Exhibit 10.3

SUBORDINATION AGREEMENT

[Dated]

[names of Purchasers]

Ladies and Gentlemen:

The undersigned lenders (each a “Creditor”, and collectively referred to as
“Creditors”) are creditors of FLO Corporation (the “Company” or the
“Borrower”)), and desire that [names of Participating 12% Note Holders] (each, a
“Senior Lender” and collectively, the “Senior Lenders”) extend and continue to
extend such financial accommodations to the Borrowers as Borrowers may request
and as the Senior Lenders may deem proper, and continue to extend such financial
accommodations to the Borrowers as Borrowers. Defined terms not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement dated December 23, 2008 among the Company and the Senior
Lenders (the “Purchase Agreement”). For the purpose of inducing Senior Lenders
to make the loan contemplated by the Purchase Agreement and to continue or renew
such financial accommodations, and in consideration thereof, Creditors agree as
follows:

1. Any and all claims of Creditors against any Borrower, now or hereafter
existing, are, and shall be at all times, subject and subordinate to any and all
claims, now or hereafter existing which any Senior Lender may have against any
Borrower (including any claim by the Senior Lenders for interest accruing after
any assignment for the benefit of creditors by any Borrower or the institution
by or against any Borrower of any proceedings under any “Bankruptcy Law” (as
defined below), or any claim by the Senior Lenders for any such interest which
would have accrued in the absence of such assignment or the institution of such
proceedings) (such claims of the Senior Lenders, the “Senior Claims”). As used
herein, “Bankruptcy Law” means any of the following: (x) Title 11, U.S. Code or
(y) any similar Federal, foreign, provincial or state law for the relief of
debtors.

2. Each Creditor agrees not to commence or threaten to commence any action or
proceeding, sue upon, or to collect, or to receive payment of the principal or
interest of any claim or claims now or hereafter existing which such Creditor
may hold against any Borrower, and not to sell, assign, transfer, pledge,
hypothecate, or encumber such claim or claims except subject expressly to this
Agreement, and not to enforce or apply any security now or hereafter existing
therefor, nor to file or join in any petition to commence any proceeding under
any Bankruptcy Law, nor to take any lien or security on any of Borrower’s
property, real or personal, until 91 days following the date all claims of the
Senior Lenders against any Borrower have been indefeasibly paid in full.

3. In case of any assignment for the benefit of creditors by any Borrower or in
case any proceedings under any Bankruptcy Law are instituted by or against any
Borrower, or in case of the appointment of any receiver for any Borrower’s
business or assets, or in case of any dissolution or winding up of the affairs
of any Borrower: (a) Each Borrower and any assignee, trustee in bankruptcy,
receiver, debtor in possession or other person or persons in charge are

 

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hereby directed to pay to Senior Lenders the full amount of Senior Lenders
claims against any Borrower (including interest to the date of payment) before
making any payment of principal or interest to Creditors, and insofar as may be
necessary for that purpose, each Creditor hereby assigns and transfers to the
Senior Lenders all security or the proceeds thereof, and all rights to any
payments, dividends or other distributions, and (b) each Creditor hereby
irrevocably constitutes and appoints each Senior Lender its true and lawful
attorney to act in its name and stead: (i) to file the appropriate claim or
claims on behalf of such Creditor if such Creditor does not do so prior to 30
days before the expiration of the time to file claims in such proceeding and if
any Senior Lender elects at its sole discretion to file such claim or claims and
(ii) to accept or reject any plan of reorganization or arrangement on behalf of
Creditors, and to otherwise vote Creditors’ claim in respect of any indebtedness
now or hereafter owing from any Borrower to Creditors in any manner the Senior
Lenders deem appropriate for their respective own benefit and protection.

4. Each Senior Lender is hereby authorized by Creditors to: (a) renew,
compromise, extend, accelerate or otherwise change the time of payment, or any
other terms, of any existing or future claim of such Senior Lender against any
Borrower, (b) increase or decrease the rate of interest payable thereon or any
part thereof, (c) exchange, enforce, waive or release any security therefor,
(d) apply such security and direct the order or manner of sale thereof in such
manner as such Senior Lender may at its discretion determine, (e) release any
Borrower or any guarantor of any indebtedness of a Borrower from liability, and
(f) make optional future advances to any Borrower, all without notice to
Creditors and without affecting the subordination provided by this Agreement.

5. On request of any Senior Lender, a Creditor shall deliver to the Collateral
Agent (as defined in the Security Agreement) the original of any preferred
stock, promissory note or other evidence of any existing or future indebtedness
of any Borrower to such Creditor, and mark same with a conspicuous legend which
reads substantially as follows:

“THIS PROMISSORY NOTE IS SUBORDINATED TO ANY PRESENT OR FUTURE INDEBTEDNESS
OWING FROM THE MAKER TO [NAMES OF SENIOR LENDERS] AND ITS ASSIGNS, AND MAY BE
ENFORCED ONLY IN ACCORDANCE WITH THAT CERTAIN SUBORDINATION AGREEMENT DATED
December 23, 2008 WITH [NAMES OF SENIOR LENDERS]”

6. In the event that any payment or any cash or noncash distribution is made to
any Creditor in violation of the terms of this Agreement, such Creditor shall
receive same in trust for the benefit of the Senior Lenders, and shall forthwith
remit it to the Collateral Agent (as defined in the Purchase Agreement) in the
form in which it was received, together with such endorsements or documents as
may be necessary to effectively negotiate or transfer same to the Senior
Lenders.

 

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7. Until all such claims of Senior Lenders against the Borrowers, now or
hereafter existing, shall be paid in full, no gift or loan shall be made by any
Borrower to any Creditor.

8. For violation of this Agreement, each Creditor shall be liable for all loss
and damage sustained by reason of such breach, and upon any such violation each
Senior Lender may, at its option, accelerate the maturity of any of its existing
or future claims against any Borrower.

9. This Agreement shall be binding upon the heirs, successors and assigns of
Creditors, the Borrowers and the Senior Lenders. This Agreement and any existing
or future claim of a Senior Lender against a Borrower may be assigned by such
Senior Lender, in whole or in part, without notice to Creditors or such
Borrower.

10. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be delivered as set forth in the
Purchase Agreement.

11. All questions concerning the construction, validity, enforcement and
interpretation of this agreement shall be determined in accordance with the
provisions of the Purchase Agreement.

12. This agreement may be executed in 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.

13. This agreement constitutes the entire agreement among the parties with
respect to the matters covered hereby and thereby and supersede all previous
written, oral or implied understandings among them with respect to such matters.

14. The invalidity of any portion hereof shall not affect the validity, force or
effect of the remaining portions hereof. If it is ever held that any restriction
hereunder is too broad to permit enforcement of such restriction to its fullest
extent, such restriction shall be enforced to the maximum extent permitted by
law.

15. Each of the parties hereto acknowledges that this agreement has been
prepared jointly by the parties hereto, and shall not be strictly construed
against either party.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Subordination Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

 

 

Name of Creditor By:  

 

Name and Title:  

 

Address for Notice:  

 

 

 

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Acceptance of Subordination Agreement by Borrower

The undersigned being the Borrower named in the foregoing Subordination
Agreement, hereby accepts and consents thereto and agrees to be bound by all the
provisions thereof and to recognize all priorities and other rights granted
thereby to [names of Senior Lenders], their respective successors and assigns,
and to perform in accordance therewith. Further, the undersigned shall cause all
direct and indirect subsidiaries hereafter formed or acquired to agree to be
bound by the terms of this Agreement.

 

Dated:                                  ,                          FLO
CORPORATION       By:  

 

      Name:  

 

      Title:  

 

      [NAMES OF SUBS]       By:  

 

      Name:  

 

      Title:  

 

 

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