Document:

SECOND AMENDED AND RESTATED GUARANTY AGREEMENT

 

THIS SECOND AMENDED AND RESTATED GUARANTY AGREEMENT (this “Guaranty”) dated December 14, 2011, amends and restates that certain Amended and Restated Guaranty Agreement dated as of July 8, 2011 by and between Infusion Brands, Inc. (f/k/a Omniresponse, Inc.), a Nevada corporation, Fashion Safari, Inc., a Nevada corporation, and Vicis Capital Master Fund (“Vicis”), a sub-trust of Vicis Capital Series Master Trust, a unit trust organized and existing under the laws of the Cayman Islands.  Each of OmniReliant Acquisition Sub, Inc., OmniResponse Cleaning Solutions, Inc., Designer Liquidator, Inc., Dual Saw, Inc., OmniResponse Safety Solutions, Inc. and OmniReliant Corp. was a party to the 2010 Guaranty Agreement (as defined below) but has been released from its obligations hereunder pursuant to a release previously executed by Vicis.  Fashion Safari, Inc. and Infusion Brands, Inc. shall be collectively referred to herein as the “Guarantor”.

 

RECITALS

 

WHEREAS, each Guarantor is a wholly owned subsidiary of Infusion Brands International, Inc., a Nevada corporation (f/k/a OmniReliant Holdings, Inc.) (“Issuer”).

 

WHEREAS, in connection with the transactions contemplated by the Purchase Agreement dated June 30, 2010, the parties entered into a Guaranty Agreement dated as of June 30, 2010 (the “2010 Guaranty Agreement”).

 

WHEREAS, since the date of the 2010 Guaranty Agreement, Vicis has released each of OmniReliant Acquisition Sub, Designer Liquidator, Inc. Omniresponse Cleaning Solutions, Inc., Dual Saw, Inc., OmniResponse Safety Solutions, Inc. and OmniReliant Corp. from its obligations under the 2010 Guaranty Agreement , and the Issuer has formed Fashion Safari, Inc., a Nevada corporation and wholly owned subsidiary of the Issuer.

 

WHEREAS, in connection with the transactions contemplated by the Purchase Agreement dated July 8, 2011, the parties amended and restated the 2010 Guaranty Agreement (the “Amended Guaranty Agreement”).

 

WHEREAS, pursuant to a Securities Purchase Agreement of even date herewith by and between Vicis and Issuer (as amended or modified from time to time, the “December Purchase Agreement”), Issuer has issued (i) 3,500,000 shares of the Issuer’s Series G Convertible Preferred Stock, par value $.00001 per share (such 3,500,000 shares, together with 8,000,000 shares in the aggregate of such Series G Convertible Preferred Stock acquired by Vicis pursuant to those certain Securities Purchase Agreement dated June 30, 2010 and July 8, 2011 by and between Debtor and Vicis (the “Purchase Agreements”), the “Preferred Shares”), to Vicis.

 

WHEREAS, it is a condition precedent to Vicis entering into the Purchase Agreements and the December Purchase Agreement and acquiring the Preferred Shares that the Guarantor execute and deliver to Vicis a guaranty in the form hereof.

 

  

  

 

 

WHEREAS, as consideration for the transactions contemplated under the December Purchase Agreement, Vicis and Infusion Brands, Inc. (f/k/a OmniResponse, Inc.) desire to amend and restate the Amended Guaranty Agreement as described herein.

 

WHEREAS, this is the Guaranty Agreement referred to in the Purchase Agreements and the December Purchase Agreement.

 

NOW, THEREFORE, in consideration of the recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby agrees with Vicis as follows:

 

ARTICLE 1

DEFINITIONS

 

When used in this Guaranty, capitalized terms shall have the meanings specified in the December Purchase Agreement, the preamble, the recitals and as follows:

 

1.1           Event of Default.  “Event of Default” means an Event of Default (as defined in each of the Purchase Agreements) and an Event of Default (as defined in the December Purchase Agreement).

 

1.2           Guaranty.  “Guaranty” shall mean this Guaranty, as the same shall be amended from time to time in accordance with the terms hereof.

 

1.3           Law.  “Law” shall mean any federal, state, local or other law, rule, regulation or governmental requirement of any kind, and the rules, regulations, interpretations and orders promulgated thereunder.

 

1.4           Obligations.  “Obligations” shall mean (a) the redemption of, and payment of dividends on, the Preferred Shares, and any renewal, extension or refinancing thereof; (b) all debts, liabilities, obligations, covenants and agreements of the Issuer and the Guarantor contained in the Transaction Documents; and (c) any and all other debts, liabilities and obligations of the Guarantor and of Issuer to Vicis.  As used in this Guaranty, “Transaction Documents” means (i) the Transaction Documents (as defined in each of the Purchase Agreements), and (ii) the Transaction Documents (as defined in the December Purchase Agreement).

 

1.5           Person.  “Person” shall mean and include an individual, partnership, corporation, trust, unincorporated association and any unit, department or agency of government.

 

ARTICLE 2

THE GUARANTY

 

2.1           The Guaranty.  The Guarantor, for itself, its successors and assigns, hereby unconditionally and absolutely guarantees to Vicis the full and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of each of the Obligations.  This is a guaranty of payment and performance and not of collection.

 

  

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2.2         Waivers and Consents.

 

(a)           The Guarantor acknowledges that the obligations undertaken herein involve the guaranty of obligations of a Person other than the Guarantor and, in full recognition of that fact, the Guarantor consents and agrees that Vicis may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof:  (i) supplement, modify, amend, extend, renew, accelerate or otherwise change the time for payment or the other terms of the Obligations or any part thereof, including without limitation any increase or decrease of the principal amount thereof or the rate(s) of interest thereon; (ii) supplement, modify, amend or waive, or enter into or give any agreement, approval or consent with respect to, the Obligations or any part thereof, or any of the Transaction Documents or any additional security or guaranties, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder; (iii) accept new or additional instruments, documents or agreements in exchange for or relative to any of the Transaction Documents or the Obligations or any part thereof; (iv) accept partial payments on the Obligations; (v) receive and hold additional security or guaranties for the Obligations or any part thereof; (vi) release, reconvey, terminate, waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer and/or enforce any security or guaranties, and apply any security and direct the order or manner of sale thereof as Vicis in its sole and absolute discretion may determine; (vii) release any Person from any personal liability with respect to the Obligations or any part thereof; (viii) settle, release on terms satisfactory to Vicis or by operation of applicable Law or otherwise, liquidate or enforce any Obligations and any security or guaranty in any manner, consent to the transfer of any security and bid and purchase at any sale; and/or (ix) consent to the merger, change or any other restructuring or termination of the corporate existence of Issuer or any other Person, and correspondingly restructure the Obligations, and any such merger, change, restructuring or termination shall not affect the liability of the Guarantor or the continuing effectiveness hereof, or the enforceability hereof with respect to all or any part of the Obligations.

 

(b)           Upon the occurrence and during the continuance of any Event of Default, Vicis may enforce this Guaranty independently of any other remedy, guaranty or security Vicis at any time may have or hold in connection with the Obligations, and it shall not be necessary for Vicis to marshal assets in favor of Issuer, any other guarantor of the Obligations or any other Person or to proceed upon or against and/or exhaust any security or remedy before proceeding to enforce this Guaranty.  The Guarantor expressly waives any right to require Vicis to marshal assets in favor of Issuer or any other Person or to proceed against Issuer or any other guarantor of the Obligations or any collateral provided by any Person, and agrees that Vicis may proceed against any obligor and/or the collateral in such order as it shall determine in its sole and absolute discretion.  Vicis may file a separate action or actions against the Guarantor, whether action is brought or prosecuted with respect to any security or against any other Person, or whether any other Person is joined in any such action or actions.  The Guarantor agrees that Vicis and Issuer may deal with each other in connection with the Obligations or otherwise, or alter any contracts or agreements now or hereafter existing between them, in any manner whatsoever, all without in any way altering or affecting the security of this Guaranty.

 

  

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(c)           The rights of Vicis hereunder shall be reinstated and revived, and the enforceability of this Guaranty shall continue, with respect to any amount at any time paid on account of the Obligations which thereafter shall be required to be restored or returned by Vicis upon the bankruptcy, insolvency or reorganization of any Person, all as though such amount had not been paid.  The rights of Vicis created or granted herein and the enforceability of this Guaranty shall remain effective at all times to guarantee the full amount of all the Obligations even though the Obligations, including any part thereof or any other security or guaranty therefor, may be or hereafter may become invalid or otherwise unenforceable as against Issuer or any other guarantor of the Obligations and whether or not Issuer or any other guarantor of the Obligations shall have any personal liability with respect thereto.

 

(d)           To the extent permitted by applicable law, the Guarantor expressly waives any and all defenses now or hereafter arising or asserted by reason of:  (i) any disability or other defense of Issuer or any other guarantor for the Obligations with respect to the Obligations (other than full payment and performance of all of the Obligations); (ii) the unenforceability or invalidity of any security for or guaranty of the Obligations or the lack of perfection or continuing perfection or failure of priority of any security for the Obligations; (iii) the cessation for any cause whatsoever of the liability of Issuer or any other guarantor of the Obligations (other than by reason of the full payment and performance of all Obligations); (iv) any failure of Vicis to marshal assets in favor of Issuer or any other Person; (v) any failure of Vicis to give notice of sale or other disposition of collateral to Issuer or any other Person or any defect in any notice that may be given in connection with any sale or disposition of collateral; (vi) any failure of Vicis to comply with applicable Laws in connection with the sale or other disposition of any collateral or other security for any Obligation, including, without limitation, any failure of Vicis to conduct a commercially reasonable sale or other disposition of any collateral or other security for any Obligation; (vii) any act or omission of Vicis or others that directly or indirectly results in or aids the discharge or release of Issuer or any other guarantor of the Obligations, or of any security or guaranty therefor by operation of Law or otherwise; (viii) any Law which provides that the obligation of a surety or guarantor must neither be larger in amount nor in other respects more burdensome than that of the principal or which reduces a surety’s or guarantor’s obligation in proportion to the principal obligation; (ix) any failure of Vicis to file or enforce a claim in any bankruptcy or other proceeding with respect to any Person; (x) the election by Vicis, in any bankruptcy proceeding of any Person, of the application or non-application of Section 1111(b)(2) of the United States Bankruptcy Code; (xi) any extension of credit or the grant of any lien under Section 364 of the United States Bankruptcy Code; (xii) any use of collateral under Section 363 of the United States Bankruptcy Code; (xiii) any agreement or stipulation with respect to the provision of adequate protection in any bankruptcy proceeding of any Person; (xiv) the avoidance of any lien or security interest in favor of Vicis for any reason; (xv) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against any Person, including without limitation any discharge of, or bar or stay against collecting, all or any of the Obligations (or any interest thereon) in or as a result of any such proceeding; or (xvi) any action taken by Vicis that is authorized by this Section or any other provision of any Transaction Document.  Until all of the Obligations have been paid in full, the Guarantor expressly waives all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Obligations.

  

  

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(e)           Condition of Issuer.  The Guarantor represents and warrants to Vicis that it has established adequate means of obtaining from Issuer, on a continuing basis, financial and other information pertaining to the business, operations and condition (financial and otherwise) of Issuer and its assets and properties.  The Guarantor hereby expressly waives and relinquishes any duty on the part of Vicis (should any such duty exist) to disclose to the Guarantor any matter, fact or thing related to the business, operations or condition (financial or otherwise) of Issuer or its assets or properties, whether now known or hereafter known by Vicis during the life of this Guaranty.  With respect to any of the Obligations, Vicis need not inquire into the powers of Issuer or agents acting or purporting to act on its behalf, and all Obligations made or created in good faith reliance upon the professed exercise of such powers shall be guaranteed hereby.

 

(f)           Continuing Guaranty.  This is a continuing guaranty and shall remain in full force and effect as to all of the Obligations until all amounts owing by Issuer to Vicis on the Obligations shall have been paid in full.

 

(g)           Subrogation; Subordination.  The Guarantor expressly waives any claim for reimbursement, contribution, indemnity or subrogation which the Guarantor may have against Issuer as a guarantor of the Obligations and any other legal or equitable claim against Issuer arising out of the payment of the Obligations by the Guarantor or from the proceeds of any collateral for this Guaranty, until all amounts owing to Vicis under the Obligations shall have been paid in full and all commitments to lend have been terminated or expired.  In furtherance, and not in limitation, of the foregoing waiver, until all amounts owing to Vicis under the Obligations shall have been paid in full, the Guarantor hereby agrees that no payment by the Guarantor pursuant to this Guaranty shall constitute the Guarantor a creditor of Issuer.  Until all amounts owing to Vicis under the Obligations shall have been paid in full, no Guarantor shall seek any reimbursement from Issuer in respect of payments made by the Guarantor in connection with this Guaranty, or in respect of amounts realized by Vicis in connection with any collateral for the Obligations, and the Guarantor expressly waives any right to enforce any remedy that Vicis now has or hereafter may have against any other Person and waives the benefit of, or any right to participate in, any collateral now or hereafter held by Vicis.  No claim which any Guarantor may have against any other guarantor of any of the Obligations or against Issuer, to the extent not waived pursuant to this Section, shall be enforced nor any payment accepted until the Obligations are paid in full and all such payments are not subject to any right of recovery.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF GUARANTOR

 

Each Guarantor hereby represents and warrants to Vicis as follows:

 

3.1         Authorization.  The Guarantor is a corporation duly and validly organized and existing under the laws of its state of organization, has the corporate power to own its owned assets and properties and to carry on its business, and is duly licensed or qualified to do business in all jurisdictions in which failure to do so would have a material adverse effect on its business or financial condition.  The making, execution, delivery and performance of this Guaranty, and compliance with its terms, have been duly authorized by all necessary corporate action of the Guarantor.

  

  

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3.2           Enforceability.  This Guaranty is the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms.

 

3.3           Absence of Conflicting Obligations.  The making, execution, delivery and performance of this Guaranty, and compliance with its terms, do not violate any existing provision of Law; the articles of incorporation or bylaws of any Guarantor; or any agreement or instrument to which the Guarantor is a party or by which it or any of its assets is bound.

 

3.4           Consideration for Guaranty.  The Guarantor acknowledges and agrees with Vicis that but for the execution and delivery of this Guaranty by the Guarantor, Vicis would not have acquired the Preferred Shares.  The Guarantor acknowledges and agrees that the proceeds of the sale of the Preferred Shares will result in significant benefit to the Guarantor who is the wholly-owned subsidiary of Issuer and the intended beneficiary of such proceeds.

 

ARTICLE 4

COVENANTS OF THE GUARANTOR

 

4.1           Actions by Guarantor.  No Guarantor shall take or permit any act, or omit to take any act, that would:  (a) cause Issuer to breach any of the Obligations; (b) impair the ability of Issuer to perform any of the Obligations; or (c) cause an Event of Default under any of the Purchase Agreements or the December Purchase Agreement.

 

4.2           Reporting Requirements.  The Guarantor shall furnish, or cause to be furnished, to Vicis such information respecting the business, assets and financial condition of the Guarantor as Vicis may reasonably request.

 

ARTICLE 5

MISCELLANEOUS

 

5.1           Expenses and Attorneys’ Fees.  Guarantor shall pay all reasonable fees and expenses incurred by Vicis, including the reasonable fees of counsel, in connection with the protection or enforcement of its rights under this Guaranty, including without limitation the protection and enforcement of such rights in any bankruptcy, reorganization or insolvency proceeding involving Issuer or any Guarantor, both before and after judgment.

 

5.2           Revocation.  This is a continuing guaranty and shall remain in full force and effect with respect to a Guarantor until Vicis receives written notice of revocation signed by the Guarantor.  Upon revocation by written notice, this Guaranty shall continue in full force and effect as to all Obligations contracted for or incurred before revocation, and as to them Vicis shall have the rights provided by this Guaranty as if no revocation had occurred.  Any renewal, extension, or increase in the interest rate(s) of any such Obligation, whether made before or after revocation, shall constitute an Obligation contracted for or incurred before revocation.  Obligations contracted for or incurred before revocation shall also include credit extended after revocation pursuant to commitments made before revocation.

 

  

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5.3           Assignability; Successors.  The Guarantor’s rights and liabilities under this Guaranty are not assignable or delegable, in whole or in part, without the prior written consent of Vicis.  The provisions of this Guaranty shall be binding upon the Guarantor, its successors and permitted assigns and shall inure to the benefit of Vicis, its successors and assigns.

 

5.4           Survival.  All agreements, representations and warranties made herein or in any document delivered pursuant to this Guaranty shall survive the execution and delivery of this Guaranty and the delivery of any such document.

 

5.5           Governing Law.  This Guaranty and the documents issued pursuant to this Guaranty shall be governed by, and construed and interpreted in accordance with, the Laws of the State of New York applicable to contracts made and wholly performed within such state.

 

5.6           Execution; Headings.  This Guaranty may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.  The article and section headings in this Guaranty are inserted for convenience of reference only and shall not constitute a part hereof.

 

5.7           Notices.  All notices, requests and demands to or upon Vicis or any Guarantor (to be delivered care of Issuer) shall be delivered in the manner set forth in Section 5.4 of the December Purchase Agreement.

 

5.8           Amendment.  No amendment of this Guaranty shall be effective unless in writing and signed by the Guarantor and Vicis.

 

5.9           Severability.  Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Guaranty in such jurisdiction or affecting the validity or enforceability of any provision in any other jurisdiction.

 

5.10         Taxes.  If any transfer or documentary taxes, assessments or charges levied by any governmental authority shall be payable by reason of the execution, delivery or recording of this Guaranty, Guarantor shall pay all such taxes, assessments and charges, including interest and penalties, and the Guarantor hereby indemnifies Vicis against any liability therefor.

 

5.11         WAIVER OF RIGHT TO JURY TRIAL.  THE GUARANTOR ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS GUARANTY WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE GUARANTOR AGREES THAT ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

5.12         SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.  AS A MATERIAL INDUCEMENT TO VICIS TO ENTER INTO THIS TRANSACTION:

 

  

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THE GUARANTOR AGREES THAT ALL ACTIONS OR PROCEEDINGS IN ANY MANNER RELATING TO OR ARISING OUT OF THIS GUARANTY OR THE OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH MAY BE BROUGHT ONLY IN COURTS OF THE STATE OF NEW YORK OR THE FEDERAL COURTS LOCATED IN NEW YORK AND THE GUARANTOR CONSENTS TO THE JURISDICTION OF SUCH COURTS.  THE GUARANTOR WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH COURT AND ANY RIGHT IT MAY HAVE NOW OR HEREAFTER HAVE TO CLAIM THAT ANY SUCH ACTION OR PROCEEDING IS IN AN INCONVENIENT COURT; AND

 

the Guarantor consents to the service of process in any such action or proceeding by certified mail sent to the address specified in Section 5.7. Nothing contained herein shall affect the right of Vicis to serve process in any other manner permitted by law or to commence an action or proceeding in any other jurisdiction.

 

  

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

 

	
Infusion Brands, Inc.

	  
	
By:

	  
	  	
Name:

	
Robert DeCecco

	  	
Title:

	
Chief Executive Officer/President

	  	  	  
	
Fashion Safari, Inc.

	  
	
By:

	  
	  	
Name:

	
Robert DeCecco

	  	
Title:

	
President

Signature Page to Second Amended and Restated Guaranty Agreement

  

  

  

  

 

ACCEPTANCE BY VICIS

 

This Guaranty is accepted by Vicis Capital Master Fund.

 

	
VICIS CAPITAL MASTER FUND

	
By:  Vicis Capital, LLC, its investment advisor

	  
	
By:

	  	  
	  	
Name:

	  
	  	
Title:

	  

Acceptance Page to Second Amended and Restated Guaranty AgreementUnassociated Document

SECOND AMENDED AND RESTATED GUARANTOR SECURITY AGREEMENT

 

THIS SECOND AMENDED AND RESTATED GUARANTOR SECURITY AGREEMENT (this “Security Agreement”) dated December 14, 2011, amends and restates the Amended and Restated Guarantor Security Agreement dated as of July 8, 2011, by and among Infusion Brands, Inc. (f/k/a Omniresponse, Inc.), a Nevada corporation, Fashion Safari, Inc., a Nevada corporation, and Vicis Capital Master Fund (“Vicis”), a sub-trust of Vicis Capital Series Master Trust, a unit trust organized and existing under the laws of the Cayman Islands (the “Amended Guarantor Security Agreement”).  Each of OmniReliant Acquisition Sub, Inc., Designer Liquidator, Inc., OmniResponse Cleaning Solutions, Inc., Dual Saw, Inc., OmniResponse Safety Solutions, Inc., and OmniReliant Corp., which were parties to the 2010 Guarantor Security Agreement (as defined below), had been released from its obligations under this Security Agreement by Vicis prior to entering into the Amended Guarantor Security Agreement by the parties thereto.  Fashion Safari, Inc. was added as a party to the Amended Guarantor Security Agreement and, along with Infusion Brands, Inc., shall collectively be referred to as, the “Debtor”.

 

RECITALS

 

WHEREAS, each Debtor is a wholly owned subsidiary of Infusion Brands International, Inc., a Nevada corporation (“Issuer”).

 

WHEREAS, in connection with the transactions contemplated by the Securities Purchase Agreement dated June 30, 2010, the parties entered into a Guarantor Security Agreement of even date therewith (the “2010 Guarantor Security Agreement”).

 

WHEREAS, in connection with the transactions contemplated by the Securities Purchase Agreement dated July 8, 2011, the parties hereto entered into the Amended Guarantor Security Agreement amending and restating the 2010 Guarantor Security Agreement.

 

WHEREAS, pursuant to a Securities Purchase Agreement of even date herewith by and between Vicis and Issuer (as amended or modified from time to time, the “December Purchase Agreement”), Issuer has issued 3,500,000 shares of the Issuer’s Series G Convertible Preferred Stock, par value $.00001 per share (such 3,500,000 shares, together with 8,000,000 shares in the aggregate of such Series G Convertible Preferred Stock acquired by Vicis pursuant to those certain Securities Purchase Agreements dated June 30, 2010 and July 8, 2011 by and between Issuer and Vicis (the “Purchase Agreements”), the “Preferred Shares”), to Vicis.

 

WHEREAS, since the date of the 2010 Guarantor Security Agreement Agreement, Vicis has released each of OmniReliant Acquisition Sub, Designer Liquidator, Inc. Omniresponse Cleaning Solutions, Inc., Dual Saw, Inc., OmniResponse Safety Solutions, Inc. and OmniReliant Corp. from its obligations under the 2010 Guarantor Security Agreement and the Issuer has formed Fashion Safari, Inc., a Nevada corporation as a wholly owned subsidiary of the Issuer.

 

WHEREAS, it is a condition precedent to Vicis’ entrance into the Purchase Agreements and the December Purchase Agreement and acquisition of the Preferred Shares that the Debtor execute and deliver to Vicis a security agreement in the form hereof to secure its obligations, covenants and agreements contained in its Second Amended and Restated Guaranty, dated of even date herewith, in favor of Vicis (the “Guaranty”).

  

  

  

 

WHEREAS, as consideration for the transactions contemplated under the December Purchase Agreement, Vicis and Infusion Brands, Inc. (f/k/a OmniResponse, Inc.) desire to amend and restate the Amended Guarantor Security Agreement as described herein.

 

WHEREAS, this is the Guarantor Security Agreement referred to in the Purchase Agreements and the December Purchase Agreement.

 

NOW, THEREFORE, in consideration of the recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby agrees with Vicis as follows:

 

ARTICLE I

DEFINITIONS

 

Capitalized terms not defined herein shall have the meaning given to them in the December Purchase Agreement.  Capitalized terms not otherwise defined herein and defined in the UCC shall have, unless the context otherwise requires, the meanings set forth in the UCC as in effect on the date hereof (except that the term “document” shall only have the meaning set forth in the UCC for purposes of clause (d) of the definition of Collateral), the recitals and as follows:

 

1.1           Accounts.  “Accounts” shall mean all accounts, including without limitation all rights to payment for goods sold or services rendered that are not evidenced by instruments or chattel paper, whether or not earned by performance, and any associated rights thereto.

 

1.2           Collateral.  “Collateral” shall mean, subject to any limitations or qualifications set forth in this definition or in Section 2.1 hereof, all personal properties and assets of the Debtor, wherever located, whether tangible or intangible, and whether now owned or hereafter acquired or arising, including without limitation:

 

(a)           all Inventory and documents relating to Inventory;

 

(b)           all Accounts and documents relating to Accounts;

 

(c)           all equipment, fixtures and other goods, including without limitation machinery, furniture and trade fixtures;

 

(d)           all general intangibles (including without limitation, software, customer lists, sales records and other business records, and licenses, permits, franchises, patents, copyrights, trademarks, and goodwill of the business in which the trademark is used, trade names, or rights to any of the foregoing), promissory notes, chattel paper, documents, letter-of-credit rights and instruments;

 

(e)           all motor vehicles;

  

  

  

 

(f)           (i) all deposit accounts and (ii) all cash and cash equivalents deposited with or delivered to Vicis from time to time and pledged as additional security for the Obligations;

 

(g)          all investment property;

 

(h)          all commercial tort claims; and

 

(i)           all additions and accessions to, all spare and repair parts, special tools, equipment and replacements for, and all supporting obligations, proceeds and products of, any and all of the foregoing assets described in Sections (a) through (h), inclusive, above.

 

Notwithstanding the foregoing, “Collateral” shall not include and expressly excludes (i) any general intangibles or other rights arising under any contracts, instruments, licenses or other documents to the extent that the grant of a lien or the Security Interest therein would (A) result in a breach of the terms of, or constitute a default under, such contract, instrument, license, agreement or other document (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-406, 9-407 or 9-408 of the UCC or any successor provision of the UCC of any relevant jurisdiction or other applicable law) or (B) give any other party to such contract, instrument, license or other document the right to terminate its obligations thereunder pursuant to a valid and enforceable provision (including without limitation in connection with the operation of Section 9-406, 9-407 or 9-408 of the UCC or any other applicable law), (ii) any personal property (including motor vehicles) in respect of which perfection of a lien or security interest is not either (A) governed by the UCC or (B) accomplished by appropriate evidence of the lien being recorded in the United States Copyright Office or the United States Patent and Trademark Office, (iii) any property subject to any pledge agreement, (iv) any Accounts and documents relating to Accounts; or (v) any payment intangibles, contract rights and causes of action.

 

1.3           Event of Default.  “Event of Default” shall mean an Event of Default under either of the Purchase Agreements or an Event of Default under the December Purchase Agreement.

 

1.4           Inventory.  “Inventory” shall mean all inventory, including without limitation all goods held for sale, lease or demonstration or to be furnished under contracts of service, goods leased to others, trade-ins and repossessions, raw materials, work in process and materials used or consumed in the Debtor’s business, including, without limitation, goods in transit, wheresoever located, whether now owned or hereafter acquired by the Debtor, and shall include such property the sale or other disposition of which has given rise to Accounts and which has been returned to or repossessed or stopped in transit by the Debtor.

 

1.5           Obligations.  “Obligations” shall mean all debts, liabilities, obligations, covenants and agreements of the Debtor contained in the Guaranty.

 

1.6           Person.  “Person” shall mean and include an individual, partnership, corporation, trust, unincorporated association and any unit, department or agency of government.

  

  

  

1.7           Security Agreement.  “Security Agreement” shall mean this Second Amended and Restated Guarantor Security Agreement, together with the schedules attached hereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.  This Security Agreement amends and restates the Amended Guarantor Security Agreement.

 

1.8           Security Interest.  “Security Interest” shall mean the security interest of Vicis in the Collateral granted by the Debtor pursuant to this Security Agreement.

 

1.9           UCC.  “UCC” shall mean the Uniform Commercial Code as adopted in the state of organization of the Debtor and in effect from time to time.

 

ARTICLE II

THE SECURITY INTEREST; REPRESENTATIONS AND WARRANTIES

 

2.1           The Security Interest.  To secure the full and complete payment and performance when due (whether at stated maturity, by acceleration, or otherwise) of each of the Obligations, the Debtor hereby grants to Vicis a first-priority security interest in all of the Debtor’s right, title and interest in and to the Collateral.

 

2.2           Representations and Warranties.  Each Debtor hereby represents and warrants to Vicis that:

 

(a)           The records of the Debtor with respect to the Collateral are presently located only at the address(es) listed on Schedule 1 attached to this Security Agreement.

 

(b)           The Collateral is presently located only at the location(s) listed on Schedule 1 attached to this Security Agreement.

 

(c)           The chief executive office and chief place(s) of business of the Debtor are presently located at the address(es) listed on Schedule 1 to this Security Agreement.

 

(d)           The Debtor is a Person duly organized as the type of entity and in the state listed in Schedule 1 to this Security Agreement, and its exact legal name is set forth in the definition of “Debtor” in the introductory paragraph of this Security Agreement.  The organization identification number of the Debtor is listed on Schedule 1 to this Security Agreement.

 

(e)           All of the Debtor’s present patents and trademarks, if any, including those that have been registered with, or for which an application for registration has been filed in, the United States Patent and Trademark Office are listed on Schedule 2 attached to this Security Agreement.  All of the Debtor’s present copyrights registered with, or for which an application for registration has been filed in, the United States Copyright Office or any similar office or agency of any state or any other country are listed on Schedule 2 attached to this Security Agreement.

 

(f)           The Debtor has good title to, or valid leasehold interest in, all of the Collateral, and there are no Liens on any of the Collateral except Permitted Liens.

  

  

  

 

2.3           Authorization to File Financing Statements.  The Debtor hereby irrevocably authorizes Vicis at any time and from time to time to file in any UCC jurisdiction any initial financing statements and amendments thereto that contain any information required by part 5 of Article 9 of the UCC for the sufficiency of filing office acceptance of any financing statement or amendment, including whether the Debtor is an organization, the type of organization and any state or federal organization identification number issued to the Debtor.  The Debtor agrees to furnish any such information to Vicis promptly upon written request.

 

ARTICLE III

AGREEMENTS OF DEBTOR

 

From and after the date of this Security Agreement, and until all of the Obligations are paid in full, the Debtor shall:

 

3.1           Sale of Collateral.  Not sell, lease, transfer or otherwise dispose of Collateral or any interest therein, except as provided for in the Purchase Agreements and the December Purchase Agreement and for sales of Inventory in the ordinary course of business.

 

3.2           Maintenance of Security Interest.

 

(a)           At the expense of the Debtor, defend the Security Interest against any and all claims of any Person adverse to Vicis (but only to the extent the claim of such adverse Person is subordinate or junior to the interest of Vicis) and take such action and execute such financing statements and other documents as Vicis may from time to time reasonably request in writing to maintain the perfected status of the Security Interest.  The Debtor shall not further encumber or grant a security interest in any of the Collateral except as provided for in the Purchase Agreements and the December Purchase Agreement.

 

(b)           The Debtor further agrees to take any other commercially reasonable action reasonably requested in writing by Vicis to ensure the attachment, perfection and first priority of, and the ability of Vicis to enforce its security interest in any and all of the Collateral including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC, to the extent, if any, that the Debtor’s signature thereon is required therefor, (ii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Vicis to enforce, its security interest in such Collateral, (iii) taking all actions required by any earlier versions of the UCC (to the extent applicable) or by other law, as applicable in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction, and (iv) obtaining waivers from landlords where any material portion of the tangible Collateral is located in form and substance reasonably satisfactory to Vicis.

 

3.3           Locations.  Give Vicis at least thirty (30) days prior written notice of the Debtor’s intention to relocate the tangible Collateral (other than Inventory in transit) or any of the records relating to the Collateral from the locations listed on Schedule 1 attached to this Security Agreement, in which event Schedule 1 shall be deemed amended to include the new location.  Any additional filings or refilings requested in writing by Vicis as a result of any such relocation in order to maintain the Security Interest in such Collateral shall be at the Debtor’s expense.

  

  

  

 

3.4           Insurance.  Maintain insurance (including, without limitation, commercial general liability and property insurance) with respect to the Collateral consisting of tangible personal property in such amounts, against such risks, in such form and with responsible and reputable insurance companies or associations as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.  The Debtor will obtain lender’s loss payable endorsements on applicable insurance policies in favor of Vicis and will provide to Vicis certificates of such insurance or copies thereof.  The Debtor shall use commercially reasonable efforts to cause each insurer to agree, by endorsement on the policy or policies or certificates of insurance issued by it or by independent instrument furnished to Vicis, that such insurer will give thirty (30) days written notice to Vicis before such policy will be altered or canceled. No settlement of any insurance claim shall be made without Vicis’s prior consent, which consent will not be unreasonably withheld, conditioned or delayed.  In the event of any insured loss, the Debtor shall promptly notify Vicis thereof in writing, and, after an Event of Default shall have occurred and be continuing, the Debtor hereby authorizes and directs any insurer concerned to make payment of such loss directly to Vicis as its interest may appear. Vicis is authorized, in the name and on behalf of the Debtor, to make proof of loss and to adjust, compromise and collect, in such manner and amounts as it reasonably shall determine, all claims under all policies; and the Debtor agrees to sign, on written demand of Vicis, all receipts, vouchers, releases and other instruments which may be necessary in aid of this authorization.  After an Event of Default shall have occurred and be continuing, the proceeds of any insurance from loss, theft, or damage to the Collateral shall be held in a segregated account established by Vicis and disbursed and applied at the discretion of Vicis, either in reduction of the Obligations or applied toward the repair, restoration or replacement of the Collateral.

 

3.5           Name; Legal Status.  (a) Without providing at least 30 days prior written notice to Vicis, the Debtor will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational identification number if it has one, (b) if the Debtor does not have an organizational identification number and later obtains one, the Debtor shall forthwith notify Vicis of such organizational identification number, and (c) the Debtor will not change its type of organization or jurisdiction of organization.

 

ARTICLE IV

RIGHTS AND REMEDIES

 

4.1           Right to Cure.  In case of failure by a Debtor after receipt of written notice from Vicis to procure or maintain insurance, or to pay any fees, assessments, charges or taxes (subject to the Debtor’s right to contest in good faith, such assessments, charges or taxes) arising with respect to the Collateral, Vicis shall have the right, but shall not be obligated, to effect such insurance or pay such fees, assessments, charges or taxes, as the case may be, and, in that event, the cost thereof shall be payable by the Debtor to Vicis immediately upon demand, together with interest at an annual rate of 10% from the date of disbursement by Vicis to the date of payment by the Debtor.  If Vicis effects any insurance on behalf of the Debtor, the Debtor thereafter may cancel such insurance so effected after providing Vicis with evidence that the Debtor has obtained insurance as required by this Security Agreement.

  

  

  

 

4.2           Rights of Parties.  Upon the occurrence and during the continuance of an Event of Default, in addition to all the rights and remedies provided in the Transaction Documents or in Article 9 of the UCC and any other applicable law, Vicis may (but is under no obligation so to do):

 

(a)           require the Debtor to assemble the Collateral at a place designated by Vicis, which is reasonably convenient to the parties; and

 

(b)           take physical possession of Inventory and other tangible Collateral and of the Debtor’s records pertaining to all Collateral that are necessary to properly administer and control the Collateral or the handling and collection of Collateral, and sell, lease or otherwise dispose of the Collateral in a commercially reasonable manner in whole or in part, at public or private sale, on or off the premises of the Debtor; and

 

(c)           collect any and all money due or to become due and enforce in the Debtor’s name all rights with respect to the Collateral; and

 

(d)           settle, adjust or compromise any dispute with respect to any Account; and

 

(e)           receive and open mail addressed to the Debtor; and

 

(f)           on behalf of the Debtor, indorse checks, notes, drafts, money orders, instruments or other evidences of payment.

 

4.3           Power of Attorney.  Upon the occurrence and during the continuance of an Event of Default with respect to a Debtor, the Debtor does hereby constitute and appoint Vicis as the Debtor’s true and lawful attorney with full power of substitution for the Debtor in the Debtor’s name, place and stead for the purposes of performing any obligation of the Debtor under this Security Agreement and taking any action and executing any instrument which Vicis may deem necessary or advisable to perform any obligation of the Debtor under this Security Agreement, which appointment is irrevocable and coupled with an interest, and shall not terminate until the Obligations are paid in full.

 

4.4           Right to Collect Accounts.  Upon the occurrence and during the continuance of an Event of Default, and without limiting Debtor’s obligations under the Transaction Documents:  (a) the Debtor authorizes Vicis to notify any and all debtors on the Accounts to make payment directly to Vicis (or to such place as Vicis may direct); (b) the Debtor agrees, on written notice from Vicis, to deliver to Vicis promptly after receipt thereof, in the form in which received (together with all necessary endorsements), all payments received by the Debtor on account of any Account; and (c) Vicis may, at its option, apply all such payments against the Obligations or remit all or part of such payments to the Debtor.

  

  

  

4.5           Reasonable Notice.  Written notice, when required by law, sent to a Debtor, care of the Issuer, in accordance with the provisions of Section 5.4 of the December Purchase Agreement and given at least ten (10) calendar days (counting the day of sending) before the date of a proposed disposition of the Collateral shall be reasonable notice.

 

4.6           Limitation on Duties Regarding Collateral.  The sole duty of Vicis with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the UCC or otherwise, shall be to deal with it in the same manner as Vicis deals with similar property for its own account.  Neither Vicis nor its investment adviser, nor any of their respective members, directors, officers, employees or agents, shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of a Debtor or otherwise.

 

4.7           Lock Box; Collateral Account.  This Section 4.7 shall be effective only upon the occurrence and during the continuance of an Event of Default.  If Vicis so requests in writing, a Debtor will direct each of its debtors on the Accounts to make payments due under the relevant Account or chattel paper directly to a special lock box to be under the control of Vicis.  The Debtor hereby authorizes and directs Vicis to deposit into a special collateral account to be established and maintained by Vicis all checks, drafts and cash payments received in said lock box.  All deposits in said collateral account shall constitute proceeds of Collateral and shall not constitute payment of any Obligation until so applied.  At its option, Vicis may, at any time, apply finally collected funds on deposit in said collateral account to the payment of the Obligations, in the order of application set forth in Section 4.8, or permit the Debtor to withdraw all or any part of the balance on deposit in said collateral account.  If a collateral account is so established, the Debtor agrees that it will promptly deliver to Vicis, for deposit into said collateral account, all payments on Accounts and chattel paper received by it.  All such payments shall be delivered to Vicis in the form received (except for the Debtor’s indorsement where necessary).  Until so deposited, all payments on Accounts and chattel paper received by the Debtor shall be held in trust by Debtor for and as the property of Vicis and shall not be commingled with any funds or property of Debtor.

 

4.8           Application of Proceeds.  Vicis shall apply the proceeds resulting from any sale or disposition of the Collateral in the following order:

 

(a)           to the reasonable costs of any sale or other disposition;

 

(b)           to the reasonable expenses incurred by Vicis in connection with any sale or other disposition, including attorneys’ fees;

 

(c)           to the payment of the Obligations then due and owing in any order selected by Vicis in a commercially reasonable manner; and

 

(d)           to Debtor.

 

4.9           Other Remedies.  No remedy herein conferred upon Vicis is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Security Agreement and the Transaction Documents now or hereafter existing at law or in equity or by statute or otherwise.  No failure or delay on the part of Vicis in exercising any right or remedy hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any right hereunder preclude other or further exercise thereof or the exercise of any other right or remedy.

  

  

  

 

ARTICLE V

MISCELLANEOUS

 

5.1           Expenses and Attorneys’ Fees.  Debtor shall pay all fees and expenses incurred by Vicis, including the reasonable fees of counsel, in connection with the protection, administration and enforcement of the rights of Vicis under this Security Agreement or with respect to the Collateral, including without limitation the protection and enforcement of such rights in any bankruptcy.

 

5.2           Setoff.  The Debtor agrees that, upon the occurrence and during the continuance of an Event of Default, Vicis shall have all rights of setoff and bankers’ lien provided by applicable law.

 

5.3           Assignability; Successors.  No Debtor’s rights and liabilities under this Security Agreement are assignable or delegable, in whole or in part, without the prior written consent of Vicis.  The provisions of this Security Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties.

 

5.4           Survival.  All agreements, representations and warranties made in this Security Agreement or in any document delivered pursuant to this Security Agreement shall survive the execution and delivery of this Security Agreement, and the delivery of any such document.

 

5.5           Governing Law.  This Security Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York applicable to contracts made and wholly performed within such state.

 

5.6           Execution; Headings.  This Security Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.  The article and section headings in this Security Agreement are inserted for convenience of reference only and shall not constitute a part hereof.

 

5.7           Notices.  All communications or notices required or permitted by this Security Agreement shall be given to Debtor (to be delivered care of Issuer) in accordance with Section 5.4 of the December Purchase Agreement.

 

5.8           Amendment.  No amendment of this Security Agreement shall be effective unless in writing and signed by the Debtor and Vicis.

  

  

  

5.9          Severability.  Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement in such jurisdiction or affecting the validity or enforceability of any provision in any other jurisdiction.

 

5.10        WAIVER OF RIGHT TO JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF ANY CONTROVERSY THAT MAY ARISE UNDER THIS SECURITY AGREEMENT.

 

5.11        SUBMISSION TO JURISDICTION.

 

(a)           EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED THE STATE OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT.  EACH OF THE PARTIES TO THIS SECURITY AGREEMENT IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(b)           EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY CONSENTS TO SERVICE OF PROCESS BY NOTICE IN THE MANNER SPECIFIED IN SECTION 5.4 OF THE DECEMBER PURCHASE AGREEMENT AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION SUCH PARTY MAY NOW OR HEREAFTER HAVE TO SERVICE OF PROCESS IN SUCH MANNER.  THE DEBTOR AGREES THAT SERVICE OF PROCESS MAY BE DELIVERED CARE OF ISSUER.

5.12        Effect of Amendment and Restatement.  This Security Agreement amends and restates the Amended Guarantor Security Agreement and shall not be construed to be a substitution or novation of the Amended Guarantor Security Agreement.

(signature page follows)

  

  

  

IN WITNESS WHEREOF, this Second Amended and Restated Guarantor Security Agreement has been executed as of the day and year first above written.

 

	  	
Infusion Brands, Inc.

	  	  
	  	
By:

	  
	  	  	
Name:  Robert DeCecco

	  	  	
Title:    Chief Executive Officer/President

	  	  	  
	  	
Fashion Safari, Inc.

	  	  	  
	  	
By:

	  
	  	  	
Name:  Robert DeCecco

	  	  	
Title:    President

	  	  	  
	  	
VICIS CAPITAL MASTER FUND

	  	
By: Vicis Capital, LLC, its investment advisor

	  	  	  
	  	
By:

	  
	  	
Name:

	  	
Title:

Signature Page to Second Amended and Restated Guarantor Security Agreement

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