EXHIBIT 10.1
LOAN AGREEMENT
     THIS LOAN AGREEMENT (this “Agreement”) dated as of December 29, 2006,
between BabyUniverse, Inc., a Florida corporation (“Borrower or BabyUniverse”),
and Lydian Private Bank (the “Lender”).
RECITALS:
     Lender has agreed to make a loan available to the Borrower under the terms
set forth in this Agreement,
     NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth on the part of the parties hereto to be
performed, the parties hereto agree as follows:
1. DEFINITIONS AND ACCOUNTING TERMS
     A. Certain Defined Terms. As used in this Agreement, unless the context
shall otherwise require, the following terms shall have the respective meanings
set forth in this section (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
          i. “Additional Stock” — collectively, 83,470 shares of common stock in
BabyUniverse owned by Wyndcrest II and 180,382 shares of common stock in
BabyUniverse owned by Wyndcrest III, as described on the Annex to the Security
Agreement.
          ii. “Agreement” — this Loan Agreement and any amendments or
supplements thereto.
          iii. “BabyUniverse” — BabyUniverse, Inc., a Florida corporation.
          iv. “Closing” — the date the Loan Documents are executed by Borrower
and delivered to the Lender.
          v. “Debt Service Reserve Account” — the account established at Lender
pursuant to that certain Debt Service Reserve and Pledge Agreement dated
September 22, 2006, between Wyndcrest II, Wyndcrest III and Lender.
          vi. “Event of Default” — as defined in Section 6.A. hereof.
          vii. “Existing Stock” — collectively, 475,988 shares of common stock
of BabyUniverse owned by Wyndcrest II and 1,028,624 shares of common stock of
BabyUniverse owned by Wyndcrest III, as described on the Annex to the Security
Agreement.

 

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          viii. “GAAP” — generally accepted accounting principles in the United
States.
          ix. “Guarantor” — John C. Textor, Wyndcrest II and Wyndcrest III,
jointly and severally.
          x. “Guaranty” — the unconditional guaranty of repayment executed by
the Guarantor in connection with the Loan.
          xi. “Lender” — Lydian Private Bank.
          xii. “Loan” — the loan made by Lender to Borrower in accordance with
this Agreement, in the original principal balance of $2,000,000.00.
          xiii. “Loan Documents” — this Agreement, the Note, the Security
Agreement and the other instruments and documents delivered in connection
therewith.
          xiv. “Registered” — means that the Registration Statement covering the
corporate equity shares in question has been declared or ordered effective by
the Securities and Exchange Commission and such effectiveness is continuing and
has not been canceled, revoked or terminated.
          xv. “Registered Additional Stock” — such of the Additional Stock as
has been Registered.
          xvi. “Registration Statement” — means a registration statement on Form
S-3 of the Company under the Securities Act of 1933, as amended, that names
Wyndcrest II and Wyndcrest III, and each of them, as selling shareholders.
          xvii. “Security Agreement” — that certain Security and Pledge
Agreement dated of even date herewith executed by Wyndcrest II and Wyndcrest
III.
          xviii. “Note” — that certain promissory note bearing even date
herewith executed and delivered by Borrower to Lender which evidences the Loan.
          xix. “Wyndcrest II” — Wyndcrest Baby Universe Holdings II, LLC, a
Florida limited liability company.
          xx. “Wyndcrest III” — Wyndcrest BabyUniverse Holdings III, LLC, a
Florida limited liability company.
          xxi. “Wyndcrest Note” — that certain Promissory Note dated
September 22, 2006, in the original principal amount of Two Million Five Hundred
Thousand Dollars ($2,500,000.00) executed by Wyndcrest II and Wyndcrest III in
favor of Lender.
     B. Financial Terms. All accounting and financial terms not otherwise
defined herein shall be defined under GAAP.

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2. TERM LOAN; USE OF PROCEEDS
     A. Amount and Term of the Term Loan. Subject to the terms and conditions of
the Note and as hereinafter set forth, Lender shall lend to the Borrower and the
Borrower shall borrow from Lender the principal sum of Two Million Dollars
($2,000,000.00). The Loan will be evidenced by the Note executed by Borrower and
delivered to Lender concurrent with the execution hereof. The Security Agreement
will secure repayment of the Guaranty and the Note. The Loan shall mature on
July 1, 2008, as more fully set forth in the Note.
     B. Interest. The Note shall bear interest on the entire unpaid principal
amount from time to time outstanding as set forth in the Note.
     C. Use of Proceeds. Borrower will use the proceeds of the Loan solely to:
(i) pay operating expenses of Borrower as needed, and (ii) pay closing costs in
connection with the Closing.
     D. Loan Fee. In consideration of Lender’s agreement to make the Loan,
Borrower has paid to Lender a commitment fee in the amount of Fifteen Thousand
Dollars ($15,000.00).
     E. Auto Transfer. Borrower hereby authorizes Lender to initiate withdrawals
from its checking account number ___(maintained at Lender) for the monthly
payment due on the Loan on the 1st day of each month. Any scheduled changes in
the monthly payment amount will automatically take effect, i.e. monthly interest
rate changes. This authorization will remain in effect until Borrower notifies
Lender to cancel it in such time as to provide Lender with reasonable time to
act.
3. COLLATERAL
     Repayment of the Note and all the obligations set forth in the Loan
Documents is and shall be secured by a perfected first security interest in the
Existing Stock and the Additional Stock, as more fully set forth in the Security
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BORROWER
     A. Representation and Warranties by the Borrower. In order to induce Lender
to enter into this Agreement and to make the Loan to Borrower, Borrower
represents and warrants to Lender that:
          i. Corporate Existence and Powers; Ownership. Borrower is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Florida. Borrower has full power and authority to own its
assets and to conduct its business as now conducted. Borrower has complied with
all filing, permit, license and other requirements of federal, state and local
laws necessary to permit it to continue to do business in respect to all
applicable jurisdictions and as now conducted.

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          ii. Authority. Borrower has all requisite power and authority to
execute and deliver and to perform its obligations hereunder and to borrow from
Lender hereunder. The execution, delivery and performance by Borrower of this
Agreement and the other Loan Documents: (a) has been duly authorized by all
necessary company action; (b) will not violate any provision of law or
governmental regulation, will not violate any order, decree, writ, injunction,
determination, award or judgment of any court, arbitrator or governmental body,
and will not violate Borrower’s Articles of Incorporation or Bylaws; and
(c) will not conflict with any of the terms or provisions of, or result in a
breach of, or constitute a default under, or result in the creation or
imposition of any lien, charge, security interest or encumbrance upon any assets
of Borrower pursuant to any mortgage, indenture, contract, lease, loan or credit
agreement, or other agreement or instrument to which Borrower is a party or by
which its assets are bound. This Agreement constitutes, and the other Loan
Documents when executed and delivered by Borrower will constitute, legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms.
          iii. No Consents. No consent of any other party and no consent, or
authorization of, or registration, filing or declaration with, any court or
governmental body, authority, bureau, agency or instrumentality, or any
specifically granted exemption from any of the foregoing, is or will be
necessary to or for the valid execution, delivery or performance by Borrower of
the Loan Documents.
          iv. Litigation. Except as disclosed in writing by Borrower to Lender,
there are no actions, suits, or proceedings pending, or to the knowledge of
Borrower, threatened against or affecting such party or its assets, in any court
or before any arbitrator of any kind or before any governmental agency or
instrumentality, which, if adversely determined would: (a) significantly impair
the ability of such party to carry on its businesses substantially as now
conducted; or (b) have a material adverse effect on the financial condition of
the party.
          v. Title to Property. Wyndcrest II and Wyndcrest III have good title
to the Existing Stock and the Additional Stock, free and clear of all liens,
security interests or other encumbrances except for a lien in favor of Lender.
          vi. No Default. Borrower is not in default with respect to any law,
statute, judgment, writ, injunction, decree, rule or regulation of any court or
governmental agency, or instrumentality, which could have a material adverse
effect upon its financial condition or properties or its ability to carry on its
business substantially as now conducted.
          vii. Burdensome Agreements. Borrower is not a party to any agreement
which may reasonably be expected to have an adverse effect on its business,
assets, operations or conditions, financial or otherwise, or on its ability to
carry out its obligations under the Loan Documents.
          viii. Taxes. Borrower has filed all tax returns which are required to
be filed and has paid all taxes shown to be due and payable on said returns or
on any

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assessment received by it to the extent that such taxes and assessments have
become due and payable.
          ix. Accuracy of Statements; No Material Adverse Changes. No
information, exhibit or report furnished by Borrower to Lender in connection
with the negotiation of this Agreement contains any material misstatement of
fact or omits to state any fact necessary to make the statements contained
therein not misleading. All financial statements previously delivered to Lender
have been prepared in accordance with GAAP and fairly present Borrower’s
financial condition as of the respective dates thereof. No material adverse
change has occurred in the financial condition of Borrower from the condition
disclosed in its financial statements delivered to Lender, or in its operations.
5. COVENANTS OF THE BORROWER AND GUARANTOR
     A. Affirmative Covenants Other Than Reporting Requirements. So long as any
portion of the Loan shall remain unpaid, Borrower will, unless Lender shall
otherwise consent in writing:
          i. Payment, etc. Pay the Loan and promptly perform its obligations and
pay and discharge all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits, or upon any of its assets, prior
to the date on which penalties attach thereto, and pay all lawful claims which,
if unpaid, might become liens or charges upon any of its assets, provided that
Borrower shall not be required to pay any such tax, assessment, charge, levy or
claim during the period when such is being contested in good faith and by proper
proceedings, and adequate reserves for the accrual of any of the same are
maintained.
          ii. Existence. Preserve and maintain the legal existence, rights,
franchises and privileges of Borrower, in the jurisdiction of its organization
and any other jurisdictions in which it is qualified to do business.
          iii. Compliance. Comply with the requirements of all applicable laws,
rules, regulations, ordinances, and orders of any governmental authority,
noncompliance with which would reasonably be expected to materially and
adversely affect the business or credit of Borrower.
          iv. Books and Records. Keep records and books of account in form
reasonably acceptable to Lender reflecting all financial transactions of
Borrower.
          v. Notification of Claims. Promptly notify Lender of the commencement
of any action, suit, claim, counterclaim or proceeding against or investigation
of Borrower (a) the result of which could materially adversely affect the
business, operations or financial condition of Borrower, or (b) which questions
the validity of this Agreement or any other Loan Document or any action taken or
to be taken pursuant to any of the foregoing.

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          vi. Notification of Default, etc. Promptly notify Lender in writing
of: (a) any material assessment by any taxing authority for unpaid taxes as soon
as Borrower has knowledge thereof; or (b) any default by Borrower in the
performance of, or any modifications of, any of the terms or conditions
contained in any agreement, note, mortgage, indenture, or instrument to which
Borrower is a party or which is binding upon it, which would materially and
adversely affect the operations, business or financial condition of Borrower.
          vii. Maintenance of Licenses. Maintain and keep in effect licensing,
know-how and similar agreements necessary in the proper conduct of the business
of Borrower.
          viii. Further Assurances. Upon the reasonable request of Lender, do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further instruments, acts, deeds, and assurances as may be
reasonably required by Lender for the purpose of carrying out the provisions and
intent of this Agreement, including without limitation satisfying or otherwise
removing any liens or other encumbrances on any of its assets.
          ix. Payment of Documentary Stamp and Intangible Taxes. If Lender is
ever required to pay documentary stamp or intangible taxes in connection with
the Loan, Borrower will, upon ten (10) days written demand from Lender, pay all
such documentary stamp or intangible taxes and hold Lender harmless from all
liabilities, claims, costs and expenses in connection therewith.
          x. Transfer of Assets. Neither Borrower nor any Guarantor shall
transfer any asset to a third party or trust, except in an arms length
transaction for reasonably equivalent value, without the express written consent
of Lender. Notwithstanding the foregoing, prior to the date the Loan is paid in
full, any or all of the three (3) parties which constitute the Guarantor may,
without such consent of Lender, transfer assets, provided, however, that the
aggregate value of all such transfers shall not exceed One Hundred Thousand
Dollars ($100,000.00), in a transfer or series of transfers which are not arms
length or are not for reasonably equivalent value.
          xi. Registration of the Additional Stock. Borrower will cause the
Additional Stock to be covered by a Registration Statement filed with the
Securities and Exchange Commission on or before January 3, 2007. After the
Additional Stock is Registered, Borrower will promptly provide Lender with
evidence that the Additional Stock has been Registered.
     B. Reporting Requirements. So long as any portion of the Note shall remain
unpaid, Borrower will furnish, or will cause to be furnished, to Lender:
          i. as soon as possible after receipt by Borrower of actual notice, the
statement of the Borrower setting forth the details of any action, event or
condition including actions, suits or proceedings before any court or
governmental agency, domestic or foreign, of any nature of which Borrower has
knowledge, and any uninsured

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or partially uninsured loss through fire, theft, liability or property damage in
excess of Ten Thousand Dollars ($10,000.00), which may reasonably be expected to
have a material adverse effect upon the business, assets or financial condition
of Borrower and the action which Borrower proposes to take with respect thereto;
          ii. within ten (10) days of filing same, but in no event later than
each October 15, copies of the federal income tax returns (including all
schedules thereto) filed by Borrower and each Guarantor;
          iii. within thirty (30) days of Lender’s written request, annual
financial statements and liquidity statements covering each Guarantor, in
reasonable detail, fairly presenting the financial condition and liquidity of
each Guarantor, provided, at no time will personal financial statements and
liquidity statements on file with Lender be older than one (1) year; and
          iv. such other information respecting the business, assets or the
conditions or operations, financial or otherwise, of Borrower or any Guarantor
as Lender may from time to time reasonably request to determine whether an Event
of Default has occurred.
6. EVENTS OF DEFAULT
     A. Events of Default. The occurrence or existence of any one or more of the
following events are referred to herein individually as an “Event of Default”
and collectively as “Events of Default:”
          i. failure to pay or perform any obligation, liability or indebtedness
of Borrower to Lender, or to any affiliate of Lender, whether under the Note,
this Agreement, any other Loan Document or any other agreement, note or
instrument now or hereafter existing, as and when due (whether upon demand, at
maturity or by acceleration);
          ii. failure to pay or perform any obligation, liability or
indebtedness of Borrower to some other third party if such failure is not cured
after written notice from Lender by Borrower or any Guarantor within ten
(10) days from the day in which such obligation, liability or indebtedness
became due (whether upon demand, at maturity or by acceleration);
          iii. if a judgment or decree shall be entered against Borrower for
dissolution or liquidation, or should Borrower or Guarantor voluntarily or
involuntarily terminate or dissolve or be terminated or dissolved;
          iv. insolvency of, business failure of, the appointment of a
custodian, trustee, liquidator or receiver for, or for any of the property of,
or an assignment for the benefit of creditors by, or the filing of a petition
under bankruptcy, insolvency or debtors’ relief law or for any adjustment of
indebtedness, composition or extension by or against Borrower or any Guarantor;

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          v. the aggregate outstanding principal balances of the Note and of the
Wyndcrest Note shall be more than forty-five percent (45%) of the aggregate
value of: the Existing Stock, the Registered Additional Stock, the then existing
balance of the Debt Service Reserve Account, and any cash, shares of
BabyUniverse common stock or other property (reasonably acceptable to Lender) of
any Guarantor voluntarily deposited by said Guarantor as additional collateral
pursuant to Section 1.(b) of the Security Agreement or as additional security
for the Guaranty (the value of all such assets to be determined by Lender using
reasonable valuation methods;
          vi. should any representation or warranty made by Borrower or any
Guarantor in any of the Loan Documents or otherwise given to the Lender is, or
was, materially untrue or materially misleading;
          vii. failure of any Borrower or any Guarantor to timely deliver such
financial statements and other statements of condition or information as Lender
shall reasonably request from time to time or shall otherwise be required to be
delivered hereunder and such failure continues for thirty (30) days after
written notice from Lender;
          viii. if Borrower or any Guarantor fails to perform any of the terms,
covenants, conditions or provisions contained in this Agreement or in any of the
other Loan Documents and such failure continues for ten (10) days after written
notice from Lender;
          ix. if Wyndcrest II or Wyndcrest III violates any of the terms,
covenants, conditions or provisions contained in the Security Agreement;
          x. seizure or forfeiture of, or the issuance of any writ of
possession, garnishment or attachment, or any turnover order for, any property
of Borrower or any Guarantor which is not dismissed or stayed as to enforcement
within thirty (30) days of its occurrence;
          xi. determination by Lender that a material adverse change has
occurred in the financial condition of Borrower or any Guarantor;
          xii. if the Security Agreement shall be or become invalid;
          xiii. if an Event of Default shall occur under the Wyndcrest Note or
any of the documents or instruments delivered in connection therewith,
including, without limitation, the Loan Agreement by and between Wyndcrest II,
Wyndcrest III and Lender;
          xiv. the death of John Textor;
          xv. if any Guarantor shall fail to timely and completely perform all
of the covenants imposed upon such Guarantor by the Guaranty or otherwise
defaults under the Guaranty; and

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          xvi. the Additional Stock is not Registered within ninety (90) days of
the date of this Agreement.
     B. Remedies Upon Default. In the event of the occurrence of any Event of
Default, Lender shall, at its sole discretion, be entitled to any and all of the
rights, remedies and procedures provided by law and by the various Loan
Documents including without limitation, the right to accelerate and demand
immediate repayment of all monies due under the Note and to sell the Existing
Stock and the Additional Stock to satisfy the monetary obligations of Borrower
under the Loan Documents. All of said rights and remedies from whatever source
shall be cumulative and not alternative or exclusive. In addition, upon the
occurrence of any Event of Default, Lender may declare any and all indebtedness,
liabilities and obligations of Borrower to Lender, or to any affiliate of
Lender, to be immediately due and payable and Lender, or its affiliate, may
pursue any remedies available to it under the documents which evidence and
secure such indebtedness, obligations and liabilities.
7. MISCELLANEOUS
     A. No Waiver. No failure or delay on the part of Lender, or any other
holder of the Note, in exercising any right, power or remedy hereunder or under
any of the Loan Documents, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder or under any of the Loan Documents.
     B. Lien; Set-off By Lender. Borrower hereby grants to Lender a continuing
lien for all indebtedness and other liabilities of Borrower to Lender upon any
and all monies, securities, and other property of Borrower and the proceeds
thereof, now or hereafter held, or received by or in transit to, Lender from or
for Borrower whether for safekeeping, custody, pledge, transmission, collection
or otherwise, and also upon any and all deposits (general or special) and
credits of Borrower and any and all claims of Borrower against Lender, at any
time existing. Upon the occurrence of any Event of Default, Lender is hereby
authorized at any time and from time to time, without notice to Borrower to set
off, appropriate, and apply any or all items hereinabove referred to against all
indebtedness or other liabilities of Borrower to Lender, whether under this
Agreement, the Note, any of the other Loan Documents or otherwise, and whether
now existing or hereafter arising.
     C. Intent Not to Commit Usury. Notwithstanding any provision herein, in the
Note or any of the other Loan Documents, the total liability for payments in the
nature of interest shall not exceed the limits imposed by the usury laws of
Florida. In the event of acceleration of the Note, the total charges for
interest and in the nature of interest shall not exceed the maximum amount
allowed by law as calculated under the Florida usury statutes, and any excess
portion of such charges that may have been prepaid shall be refunded or credited
to Borrower at the time of acceleration or prepayment. Such crediting may be
made by application of the amounts involved against the principal

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sums then due hereunder, but such crediting shall not cure or waive any default
occasioning acceleration.
     D. Waivers. Borrower waives presentment, demand, protest, notice of
default, nonpayment, partial payments and all other notices and formalities
relating to this Agreement other than notices specifically required hereunder.
Borrower consents to and waives notice of the granting of indulgences or
extensions of time of payment, the taking or releasing of security, the addition
or release of persons primarily or secondarily liable on or with respect to
liabilities of Borrower to Lender, all in such manner and at such time or times
as Lender may deem advisable. No act or omission of Lender shall in any way
impair or affect any of the indebtedness or liabilities of Borrower to Lender or
rights of Lender in any security. No delay by Lender to exercise any right,
power or remedy hereunder or under any of the other Loan Documents and no
indulgence given to Borrower in case of any default shall impair any such right,
power or remedy or be construed as having created a course of dealing or
performance contrary to the specific provisions of this Agreement or as a waiver
of any default by such parties or any acquiescence therein or as a violation of
any of the terms or provisions of this Agreement. No course of dealing between
Borrower and Lender shall operate as a waiver of any of Lender’s rights.
     E. Amendments, Etc. No amendment, modification, termination, or waiver of
any provision of this Agreement or of any of the other Loan Documents, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by Lender and Borrower. No notice
to or demand on Borrower in any case shall entitle such parties to any other or
further notice or demand in similar or other circumstances.
     F. Addresses for Notices, Etc. All notices, requests, demands, directions
and other communications provided for hereunder and under the Loan Documents
shall be in writing and mailed, sent by special delivery service (i.e., Federal
Express) or delivered to the applicable party at the addresses indicated below.
     If to Borrower:
BabyUniverse, Inc.
Attn: John C. Textor
150 South U.S. Highway One, Suite 500
Jupiter, Florida 33477
     with a copy to:
D. Thomas Triggs, Esq.
Sullivan & Triggs, LLP
1230 Montana Avenue, Suite 201
Santa Monica, California 90403

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     If to Lender:
Lydian Private Bank
180 Royal Palm Way
Palm Beach, Florida 33480
Attn: Debbie Vasilopoulos
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this paragraph. All such notices mailed or telegraphed, shall be effective
upon receipt by the addressee when deposited in the mails (postage prepaid)
return receipt requested, upon receipt by the addressee when delivered or on the
next business day following delivery to a special delivery service.
     G. Costs, Expenses and Taxes. Upon the occurrence of an Event of Default,
Borrower agrees to pay on demand all reasonable costs and expenses of Lender in
connection with the Event of Default including but not limited to the reasonable
attorneys’ fees, including appellate attorneys’ fees, and out-of-pocket expenses
of legal counsel, independent public accountants and outside experts retained by
Lender in connection with such default, and all costs and expenses, including
all reasonable attorneys’ fees if any, in connection with the enforcement of
this Agreement, the Note, and the other Loan Documents.
     H. Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which counterparts of this Agreement when taken together shall constitute
but one and the same instrument.
     I. Binding Effect, Assignment. This Agreement shall become effective when
it shall have been executed and delivered by Borrower and Lender, and thereafter
shall be binding upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns, except that Borrower shall not have the right
to assign its rights hereunder or any interest herein without the prior written
consent of Lender.
     J. Governing Law. This Agreement and the other Loan Documents shall be
governed by, and construed in accordance with, the laws of the State of Florida,
without regard to the choice of law provisions thereof.
     K. Severability of Provisions. Any provision of this Agreement or of any of
the other Loan Documents which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability, without invalidating the remaining
provisions hereof or thereof or affecting the validity or enforceability of such
provision in any other jurisdiction.

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     L. Headings. Article and paragraph headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
     M. Integration; Entire Agreement. This Agreement, the Note and the other
Loan Documents are intended by the parties hereto and thereto to be an
integrated contract, which together contain the entire understandings of the
parties with respect to the subject matter contained herein and therein. There
are no restrictions, warranties, representations, covenants or undertakings
other than those expressly set forth herein and therein. This Agreement, the
Note and the other Loan Documents supersede all prior agreements and
understandings between the parties with respect to such subject matter.
     N. Venue and Jurisdiction. Borrower and Lender irrevocably consent and
submit to the nonexclusive jurisdiction of the State of Florida and the United
States District Court for the Southern District of Florida and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the Loan Documents or
in any way connected with, or related to, the dealings of the parties hereto in
respect to this Agreement or any of the other Loan Documents or the transactions
related hereto or thereto. Venue for any action or proceeding brought against
Borrower by Lender shall lie in Palm Beach County, Florida.
     O. Indemnification. Borrower shall indemnify and hold the Lender, its
directors, agents, employees and counsel (collectively, the “Indemnified
Parties”), harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses imposed on, incurred by or asserted against
Borrower in connection with any litigation, investigation, claim or proceeding
commenced or threatened related to the negotiation, preparation, execution,
delivery, enforcement, performance or administration of this Agreement, any of
the other Loan Documents, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including, without limitation, amounts paid in
settlement, court costs, and the fees and expenses of counsel. Notwithstanding
the foregoing, Borrower shall not be obligated to indemnify and hold the
Indemnified Parties harmless from and against any and all losses, claims,
damages, liabilities, costs or expenses incurred in connection with the grossly
negligent, reckless or willful breach of this Agreement or any of the other Loan
Documents by any of the Indemnified Parties.
     P. JURY TRIAL WAIVER. BORROWER AND LENDER HEREBY WAIVE ANY AND ALL RIGHTS
TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, COUNTERCLAIM OR SUBSEQUENT
PROCEEDING, BROUGHT BY BORROWER OR LENDER WITH RESPECT TO ANY OBLIGATION CREATED
UNDER THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER LOAN DOCUMENTS AGAINST ANY OR
ALL OF THE OTHERS ON ANY MATTERS WHATSOEVER ARISING OUT OF, OR IN ANY WAY
RELATED TO THIS AGREEMENT, THE NOTE, THE COLLATERAL OR ANY OF THE OTHER LOAN
DOCUMENTS.

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     Q. Guarantor Consent. Lender agrees that it will not modify the Loan
Documents or the terms thereof in any respect without first obtaining the
written consent of Guarantor.
     IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be executed by their respective officers thereunto duly authorized, or on their
own behalf, individually, on the date first above written.

            “BORROWER”

BabyUniverse, Inc., a Florida corporation
      By:           Name:           Its:        “GUARANTORS”            John C.
Textor                           Wyndcrest Baby Universe Holdings II, LLC,
a Florida limited liability company
         By:  Wyndcrest Holdings, LLC,        
a Florida limited liability 
     
company, its manager 
               By:  Textor Ventures, Inc.,        
a Florida corporation, 
     
its manager 
         

            By:           Name:   John C. Textor        Its: President     

[SIGNATURES CONTINUED ON FOLLOWING PAGES]

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[SIGNATURE PAGE TO LOAN AGREEMENT CONTINUED]

            Wyndcrest BabyUniverse Holdings III, LLC,
a Florida limited liability company
        By:  Wyndcrest Holdings, LLC,        
a Florida limited liability 
     
company, its manager 
               By:  Textor Ventures, Inc.,        
a Florida corporation, 
     
its manager 
         

            By:           Name:   John C. Textor        Its: President     

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[SIGNATURE PAGE TO LOAN AGREEMENT CONTINUED]

            “LENDER”

Lydian Private Bank
      By:           Print Name:         Its:   

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