Exhibit 7(e)
AMENDED AND RESTATED CREDIT ENHANCEMENT AGREEMENT
This Amended and Restated Credit Enhancement Agreement (this "AGREEMENT")
is dated as of December 20, 2006, by and between, on the one hand, THE FASHION
HOUSE HOLDINGS, INC., a Colorado corporation ("FHH"), and its wholly owned
subsidiary, THE FASHION HOUSE, INC., a Delaware corporation ("FHI"), acting
jointly and severally hereunder, and on the other hand, WESTREC CAPITAL
PARTNERS, LLC, a Delaware limited liability company ("WESTREC"), and its
controlling member, XXXXXXX X. XXXXX, an individual ("SACHS"). This Agreement
amends and restates the Credit Enhancement Agreement dated September 15, 2006 by
and between FHI, FHH, Westrec and Sachs (the "ORIGINAL AGREEMENT").
RECITALS
A. FHI and FHH (singly and collectively, "BORROWER") have been unable to
obtain without the assistance of Westrec and Sachs (singly, "GUARANTOR," and
collectively, "GUARANTORS"), the third-party financing that FHI needs to
continue to operate.
B. Comerica Bank ("COMERICA") and The CIT Group/Commercial Services, Inc.
("CIT") have provided financing to Borrower that has been guaranteed by
Guarantors.
C. Borrower may seek additional third-party financing to be guaranteed by
Guarantors, which Guarantors may in their sole and absolute discretion determine
to guaranty.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Borrower and the Guarantors (singly
each sometimes herein, a "PARTY," and collectively both sometimes herein, the
"PARTIES") hereby agree as follows:
AGREEMENT
1. THE GUARANTY
1.1 For purposes of this Agreement, the following terms shall have the
meanings set forth below.
1.1.1 "AGGREGATE PRINCIPAL OWED" at any date shall mean the sum of
the following, determined as of the close of business on such date: (a) the face
amount of all Loans in the form of letters of credit outstanding; and (b) the
outstanding principal amount on all Loans other than Loans in the form of
Letters of Credit.
1.1.2 "GUARANTY" shall mean the guaranty by Guarantors (or either of
them) of the obligations of Borrower under a Loan, and "GUARANTIES" shall mean
all such guaranties.
1.1.3 "LENDER" shall mean the party providing the loan, letter of
credit, or financing under the Loan Agreement, and "LENDERS" shall mean all the
parties providing the loans, letters of credit and financing under the Loan
Agreements.
1.1.4 "LOAN" shall mean the loan, letter of credit, or any other
type of financing as provided under the Loan Agreement, and "Loans" shall mean
all such loans, letters of credit or other financing.
1.1.5 "LOAN AGREEMENT" shall mean any agreement pursuant to which
Borrower may obtain financing through a loan, letter of credit or other form of
financing, the obligations of which are guaranteed by Guarantors, and "LOAN
AGREEMENTS" shall mean all such agreements.
1.1.6 "LOAN DOCUMENTS" shall mean all agreements and documents
between Borrower and Lenders, or delivered by Borrower, with respect to the
Loans, including without limitation, the Loan Agreements, the notes, security
agreements, pledge agreements, certificates, financing statements and other
documents containing agreements, covenants, representations and/or warranties by
Borrower to or in favor of Lenders.
For avoidance of doubt, the loan agreements between Borrower and each of
CIT and Comerica are "Loan Agreements," the revolving lines of and letters of
credit provided by CIT and Comerica under such Loan Agreements are "Loans," and
CIT and Comerica are Lenders.
1.2 As of the date of this Agreement, Guarantors have guaranteed the
obligations of the Borrower under Loans from CIT and Comerica. Upon the request
of Borrower, Guarantors may, in the future, and in their sole and absolute
discretion, guaranty the obligations of Borrower under other Loans (including
additional Loans or renewals of the Loans from CIT and Comerica). This Agreement
sets forth the consideration and other terms and conditions pursuant to which
Guarantors have guaranteed and may in the future guaranty the obligations of
Borrower under Loans.
1.3 Borrower acknowledges that:
1.3.1 Guarantors have no obligation to deliver a guaranty,
Guarantors may refuse to issue such guaranty in its sole and absolute
discretion, and Guarantors may terminate a Guaranty at any time;
1.3.2 Each Guaranty shall apply only to obligations guaranteed
thereunder existing on or before the date that is the earliest of (the "GUARANTY
TERMINATION DATE") (i) September 14, 2007; (ii) the date that a Guarantor
delivers to Borrower written notice of Guarantor's termination of the Guaranty
along with a written consent from Lender thereto; or (iii) with respect to any
Loan, the date that Borrower delivers to Guarantors written notice of Borrower's
repayment in full (and termination) of the Loan, along with written confirmation
thereof from Lender, it being understood that Borrower shall have the right at
any time, without premium or penalty, to do so. Without limiting the generality
of the foregoing, the Guaranties shall not apply to increases in the
indebtedness owed on the Loan arising after the Guaranty Termination Date.
2. CONSIDERATION FOR GUARANTIES: In addition to Borrower's obligations,
representations and warranties hereunder, as consideration for Guarantors'
issuances of the Guaranties, Borrower shall do as follows:
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2.1 LETTERS-OF-CREDIT-BASED FEES: For the issuance of each Loan in the
form of a letter of credit (if any) guaranteed by Guarantors under a Guaranty
and until such letter of credit is no longer guaranteed under a Guaranty,
Borrower shall pay to Westrec, upon or before the issuance of each such letter
of credit and whenever thereafter a letter of credit fee is owed to Lender for a
renewal or extension or modification of such letter of credit, a cash amount
equal to TWO PERCENT (2%) of the face amount thereof. FHI shall not pay, or be
obligated to pay, to Lender under the Loan Documents a fee for any letter of
credit in excess of a cash amount equal to ONE PERCENT (1%) of the face amount
thereof.
2.2 LOAN FEES: With respect to any Loan other than a Loan in the form of a
letter of credit, Borrower shall pay to Westrec monthly in arrears, for so long
as any amount is outstanding on such Loan and is guaranteed under a Guaranty,
fees (the "LOAN FEES") equal to the difference between (i) an amount equal to
the interest accrued for the month in question under the Loan using however (in
lieu of the actual interest rate under the Note) the greater of (A) the sum of
TWENTY PERCENT (20%) PER ANNUM, plus (if applicable) the Default Increase (as
defined below), or (B) the sum of (I) the Lender's prime, reference or similar
base rate under the Loan pursuant to which interest is determined, or if no such
term is used, the interest rate on the loan, plus (II) 11.75% PER ANNUM, plus
(if applicable) the Default Increase, less (ii) an amount equal to the interest
actually accrued for the month in question under the Loan using the actual
interest rate thereunder, plus the Default Increase (if applicable). As used
herein, "DEFAULT INCREASE" means the percentage increase to the interest rate
under the Loan arising by reason of a default thereunder. The Default Increase
shall apply hereunder only if and when the Lender is entitled to charge it under
the Loan Documents for such Loan. Borrower shall pay the Loan Fees to Westrec
regardless of whether Lender fails, voluntarily, involuntarily or otherwise for
any reason whatsoever, to demand, receive or collect the interest or the Default
Increase in accordance with the terms of the Loan.
2.3 WARRANTS: FHH has concurrently herewith issued to Westrec an Amended
and Restated Common Stock Purchase Warrant to purchase up to 9,000,000 shares of
common stock of FHH, subject to adjustment as set forth therein (the "WARRANT").
2.4 SECURITY FOR AGREEMENT OBLIGATIONS: Each of FHH and FHI have
previously delivered to Guarantors a security agreement dated September 15, 2006
(the "FHH SECURITY AGREEMENT" and the "FHI SECURITY AGREEMENT," respectively),
pursuant to which Borrower has granted to the Guarantors a perfected security
interest in all Borrower's tangible and intangible property and assets, which
security interest shall be prior to all others EXCEPT those of Lender and any
others, if any, approved by the Guarantors. Each of FHH and FHI acknowledge that
by virtue of this amendment and restatement of the Original Agreement, this
Agreement shall be the "Credit Enhancement Agreement" referred to in the first
paragraph of the FHH Security Agreement and FHI Security Agreement with the
effect, among other things, that the collateral secures (among other things) the
obligations of Borrower under the Credit Enhancement Documents as defined in
this Agreement.
2.5 XXXXX SECURED GUARANTY: Xxxx Xxxxx, the Chief Executive Officer of FHH
acting in his personal capacity ("XXXXX"), has delivered to Guarantors his
personal guaranty dated September 15, 2006 (the "XXXXX GUARANTY"), and a Pledge
and Security Agreement dated September 15, 2006 (the "XXXXX PLEDGE"), pursuant
to which Xxxxx has (a) granted to
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Guarantors a first-priority security interest and pledge of all FHH common
stock, options, warrants and other equity securities (if any) held by him, and
(b) delivered to Guarantors any and all original certificates evidencing such
common stock and warrants along with stock and warrant transfer instruments duly
endorsed in blank (collectively, the "XXXXX CERTIFICATES").
2.6 TRANSACTION EXPENSES: Borrower, not Guarantors, shall pay and be
responsible for any and all costs, fees and expenses arising out of, or in
connection with, the Original Agreement, this Agreement, the Warrant, the Xxxxx
Guaranty, the Xxxxx Pledge, the FHI Security Agreement and the FHH Security
Agreement, and any and all amendments thereof (collectively, the "CREDIT
ENHANCEMENT DOCUMENTS") and the transactions contemplated thereby (collectively,
"COSTS AND EXPENSES"), including, without limitation, any filing or recordation
fees, the fees and disbursements of Guarantors' in-house and outside legal
counsel, and the Guarantors' expenses incurred for their due diligence or
otherwise, including, without limitation, fees and expenses for travel,
auditing, appraisal work and miscellaneous items. Borrower shall reimburse
Guarantors upon their demand for any such Costs and Expenses that Guarantors may
have elected to pay. The aggregate of the Costs and Expenses through September
15, 2006 will not exceed THIRTY-FIVE THOUSAND DOLLARS ($35,000).
2.7 CREDIT MONITORING FEE: Borrower shall pay to Westrec for each calendar
month up to and including the month that the Agreement Termination Date (as
defined below) occurs a monthly credit monitoring fee of FIVE THOUSAND DOLLARS
($5,000), such fee to be payable in arrears on the last day of each calendar
month and shall be prorated for each partial calendar month prior to the
Agreement Termination Date.
2.8 LATE FEE: Borrower acknowledges that any late payment hereunder will
cause Guarantors to incur costs not contemplated by this Agreement, and proof of
actual damages would be costly or inconvenient. Therefore, should Borrower fail
to pay any amount due hereunder, including, without limitation, any amount due
under subsections 2.1, 2.2 or 2.7 of this Section 2, within ten calendar days
after the due date thereof, Borrower shall pay to Westrec (without further
notice or demand from Guarantors) an amount (the "LATE FEE") equal to five
percent (5%) of each such late payment, but Westrec's acceptance of any such
Late Fee shall not constitute a waiver by Guarantors of any Event of Default (as
defined below) or of any right or remedy of Guarantors hereunder. Only one Late
Fee shall be collected on account of any late payment regardless of the period
during which it remains in default. The Late Fee represents a reasonable sum
considering all the circumstances existing on the date of this Agreement and
represents a fair and reasonable estimate of the costs that Westrec will incur
by reason of late payment.
3. AGREEMENT TERMINATION DATE: NOTWITHSTANDING any Guaranty Termination Date,
Borrower's and/or Xxxxx'x obligations to Guarantor under the Credit Enhancement
Documents, and each Guarantor's rights and remedies against Borrower and/or
Xxxxx thereunder, shall remain in full force and effect until the date that the
following conditions are fulfilled (the "AGREEMENT TERMINATION DATE"):
3.1 Each Lender shall have delivered to each Guarantor its or his original
Guaranty and a written release (the "LENDER RELEASE") whereby such Lender shall
forever waive, and release such Guarantor from, any and all claims, damages,
losses, liabilities, obligations, costs or
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expenses, (including, without limitation, attorneys' fees and disbursements and
court costs), whether known, unknown, suspected or unsuspected (collectively,
"RELEASED CLAIMS"), arising out of, or in connection with, such Guaranty, any
obligations of the Guarantor thereunder, and any transactions contemplated
thereby, such Lender Release to be in form and substance entirely satisfactory
to such Guarantor and its or his legal counsel.
3.2 Borrower shall deliver in cash (a) (to Westrec) any and all amounts
payable under Sections 2.1, 2.2, 2.7 and 2.8 above through the effective date of
the Lender Release; (b) (to Guarantors) any other amounts, if any, that Borrower
and/or Xxxxx may owe to Guarantors under the Credit Enhancement Documents; and
(c) (to Guarantors) an amount equal to Guarantors' out-of-pocket costs and
expenses, including, without limitation, the fees and disbursements of
Guarantors' legal counsel, incurred in connection with or pursuant to this
Section 3.2.
3.3 Borrower and Xxxxx shall deliver to the Guarantors a written release
(the "BORROWER/XXXXX RELEASE") whereby Borrower and Xxxxx, acting jointly and
severally, shall forever waive, and release the Guarantors from, any Released
Claims arising out of, or in connection with, the Credit Enhancement Documents
and any transactions contemplated thereby, such Borrower/Xxxxx Release to be in
a form and substance entirely satisfactory to the Guarantors and their legal
counsel.
3.4 Neither Borrower nor Xxxxx shall be in default of any of its or his
obligations to a Guarantor under any Credit Enhancement Document.
4. ADDITIONAL BORROWER COVENANTS
4.1 MODIFICATIONS OF LOAN DOCUMENTS: Borrower shall not, without
Guarantors' prior written consent, which consent Guarantors may withhold in
their sole and absolute discretion, modify, amend, supplement, terminate or
otherwise change any Loan Document, whether orally, in writing, by conduct, by
acquiescence or otherwise.
4.2 GUARANTOR RIGHT TO APPROVE DRAWS: Each draw or advance by FHI on its
Loan (including, without limitation, each request for additional loan funds and
each request for a letter of credit under the Loan Documents) (singly and
collectively, "DRAW") shall be subject to the prior written approval of
Guarantors, which approval Guarantors may withhold in their sole and absolute
discretion.
4.3 FHI RECEIVABLES: All FHI receivables shall go to a lockbox, be
collected solely by CIT (or another financial institution satisfactory to
Westrec), and be delivered by CIT (or such other institution) directly to
Lender.
4.4 INCORPORATION OF LOAN AGREEMENT PROVISIONS: Sections dealing with the
representations and warranties and the covenants of the Borrower in the Loan
Agreements are hereby incorporated herein as if set forth in full herein, EXCEPT
THAT for purposes of this incorporation, in connection with any Loan Agreement:
(a) the term for Lender in such Loan Agreement, however defined in the Loan
Agreement, shall mean Guarantors; (b) the term for FHI or FHH, however defined,
shall mean Borrower; (c) the term for the Loan Agreement shall mean this
Agreement, and (d) other defined terms used in such incorporated Sections shall
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have the meanings set forth in the Loan Agreement. To the extent that any
provisions of any Loan Document are incorporated herein, such incorporated
provisions shall not be considered changed or terminated hereunder unless and
until Guarantors specifically agree to such change or termination for purposes
of the incorporation thereof in this Section.
4.5 GUARANTOR DUE DILIGENCE: Guarantors shall have the right to perform,
from time to time before and after the date of this Agreement, such
investigations and due diligence with respect to Borrower, Xxxxx and any
collateral granted to Guarantor under any Credit Enhancement Document
(collectively, "COLLATERAL") as the Guarantors may deem necessary or desirable.
Without limiting the generality of the foregoing or any other obligations of
Borrower or Xxxxx under any Credit Enhancement Document, Guarantors shall have
the right to access, and to receive copies of, such financial and other
information or reports about Borrower and/or any Collateral as Guarantors may in
their sole and absolute discretion request.
4.6 BORROWER PERFORMANCE OF LOAN DOCUMENTS: Borrower shall perform its
obligations under the Loan Documents in a timely manner, and shall not otherwise
default in its obligations thereunder. All of Borrower's representations and
warranties made under the Loan Documents at the date of the Original Agreement,
at the date hereof and hereafter shall be true, correct and complete when made
or deemed made.
4.7 SUBROGATION AND INDEMNIFICATION: In the event that a Guarantor makes
any payment to Lender (or its successors) pursuant to a Guaranty, such Guarantor
shall be subrogated to any and all Lender rights and remedies under the Loan
Documents. Borrower hereby indemnifies, agrees to defend (with counsel
reasonably satisfactory to Guarantors), and holds harmless Guarantors and their
directors, officers, managers, members, agents and representatives
(collectively, the "INDEMNIFIED PARTIES") from and against any claims, damages,
liabilities, losses, obligations, costs and expenses (including attorneys' fees
and disbursements and court costs) resulting from, arising out of, or related
to: (a) any Credit Enhancement Document, or any Loan Document, including,
without limitation, any breach by Borrower thereunder; (b) the Guaranties,
including without limitation, any payments made by a Guarantor under a Guaranty;
and (c) any action, suit, proceeding or claim by Lender (or its successors)
against an Indemnified Party under or with respect to any Credit Enhancement
Document, any Guaranty, any Loan Document or any transaction contemplated
thereby.
4.8 BOARD AND SHAREHOLDER MEETING ATTENDANCE: Borrower shall deliver to
the Guarantors no less than ten (10) days' prior written notice of any meeting
of FHI's or FHH's board of directors or of its shareholders. The Guarantors
shall have the right to have a Guarantor representative present at any and all
such meetings, and the Guarantors may in their discretion have such
representative present in person or by telephone. Borrower shall reimburse the
Guarantors for any expenses reasonably incurred by the Guarantors or their
representative in connection with any such participation, including, without
limitation, reasonable travel expenses.
5. BORROWER REPRESENTATIONS AND WARRANTIES: In addition to the representations
and warranties made to Guarantors by virtue of the incorporation of relevant
sections of the Loan Agreements in Section 4.4 above, each Borrower hereby
represents and warrants to the Guarantors as follows:
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5.1 FHH COMMON STOCK: The Common Stock of FHH has been registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and FHH is subject to the periodic reporting requirements of Section 13
of the Exchange Act. FHH has filed all forms, reports, schedules, statements and
other documents required to be filed by it under the Exchange Act (collectively,
the "SEC DOCUMENTS"), and each of the SEC Documents, including, without
limitation, any financial statements and schedules included therein, (i) did not
contain any untrue statement of a material fact, contained all statements
required to be stated therein, and did not omit any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) complied in all respects with the applicable
requirements of the Exchange Act and the applicable rules and regulations
thereunder.
5.2 BORROWER ORGANIZATION: Each Borrower and each of FHH's subsidiaries
(collectively, the "BORROWER GROUP") (i) has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation with full power and authority (corporate and other) to own,
lease and operate its properties and conduct its business as described in the
SEC Documents; (ii) is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the ownership or leasing
of its respective properties or the conduct of its respective business requires
such qualification, EXCEPT where the failure to be so qualified or be in good
standing would not have a material adverse effect on the financial condition,
results of operations, properties, projects or business of the Borrower Group
taken as a whole (a "MATERIAL ADVERSE EFFECT"); (iii) is in possession of, and
operating in compliance with, all authorizations, licenses, certificates,
consents, orders and permits from government authorities that are material to
the conduct of its business, all of which are valid and in full force and
effect.
5.3 NO BORROWER GROUP VIOLATIONS: No member of the Borrower Group is (i)
in violation of its charter or bylaws, (ii) in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract or agreement, or (iii) in violation of any law, rule, regulation or
order, where such violation or default would have a Material Adverse Effect.
5.4 BORROWER AUTHORITY: Each Borrower has full legal right, power and
authority to enter into the Credit Enhancement Documents executed by it and to
perform the transactions contemplated thereby. Each such Credit Enhancement
Document has been duly authorized, executed and delivered by such Borrower and
is a valid and binding agreement on the part of such Borrower, enforceable in
accordance with its terms; the performance of each such Credit Enhancement
Document and the consummation of the transactions therein contemplated will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under: (i) any contract or agreement to which any member of
the Borrower Group is a party or to which any of its assets are subject; (ii)
the charter or bylaws of any member of the Borrower Group; or (iii) any law,
rule, regulation or order. No consent, approval, authorization or order of, or
qualification with, any governmental authority having jurisdiction over any
member of the Borrower Group or over its respective properties or assets is
required for the execution and delivery of the Credit Enhancement Documents
executed by Borrower or the consummation by the Borrower of the transactions
therein contemplated.
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5.5 NO PENDING CLAIMS: There is not pending or, to the best of Borrower's
knowledge, threatened, any claim, action, suit, proceeding or arbitration
against any member of the Borrower Group, or any director or officer of any
member of the Borrower Group in his or her capacity as such, that could have a
Material Adverse Effect.
5.6 FINANCIALS: The consolidated financial statements included in the SEC
Documents fairly present the consolidated financial position and the
consolidated results of operations, cash flows and stockholders' equity of the
Borrower Group at the respective dates and for the respective periods to which
they apply; such financial statements comply as to form in all material respects
with applicable accounting requirements and with the rules and regulations of
the Securities and Exchange Commission ("SEC") with respect hereto when filed,
and have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as may be
otherwise stated therein (except as may be indicated in the notes thereto or as
permitted by the rules and regulations of the SEC). The procedures pursuant to
which the aforementioned financial statements have been audited are compliant
with generally accepted auditing standards.
5.7 UPDATING: Subsequent to the respective dates as of which information
is given in the SEC Documents, there has not been (i) any material adverse
change in the business, prospects, financial condition or results of operations
of the Borrower Group taken as a whole, or (ii) any obligation, direct or
contingent, that is material to the Borrower Group taken as a whole incurred by
any member of the Borrower Group, EXCEPT such obligations as have been incurred
in the ordinary course of business.
5.8 ACCURACY OF INFORMATION PROVIDED: All copies of all agreements and
other documents provided to a Guarantor by Borrower are true and accurate copies
thereof; none of the information provided by Borrower in connection with the
Credit Enhancement Documents contained any untrue statement of a material fact
and did not omit any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5.9 LENDER REPRESENTATIONS: All representations and warranties made to
Lender in any Loan Document are true and correct, and the Borrower has complied
with all of its obligations and agreements under the Loan Documents.
5.10 RENEWAL OF REPRESENTATIONS: All Borrower's representations and
warranties herein (whether made by incorporation under Section 4.4 hereof or in
this Section 5 or otherwise) were made as of September 15, 2006, are made as of
the date hereof, and shall be deemed remade as of each date that FHI requests or
receives a Draw.
5.11 LEGAL COUNSEL: Each Borrower and Xxxxx have been represented by, and
have obtained the advice of, legal counsel with respect to the Credit
Enhancement Documents, the Loan Documents and the transaction contemplated
thereby.
5.12 JOINT AND SEVERAL LIABILITY: FHI and FHH are acting jointly and
severally hereunder, and are jointly and severally liable hereunder for both
their separate and their joint obligations, representations and warranties
hereunder.
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6. GUARANTOR REPRESENTATIONS AND WARRANTIES: In connection with the Warrant,
each Guarantor represents and warrants to Borrower as follows:
6.1 INVESTMENT INTENT: Westrec is acquiring the Warrant for its own
account, for investment purposes only and not with a view to distribution of the
Warrant in violation of the Securities Act of 1933 (as amended) (the "SECURITIES
ACT").
6.2 ACCEPTANCE OF RISK: The Guarantors understand that an investment in
the Warrant involves a high degree of risk, and each Guarantor has the financial
ability to bear the economic risk of this investment in the Warrant, including a
complete loss of such investment.
6.3 KNOWLEDGE AND EXPERIENCE: Each Guarantor has such knowledge and
experience in financial and business matters that it or he is capable of
evaluating the merits and risks of an investment in the Warrant and in
protecting its or his own interest in connection with this transaction.
6.4 NO REGISTRATION: The Guarantors understand that the issuance of the
Warrant has not been registered under the Securities Act or under any state
securities laws. The Guarantors are familiar with the provisions of the
Securities Act and Rule 144 thereunder and understand that the restrictions on
transfer on the Warrant may result in Westrec being required to hold the Warrant
for an indefinite period of time.
6.5 RESTRICTED TRANSFERS: Westrec agrees not to sell, transfer, assign,
gift, create a security interest in, or otherwise dispose of, with or without
consideration (collectively, "TRANSFER") the Warrant or any portion thereof
except pursuant to an effective registration statement under the Securities Act
or an exemption from registration. As a further condition to any such Transfer,
except in the event that such Transfer is made pursuant to an effective
registration statement under the Securities Act, if in the reasonable opinion of
counsel to FHH, any Transfer of the Warrant by the contemplated transferee
thereof would not be exempt from the registration and prospectus delivery
requirements of the Securities Act, FHH may require the contemplated transferee
to furnish FHH with an investment letter setting forth such information and
agreements as may be reasonably requested by FHH to ensure compliance by such
transferee with the Securities Act.
7. [Intentionally left blank]
8. EVENTS OF DEFAULT: In addition to any other rights or remedies that the
Guarantors may have otherwise under any Credit Enhancement Document or
otherwise, upon the occurrence of, and at any time during the continuance or
existence of, any Event of Default hereunder, the Guarantors may exercise any
and all rights and remedies that they may have available to them as a result
thereof, whether by agreement, by law or otherwise. As used herein, an "EVENT OF
DEFAULT" shall be deemed to have occurred or exist under this Agreement upon the
occurrence and/or existence of any of the following conditions:
8.1 BREACH OF OBLIGATIONS: Borrower shall fail to pay or perform its
obligations hereunder or under any other Credit Enhancement Document;
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8.2 BREACH OF REPRESENTATIONS: Any representation, warranty, certification
or statement made or deemed to have been made by the Borrower herein or in any
other Credit Enhancement Document, or in any certificate, financial statement or
other document or agreement delivered to the Guarantors by or on behalf of the
Borrower pursuant to, or in connection with, this Agreement or any other Credit
Enhancement Document shall prove to be untrue in any material respect;
8.3 LOAN AGREEMENT DEFAULTS: An Event of Default (as defined in the Loan
Agreement) shall exist, regardless of whether or how the Lender enforces its
rights and remedies with respect thereto; or
8.4 BORROWER CHANGES: Any change for any reason whatsoever in the
management, ownership or control of either Borrower that, in the sole discretion
of the Guarantors, could result in a Material Adverse Effect.
9. MISCELLANEOUS PROVISIONS
9.1 NOTICES: Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be delivered personally or by
facsimile (receipt confirmed electronically) or shall be sent by a reputable
express delivery service or by certified mail, postage prepaid with return
receipt requested, addressed as follows:
if to Borrower, to:
The Fashion House, Inc.
0000 Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Fax: (000) 000-0000
if to a Guarantor, to:
Westrec Capital Partners, LLC
00000 Xxxxxxx Xxxx.
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. XxXxxxxxx, President
Fax: (000) 000-0000
with a copy to:
Xxxx & Xxxxx PC
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
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Either Party hereto may change the above-specified recipient or mailing address
by notice to the other Party given in the manner herein prescribed. All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally or by facsimile, provided that any such facsimile is
received during regular business hours at the recipient's location) or on the
day shown on the return receipt (if delivered by mail or delivery service).
9.2 ENTIRE AGREEMENT: This Agreement and any agreements contemplated
hereby (including any exhibits hereto) contain the entire agreement between the
Parties with respect to the transactions contemplated hereby and supersedes all
prior agreements, written or oral, with respect thereto.
9.3 WAIVERS AND AMENDMENTS: This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the Parties or, in the
case of a waiver, by the Party waiving compliance. No delay on the part of any
Party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any Party of any right,
power or privilege hereunder, nor any single or partial exercise of any right,
power or privilege hereunder, preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
9.4 FURTHER ACTIONS: Each Party agrees, without further consideration, to
take such actions and to execute and deliver such documents as may be reasonably
necessary to effectuate the purposes of this Agreement.
9.5 GOVERNING LAW: This Agreement shall be governed and construed in
accordance with the laws of California applicable to agreements made and to be
performed entirely within such state.
9.6 BINDING EFFECT; ASSIGNMENT: This Agreement shall be binding upon and
shall inure to the benefit of the Parties hereto and their respective successors
and permitted assigns.
9.7 COUNTERPARTS; FACSIMILE SIGNATURES: This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. The signature of
any Party on a copy of this Agreement that is delivered by facsimile
transmission to another Party shall be deemed the equivalent of an original
signature.
9.8 RECITALS; EXHIBITS: The Recitals and any Exhibits to this Agreement
are a part of this Agreement as if set forth in full herein. All references to
the Credit Enhancement Agreement in the Exhibits shall include this Agreement.
9.9 HEADINGS: The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
9.10 SEVERABILITY: Any portion or provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be reformed to the extent necessary to avoid such invalidity,
illegality or unenforceability, without affecting in any way the remaining
portions or provisions hereof in such jurisdiction or, to the extent permitted
by law,
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rendering that or any other portion or provision hereof invalid, illegal
or unenforceable in any other jurisdiction.
9.11 RELATIONSHIP BETWEEN THE PARTIES: The Parties agree that this is an
arm's-length transaction in which the Parties' undertakings and obligations are
limited to the performance of their obligations under this Agreement.
9.12 JUDICIAL INTERPRETATION: Should any provision of this Agreement
require judicial interpretation, it is agreed that a court interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly construed against any person by reason of the rule of construction
that a document is to be construed more strictly against the person which itself
or through its agent prepared the same, it being agreed that all Parties have
participated in the preparation of this Agreement.
9.13 PREVAILING PARTY: If either Party brings any legal suit, action,
arbitration or other proceeding against the other Party arising out of, relating
to, or concerning the interpretation or the enforcement of rights and duties
hereunder or any transaction related hereto (collectively, an "ACTION"), the
losing Party shall pay to the prevailing Party a reasonable sum for attorneys'
fees and shall reimburse all costs (whether or not such costs are otherwise
recoverable under the provisions of any statutory or other law of California or
any other jurisdiction) incurred in connection with the prosecution or defense
of such Action and/or enforcement of any judgment, order, ruling or award
granted therein, all of which shall be deemed to have accrued on the
commencement of such Action and shall be paid whether or not such Action is
prosecuted to a judgment, order, ruling or award. "PREVAILING PARTY" within the
meaning of this Section includes, without limitation, a Party who or which
agrees to dismiss an Action on the other Party's payment of some or all sums
allegedly due or performance of some or all of the covenants allegedly breached,
or which obtains substantially the relief sought by it.
9.14 REFERENCE PROVISION: The provisions of EXHIBIT A attached hereto are
hereby incorporated herein.
WESTREC CAPITAL PARTNERS, LLC THE FASHION HOUSE HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxx XxXxxx
----------------------------- ------------------------------------
Xxxxxxx X. Xxxxx, Sole Member Xxxx XxXxxx, Chief Financial Officer
/s/ Xxxxxxx X. Xxxxx THE FASHION HOUSE, INC.
--------------------------------
Xxxxxxx X. Xxxxx By: /s/ Xxxx XxXxxx
------------------------------------
Xxxx XxXxxx, Chief Financial Officer
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EXHIBIT A
TO
AMENDED AND RESTATED CREDIT ENHANCEMENT AGREEMENT
REFERENCE PROVISIONS
(a) The Parties elect to proceed under this Reference Provision with
respect to each Credit Enhancement Document.
(b) With the exception of the items specified in clause (c), below, any
controversy, dispute or claim (each, a "CLAIM") between the Parties arising out
of or relating to a Credit Enhancement Document will be resolved by a reference
proceeding in California in accordance with the provisions of Section 638 et
seq. of the California Code of Civil Procedure ("CCP"), or their successor
sections, which shall constitute the exclusive remedy for the resolution of any
Claim, including whether the Claim is subject to the reference proceeding.
Except as otherwise provided in the Credit Enhancement Document in question,
venue for the reference proceeding will be in the state or federal court in the
county or district where venue is otherwise appropriate under applicable law
(the "COURT").
(c) The matters that shall not be subject to a reference are the
following: (i) non-judicial foreclosure of any security interests in real or
personal property, (ii) exercise of self-help remedies (including, without
limitation, set-off), (iii) appointment of a receiver and (iv) temporary,
provisional or ancillary remedies (including, without limitation, writs of
attachment, writs of possession, temporary restraining orders or preliminary
injunctions). Nothing in this Exhibit A limits the right of any Party to
exercise or oppose any of the rights and remedies described in clauses (i) and
(ii) or to seek or oppose from a court of competent jurisdiction any of the
items described in clauses (iii) and (iv). The exercise of, or opposition to,
any of those items does not waive the right of any Party to a reference pursuant
to this Exhibit A.
(d) The referee shall be a retired judge or justice selected by mutual
written agreement of the parties. If the Parties do not agree within ten (10)
days of a written request to do so by any Party, then, upon request of any
Party, the referee shall be selected by the Presiding Judge of the Court (or his
or her representative). A request for appointment of a referee may be heard on
an ex parte or expedited basis, and the Parties agree that irreparable harm
would result if ex parte relief is not granted. Pursuant to CCP Section 170.6,
each Party shall have one peremptory challenge to the referee selected by the
Presiding Judge of the Court (or his or her representative).
(e) The Parties agree that time is of the essence in conducting the
reference proceedings. Accordingly, the referee shall be requested, subject to
change in the time periods specified herein for good cause shown, to (i) set the
matter for a status and trial-setting conference within fifteen (15) days after
the date of selection of the referee, (ii) if practicable, try all issues of law
or fact within one hundred twenty (120) days after the date of the conference
and (iii) report a statement of decision within twenty (20) days after the
matter has been submitted for decision.
(f) The referee will have power to expand or limit the amount and duration
of discovery. The referee may set or extend discovery deadlines or cutoffs for
good cause, including a Party's failure to provide requested discovery for any
reason whatsoever. Unless otherwise ordered, no Party shall be entitled to
"priority" in conducting discovery, depositions may be taken by either Party
upon seven (7) days written notice, and all other discovery shall be responded
to within fifteen (15) days after service. All disputes relating to discovery
which cannot be resolved by the Parties shall be submitted to the referee whose
decision shall be final and binding.
(g) Except as expressly set forth in this Exhibit A, the referee shall
determine the manner in which the reference proceeding is conducted, including
the time and place of hearings, the order of presentation of evidence, and all
other questions that arise with respect to the course of the reference
proceeding. All proceedings and hearings conducted before the referee, except
for trial, shall be conducted without a court reporter, except that when any
Party so requests, a court reporter will be used at any hearing conducted before
the referee, and the referee will be provided a courtesy copy of the transcript.
The Party making such a request shall have the obligation to arrange for and pay
the court reporter. Subject to the referee's power to award costs to the
prevailing party, the Parties will equally share the cost of the referee and the
court reporter at trial.
(h) The referee shall be required to determine all issues in accordance
with existing case law and the statutory laws of the State of California The
rules of evidence applicable to proceedings at law in the State of California
will be applicable to the reference proceeding. The referee shall be empowered
to enter equitable as well as legal relief, enter equitable orders that will be
binding on the parties and rule on any motion which would be authorized in a
trial, including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding that disposes of all claims of the Parties that are the subject of
the reference. Pursuant to CCP Section 644, such decision shall be entered by
the Court as a judgment or an order in the same manner as if the action had been
tried by the Court and any such decision will be final, binding and conclusive.
The Parties reserve the right to appeal from the final judgment or order or from
any appealable decision or order entered by the referee. The Parties reserve the
right to findings of fact, conclusions of laws, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial,
if granted, is also to be a reference proceeding under this provision.
(i) If the enabling legislation that provides for appointment of a referee
is repealed (and no successor statute is enacted), any dispute between the
Parties that would otherwise be determined by reference procedure will be
resolved and determined by arbitration. The arbitration will be conducted by a
retired judge or Justice, in accordance with the California Arbitration Act
Section 1280 through Section 1294.2 of the CCP as amended from time to time. The
limitations with respect to discovery set forth above shall apply to any such
arbitration proceeding.
(j) THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS
REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN
CHOICE, EACH
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PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES,
AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR
CLAIM BETWEEN OR AMONG THEM WHICH ARISES OUT OF OR IS RELATED TO THIS AGREEMENT.
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