NO.
	 	 	AMOUNT

$5,000,000	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

3

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