Document:

exv10w23wxby

 

Exhibit
10.23(b)

Guaranty

     This Guaranty is given pursuant to that certain Credit Enhancement Agreement dated as of the
date hereof (the “Credit Enhancement Agreement”) among Holder (as defined below), The Fashion House
Holdings, Inc. (“FHH”) and The Fashion House, Inc. (“FHI”). Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Credit Enhancement Agreement.

     The undersigned, for value received, unconditionally and absolutely guarantees to each and to
both of Westrec Capital Partners, LLC and Michael M. Sachs (singly and collectively, “Holder”), and
to the Holder’s successors and assigns, payment or performance when due, whether by stated
maturity, demand, acceleration or otherwise, of all existing and future indebtedness and/or other
obligations, however such indebtedness or other obligations have been or may be incurred or
evidenced, whether absolute or contingent, direct or indirect, voluntary or involuntary, liquidated
or unliquidated, joint or several, and whether or not known to the undersigned at the time of this
Guaranty or at the time any future indebtedness or other obligations is or are incurred, owed to
(a) the Holder by FHI and/or FHH under the Credit Enhancement Agreement, the Warrant, the FHH
Security Agreement or the FHI Security Agreement, and (b) the Lender by FHI under any Loan Document
((a) and (b) singly and collectively, the “Indebtedness”). As used herein, “Borrower” means FHI and
FHI, singly and collectively, jointly and severally, or any of its or their successors in interest,
including without limit any debtor-in-possession or trustee in bankruptcy which succeeds to the
interest of FHI or FHH, and “Guaranteed Documents” means any and all of the agreements or documents
listed in (a) and/or (b) immediately above.

     The Indebtedness includes without limit: (a) any and all indebtedness, obligations or
liabilities for which the Borrower would otherwise be liable to the Holder or the Lender were it
not for the invalidity, irregularity or unenforceability of them by reason of any bankruptcy,
insolvency or other law or order of any kind, or for any other reason, including without limit
liability for interest and attorneys’ fees on, or in connection with, any of the Indebtedness from
and after the filing by or against the Borrower of a bankruptcy petition whether an involuntary or
voluntary bankruptcy case, including, without limitation, all attorneys’ fees and costs incurred in
connection with motions for relief from stay, cash collateral motions, nondischargeability motions,
preference liability motions, fraudulent conveyance liability motions, fraudulent transfer
liability motions and all other motions brought by Borrower, Guarantor, Holder, Lender or third
parties in any way relating to Holder’s or Lender’s rights with respect to such Borrower,
Guarantor, Lender or third party and/or affecting any collateral securing any obligation owed to
Holder or Lender by Borrower, Guarantor, or any third party, probate proceedings, on appeal or
otherwise; (b) any and all amendments, modifications, renewals and/or extensions of any of the
Indebtedness, including without limit amendments, modifications, renewals and/or extensions which
are evidenced by new or additional instruments, documents or agreements; and (c) all costs of
collecting Indebtedness, including without limit reasonable attorneys’ fees and costs.

     The undersigned waives notice of acceptance of this Guaranty and presentment, demand, protest,
notice of protest, dishonor, notice of dishonor, notice of default, notice of intent to accelerate
or demand payment of any Indebtedness, and diligence in collecting any Indebtedness, and agrees
that the Holder or Lender may modify the terms of any Indebtedness, compromise, extend, increase,
accelerate, renew or forbear to enforce payment of any or all Indebtedness, or

 

 

permit the Borrower to incur additional Indebtedness, all without notice to the undersigned
and without affecting in any manner the unconditional obligation of the undersigned under this
Guaranty. The undersigned further waives any and all other notices to which the undersigned might
otherwise be entitled. The undersigned acknowledges and agrees that the liabilities created by this
Guaranty are direct and are not conditioned upon pursuit by the Holder or Lender of any remedy that
the Holder or Lender may have against the Borrower or any other person or any security. No
invalidity, irregularity or unenforceability of any part or all of the Indebtedness or any
documents evidencing the same, by reason of any bankruptcy, insolvency or other law or order of any
kind or for any other reason, and no defense or setoff available at any time to the Borrower, shall
impair, affect or be a defense or setoff to the obligations of the undersigned under this Guaranty.

     The undersigned delivers this Guaranty based solely on the undersigned’s independent
investigation of the financial condition of the Borrower and is (are) not relying on any
information furnished by the Holder or Lender. The undersigned assumes full responsibility for
obtaining any further information concerning the Borrower’s financial condition, the status of the
Indebtedness or any other matter which the undersigned may deem necessary or appropriate from time
to time. The undersigned waives any duty on the part of the Holder or Lender, and agrees that he is
not relying upon nor expecting the Holder or Lender to disclose to the undersigned any fact now or
later known by the Holder or Lender, whether relating to the operations or condition of the
Borrower, the existence, liabilities or financial condition of any co-guarantor of the
Indebtedness, the occurrence of any default with respect to the Indebtedness, or otherwise,
notwithstanding any effect that these facts may have upon the undersigned’s risk under this
Guaranty or the undersigned’s rights against the Borrower or Lender. The undersigned knowingly
accepts the full range of risk encompassed in this Guaranty, which risk includes without limit the
possibility that the Borrower may incur Indebtedness to the Holder or Lender after the financial
condition of the Borrower, or its ability to pay its debts as they mature, has deteriorated.

     The undersigned represents and warrants that: (a) neither the Holder nor Lender has made any
representation to the undersigned as to the creditworthiness of the Borrower; and (b) the
undersigned has established adequate means of obtaining from the Borrower on a continuing basis
financial and other information pertaining to the Borrower’s financial condition. The undersigned
agrees to keep adequately informed of any facts, events or circumstances that might in any way
affect the risks of the undersigned under this Guaranty.

     The undersigned agrees that no security now or later held by the Holder or Lender for the
payment or performance of any Indebtedness, whether from the Borrower, the undersigned or any other
guarantor, or otherwise, and whether in the nature of a security interest, pledge, lien,
assignment, setoff, suretyship, guaranty, indemnity, insurance or otherwise, shall affect in any
manner the unconditional obligation of the undersigned under this Guaranty, and the Holder and
Lender, each in its sole discretion, without notice to the undersigned, may release, exchange,
enforce and otherwise deal with any security without affecting in any manner the unconditional
obligation of the undersigned under this Guaranty. The undersigned acknowledges and agrees that
neither the Holder nor Lender has any obligation to acquire or perfect any lien on or security
interest in any assets, whether realty or personalty, to secure payment or performance of the
Indebtedness, and the undersigned is not relying upon any assets in which the Holder or Lender has
or may have a lien or security interest for payment or performance of the Indebtedness.

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     The undersigned acknowledges that the effectiveness of this Guaranty is not conditioned on any
or all of the Indebtedness being guaranteed by anyone else.

     Until the Indebtedness is irrevocably paid in full, the undersigned waives any and all rights
to be subrogated to the position of the Holder or Lender or to have the benefit of any lien,
security interest or other guaranty now or later held by the Holder or Lender for the Indebtednes;
or to enforce any remedy which the Holder or Lender now or later has against the Borrower or any
other person. Until the Indebtednes is irrevocably paid in full, the undersigned shall have no
right of reimbursement, indemnity, contribution or other right of recourse to or with respect to
the Borrower or any other person. The undersigned agrees to indemnify and hold harmless the Holder
from and against any and all claims, actions, damages, costs and expenses, including without limit
reasonable attorneys’ fees, incurred by the Holder in connection with the undersigned’s exercise of
any right of subrogation, contribution, indemnification or recourse with respect to this Guaranty.
Neither the Holder nor Lender has any duty to enforce or protect any rights that the undersigned
may have against the Borrower or any other person and the undersigned assumes full responsibility
for enforcing and protecting these rights.

     Notwithstanding any provision of the preceding paragraph or anything else in this Guaranty to
the contrary, if any of the undersigned is or becomes an “insider” or “affiliate” (as defined in
Section 101 of the Federal Bankruptcy Code, as it may be amended) with respect to the Borrower,
then that undersigned irrevocably and absolutely waives any and all rights of subrogation,
contribution, indemnification, recourse, reimbursement and any similar rights against the Borrower
(or any other guarantor) with respect to this Guaranty, whether such rights arise under an express
or implied contract or by operation of law. It is the intention of the parties that the undersigned
shall not be (or be deemed to be) a “creditor” (as defined in Section 101 of the Federal Bankruptcy
Code, as it may be amended) of the Borrower (or any other guarantor) by reason of the existence of
this Guaranty in the event that the Borrower becomes a debtor in any proceeding under the Federal
Bankruptcy Code. This waiver is given to induce the Holder to enter into certain Credit Enhancement
Documents with the Borrower included in the Indebtedness. The undersigned warrants and agrees that
none of Holder’s rights, remedies or interests shall be directly or indirectly impaired because of
any of the undersigned’s status as an “insider” or “affiliate” of the Borrower, and undersigned
shall take any action, and shall execute any document, which the Holder may request in order to
effectuate this warranty to the Holder.

     If any Indebtedness is guaranteed by two or more guarantors, the obligation of the undersigned
shall be several and also joint, each with all and also each with any one or more of the others,
and may be enforced at the option of the Holder against each severally, any two or more jointly, or
some severally and some jointly. The Holder, in its sole discretion, may release any one or more of
the guarantors for any consideration which it deems adequate, and may fail of elect not to prove a
claim against the estate of any bankrupt, insolvent, incompetent or deceased guarantor; and after
that, without notice to any other guarantor, the Holder or Lender may extend or renew any or all
Indebtedness and may permit the Borrower to incur additional Indebtedness, without affecting in any
manner the unconditional obligation of the remaining guarantors. This action by the Holder or
Lender shall not, however, be deemed to affect any right to contribution which may exist among the
guarantors.

     Notwithstanding any prior revocation, termination, surrender or discharge of this Guaranty (or
of any lien, pledge or security interest securing this Guaranty) in whole or part, the
effectiveness of this Guaranty, and of all liens, pledges and security interests securing this

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Guaranty, shall automatically continue or be reinstated, as the case may be, in the event that
(a) any payment received or credit given by the Holder in respect of the Indebtedness is returned,
disgorged or rescinded as a preference, impermissible setoff, fraudulent conveyance, diversion c
trust funds, or otherwise under any applicable state or federal law, including, without limitation,
laws pertaining to bankruptcy or insolvency, in which case this Guaranty, and all liens, pledges
and security interests securing this Guaranty, shall be enforceable against the undersigned as if
the returned, disgorged or rescinded payment or credit had not been received or given by the
Holder, and whether or not the Holder relied upon this payment or credit or changed its position as
a consequence of it; or (b) any liability is imposed, or sought to be imposed, against the Holder
relating to the environmental condition of, or the presence of hazardous or toxic substances on, in
or about, any property given as collateral to the Holder or Lender by the Borrower or the
undersigned, whether this condition is known or unknown, now exists or subsequently arises
(excluding only conditions which arise after any acquisition by the Holder o any such property, by
foreclosure, in lieu of foreclosure or otherwise, to the extent due to the wrongful act or omission
of the Holder), in which case this Guaranty, and all liens, pledges and security interests securing
this Guaranty, shall be enforceable against the undersigned to the extent of all liability, costs
and expenses (including without limit reasonable attorneys’ fees and costs) incurred by the Holder
as the direct or indirect result of any environmental condition or hazardous or toxic substances.
In the event of continuation or reinstatement of this Guaranty and the liens, pledges and security
interests securing it, the undersigned agrees upon demand by the Holder to execute and deliver to
the Holder those documents that the Holder determines are appropriate to further evidence (in the
public records or otherwise) this continuation or reinstatement, although the failure of the
undersigned to do so shall not affect in any way the reinstatement or continuation. If the
undersigned does not execute and deliver to the Holder upon demand such documents, the Holder and
each officer thereof is irrevocably appointed (which appointment is coupled with an interest) the
true and lawful attorney of the undersigned (with full power of substitution) to execute and
deliver such documents in the name and on behalf of the undersigned. For purposes of this Guaranty,
“environmental condition” includes, without limitation, conditions existing with respect to the
surface or ground water, drinking water supply, land surface or subsurface and the air; and
“hazardous or toxic substances” shall include any and all substances now or subsequently determined
by any federal, state or local authority to be hazardous or toxic, or otherwise regulated by any of
these authorities.

     The undersigned waives any right to require the Holder or Lender to: (a) proceed against any
person, including without limit the Borrower; (b) proceed against or exhaust any security held from
the Borrower or any other person; (c) pursue any other remedy in the Holder’s power; or (d) make
any presentments or demands for performance, or give any notices of nonperformance, protests,
notices of protest, or notices of dishonor in connection with any obligations or evidences of
Indebtedness held by the Holder or Lender as security, in connection with any other obligations or
evidences of indebtedness that constitute in whole or in part Indebtedness, or in connection with
the creation of new or additional Indebtedness.

     The undersigned authorizes the Holder and Lender, either before or after termination of this
Guaranty, without notice to or demand on the undersigned and without affecting the undersigned’s
liability under this Guaranty, from time to time to: (a) apply any security and direct the order or
manner of sale of it, including without limit, a nonjudicial sale permitted by the terms of the
controlling security agreement, mortgage or deed of trust, as the Holder or Lender in its
discretion may determine; (b) release or substitute any one or more of the endorser or any other
guarantors of the Indebtedness; and (c) apply payments received by the Holder or

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Lender from the Borrower to any indebtedness of the Borrower to the Holder or Lender, in such
order as the Holder or Lender shall determine in its sole discretion, whether or not this
indebtedness is covered by this Guaranty, and the undersigned waives any provision of law regarding
application of payments which specifies otherwise. The Holder may without notice assign this
Guaranty in whole or in part. Upon the Holder’s request, the undersigned agrees to provide to the
Holder copies of the undersigned’s financial statements.

     The undersigned waives any defense based upon or arising by reason of (a) any disability or
other defense of the Borrower or any other person; (b) the cessation or limitation from any cause
whatsoever, other than final and irrevocable payment in full, of the Indebtedness; (c) any lack of
authority of any officer, director, partner, agent or any other person acting or purporting to act
on behalf of the Borrower that is a corporation, partnership or other type of entity, or any defect
in the formation of the Borrower; (d) the application by the Borrower of the proceeds of any
Indebtedness for purposes other than the purposes represented by the Borrower to the Holder or
Lender or intended or understood by the Holder, Lender or the undersigned; (e) any act or omission
by the Holder or Lender that directly or indirectly results in or aids the discharge of the
Borrower or any Indebtedness by operation of law or otherwise; or (f) any modification of the
Indebtedness, in any form whatsoever including without limit any modification made after effective
termination, and including without limit, the renewal, extension, acceleration or other change in
time for payment of the Indebtedness, or other change in the terms of any Indebtedness, including
without limit increase or decrease of the interest rate. The undersigned understands that, absent
this waiver, Holder’s and Lender’s election of remedies, including but not limited to its decision
to proceed to nonjudicial foreclosure on any real property securing the Indebtedness, could
preclude Holder or Lender from obtaining a deficiency judgment against Borrower and the undersigned
pursuant to California Code of Civil Procedure sections 580a, 580b, 580d or 726 and could also
destroy any subrogation rights which the undersigned has against Borrower. The undersigned further
understands that, absent this waiver, California law, including without limitation, California Code
of Civil Procedure sections 580a, 580b, 580d or 726, could afford the undersigned one or more
affirmative defenses to any action maintained by Holder against the undersigned on this Guaranty.

     The undersigned waives any and all rights and provisions of California Code of Civil Procedure
sections 580a, 580b, 580d and 726, including, but not limited to any provision thereof that: (i)
may limit the time period for Holder or Lender to commence a lawsuit against Borrower or the
undersigned to collect any Indebtedness owing by Borrower or the undersigned to the Holder or
Lender; (ii) may entitle Borrower or the undersigned to a judicial or nonjudicial determination of
any deficiency owed by Borrower or the undersigned to the Holder or Lender, or to otherwise limit
the Holder’s or Lender’s right to collect a deficiency based on the fair market value of such real
property security; (iii) may limit the Holder’s or the Lender’s right to collect a deficiency
judgment after a sale of any real property securing the Indebtedness; (iv) may require Holder or
Lender to take only one action to collect the Indebtedness or that may otherwise limit the remedies
available to Holder or Lender to collect the Indebtedness.

     The undersigned waives all rights and defenses arising out of an election of remedies by
Holder or Lender even though that election of remedies, such as a nonjudicial foreclosure with
respect to security for a guaranteed obligation, has destroyed the undersigned’s rights of
subrogation and reimbursement against Borrower by the operation of Section 580d of the Code of
Civil Procedure or otherwise.

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     Without limiting the generality of any other waiver or other provision set forth in this
Guaranty, the undersigned waives all rights and defenses that any such undersigned may have because
the Indebtedness is secured by real property. This means, among other things:

     (1) Holder may collect from any undersigned Guarantor without first foreclosing on any real or
personal property collateral pledged by any Borrower to secure the Indebtedness.

     (2) If Holder forecloses on any real property collateral pledged by any Borrower to secure the
Indebtedness:

	 	(a)	 	the amount of the Indebtedness 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.
	 
	 	(b)	 	Holder may collect from any undersigned even if the Holder, by
foreclosing on the real property pledged as collateral, has destroyed any right
that the undersigned may have to collect from Borrower.

     This is an unconditional and irrevocable waiver of any rights and defenses each undersigned
Guarantor may have because the Indebtedness is secured by real property. These rights and defenses
include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726
of the California Code of Civil Procedure.

     WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN THIS
GUARANTY, THE UNDERSIGNED HEREBY WAIVES. TO THE MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY
AND ALL BENEFITS, DEFENSES TO PAYMENT OR PERFORMANCE, OR ANY RIGHT TO PARTIAL OR COMPLETE
EXONERATION ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE SECTIONS
2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2847, 2848, 2849, AND 2850.

     The undersigned acknowledges and agrees that this is a knowing and informed waiver of the
undersigned’s rights as discussed above and that Holder is relying on this waiver in extending
credit to Borrower.

     The undersigned acknowledges that the Holder has the right to sell, assign, transfer,
negotiate, or grant participations in all or any part of the Indebtedness and any related
obligations, including without limit this Guaranty. In connection with that right, the Holder may
disclose any documents and information which the Holder now or later acquires relating to the
undersigned and this Guaranty, whether furnished by the Borrower, the undersigned or otherwise. The
undersigned further agrees that the Holder may disclose these documents and information to the
Borrower. The undersigned agrees that the Holder may provide information relating to this Guaranty
or to the undersigned to the Lender, or the Holder’s parent, affiliates, subsidiaries and service
providers.

     The total obligation under this Guaranty shall be UNLIMITED except as specifically limited in
the Additional Provisions of this Guaranty below, and this obligation (whether unlimited or limited
to the extent indicated in the Additional Provisions) shall include, IN ADDITION TO any limited
amount of principal guaranteed, any and all interest on all Indebtedness and any and all costs and
expenses of any kind, including without limit reasonable

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attorneys’ fees and costs, incurred by the Holder at any times for any reason in enforcing any
of the duties and obligations of the undersigned under this Guaranty or otherwise incurred by the
Holder in any way connected with this Guaranty, the Indebtedness or any other guaranty of the
Indebtedness (including without limit reasonable attorneys’ fees and other expenses incurred in any
suit involving the conduct of the Holder, the Borrower or the undersigned). All of these costs and
expenses shall be payable immediately by the undersigned when incurred by the Holder, without
demand, and until paid shall bear interest at the highest per annum rate applicable to any of the
Indebtedness, but not in excess of the maximum rate permitted by law. Any reference in this
Guaranty to attorneys’ fees shall be deemed a reference to fees, charges, costs and expenses of
both in-house and outside counsel and paralegals, whether or not a suit or action is instituted,
and to court costs if a suit or action is instituted, and whether attorneys’ fees or court costs
are incurred at the trial court level, on appeal, in a bankruptcy, administrative or probate
proceeding or otherwise.

     The undersigned unconditionally and irrevocably waives each and every defense and setoff of
any nature that, under principles of guaranty or otherwise, would operate to impair or diminish in
any way the obligation of the undersigned under this Guaranty, and acknowledges that each such
waiver is by this reference incorporated into each security agreement, collateral assignment,
pledge and/or other document from the undersigned now or later securing this Guaranty and/or the
Indebtedness, and acknowledges that as of the date of this Guaranty no such defense or setoff
exists. The undersigned acknowledges that the effectiveness of this Guaranty i, subject to no
conditions of any kind.

     This Guaranty shall remain effective with respect to successive transactions that shall either
continue the Indebtedness, increase or decrease it, or from time to time create new Indebtedness
after all or any prior Indebtedness has been satisfied, until this Guaranty is terminated in the
manner and to the extent provided above.

     The undersigned warrants and agrees that each of the waivers set forth above are made with the
undersigned’s full knowledge of their significance and consequences, and that under the
circumstances, the waivers are reasonable and not contrary to public policy or law If any of these
waivers are determined to be contrary to any applicable law or public policy, these waivers shall
be effective only to the extent permitted by law.

     This Guaranty constitutes the entire agreement of the undersigned and the Holder with respect
to the subject matter of this Guaranty. No waiver, consent, modification or change of the terms or
this Guaranty snail bind any or the undersigned or the Holder unless in writing and signed by the
waiving party or an authorized officer of the waiving party, and then this waiver, consent,
modification or change shall be effective only in the specific instance and for the specific
purpose given. This Guaranty shall inure to the benefit of the Holder and its successors and
assigns. This Guaranty shall be binding on the undersigned and the undersigned’s heirs, legal
representatives, successors and assigns including, without limit, any debtor in possession of
trustee in bankruptcy for any of the undersigned. The undersigned has knowingly and voluntarily
entered into this Guaranty in good faith for the purpose of inducing the Holder to extend credit or
make other financial accommodations to the Borrower, and the undersigned acknowledges that the
terms of this Guaranty are reasonable. If any provision of this Guaranty is unenforceable in whole
or in part for any reason, the remaining provisions shall continue to be effective. THIS GUARANTY
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

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     Additional Provisions: Notwithstanding anything to the contrary expressed or implied
herein, the Holder’s recourse against the undersigned under this Guaranty shall be limited to the
Pledged Collateral under that certain Pledge and Security Agreement dated the date hereof and given
by the undersigned to secure the undersigned’s obligations under this Guaranty, except that such
limitation on the Holder’s recourse shall not:

     (a) apply, or have any effect, and Holder shall have full recourse against the
undersigned (including, without limitation, the right to a deficiency judgment), in the
event of fraud or material misrepresentation under or in connection with any Credit
Enhancement Document, or any Loan Document or any affidavits, reports, information or
certifications made or given thereunder; any act of arson, malicious destruction or waste
committed by Borrower or the undersigned with respect to any collateral that may now or
hereafter secure any Credit Enhancement Document (collectively, “Collateral”); interference
by Borrower or the undersigned with the Holder’s exercise of its rights or remedies under
any Credit Enhancement Document; the voluntary filing by Borrower or the undersigned of any
insolvency or bankruptcy proceeding; the involuntary filing against Borrower or the
undersigned of any such proceeding that is not dismissed within ninety (90) days after the
filing thereof; or the violation of any restrictions contained in any Credit Enhancement
Document on the sale, hypothecation or other transfer of any Collateral; or

     (b) constitute a waiver, release or impairment of any obligation owed to the Holder
under any Credit Enhancement Document; be deemed a waiver of any right that the Holder may
have under Sections 506(a), 506(b) or 1111(b) or any other provisions of any Federal
Bankruptcy Act or statute to file a claim for the full amount of the Indebtedness or to
require that all Collateral shall continue to secure the obligations that such Collateral
may secure; impair the right of the Holder to name the undersigned or any other person as a
party defendant in any action or suit for foreclosure and sale of any Collateral; or impair
the Holder’s right to obtain appointment of a receiver or any ancillary remedy under any
Credit Enhancement Document.

     THE UNDERSIGNED REPRESENTS AND WARRANTS TO THE HOLDER THAT HE HAS CONSULTED (OR HAS HAD THE
OPPORTUNITY TO CONSULT)

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WITH COUNSEL OF HIS CHOICE, WITH REGARD TO THIS GUARANTY, THE GUARANTEED DOCUMENTS AND THE
INDEBTEDNESS.

     IN WITNESS WHEREOF, the undersigned has signed and delivered this Guaranty as of September 15,
2006.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	GUARANTOR:	 	 
	 	 	 	 	JOHN HANNA	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ John Hanna	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Signature of John Hanna	 	 
	 
	 	 	 	 	 	 	 	 
	WITNESS:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	     /s/ Shirl DeNault
	 	 	 	 	 	 	 	 
	 

Signature of

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	GUARANTOR’S ADDRESS	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Street Address	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	City                  State
         Zip Code	 	 

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CONSENT OF SPOUSE

     I, Shannon Hanna , the wife of John Hanna (“Hanna”), represent, warrant, agree and
acknowledge that:

     I have read, know the contents of, and consent to, the Guaranty (the “Guaranty”) and the
Pledge and Security Agreement (the “Security Agreement”) executed by Hanna (collectively, the
“Agreements”), each dated as of the date hereof and each of which Agreements has been given to (and
made for the benefit of) Westrec Capital Partners, LLC, a Delaware limited liability company, and
Michael M. Sachs ( singly and collectively, “Secured Party”).

     I understand that by the provisions of such Guaranty, Hanna has guaranteed certain obligations
of The Fashion House, Inc. and The Fashion House Holdings, Inc., and that by the provisions of such
Security Agreement, Hanna has pledged and granted to Secured Party a security interest in the
personal property defined therein as the Pledged Collateral (the “Pledged Collateral”) to secure
Hanna’ obligations under the Guaranty.

     I understand and agree that all my right, title and interest, if any, (whether as community
property or otherwise) in the Pledged Collateral and any other personal property, the assignment
transfer, pledge or hypothecation of which is contemplated in the Security Agreement, is subject
to, and may be foreclosed upon or otherwise transferred or handled as provided in, the Security
Agreement.

     I also understand and agree that except as may be expressly provided to the contrary in the
Guaranty, the holder of the Guaranty shall have recourse (and may recover) against any and all
community property of the marriage between Hanna and myself (“Community Property”) in the event of
any breach by Hanna of any of the Agreements.

     I shall not take any action at any time that would abrogate or circumvent the provisions and
intent of the Agreements, including, without limitation, causing or allowing (other than by the
death of Hanna) any Community Property to become my sole and separate property.

     I specifically waive the benefit of any presumptions in my favor contained in Probate Code
Sections 16002 and 16004 and Family Code Sections 720, 721, 915, 1100, et seq.,
1500, et seq., 4301 and 4302, and I acknowledge that all such presumptions are
inapplicable to the Agreements and the transactions contemplated thereby.

	 	 	 	 	 	 	 
	Dated as of September 15, 2006

	 	 	 	  /s/ Shannon Hanna	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	  Signature of Shannon Hanna	 	 

10exv10w23wxcy

 

Exhibit
10.23(c)

Security Agreement

(All Assets)

     This Security Agreement is given pursuant to that certain Credit Enhancement Agreement dated
as of the date hereof among the Debtor, the Secured Party and others. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in such Credit Enhancement
Agreement.

     As of September 15, 2006, for value received, the undersigned (“Debtor”) pledges, assigns and
grants to each and both of Westrec Capital Partners, LLC and Michael M. Sachs, jointly and
severally (singly and collectively, “Secured
Party”), whose address is 16633 Ventura Boulevard,
Encino, CA 91436, Attention: Gregory McPherson, President, a continuing security interest and lien
(any pledge, assignment, security interest or other lien arising hereunder is sometimes referred to
herein as a “security interest”) in the Collateral (as defined below) to secure the Debtor’s
payment or performance when due, whether by stated maturity, demand, acceleration or otherwise, of
all existing and future indebtedness and other obligations (collectively, the “Secured
Obligations”) to Secured Party under any Credit Enhancement Document signed by Debtor. The Secured
Obligations include without limit any and all obligations or liabilities of Debtor to the Secured
Party, whether absolute or contingent, direct or indirect, voluntary or involuntary, liquidated or
unliquidated, joint or several, known or unknown; any and all obligations or liabilities for which
the Debtor would otherwise be liable to the Secured Party were it not for the invalidity or
unenforceability of them by reason of any bankruptcy, insolvency or other law, or for any other
reason; any and all amendments, modifications, renewals and/or extensions of any of the above; all
costs incurred by Secured Party in establishing, determining, continuing, or defending the validity
or priority of its security interest, or in pursuing its rights and remedies under this Agreement;
and all other costs of collecting the Secured Obligations, including without limit attorneys fees.
Debtor agrees to pay Secured Party all such costs incurred by Secured Party, immediately upon
demand, and until paid all costs shall bear interest at the highest per annum rate applicable to
any of the Secured Obligations, but not in excess of the maximum rate permitted by law. Any
reference in this Agreement to attorneys fees shall be deemed a reference to reasonable fees,
costs, and expenses of both in-house and outside counsel and paralegals, whether inside or outside
counsel is used, whether or not a suit or action is instituted, and to court costs if a suit or
action is instituted, and whether attorneys fees or court costs are incurred at the trial court
level, on appeal, in a bankruptcy, administrative or probate proceeding or otherwise. Debtor
further covenants, agrees, represents and warrants as follows:

     1. Collateral shall mean all personal property of Debtor including, without limitation, all of
the following property Debtor now or later owns or has an interest in, wherever located:

	 	•	 	all Accounts Receivable (for purposes of this Agreement, “Accounts
Receivable” consists of all accounts, general intangibles, chattel paper
(including without limit electronic chattel paper and tangible chattel paper),
contract rights, deposit accounts, documents, instruments and rights to payment
evidenced by chattel paper, documents or instruments, health care insurance
receivables; commercial tort claims, letters of credit, letter of credit
rights, supporting obligations, and rights to payment for money or funds
advanced or sold),

 

 

	 	•	 	all Inventory,
	 
	 	•	 	all Equipment and Fixtures,
	 
	 	•	 	all Software (for purposes of this Agreement, “Software” consists of all (i)
computer programs and supporting information provided in connection with a
transaction relating to the program, and (ii) computer programs embedded in
goods and any supporting information provided in connection with a transaction
relating to the program whether or not the program is associated with the goods
in such a manner that it customarily is considered part of the goods, and
whether or not, by becoming the owner of the goods, a person acquires a right
to use the program in connection with the goods, and whether or not the program
is embedded in goods that consist solely of the medium in which the program is
embedded),
	 
	 	•	 	all investment property (including, without limit, securities, securities
entitlements, and financial assets),
	 
	 	•	 	specific items listed below and/or on attached Schedule A, if any, is/are
also included in Collateral:
	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	•	 	all goods, instruments, (including, without limit, promissory notes),
documents (including, without limit, negotiable documents), policies and
certificates of insurance, deposit accounts, and money or other property
(except real property which is not a fixture) which are now or later in
possession of Secured Party, or as to which Secured Party now or later controls
possession by documents or otherwise, and
	 
	 	•	 	all additions, attachments, accessions, parts, replacements, substitutions,
renewals, interest, dividends, distributions, rights of any kind (including but
not limited to stock splits, stock rights, voting and preferential rights),
products, and proceeds of or pertaining to the above including, without limit,
cash or other property which were proceeds and are recovered by a bankruptcy
trustee or otherwise as a preferential transfer by Debtor.

     In the definition of Collateral, a reference to a type of collateral shall not be limited by a
separate reference to a more specific or narrower type of that collateral.

     2. Warranties, Covenants and Agreements. Debtor warrants, covenants and agrees as
follows:

          2.1 Debtor shall furnish to Secured Party, in form and at intervals as Secured Party may
request, any information Secured Party may reasonably request and allow Secured Party to examine,
inspect, and copy any of Debtor’s books and records. Debtor shall, at the

2

 

request of Secured Party, mark its records and the Collateral to clearly indicate the security
interest of Secured Party under this Agreement.

          2.2 At the time any Collateral becomes, or is represented to be, subject to a security
interest in favor of Secured Party, Debtor shall be deemed to have warranted that (a) Debtor is the
lawful owner of the Collateral and has the right and authority to subject it to a security interest
granted to Secured Party; (b) none of the Collateral is subject to any security interest other than
those in favor of Secured Party or (to the extent they exist on the date hereof) in favor of
Comerica Bank or CIT Group/Commercial Services, Inc.(collectively, “Permitted Security Interests”);
(c) there are no financing statements on file, other than in favor of Secured Party, Comerica Bank
and CIT Group/Commercial Services, Inc.; (d) no person, other than Secured Party, Comerica Bank or
CIT Group/Commercial Services, Inc, has possession or control (as defined in the Uniform Commercial
Code) of any Collateral of such nature that perfection of a security interest may be accomplished
by control; and (e) Debtor acquired its rights in the Collateral in the ordinary course of its
business.

          2.3 Debtor will keep the Collateral free at all times from all claims, liens, security
interests and encumbrances other than Permitted Security Interests. Debtor will not, without the
prior written consent of Secured Party, sell, transfer or lease, or permit to be sold, transferred
or leased, any or all of the Collateral, except (where inventory is pledged as Collateral) for
Inventory in the ordinary course of its business and will not return any Inventory to its supplier.
Secured Party or its representatives may at all reasonable times inspect the Collateral and may
enter upon all premises where the Collateral is kept or might be located.

          2.4 Debtor will do all acts and will execute or cause to be executed all writings requested by
Secured Party to establish, maintain and continue an exclusive, perfected security interest of
Secured Party in the Collateral. Debtor agrees that Secured Party has no obligation to acquire or
perfect any lien on or security interest in any asset(s), whether realty or personally, to secure
payment of the Secured Obligations, and Debtor is not relying upon assets in which the Secured
Party may have a lien or security interest for payment of the Secured Obligations.

          2.5 Debtor will pay within the time that they can be paid without interest or penalty all
taxes, assessments and similar charges which at any time are or may become a lien, charge, or
encumbrance upon any Collateral, except to the extent contested in good faith and bonded in a
manner satisfactory to Secured Party. If Debtor fails to pay any of these taxes, assessments, or
other charges in the time provided above, Secured Party has the option (but not the obligation) to
do so and Debtor agrees to repay all amounts so expended by Secured Party immediately upon demand,
together with interest at the highest lawful default rate which could be charged by Secured Party
on any Secured Obligations.

          2.6 Debtor will keep the Collateral in good condition and will protect it from loss, damage,
or deterioration from any cause. Debtor has and will maintain at all times (a) with respect to the
Collateral, insurance under an “all risk” policy against fire and other risks customarily insured
against, and (b) public liability insurance and other insurance as may be required by law or
reasonably required by Secured Party, all of which insurance shall be in amount, form and content,
and written by companies as may be satisfactory to Secured Party, containing a lender’s loss
payable endorsement acceptable to Secured Party. Debtor will deliver to Secured Party immediately
upon demand evidence satisfactory to Secured Party that the

3

 

required insurance has been procured. If Debtor fails to maintain satisfactory insurance,
Secured Party has the option (but not the obligation) to do so and Debtor agrees to repay all
amounts so expended by Secured Party immediately upon demand, together with interest at the highest
lawful default rate which could be charged by Secured Party on any Secured Obligations.

          2.7 On each occasion on which Debtor evidences to Secured Party the account balances on and
the nature and extent of the Accounts Receivable, Debtor shall be deemed to have warranted that
except as otherwise indicated (a) each of those Accounts Receivable is valid and enforceable
without performance by Debtor of any act; (b) each of those account balances are in fact owing, (c)
there are no setoffs, recoupments, credits, contra accounts, counterclaims or defenses against any
of those Accounts Receivable, (d) as to any Accounts Receivable represented by a note, trade
acceptance, draft or other instrument or by any chattel paper or document, the same have been
endorsed and/or delivered-by Debtor to Secured Party, (e) Debtor has not received with respect to
any Account Receivable, any notice of the death of the related account debtor, nor of the
dissolution, liquidation, termination of existence, insolvency, business failure, appointment of a
receiver for, assignment for the benefit of creditors by, or filing of a petition in bankruptcy by
or against, the account debtor, and (f) as to each Account Receivable, except as may be expressly
permitted by Secured Party to the contrary in another document, the account debtor is not an
affiliate of Debtor, the United States of America or any department, agency or instrumentality of
It, or a citizen or resident of any jurisdiction outside of the United States. Debtor will do all
acts and will execute all writings requested by Secured Party to perform, enforce performance of,
and collect all Accounts Receivable. Debtor shall neither make nor permit any modification,
compromise or substitution for any Account Receivable without the prior written consent of Secured
Party. Secured Party may at any time and from time to time verify Accounts Receivable directly with
account debtors or by other methods acceptable to Secured Party without notifying Debtor. Debtor
agrees, at Secured Party’s request, to arrange or cooperate with Secured Party in arranging for
verification of Accounts Receivable.

          2.8 Debtor at all times shall be in strict compliance with all applicable laws, including
without limit any laws, ordinances, directives, orders, statutes, or regulations an object of which
is to regulate or improve health, safety, or the environment (“Environmental Laws”).

          2.9 If Secured Party, acting in its sole discretion, redelivers Collateral to Debtor or
Debtor’s designee for the purpose of (a) the ultimate sale or exchange thereof; or (b)
presentation, collection, renewal, or registration of transfer thereof; or (c) loading, unloading,
storing, shipping, transshipping, manufacturing, processing or otherwise dealing with it
preliminary to sale or exchange: such redelivery shall be in trust for the benefit of Secured Party
and shall not constitute a release of Secured Party’s security interest in it or in the proceeds or
products of it unless Secured Party specifically so agrees in writing, If Debtor requests any such
redelivery, Debtor will deliver with such request a duly executed financing statement in form and
substance satisfactory to Secured Party. Any proceeds of Collateral coming into Debtor’s possession
as a result of any such redelivery shall be held in trust for Secured Party and immediately
delivered to Secured Party for application on the Secured Obligations. Secured Party may (in its
sole discretion) deliver any or all of the Collateral to Debtor, and such delivery by Secured Party
shall discharge Secured Party from all liability or responsibility for such Collateral. Secured
Party, at its option, may require delivery of any Collateral to Secured Party at any time with such
endorsements or assignments of the Collateral as Secured Party may request.

4

 

          2.10 At any time and without notice, Secured Party may, as to Collateral other than Equipment,
Fixtures or Inventory; (a) cause any or all of such Collateral to be transferred to its name or to
the name of its nominees; (b) receive or collect by legal proceedings or otherwise all dividends,
interest, principal payments and other sums and all other distributions at any time payable or
receivable on account of such Collateral, and hold the same as Collateral, or apply the same to the
Secured Obligations, the manner and distribution of the application to be in the sole discretion of
Secured Party; (c) enter into any extension, subordination, reorganization, deposit, merger or
consolidation agreement or any other agreement relating to or affecting such Collateral, and
deposit or surrender control of such Collateral, and accept other property in exchange for such
Collateral and hold or apply the property or money so received pursuant to this Agreement; and (d)
take such actions in its own name or in Debtor’s name as Secured Party, in its sole discretion,
deems necessary or appropriate to establish exclusive control (as defined in the Uniform Commercial
Code) over any Collateral of such nature that perfection of the Secured Party’s security interest
may be accomplished by control.

          2.11 Secured Party may assign any of the Secured Obligations and deliver any or all of the
Collateral to its assignee, who then shall have with respect to Collateral so delivered all the
rights and powers of Secured Party under this Agreement, and after that Secured Party shall be
fully discharged from all liability and responsibility with respect to Collateral so delivered.

          2.12 [This Section intentionally left blank.]

          2.13 Debtor shall defend, indemnify and hold harmless Secured Party, its employees, agents,
shareholders, affiliates, officers, and directors from and against any and all claims, damages,
fines, expenses, liabilities or causes of action of whatever kind, including without limit
consultant fees, legal expenses, and attorneys fees, suffered by any of them as a direct or
indirect result of any actual or asserted violation of any law, including, without limit,
Environmental Laws, or of any remediation relating to any property required by any law, including
without limit Environmental Laws, INCLUDING ANY CLAIMS, DAMAGES, FINES, EXPENSES, LIABILITIES OR
CAUSES OF ACTION OF WHATEVER KIND RESULTING FROM SECURED PARTY’S OWN NEGLIGENCE, except and to the
extent (but only to the extent) caused by Secured Party’s gross negligence or willful misconduct.

     3. Collection of Proceeds.

          3.1 Debtor agrees to collect and enforce payment of all Collateral until Secured Party shall
direct Debtor to the contrary. Immediately upon notice to Debtor by Secured Party and at all times
after that, Debtor agrees to fully and promptly cooperate and assist Secured Party in the
collection and enforcement of all Collateral and to hold in trust for Secured Party all payments
received in connection with Collateral and from the sale, lease or other disposition of any
Collateral, all rights by way of suretyship or guaranty and all rights in the nature of a lien or
security interest which Debtor now or later has regarding Collateral. Immediately upon and after
such notice, Debtor agrees to (a) endorse to Secured Party and immediately deliver to Secured Party
all payments received on Collateral or from the sale, lease or other disposition of any Collateral
or arising from any other rights or interests of Debtor in the Collateral, in the form received by
Debtor without commingling with any other funds, and (b) immediately deliver to Secured Party all
property in Debtor’s possession or later coming into Debtor’s possession through enforcement of
Debtor’s rights or interests in the Collateral, Debtor irrevocably

5

 

authorizes Secured Party or any Secured Party employee or agent to endorse the name of Debtor
upon any checks or other items which are received in payment for any Collateral, and to do any and
all things necessary in order to reduce these items to money. Secured Party shall have no duty as
to the collection or protection of Collateral or the proceeds of it, nor as to the preservation of
any related rights, beyond the use of reasonable care in the custody and preservation of Collateral
in the possession of Secured Party. Debtor agrees to take all steps necessary to preserve rights
against prior parties with respect to the Collateral. Nothing in this Section 3.1 shall be deemed a
consent by Secured Party to any sale, lease or other disposition of any Collateral.

          3.2 Debtor agrees that immediately upon Secured Party’s request (whether or not any Event of
Default exists) but subject to the rights as of the date hereof of Comerica Bank and/or CIT
Group/Commercial Services, Inc., the Secured Obligations shall be on a “remittance basis” in
accordance with the following. In connection therewith, Debtor shall at its sole expense establish
and maintain (and Secured Party, at Secured Party’s option may establish and maintain at Debtor’s
expense):

               (a) A United States Post Office lock box (the “Lock Box”), to which Secured Party shall have
exclusive access and control. Debtor expressly authorizes Secured Party, from time to time, to
remove contents from the Lock Box, for disposition in accordance with this Agreement. Debtor agrees
to notify all account debtors and other parties obligated to Debtor that all payments made to
Debtor (other than payments by electronic funds transfer) shall be remitted, for the credit of
Debtor, to the Lock Box, and Debtor shall include a like statement on all invoices; and

               (b) A non-interest bearing deposit account with a financial institution selected by Secured
Party over which Secured Party shall have the “control” contemplated by the Uniform Commercial Code
to perfect Secured Party’s security interest in such account (the “Cash Collateral Account”) and to
which Secured Party shall have exclusive access and control. Debtor agrees to notify all account
debtors and other parties obligated to Debtor that all payments made to Debtor by electronic funds
transfer shall be remitted to the Cash Collateral Account, and Debtor, at Secured Party’s request,
shall include a like statement on all invoices. Debtor shall execute all documents and
authorizations as required by Secured Party to establish and maintain the Lock Box and the Cash
Collateral Account.

          3.3 All items or amounts which are remitted to the Lock Box, to the Cash Collateral Account,
or otherwise delivered by or for the benefit of Debtor to Secured Party on account of partial or
full payment of, or with respect to, any Collateral shall, at Secured Party’s option, (i) be
applied to the payment of the Secured Obligations, whether then due or not, in such order or at
such time of application as Secured Party may determine in its sole discretion, or, (ii) be
deposited to the Cash Collateral Account. Debtor agrees that Secured Party shall not be liable for
any loss or damage which Debtor may suffer as a result of Secured Party’s processing of items or
its exercise of any other rights or remedies under this Agreement, including without limitation
indirect, special or consequential damages, loss of revenues or profits, or any claim, demand or
action by any third party arising out of or in connection with the processing of items or the
exercise of any other rights or remedies under this Agreement. Debtor agrees to indemnify and hold
Secured Party harmless from and against all such third party claims, demands or actions, and all
related expenses or liabilities, including, without limitation, attorneys fees and INCLUDING ANY
CLAIMS, DAMAGES, FINES, EXPENSES, LIABILITIES OR CAUSES

6

 

OF ACTION OF WHATEVER KIND RESULTING FROM SECURED PARTY’S OWN NEGLIGENCE, except and to the
extent (but only to the extent) caused by Secured Party’s gross negligence or willful misconduct.

     4. Defaults, Enforcement and Application of Proceeds.

          4.1 Upon the occurrence of any of the following events (each an “Event of Default”), Debtor
shall be in default under this Agreement:

               (a) Any failure to pay or perform the Secured Obligations when due, or such portion of it as
may be due, by acceleration or otherwise: or

               (b) Any failure or neglect to comply with, or breach of or default under, any term of this
Agreement; or

               (c) Any warranty, representation, financial statement, or other information made, given or
furnished to Secured Party by or on behalf of Debtor shall be, or shall prove to have been, false
or materially misleading when made, given, or furnished: or

               (d) Any loss, theft, substantial damage or destruction to or of any Collateral, or the
issuance or filing of any attachment, levy, garnishment or the commencement of any proceeding in
connection with any Collateral or of any other judicial process of, upon or in respect of Debtor or
any Collateral; or

               (e) Sale or other disposition by Debtor of any substantial portion of its assets or property
or voluntary suspension of the transaction of business Debtor, or dissolution, termination of
existence, merger, consolidation, insolvency, business failure, or assignment for the benefit of
creditors of or by Debtor; or commencement of any proceedings under any state or federal bankruptcy
or insolvency laws or laws for the relief of debtors by or against Debtor; or the appointment of a
receiver, trustee, court appointee, sequestrator or otherwise, for all or any part of the property
of Debtor; or

               (f) Secured Party deems the margin of Collateral insufficient or itself insecure, in good
faith believing that the prospect of payment of the Secured Obligations or performance of this
Agreement is impaired or shall fear deterioration, removal, or waste of Collateral; or

               (g) An Event of Default shall occur under the Credit Enhancement Agreement;

          4.2 Upon the occurrence of any Event of Default, Secured Party may at its discretion and
without prior notice to Debtor declare any or all of the Secured Obligations to be immediately due
and payable, and shall have and may exercise any right or remedy available to it including, without
limitation, any one or more of the following rights and remedies:

               (a) Exercise all the rights and remedies upon default, in foreclosure and otherwise, available
to secured parties under the provisions of the Uniform Commercial Code and other applicable law;

7

 

               (b) Institute legal proceedings to foreclose upon the lien and security interest granted by
this Agreement, to recover judgment for all amounts then due and owing as Secured Obligations, and
to collect the same out of any Collateral or the proceeds of any sale of it;

               (c) Institute legal proceedings for the sale, under the judgment or decree of any court of
competent jurisdiction, of any or all Collateral; and/or

               (d) Personally or by agents, attorneys, or appointment of a receiver, enter upon any premises
where Collateral may then be located, and take possession of all or any of it and/or render it
unusable; and without being responsible for loss or damage to such Collateral, hold, operate, sell,
lease, or dispose of all or any Collateral at one or more public or private sales, leasings or
other dispositions, at places and times and on terms and conditions as Secured Party may deem fit,
without any previous demand or advertisement; and except as provided in this Agreement, all notice
of sale, lease or other disposition, and advertisement, and other notice or demand, any right or
equity of redemption, and any obligation of a prospective purchaser or lessee to inquire as to the
power and authority of Secured Party to sell, lease, or otherwise dispose of the Collateral or as
to the application by Secured Party of the proceeds of sale or otherwise, which would otherwise be
required by, or available to Debtor under, applicable law are expressly waived by Debtor to the
fullest extent permitted.

     At any sale pursuant to this Section 4.2, whether under the power of sale, by virtue of
judicial proceedings or otherwise, it shall not be necessary for Secured Party or a public officer
under order of a court to have present physical or constructive possession of Collateral to be
sold. The recitals contained in any conveyances and receipts made and given by Secured Party or the
public officer to any purchaser at any sale made pursuant to this Agreement shall, to the extent
permitted by applicable law, conclusively establish the truth and accuracy of the matters stated
(including, without limit, as to the amounts of the principal of and interest on the Secured
Obligations, the accrual and nonpayment of it and advertisement and conduct of the sale); and all
prerequisites to the sale shall be presumed to have been satisfied and performed. Upon any sale of
any Collateral, the receipt of the officer making the sale under judicial proceedings or of Secured
Party shall be sufficient discharge to the purchaser for the purchase money, and the purchaser
shall not be obligated to see to the application of the money. Any sale of any Collateral under
this Agreement shall be a perpetual bar against Debtor with respect to that Collateral. At any sale
or other disposition of the Collateral pursuant to this Section 4.2, Secured Party disclaims all
warranties which would otherwise be given under the Uniform Commercial Code, including without
limit a disclaimer of any warranty relating to title, possession, quiet enjoyment or the like, and
Secured Party may communicate these disclaimers to a purchaser at such disposition. This disclaimer
of warranties will not render the sale commercially unreasonable.

          4.3 Debtor shall at the request of Secured Party, notify the account debtors or obligors of
Secured Party’s security interest in the Collateral and direct payment of it to Secured Party.
Secured Party may, itself, upon the occurrence of any Event of Default so notify and direct any
account debtor or obligor. At the request of Secured Party, whether or not an Event of Default
shall have occurred, Debtor shall immediately take such actions as the Secured Party shall request
to establish exclusive control (as defined in the Uniform Commercial Code) by Secured Party over
any Collateral which is of such a nature that perfection of a security interest may be accomplished
by control.

8

 

          4.4 The proceeds of any sate or other disposition of Collateral authorized by this Agreement
shall be applied by Secured Party first upon all expenses authorized by the Uniform Commercial Code
and all reasonable attorneys fees and legal expenses incurred by Secured Party; the balance of the
proceeds of the sale or other disposition shall be applied in the payment of the Secured
Obligations, first to interest, then to principal, then to remaining Secured Obligations and the
surplus, if any, shall be paid over to Debtor or to such other person(s) as may be entitled to it
under applicable law. Debtor shall remain liable for any deficiency, which it shall pay to Secured
Party immediately upon demand. Debtor agrees that Secured Party shall be under no obligation to
accept any noncash proceeds in connection with any sale or disposition of Collateral unless failure
to do so would be commercially unreasonable. If Secured Party agrees in its sole discretion to
accept noncash proceeds (unless the failure to do so would be commercially unreasonable), Secured
Party may ascribe any commercially reasonable value to such proceeds. Without limiting the
foregoing, Secured Party may apply any discount factor in determining the present value of proceeds
to be received in the future or may elect to apply proceeds to be received in the future only as
and when such proceeds are actually received in cash by Secured Party.

          4.5 Nothing in this Agreement is intended, nor shall it be construed, to preclude Secured
Party from pursuing any other remedy provided by law or in equity for the collection of the Secured
Obligations or for the recovery of any other sum to which Secured Party may be entitled for the
breach of this Agreement by Debtor. Nothing in this Agreement shall reduce or release in any way
any rights or security interests of Secured Party contained in any existing agreement between
Debtor and Secured Party.

          4.6 No waiver of default or consent to any act by Debtor shall be effective unless in writing
and signed by an authorized officer of Secured Party. No waiver of any default or forbearance on
the part of Secured Party in enforcing any of its rights under this Agreement shall operate as a
waiver of any other default or of the same default on a future occasion or of any rights.

          4.7 Debtor (a) irrevocably appoints Secured Party or any agent of Secured Party(which
appointment is coupled with an interest) the true and lawful attorney of Debtor (with full power of
substitution) to act in the name, place and stead of, and at the expense of, Debtor and (b)
authorizes Secured Party or any agent of Secured Party, in its own name, at Debtor’s expense, to do
any of the following, as Secured Party, in its sole discretion, deems appropriate:

               (i) to demand, receive, sue for, and give receipts or acquittances for any moneys due or to
become due on any Collateral and to endorse any item representing any payment on or proceeds of the
Collateral;

               (ii) to execute and file in the name of and on behalf of Debtor all financing statements or
other filings deemed necessary or desirable by Secured Party to evidence, perfect, or continue the
security interests granted in this Agreement; and

               (iii) to do and perform any act on behalf of Debtor permitted or required under this
Agreement.

9

 

          4.8 Upon the occurrence of an Event of Default, Debtor also agrees, upon request of Secured
Party, to assemble the Collateral and make it available to Secured Party at any place designated by
Secured Party that is reasonably convenient to Secured Party and Debtor.

          4.9 The following shall be the basis for any finder of fact’s determination of the value of
any Collateral which is the subject matter of a disposition giving rise to a calculation of any
surplus or deficiency under Section 9-615 (f) of the Uniform Commercial Code (as in effect on or
after July 1, 2001): (a) the Collateral which is the subject matter of the disposition shall be
valued in an “as is” condition as of the date of the disposition, without any assumption or
expectation that such Collateral will be repaired or improved in any manner; (b) the valuation
shall be based upon an assumption that the transferee of such Collateral desires a resale of the
Collateral for cash promptly (but no later than 30 days) following the disposition; (c) all
reasonable closing costs customarily borne by the seller in commercial sales transactions relating
to property similar to such Collateral shall be deducted including, without limitation, brokerage
commissions, tax proration, attorneys’ fees, whether inside or outside counsel is used, and
marketing costs; (d) the value of the Collateral which is the subject matter of the disposition
shall be further discounted to account for any estimated holding costs associated with maintaining
such Collateral pending sale (to the extent not accounted for in (c) above), and other maintenance,
operational and ownership expenses; and (e) any expert opinion testimony given or considered in
connection with a determination of the value of such Collateral must be given by persons having at
least 5 years experience in appraising property similar to the Collateral and who have conducted
and prepared a complete written appraisal of such Collateral taking into consideration the factors
set forth above. The “value” of any such Collateral shall be a factor in determining the amount of
proceeds that would have been realized in a disposition to a transferee other than a secured party,
a person related to a secured party or a secondary obligor under Section 9-615(f) of the Uniform
Commercial Code.

     5. Miscellaneous.

          5.1 Until Secured Party is advised in writing by Debtor to the contrary, all notices, requests
and demands required under this Agreement or by law shall be given to, or made upon, Debtor at the
address for Debtor under the Credit Enhancement Agreement (the “Debtor’s Address”).

          5.2 Debtor will give Secured Party not less than 90 days prior written notice of all
contemplated changes in Debtor’s name, location, chief executive office, principal place of
business, and/or location of any Collateral, but the giving of this notice shall not cure any Event
of Default caused by this change.

          5.3 Secured Party assumes no duty of performance or other responsibility under any contracts
contained within the Collateral.

          5.4 Secured Party has the right to sell, assign, transfer, negotiate or grant participations
or any interest in, any or all of the Secured Obligations and any related obligations, including
without limit this Agreement. In connection with the above, but without limiting its ability to
make other disclosures to the full extent allowable, Secured Party may disclose all documents and
information that Secured Party now or later has relating to Debtor, the Secured Obligations or this
Agreement, however obtained. Debtor further agrees that Secured Party may

10

 

provide information relating to this Agreement or relating to Debtor or the Secured
Obligations to the Lender or to Secured Party’s parent, affiliates, subsidiaries, and service
providers.

          5.5 In addition to Secured Party’s other rights, any obligations owing from Secured Party to
Debtor can be set off and applied by Secured Party on any Secured Obligations at any time(s) either
before or after maturity or demand without notice to anyone. Any such action shall not constitute
acceptance of collateral in discharge of any portion of the Secured Obligations.

          5.6 Debtor, to the extent not expressly prohibited by applicable law, waives any right to
require the Secured Party to: proceed against any person or property; (b) give notice of the terms,
time and place of any public or private sale of personal property security held from Debtor or any
other person, or otherwise comply with the provisions of Section 9-504 of the Uniform Commercial
Code in effect prior to July 1, 2001 or its successor provisions thereafter; or (c) pursue any
other remedy in the Secured Party’s power. Debtor waives notice of acceptance of this Agreement and
presentment, demand, protest, notice of protest, dishonor, notice of dishonor, notice of default,
notice of intent to accelerate or demand payment of any Secured Obligations, any and all other
notices to which the undersigned might otherwise be entitled, and diligence in collecting any
Secured Obligations, and agrees that the Secured Party may, once or any number of times, modify the
terms of any Secured Obligations, compromise, extend, increase, accelerate, renew or forbear to
enforce payment of any or all Secured Obligations, all without notice to Debtor and without
affecting in any manner the unconditional obligation of Debtor under this Agreement. Debtor
unconditionally and irrevocably waives each and every defense and setoff of any nature which, under
principles of guaranty or otherwise, would operate to impair or diminish in any way the obligation
of Debtor under this Agreement, and acknowledges that such waiver is by this reference incorporated
into each security agreement, collateral assignment, pledge and/or other document from Debtor now
or later securing the Secured Obligations, and acknowledges that as of the date of this Agreement
no such defense or setoff exists.

          5.7 [This Section intentionally left blank.]

          5.8 In the event that applicable law shall obligate Secured Party to give prior notice to
Debtor of any action to be taken under this Agreement, Debtor agrees that a written notice given to
Debtor at least ten days before the date of the act shall be reasonable notice of the act and,
specifically, reasonable notification of the time and place of any public sale or of the time after
which any private sale, lease, or other disposition is to be made, unless a shorter notice period
is reasonable under the circumstances. A notice shall be deemed to be given under this Agreement
when delivered to Debtor or when placed in an envelope addressed to Debtor and deposited, with
postage prepaid, in a post office or official depository under the exclusive care and custody of
the United States Postal Service or delivered to an overnight courier. The mailing shall be by
overnight courier, certified, or first class mail.

          5.9 Notwithstanding any prior revocation, termination, surrender, or discharge of this
Agreement in whole or in part, the effectiveness of this Agreement shall automatically continue or
be reinstated in the event that any payment received or credit given by Secured Party in respect of
the Secured Obligations is returned, disgorged, or rescinded under any applicable law, including,
without limitation bankruptcy or insolvency laws, in which case this Agreement, shall be
enforceable against Debtor as if the returned, disgorged, or rescinded payment or credit

11

 

had not been received or given by Secured Party, and whether or not Secured Party relied upon
this payment or credit or changed its position as a consequence of it. In the event of continuation
or reinstatement of this Agreement, Debtor agrees upon demand by Secured Party to execute and
deliver to Secured Party those documents which Secured Party determines are appropriate to further
evidence (in the public records or otherwise) this continuation or reinstatement, although the
failure of Debtor to do so shall not affect in any way the reinstatement or continuation.

          5.10 This Agreement and all the rights and remedies of Secured Party under this Agreement
shall inure to the benefit of Secured Party’s successors and assigns and to any other holder who
derives from Secured Party title to or an interest in the Secured Obligations or any portion of it,
and shall bind Debtor and the heirs, legal representatives, successors, and assigns of Debtor.
Nothing in this Section 5.10 is deemed a consent by Secured Party to any assignment by Debtor.

          5.11 If there is more than one Debtor, all undertakings, warranties and covenants made by
Debtor and all rights, powers and authorities given to or conferred upon Secured Party are made or
given jointly and severally.

          5.12 Except as otherwise provided in this Agreement, all terms in this Agreement have the
meanings assigned to them in Article 9 (or, absent definition in Article 9, in any other Article)
of the Uniform Commercial Code, as those meanings may be amended, revised or replaced from time to
time. “Uniform Commercial Code” means the California Commercial Code. Notwithstanding the
foregoing, the parties intend that the terms used herein that are defined in the Uniform Commercial
Code have, at all times, the broadest and most inclusive meanings possible. Accordingly, if the
Uniform Commercial Code shall in the future be amended or held by a court to define any term used
herein more broadly or inclusively than the Uniform Commercial Code in effect on the date of this
Agreement, then such term, as used herein, shall be given such broadened meaning. If the Uniform
Commercial Code shall in the future be amended or held by a court to define any term used herein
more narrowly, or less inclusively, than the Uniform Commercial Code in effect on the date of this
Agreement, such amendment or holding shall be disregarded in defining terms used in this Agreement.

          5.13 No single or partial exercise, or delay in the exercise, of any right or power under this
Agreement, shall preclude other or further exercise of the rights and powers under this Agreement.
The unenforceability of any provision of this Agreement shall not affect the enforceability of the
remainder of this Agreement. This Agreement constitutes the entire agreement of Debtor and Secured
Party with respect to the subject matter of this Agreement. No amendment or modification of this
Agreement shall be effective unless the same shall be in writing and signed by Debtor and an
authorized officer of Secured Party. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.

          5.14 To the extent that any of the Secured Obligations is payable upon demand, nothing
contained in this Agreement shall modify the terms and conditions of that Secured Obligations nor
shall anything contained in this Agreement prevent Secured Party from making demand, without notice
and with or without reason, for immediate payment of any or all of that Secured Obligations at any
time(s), whether or not an Event of Default has occurred.

12

 

          5.15 Debtor represents and warrants that Debtor’s exact name is the name set forth in this
Agreement. Debtor further represents and warrants the following and agrees that Debtor is, and at
all times shall be, located in the following place:

	 	o	 	Debtor is an individual, and Debtor is located (as determined pursuant to the
Uniform Commercial Code) at Debtor’s principal residence which is (street address,
state and county or parish):                                                                          
   
    
	 
	 	þ	 	Debtor is a registered organization that is organized under the laws of one of
the states comprising the United States (e.g. corporation, limited partnership,
registered limited liability partnership or limited liability company), and Debtor is
located (as determined pursuant to the Uniform Commercial Code) in the state under the
laws of which it was organized, which is Delaware.
	 
	 	o	 	Debtor is a domestic organization which is not a registered organization under the
laws of the United States or any state thereof (e.g. general partnership, joint
venture, trust, estate or association), and Debtor is located (as determined pursuant
to the Uniform Commercial Code) at its sole place of business or, if it has more than
one place of business, at its chief executive office, which is (street address, state
and county or parish):            
           
             
            
              
               
    
	 
	 	o	 	Debtor is a registered organization organized under the laws of the United States,
and Debtor is located in the state that United States law designates as its location
or, if United States law authorizes the Debtor to designate the state for its location,
the state designated by Debtor, or if neither of the foregoing are applicable, at the
District of Columbia. Based on the foregoing, Debtor is located (as determined pursuant
to the Uniform Commercial Code) at (state):                                                                           
      
	 
	 	o	 	Debtor is a foreign individual or foreign organization or a branch or agency of a
bank that is not organized under the laws of the United States or a state thereof
Debtor is located (as determined pursuant to the Uniform Commercial Code) at (street
address, state and county or parish):                                                                            
     

          The Collateral is located at and shall be maintained at the Debtor’s Address.

          Collateral shall be maintained only at the locations identified in this Section 5.15.

          5.16 A carbon, photographic or other reproduction of this Agreement shall be sufficient as a
financing statement under the Uniform Commercial Code and may be filed by Secured Party in any
filing office.

          5.17 This Agreement shall be terminated only by the filing of a termination statement in
accordance with the applicable provisions of the Uniform Commercial Code, but the obligations
contained in Section 2.13 of this Agreement shall survive termination.

          5.18 Debtor agrees to reimburse the Secured Party upon demand for any and all costs and
expenses (including, without limit, court costs, legal expenses and reasonable attorneys

13

 

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 enforcing or attempting to enforce this
Agreement or in exercising or attempting to exercise any right or remedy under this Agreement or
incurred in any other matter or proceeding relating to this Security Agreement.

     6. Special Provisions Applicable to this Agreement. (*None, if left blank)

	 	 	 	 	 	 	 	 	 
	Dated: September 15, 2006	 	Debtor	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	The Fashion House, Inc.	 	 
	 	 	Debtor Name Typed/Printed	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Mike McHugh	 	 
	 

	 	 	 	Name:	 	Mike McHugh	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	Chief Financial Officer	 	 
	 

	 	 	 	 	 	 	 	 

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