Document:

Unassociated Document

    Exhibit 10.3

     

    NEITHER
THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.

    

    COMMON
STOCK PURCHASE WARRANT

    

    BEYOND
COMMERCE, INC.

     

    
    

     

    
      	Warrant Shares:
      2,499,986	 	
               Initial
      Exercise Date: July 10, 2009

            

    

                                                                                                  

    

     

    THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, OmniReliant, Inc.  (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise
Date”) and on or prior to the close of business on the five year
anniversary of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Beyond Commerce, Inc., a
Nevada corporation (the “Company”), up to
2,499,986 shares (the “Warrant Shares”) of
Common Stock.  The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in Section
2(b).

     

    Section
1.                                Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
that certain Amended and Restated Securities Purchase Agreement (the “Purchase Agreement”),
dated July 10, 2009, among the Company and the purchasers signatory
thereto.

     

    Section
2.                                Exercise.

     

    a) Exercise of
Warrant.  Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within 3 Trading Days of the date
said Notice of Exercise is delivered to the Company, the Company shall have
received  payment of the aggregate Exercise Price of the shares
thereby purchased by wire transfer or cashier’s check drawn on a United States
bank.  Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender this Warrant to the Company until
the Holder has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within 3 Trading Days of the date
the final Notice of Exercise is delivered to the Company.  Partial
exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering
the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased.  The
Holder and the Company shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases.  The Company shall
deliver any objection to any Notice of Exercise Form within 1 Business Day of
receipt of such notice.  In the event of any dispute or discrepancy,
the records of the Holder shall be controlling and determinative in the absence
of manifest error. The Holder
and any assignee, by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares available for
purchase hereunder at any given time may be less than the amount stated on the
face hereof.

     

    b) Exercise
Price.  The exercise price per share of the Common Stock under
this Warrant shall be $0.70, subject to adjustment
hereunder (the “Exercise
Price”).

     

    c) Cashless
Exercise.  If at any time after the Initial Exercise
Date  there is no effective registration Statement registering, or no
current prospectus available for, the resale of the Warrant Shares by the
Holder, then this Warrant may also be exercised at such time by means of a
“cashless exercise” in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:

     

    
      	
               
      

            	
               (A)
      = the VWAP on the Trading Day immediately preceding the date of such
      election;

            

    

    

    
      	
               
      

            	
              (B)
      = the Exercise Price of this Warrant, as adjusted;
  and

            

    

    

    
      	
               
      

            	
              (X)
      = the number of Warrant Shares issuable upon exercise of this Warrant in
      accordance with the terms of this Warrant by means of a cash exercise
      rather than a cashless exercise.

            

    

    

    Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be
automatically exercised via cashless exercise pursuant to this Section
2(c).

     

     

     

    
      
         

      

      
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    d) Exercise
Limitations.

     

    
      	
              i.  

            	
              Holder’s
      Restrictions.  The Company shall not effect any exercise
      of this Warrant, and a Holder shall not have the right to exercise any
      portion of this Warrant, pursuant to Section 2 or otherwise, to the extent
      that after giving effect to such issuance after exercise as set forth on
      the applicable Notice of Exercise, the Holder (together with the Holder’s
      Affiliates, and any other person or entity acting as a group together with
      the Holder or any of the Holder’s Affiliates), would beneficially own in
      excess of the Beneficial Ownership Limitation (as defined below). 
      For purposes of the foregoing sentence, the number of shares of Common
      Stock beneficially owned by the Holder and its Affiliates shall include
      the number of shares of Common Stock issuable upon exercise of this
      Warrant with respect to which such determination is being made, but shall
      exclude the number of shares of Common Stock which would be issuable upon
      (A) exercise of the remaining, nonexercised portion of this Warrant
      beneficially owned by the Holder or any of its Affiliates and (B) exercise
      or conversion of the unexercised or nonconverted portion of any other
      securities of the Company (including, without limitation, any
      other  Common Stock Equivalents) subject to a limitation on
      conversion or exercise analogous to the limitation contained herein
      beneficially owned by the Holder or any of its affiliates.  Except as
      set forth in the preceding sentence, for purposes of this Section 2(d)(i),
      beneficial ownership shall be calculated in accordance with Section 13(d)
      of the Exchange Act and the rules and regulations promulgated thereunder,
      it being acknowledged by the Holder that the Company is not representing
      to the Holder that such calculation is in compliance with Section 13(d) of
      the Exchange Act and the Holder is solely responsible for any schedules
      required to be filed in accordance therewith.   To the
      extent that the limitation contained in this Section 2(d)(i) applies, the
      determination of whether this Warrant is exercisable (in relation to other
      securities owned by the Holder together with any Affiliates) and of which
      portion of this Warrant is exercisable shall be in the sole discretion of
      the Holder, and the submission of a Notice of Exercise shall be deemed to
      be the Holder’s determination of whether this Warrant is exercisable (in
      relation to other securities owned by the Holder together with any
      Affiliates) and of which portion of this Warrant is exercisable, in each
      case subject to the Beneficial Ownership Limitation, and the Company shall
      have no obligation to verify or confirm the accuracy of such
      determination.   In addition, a determination as to any
      group status as contemplated above shall be determined in accordance with
      Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder.  For purposes of this Section 2(d)(i),
      in determining the number of outstanding shares of Common Stock, a Holder
      may rely on the number of outstanding shares of Common Stock as reflected
      in (A) the Company’s most recent periodic or annual report, as the case
      may be, (B) a more recent public announcement by the Company or (C) any
      other notice by the Company or the Transfer Agent setting forth the number
      of shares of Common Stock outstanding.  Upon the written or oral
      request of a Holder, the Company shall within two Trading Days confirm
      orally and in writing to the Holder the number of shares of Common Stock
      then outstanding.  In any case, the number of outstanding shares of
      Common Stock shall be determined after giving effect to the conversion or
      exercise of securities of the Company, including this Warrant, by the
      Holder or its Affiliates since the date as of which such number of
      outstanding shares of Common Stock was reported.  The “Beneficial Ownership
      Limitation” shall be 4.99% of the number of shares of the Common
      Stock outstanding immediately after giving effect to the issuance of
      shares of Common Stock issuable upon exercise of this
      Warrant.  The Holder, upon not less than 61 days’ prior notice
      to the Company, may increase or decrease the Beneficial Ownership
      Limitation provisions of this Section 2(d)(i), provided that the
      Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
      shares of the Common Stock outstanding immediately after giving effect to
      the issuance of shares of Common Stock upon exercise of this Warrant held
      by the Holder and the provisions of this Section 2(d)(i) shall continue to
      apply.  Any such increase or decrease will not be effective
      until the 61st
      day after such notice is delivered to the Company.  The
      provisions of this paragraph shall be construed and implemented in a
      manner otherwise than in strict conformity with the terms of this Section
      2(d)(i) to correct this paragraph (or any portion hereof) which may be
      defective or inconsistent with the intended Beneficial Ownership
      Limitation herein contained or to make changes or supplements necessary or
      desirable to properly give effect to such limitation. The limitations
      contained in this paragraph shall apply to a successor holder of this
      Warrant.

            

    

     

    e) Mechanics of
Exercise.

     

    i. Delivery of Certificates
Upon Exercise.  Certificates for shares purchased hereunder
shall be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company through
its Deposit Withdrawal Agent Commission (“DWAC”) system if the
Company is then a participant in such system and either (A) there is an
effective registration statement permitting the resale of the Warrant Shares by
the Holder or (B) the shares are eligible for resale without volume or
manner-of-sale limitations pursuant to Rule 144, and otherwise by physical
delivery to the address specified by the Holder in the Notice of Exercise within
3 Trading Days from the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant (if required) and payment of the aggregate Exercise
Price as set forth above (the “Warrant Share Delivery
Date”).  This Warrant shall be deemed to have been exercised on
the date the Exercise Price is received by the Company.  The Warrant
Shares shall be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a holder of record
of such shares for all purposes, as of the date the Warrant has been exercised
by payment to the Company of the Exercise Price (or by cashless exercise, if
permitted) and all taxes required to be paid by the Holder, if any, pursuant to
Section 2(e)(vi) prior to the issuance of such shares, have been paid. If the
Company fails for any reason to deliver to the Holder certificates evidencing
the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery
Date, the Company shall pay to the Holder, in cash, as liquidated damages and
not as a penalty, for each 1,000 of Warrant Shares subject to such exercise,
$100 per Trading Day (increasing to $300 per Trading Day on the fifth Trading
Day after such liquidated damages begin to accrue) for each Trading Day after
such Warrant Share Delivery Date until such certificates are
delivered.

     

     

     

    
      
         

      

      
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    ii. Delivery of New Warrants
Upon Exercise.  If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

     

    iii. Rescission
Rights.  If the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates representing the
Warrant Shares pursuant to Section 2(e)(i) by the Warrant Share Delivery Date,
then, the Holder will have the right to rescind such exercise.

     

    iv. Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an exercise on or
before the Warrant Share Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (2) the price at which the sell
order giving rise to such purchase obligation was executed, and (B) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored or deliver to
the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss.  Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

     

    v. No Fractional Shares or
Scrip.  No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall, at its election, either pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.

     

    vi. Charges, Taxes and
Expenses.  Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.

     

    vii. Closing of
Books.  The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

     

    Section
3.                                Certain
Adjustments.

     

    a) Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding:
(i) pays a stock dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares or (iv)
issues by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged.  Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.

     

     

     

    
      
         

      

      
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    b) Subsequent Equity
Sales. If the Company or any Subsidiary thereof, as applicable, at any
time while this Warrant is outstanding, shall sell or grant any option to
purchase, or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock, at an effective price per share less than the
then Exercise Price (such lower price, the “Base Share Price” and
such issuances collectively, a “Dilutive Issuance”)
(if the holder of the Common Stock or Common Stock Equivalents so issued shall
at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or
due to warrants, options or rights per share which are issued in connection with
such issuance, be entitled to receive shares of Common Stock at an effective
price per share which is less than the Exercise Price, such issuance shall be
deemed to have occurred for less than the Exercise Price on such date of the
Dilutive Issuance), then, the Exercise Price shall be reduced and only reduced
to equal the Base Share Price and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate Exercise Price payable
hereunder, after taking into account the decrease in the Exercise Price, shall
be equal to the aggregate Exercise Price prior to such
adjustment.  Such adjustment shall be made whenever such Common Stock
or Common Stock Equivalents are issued.  Notwithstanding the
foregoing, no adjustments shall be made, paid or issued under this Section 3(b)
in respect of an Exempt Issuance.  The Company shall notify the
Holder, in writing, no later than the Trading Day following the issuance of any
Common Stock or Common Stock Equivalents subject to this Section 3(b),
indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such notice, the
“Dilutive Issuance
Notice”).  For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon
the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares based upon
the Base Share Price regardless of whether the Holder accurately refers to the
Base Share Price in the Notice of Exercise.

     

    c) Subsequent Rights
Offerings.  If the Company, at any time while the Warrant is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to Holders) entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the VWAP at the record date
mentioned below, then, the Exercise Price shall be multiplied by a fraction, of
which the denominator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional shares of Common Stock offered for subscription or purchase, and
of which the numerator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares so
offered (assuming receipt by the Company in full of all consideration payable
upon exercise of such rights, options or warrants) would purchase at such
VWAP.  Such adjustment shall be made whenever such rights or warrants
are issued, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants.

     

    d) Pro Rata
Distributions.  If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to
Holders of the Warrants) evidences of its indebtedness or assets (including cash
and cash dividends) or rights or warrants to subscribe for or purchase any
security other than the Common Stock (which shall be subject to Section 3(b)),
then in each such case the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the VWAP determined as of the record
date mentioned above, and of which the numerator shall be such VWAP on such
record date less the then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed applicable to
one outstanding share of the Common Stock as determined by the Board of
Directors in good faith.  In either case the adjustments shall be
described in a statement provided to the Holder of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable
to one share of Common Stock.  Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.

     

     

    
      
         

      

      
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    e) Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the
Company effects any merger or consolidation of the Company with or into another
Person, (ii) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (iii) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (each “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate
Consideration”) receivable as a result of such merger, consolidation or
disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. For purposes
of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction.  To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the
foregoing provisions and evidencing the Holder’s right to exercise such warrant
into Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 3(e)
and insuring that this Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3
transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a
Fundamental Transaction involving a person or entity not traded on a national
securities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market,
or the Nasdaq Capital Market, the Company or any successor entity shall pay at
the Holder’s option, exercisable at any time concurrently with or within 30 days
after the consummation of the Fundamental Transaction, an amount of cash equal
to the value of this Warrant as determined in accordance with the Black Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg L.P. using (A)
a price per share of Common Stock equal to the VWAP of the Common Stock for the
Trading Day immediately preceding the date of consummation of the
applicable  Fundamental Transaction, (B) the risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term
of this Warrant as of the date of consummation of the applicable Fundamental
Transaction, (C) an expected volatility equal to the 100 day volatility obtained
from the “HVT” function on Bloomberg L.P. determined as of the Trading Day
immediately following the public announcement of the applicable Fundamental
Transaction and (D) a remaining option time equal to the time between the date
of the public announcement of such transaction and the Termination
Date.

     

    f) Calculations. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.

     

    g) Notice to
Holder.

     

    i. Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly mail to the Holder a notice
setting forth the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. If the Company enters into a
Variable Rate Transaction, despite the prohibition thereon in the Purchase
Agreement, the Company shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion or exercise price at which
such securities may be converted or exercised.

     

    ii. Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  The Holder is
entitled to exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice.

     

     

     

    
      
         

      

      
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    Section
4.                                Transfer of
Warrant.

     

    a) Transferability.  Subject
to compliance with any applicable securities laws and the conditions set forth
in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase
Agreement, this Warrant and all rights hereunder (including, without limitation,
any registration rights) are transferable, in whole or in part, upon surrender
of this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such
transfer.  Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  The Warrant, if properly
assigned, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.

     

    b) New Warrants. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney.  Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the Initial Exercise Date and shall be identical with this Warrant except as to
the number of Warrant Shares issuable pursuant thereto.

     

    c) Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.

     

    d) Transfer
Restrictions. If, at the time of the surrender of this Warrant in connection with
any transfer of this Warrant, the transfer of this Warrant shall not be
either (i) registered pursuant to an effective
registration statement under the Securities
Act and under applicable state securities
or blue sky laws or (ii) eligible for
resale without volume or manner-of-sale restrictions pursuant to Rule
144, the Company may require, as a
condition of allowing such transfer, that
the Holder or transferee of this Warrant,
as the case may be, comply with the
provisions of Section [5.7 of the Purchase Agreement.

     

    Section
5.                                Miscellaneous.

     

    a) No Rights as Stockholder
Until Exercise.  This Warrant does not entitle the Holder to
any voting rights or other rights as a stockholder of the Company prior to the
exercise hereof as set forth in Section 2(e)(i).

     

    b) Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant, shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

     

    c) Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.

     

    d) Authorized
Shares.

     

    The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant.  The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed.  The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).

     

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    Except
and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment.  Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this
Warrant.

     

    Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     

    e) Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.

     

    f) Restrictions.  The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.

     

    g) Nonwaiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date.  If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

     

    h) Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.

     

    i) Limitation of
Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

     

    j) Remedies.  The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.

     

    k) Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder.  The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.

     

    l) Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.

     

    m) Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.

     

    n) Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

     

    

    ********************

    

    

    (Signature
Pages Follow)

     

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above
indicated.

     

    
      
        
          
            
              	BEYOND
      COMMERCE, INC.	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
                      By:
      /s/

                    	 	 	
                       

                    	 
	
                      Name:
      Robert McNulty

                    	 	 	
                       

                    	 
	
                      Title:
      Chief Executive Officer

                    	 	 	
                       

                    	 

            

          

        

      

    
 

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    

    

    NOTICE
OF EXERCISE

    

    TO:                      [_______________________

    

    (1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

     

    (2) Payment
shall take the form of (check applicable box):

     

    [  ]
in lawful money of the United States; or

     

    [ ] [if
permitted] the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection
2(c).

     

    (3) Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

     

    _______________________________

    

    

    The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

    

    _______________________________

    

    _______________________________

    

    _______________________________

    

    (4)  Accredited
Investor.  The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

    

    [SIGNATURE
OF HOLDER]

    

    Name of
Investing Entity:
______________________________________________________________________

    Signature of Authorized Signatory of
Investing Entity:
_______________________________________________

    Name of
Authorized Signatory:
__________________________________________________________________

    Title of
Authorized Signatory:
___________________________________________________________________

    Date:
_____________________________________________________________________________________

    

    

    

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
FORM

    

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

    

    

    

    FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to

     

    

    _______________________________________________
whose address is

    

    __________________________________________________________________________________________________________________________________.

    

    

    

    __________________________________________________________________________________________________________________________________

    

    Dated:  ______________,
_______

    

    

    Holder’s
Signature:                           _____________________________

    

    Holder’s
Address:                             _____________________________

    

    _____________________________

    

    

    

    Signature
Guaranteed:  _________________________________________________________________________________________________________________

    

    

    NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

    

     

     

     

    10Exhibit 10.1 

COLLECTION AGENCY AGREEMENT
ROSENTHAL & ROSENTHAL, INC.

1370
Broadway

New York NY 10018

	
 

	
 

	
 

	
New
  York, NY

	
STEVEN MADDEN, LTD.

	
Dated:
  July 10, 2009

	
52-16 Barnett Avenue

	
 

	
Long Island
  City, NY 11104

	
 

          The
following is the Agreement under which we are to act as your collection agent.
The effectiveness of this Agreement is conditioned upon the occurrence of all
of the following on or prior to October 31, 2009: (i) the termination of your
existing factoring agreement with GMAC Commercial Finance, LLC (“GMAC”); and
(ii) a partial termination by a UCC-3 Financing Statement releasing the
interest of GMAC in all of your assets other than any Receivables arising prior
to the date of such termination. The date on which the foregoing conditions
shall have been satisifed shall hereafter be referred to as the “Effective
Date”. Capitalized terms shall have the meanings set forth in
Section 14 hereof: 

1. COLLECTION OF RECEIVABLES :

          You
hereby appoint us as your collection agent with respect to all of your
Receivables, and we shall have the right to collect and otherwise deal
therewith as the sole collection agent. Upon each sale of your Inventory or
rendition by you of services, you shall execute and deliver to us such further
and confirmatory evidence of our authority as collection agent with respect to
your Receivables as we require, in form and manner reasonably satisfactory to
us, together with copies of invoices or such equivalent electronic document as
we may designate for such use, and all shipping or delivery receipts and such
other proof of sale and delivery or performance as we, from time to time, may
require. All invoices (and other statements to Customers) evidencing
Receivables shall clearly state, in a manner satisfactory to us, that each Receivable
is payable only to us. The form on Exhibit A annexed hereto is currently deemed
acceptable.

2. CREDIT AND APPROVAL:

          You
will submit to us for our credit approval the principal terms of each and every
Order. We may, in our sole discretion, approve all or a portion of an Order, by
issuing a Credit Approval, withdraw any Credit Approval, withdraw or adjust any
Credit Line, or suspend any Availability under a Credit Line, at any time
before you deliver the Inventory or render the services. In addition, we may
from time to time establish a Credit Line or Credit Lines pursuant to which you
may ship to Customers. No Credit Approval, including approval based upon
shipment against Availability under a Credit Line shall be effective unless (i)
the Inventory is shipped or the services rendered, within the time specified
therein, or if no time is specified, within thirty (30) days after the date our
Credit Approval is issued; (ii) the Customer has accepted delivery of the
Inventory or performance of the services; and (iii) a schedule of the
Receivables(s) which arise as a result of the Order which is the subject of the
Credit Approval has been delivered to us, within ten (10) Business Days of the
delivery of the goods or the performance of the service. Upon the effectiveness
of a Credit Approval, we shall be deemed to have accepted the Credit Risk (but
not the risk of non-payment for any other reason) to the extent of the dollar
amount specified in the Credit Approval and the Receivable which is the subject
thereof shall, to the extent of the amount specified in the Credit approval, be
a Credit Approved Receivable. In no event, however, shall we have any Credit
Risk on any Receivable for freight, samples, or sales not made in the ordinary
course of your business. We may, in our sole discretion, withdraw any Credit
Approval, or withdraw or adjust any 

 1, Collection Agency

Credit Line,
at any time before you deliver the Inventory or render the services.
Notwithstanding anything to the contrary contained herein, you shall have an
automatic Credit Approval during each Contract Year on all Orders in the
aggregate outstanding at any time not to exceed $15,000 for each Customer from
those Customers located in the United States of America other than Customers:
(i) which have been previously declined by us (other than in the event such
declination is solely by reason of lack of information required by us); (ii)
with respect to which you have submitted to us an Order for Credit Approval by
us; provided, that in the event that you submit an Order for Credit Approval to
us and you are not notified by us, within two Business Days after such
submission, that the Order is declined or that for any reason (provided that
such reason is stated) you do not have an automatic Credit Approval on such
Order, then to the extent an automatic Credit Approval on such order would
otherwise be available under the terms hereof, it shall remain available to you
on such Order; (iii) with respect to which we have notified you that you do not
have an automatic Credit Approval; or (iv) with respect to which we have
provided a specific Credit Approval. At no time during the Contract Year shall
such losses borne by us exceed $150,000 (such amount to be prorated in the
event of termination by either of us of this Agreement, for the number of
months elapsed during the Contract Year in which the Effective Termination Date
occurs). Until a Receivable subject to such automatic Credit Approval is more
than forty five (45) days past due, the automatic Credit Approval will apply to
a subsequent Order for the same Customer provided such subsequent Order
complies with the terms set forth above.

3. CLIENT RISK RECEIVABLES:

          All
CR Receivables are with full recourse to you and at your credit risk, but are
otherwise subject to the covenants, terms and conditions provided herein with
respect to Credit Approved Receivables. We shall have the right to make a
bookkeeping entry to debit your account the amount of CR Receivables at any
time either before or after their maturity and you agree to pay us upon demand
the amount of all expenses including reasonable collection charges and
reasonable attorneys’ fees incurred by us in attempting to collect or enforce
any such payment, and additionally to pay us on demand the amount of any such
CR Receivable if such CR Receivable was previously a Purchased Receivable. In
addition, if we, at your request, and in our discretion, file a proof of claim
in any insolvency proceeding with respect to a CR Receivable and/or forward a
CR Receivable to an attorney or agency for collection, we shall charge your
account with (i) the fees and expenses of such attorney or collection agency
and (ii) a service charge equal to $100 plus 5% of any amount collected on the
CR Receivable.

4. RETURNED MERCHANDISE/CLAIMS, DISPUTES AND
CHARGEBACKS:

          In
the event of a breach of any of the representations or warranties contained
herein with respect to a Receivable, or the assertion, with respect to a
Receivable, of a Dispute, any such Receivable (whether or not a Credit Approved
Receivable) shall thereupon become a CR Receivable. You shall notify us
immediately of any Dispute, including, a Customer’s return of or desire to
return any Inventory purchased from you. We may, but are not obligated, to
settle, compromise, adjust or litigate any Dispute, including, a return of the
related Inventory upon such terms as we deem advisable (provided, however, that
as long as no Default shall have occurred and be continuing, we will not
litigate any Dispute other than with respect to a Purchased Receivable without
first consulting with you with respect thereto). We may, at our option, charge
back to you all amounts owing on CR Receivables which are not paid when due. We
shall have the right to charge back to you the amount of any payment which we
receive with respect to a CR Receivable, if we are subsequently required to
disgorge such payment for any reason, including, such payment being deemed a
preferential transfer. A chargeback shall not constitute a resale or
reassignment to you of the Receivable which is the subject thereof if prior to
such chargeback, the Receivable had been purchased by us pursuant to the terms
hereof. You agree to indemnify and save us harmless from and against any and
all loss, liability, claim, cost and expense of any kind, caused by or arising
from any Disputes with or claims of your Customers or any Person or
representative thereof, asserting an interest in Receivables or payments
thereon, including: (i) any disputes or claims with respect to terms, price,
quality or otherwise with respect to Receivables; (ii) any claim for a return
of any payments with respect to Receivables (including alleged preferential
transfers with respect to payments on Receivables that were not Credit Approved
Receivables at the time the payment was received); (iii) any claims by any
governmental authorities (federal, state, municipal or otherwise) for the
turnover or payment to such 

2, Collection Agency

governmental
authority of all or any portion of any payment received from a Customer which
we paid to you and (iv) all reasonable collection expenses and attorney’s
(whether in-house or outside) fees incurred with respect to any of the
foregoing. Your liability under this paragraph, and that of any Person liable
for the Obligations, shall constitute Obligations but shall nonetheless be
independent hereof and continue notwithstanding any termination hereof.

5. REPRESENTATIONS, WARRANTIES AND COVENANTS:

          You
represent, warrant and covenant that:

          5.1.
you are fully authorized to enter into this Agreement and perform hereunder and
you will continue to be so authorized for the duration of this Agreement and
you are not and will not be bound by any agreement that would be violated by
your or our performance of this Agreement.

          5.2.
you are solvent.

          5.3.
the Receivables are, and shall be, at the time of their creation, bona fide,
existing and enforceable obligations of Customers arising out of sales made or
services rendered by you, and, at the time any Receivable becomes a Purchased
Receivable, it shall be free and clear of all security interests, liens, claims
and Disputes whatsoever other than Permitted Liens and in the event that any
such Receivables arise from the sale of goods, such goods meet all standards
imposed by any governmental agency or authority.

          5.4.
at the time any Receivable becomes a Purchased Receivable, the Inventory
relating thereto constituting returned goods shall not be subject to any security
interest, lien or encumbrance whatsoever, other than Permitted Liens, and you
covenant (i) that you shall not permit the Inventory to become so encumbered
without our prior written consent and that (ii) the Inventory meets all
standards imposed by any governmental agency or authority.

          5.5.
you shall not permit any Inventory or General Intangibles to be subject to any
security interest, lien or encumbrance whatsoever, other than Permitted Liens.

          5.6.
with respect to each Receivable as it arises and when transmitted to us: (i)
you will have delivered the Inventory or rendered the services pursuant to the
Order; (ii) the Customer will accept the Inventory and/or services without any
offset or counterclaim; (iii) no known Dispute will exist in any respect; (iv)
you will have preserved, and will continue to preserve, any liens and any other
rights available to us by virtue of this Agreement; and (v) the Customer will
not be your Affiliate.

          5.7.
you will within ten Business Days of our request therefor, provide us with
copies of invoices and shipping or delivery receipts or such equivalent
electronic documents as we may designate or other proof of sale and delivery or
performance as we may from time to time require.

          5.8.
you will not, without providing us with thirty (30) days prior written notice
thereof, change your name, your state of organization or your principal place
of business and you are not aware, and will upon your becoming aware, notify us
promptly, of any Person organizing under your name in another state. 

          5.9.
you do not transact business under any trade names or tradestyles except as set
forth on Exhibit B annexed hereto (which Exhibit shall be complete and
correct prior to the Effective Date, and as the same may thereafter be amended
from time to time) and with respect to any such tradename or tradestyles you
have (i) caused certain of the tradenames and tradestyles (if indicated on
Exhibit B) to be registered in accordance with the laws applicable to the use
of such tradenames or tradestyles and have not in any way assigned or
encumbered your interest in such tradenames or tradestyles; or (ii) obtained a
license to use such tradenames or tradestyles from the owner thereof with
respect to the goods or services sold by you under such tradenames or
tradestyles, and in the markets in which such goods or services are sold by
you; and you are not aware, and will upon your becoming aware, promptly notify
us, of any other Person using your name or any of your tradenames or
tradestyles in any similar line of business.

          5.10.
you are, and at all times during the term of this Agreement, shall be, duly
organized, existing and in good standing under the laws of the state of your
organization; and you are, and at all times during the term of this Agreement,
shall be, duly qualified, existing and in good standing in every state in which
the nature of your business requires you to be so qualified.

3, Collection Agency

6. COMMISSIONS:

          6.1.
For our services hereunder, we shall receive a commission (hereinafter referred
to as the “Base Commission”) of (i) 0.275% of the gross invoice amount of each
Receivable; plus (ii) on those Receivables due from a Customer (or any
Affiliates or subsidiaries of such Customer) listed on the Special Accounts
Schedule submitted herewith and/or from time to time hereafter, such percentage
of the gross invoice amount thereof as equals the surcharge (if applicable) set
forth on the Special Accounts Schedule, to the extent of the amount credit
approved. All commissions shall be due and payable and chargeable to your
account with us at the date a Receivable arises. 

          6.2.
Our charge specified in Section 6.1 hereof is based upon maximum selling terms
of 60 days (excepting only that for sales to off-price retailers the maximum
selling terms will be 90 days) , and no more extended terms or additional
dating shall be granted by you to any Customer without our prior written
approval. If such approval is given by us, then for each additional thirty (30)
days or part thereof of such extended terms or additional dating, our charge
with respect to the Receivables covered thereby shall be increased by an amount
equal to twenty-five percent (25%) of the charge specified in Section 6.1
hereof. In addition, we shall charge you a fee of $2.50 for each instance in
which you change the terms of sale of any Receivable after you have submitted
to us a schedule listing such Receivable. 

          6.3.
Subject to the terms of the Combined Charges Agreement, the minimum aggregate
Base Commission payable under this Agreement shall be $480,000.00 for each
Contract Year, which shall be fully earned by us at the beginning of each
Contract Year, and which to the extent of any deficiency (after giving effect
to the commissions paid or payable under Section 6.1), shall be chargeable to
your account with us at the end of each Contract Year, provided, that in the
event of any termination of this Agreement in any Contract Year after the first
Contract Year, the minimum aggregate Base Commission payable in such year shall
only be the higher of (i) 100% of the monthly average of all charges payable by
you to us under Section 6.1 of this Agreement for the twelve month period prior
to the Effective Termination Date, multiplied by the number of calendar months
for the portion of the Contract Year elapsed prior to the Effective Termination
Date (including any partial month in which the Effective Termination Date falls
if such date is on or after the 15th day of such month); and (ii)
the monthly average amount of the minimum aggregate Base Commission for the
portion of such Contract Year elapsed prior to the Effective Termination Date,
multiplied by the number of calendar months for the portion of the Contract Year
elapsed prior to the Effective Termination Date (including any partial month in
which the Effective Termination Date falls if such date is on or after the 15th
day of such month).

7. PURCHASE PRICE

          7.1.
The purchase price for each Receivable that we purchase pursuant to the terms
hereof shall be the invoice amount of the Receivable, less (i) returns
(whenever made); (ii) selling discounts, credits or deductions of any kind
allowed, granted to or taken by the Customer at any time; and (iii) our commission
provided for in Section 6 hereof. Following a Default, no discount, credit or
allowance with respect to any Purchased Receivable shall be granted by you, and
no return of Inventory shall be accepted by you without our prior written
consent. A discount, credit or allowance may be claimed only by the Customer.
All amounts collected against the purchase price shall be credited to your
account on the Payment Date.

          7.2.
Where the cause of non-payment of a Credit Approved Receivable which has become
more than 120 days past due, is solely the Customer’s financial inability to
pay, then upon your submitting a confirmatory assignment of the Receivable that
is reasonably satisfactory to us, and upon our determining to our satisfaction
that the warranties made by you under Sections 5.3, 5.4 and 5.4 hereof are true
and correct, the Receivable, to the extent of the then effective Credit
Approval, shall be purchased by us and shall be deemed collected if it is not
otherwise subject to chargeback to you under this Agreement. 

4, Collection Agency

8. ADVANCES AND INTEREST RATES:

          8.1.
Advances. In our sole discretion, in accordance with the terms of this
Agreement, we will, from time to time, at your request, subject to the terms of
the Combined Charges Agreement, (i) advance to you sums (“Advances”); and/or
(ii) cause to be opened for your account letters of credit issued by an L/C
Bank (“Letters of Credit”), provided that the aggregate amount of (x) the
Advances outstanding will not, after giving effect to such requested Advances,
exceed the lesser of (a) 85% of the aggregate Net Amount of Eligible
Receivables outstanding at the time of such request, less Reserves, if any (the
“Receivables Availability”); and (b) $30,000,000 less the outstanding amount of
undrawn Letters of Credit; and (y) the outstanding amount of undrawn Letters of
Credit will not, after giving effect to such requested Letters of Credit,
exceed the lesser of (a) the Receivables Availability; and (b) $15,000,000.

          8.2.
Net Cash Balances. Net Cash Balances shall earn interest at a rate equal
to one and one half percent (1.5%) below the Prime Rate in effect from time to
time. We may, in our sole discretion, remit to you, at any time, any amount
standing to your credit on our books. You may, in your sole discretion,
withdraw, at any time, any amount standing to your credit on our books.

          8.3.
Letter of Credit Rates. Should we cause to be opened for your account
letters of credit, we shall receive a commission equal to (i) the greater of
(a) $100; or (b) one quarter of one percent (1/4 of 1%) of the face amount of
such letters of credit or guaranties (the “Face Amount”); plus (ii) bank
charges (exclusive of any commissions the L/C Bank may charge); plus (iii) one
quarter of one percent (1/4 of 1%) of the Face Amount upon each draw of any
such letter of credit or guaranty. 

          8.4.
Prime Rate Loans. Other than with respect to any advances
made or bearing interest pursuant to Section 8.5 hereof, interest on all Obligations
will be calculated at a rate per annum equal to the Prime Rate minus 0.125% per
annum (the “Effective Prime Rate”) from the date incurred through the date of
payment. Interest will be charged to your account monthly in arrears. Any
advance bearing interest at the Effective Prime Rate shall be referred to
herein as a “Prime Rate Loan”.

          8.5.
LIBOR Rate Loans. Advances, for which you provide us written notice,
prior to our making such advance, that such advance shall bear interest at the
30, 60 or 90 day LIBOR rate, shall bear interest at such 30, 60 or 90 day LIBOR
Rate in effect on the first day of each such interest period plus two and
one-half percent (2.5%) (the “Effective LIBOR Rate”). Any advance made pursuant
to this Section 8.5 or otherwise bearing interest at the Effective LIBOR Rate
shall be referred to herein as a “LIBOR Rate Loan”. In no event shall you be
permitted to request there be more than four (4) LIBOR Rate Loans outstanding
at any time.

          8.6.
Conversion or Continuation You shall have the option at the end of any
applicable interest period, to convert any LIBOR Rate Loans or any portion
thereof into Prime Rate Loans without premium or penalty or to continue such
LIBOR Rate Loans or any portion thereof for an additional interest period, and
the succeeding interest period of such continued LIBOR Rate Loan shall commence
on such expiration. To continue any LIBOR Rate Loan, you shall deliver a notice
of continuation in advance of the proposed expiration of the applicable
interest period, specifying (i) the principal outstanding amount thereof that
is to be continued, and (ii) the requested 30, 60 or 90 day interest period. If
the option set forth in this Section 8.4 to continue any LIBOR Rate Loan is not
delivered to us prior to the expiration of any applicable LIBOR Rate Loan
interest period, such LIBOR Rate Loan shall convert automatically into a Prime
Rate Loan on the final date of the applicable interest period.

          8.7.
Yield Protection. In the event you shall prepay all or any portion of
any LIBOR Rate Loan prior to the last day of the applicable interest period,
you shall pay to us a penalty equal to the sum of (i) the amount of such LIBOR
Rate Loan being prepaid multiplied by (x) any amount by which the Effective
LIBOR Rate applicable to such LIBOR Rate Loan exceeds the Effective LIBOR Rate
in effect on the date of such prepayment; and further multiplied by (y) the
fraction of the year remaining on the applicable LIBOR Rate Loan interest
period; plus (ii) $250.

          8.8.
Overadvance Rate and Default Rate. Notwithstanding the foregoing or
anything to the contrary contained elsewhere in this Agreement, (i) any portion
of advances made by us to you which is in excess of the Receivable Availability
(the “Overadvance”) shall bear interest at the Overadvance Rate (with our
determining in our sole discretion the allocation of the Overadvance to any
LIBOR Rate Loans and Prime Rate Loans outstanding at any time); and (ii) upon
the occurrence of a Default, and for so long as such Default continues, the
Obligations shall, at our option, bear interest at the Default Rate.

5, Collection Agency

          8.9.
Miscellaneous. Notwithstanding the foregoing or anything to the contrary
contained elsewhere in this Agreement, if any change after the date hereof in
law, rule, regulation, guideline or order or in interpretation thereof by any
governmental authority charged with the administration thereof shall make it
unlawful for us to make or maintain a loan at the Effective LIBOR Rate, then,
by written notice to you, we may require that the LIBOR Rate Loans be converted
to a Prime Rate Loan, whereupon the LIBOR Rate Loan shall be automatically
converted to a Prime Rate Loan and shall bear interest at the then Effective
Prime Rate. Interest will be charged monthly to your account in arrears.
Interest shall be calculated on the basis of a three-hundred-sixty (360) day
year for the actual number of days elapsed. In no event shall any applicable
interest rate under this Agreement exceed the maximum rate permitted by
applicable law and in the event excess interest is paid, it shall be considered
a repayment of principal.

          8.10.
Financial Covenants. You shall cause to be maintained, at the end of
each fiscal year, Working Capital of not less than $25,000,000.

9. STATEMENT OF ACCOUNT AND EXPENSES:

          9.1.
All Obligations shall become immediately due and payable upon demand upon the
occurrence of the earlier of: (i) any failure to pay any Overadvance within 10
days of its occurrence; (ii) any Default; and (iii) the Effective Termination
Date. You hereby irrevocably authorize and direct us to charge at any time to
your account any Obligations owing to any of our Affiliates by charging your
account.

          9.2.
We will render a statement of account monthly to you, and such statement shall
be binding upon you, except for manifest error and specific matters which you
contest and of which we are notified in writing, within thirty (30) days after
the date of such statement.

          9.3.
You shall pay all reasonable expenses (including reasonable attorneys, both
in-house and outside, fees) incurred by us in connection with the relationship
established under this Agreement and/or the transactions contemplated hereby,
including, expenses incurred in connection with the filing of financing
statements under the UCC and the making of record searches, which such expenses
shall not exceed $25,000 in connection with the initial preparation of this
Agreement and any concurrently prepared agreements and documents. You shall pay
all reasonable expenses incurred in connection with the filing of financing
statements under the UCC with respect to Purchased Receivables. We may also
charge to your account any reasonable fees, costs or other expenses we incur to
eliminate or cure any lack of capacity that we may now or hereafter have to
maintain an action in the courts of any state to enforce payment or Receivables
due from Customers located in such state by reason of your acts or omissions,
including your failure to qualify as a foreign entity in such state or any
other failure on your part to observe the laws of such state that are
applicable to you or your assets. You shall also pay to us such fees as we may
charge from time to time for, among other things, wire transfers. In connection
with our examinations of your books, records and operations you shall pay all
of our out-of-pocket expenses plus for each examiner the Standard Examiner’s
Rate in effect at the time of any such examination. In connection with our
administration of this Agreement, our liquidation of any Collateral, settlement
of any Dispute, or enforcement of any Obligation, or our protecting, preserving
and enforcing our security interests and rights hereunder, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions or
proceedings arising out of or relating to our transactions with you, including
actions or proceedings that may involve any Person asserting a priority or
claim with respect to Purchased Receivables, all costs and expenses incurred,
including, reasonable attorneys’ (both in-house and outside) fees incurred by
us, shall be borne and paid for by you, and may, at our option, be charged to
your account with us. Your reimbursement obligations pursuant to this paragraph
shall survive termination of this Agreement for any reason.

6, Collection Agency

          9.4.
No delay or failure on our part in exercising any right, privilege, or option
hereunder shall operate as a waiver of such or of any other right, privilege,
or option, and no waiver, amendment, or modification of any provision of this
Agreement shall be valid, unless in a writing signed by us and then only to the
extent therein stated. Should any provision of this Agreement be prohibited by
or invalid under applicable law, the validity of the remaining provisions shall
not be affected thereby. Unless otherwise specifically provided in this
Agreement, any notices, requests, demands or other communications permitted or
required to be given under this Agreement shall be in writing and shall be sent
by facsimile, hand delivery or by a nationally recognized overnight delivery
service, to the addresses and facsimile numbers of the parties set forth below
(or to such other address or facsimile number as a party may hereafter
designate by a notice to the other that complies with this section) and shall
be deemed given (a) in the case of a notice sent by facsimile, when received by
the recipient if the sending party receives a confirmation of delivery from its
own facsimile machine; and (b) in the case of a notice that is hand delivered
or sent by such overnight courier, when delivered (provided that the sending
party retains a confirmation of delivery). Any notice which, pursuant to the terms
hereof must be sent by you by certified or registered mail shall be deemed
given and effective when received by us. 

	
 

	
 

	
If to us

	
If to you

	
Rosenthal
  & Rosenthal, Inc.

	
 

	
1370
  Broadway

	
Steven
  Madden, Ltd.

	
New York NY
  10018

	
52-16
  Barnett Avenue

	
Attn: David
  Flaxman, Esq., with a copy to J. Michael Stanley

	
Long Island
  City, NY 11104

	
Facsimile:
  (212) 356-0989

	
Attn: Arvind
  Dharia

	
 

	
 

	
 

	
Facsimile:
  (718) 308-8201

	
 

	
 

	
 

	
With a copy
  to:

	
 

	
 

	
 

	
CERTILMAN
  BALIN ADLER & HYMAN, LLP

	
 

	
90 E.
  Merrick Ave., 9th Floor

	
 

	
East Meadow,
  NY 11554

	
 

	
Attn: Brian
  Ziegler, Esq.

	
 

	
 

	
 

	
Facsimile:
  (516) 296-7111

          9.5
The headings used herein are intended to be for convenience of reference only
and shall not define or limit the scope, extent or intent or otherwise affect
the meaning of any portion hereof.

10 PAYMENTS:

          10.1.
All remittances obtained by you against Credit Approved Receivables and any
other Receivables due from a Customer that is obligated on Credit Approved
Receivables will be received in trust for us, and you will turn over to us the
identical remittances as speedily as possible; provided, however, that nothing
herein authorizes you to collect Credit Approved Receivables or other
Receivables due from Customers obligated on Credit Approved Receivables. You constitute
us, or any other entity or person (but in no event a direct competitor of your
business) whom we may designate in our sole discretion, reasonably exercised,
as your attorney in fact at your own cost and expense to exercise, at any time,
all or any of the following powers which, being coupled with an interest, shall
be irrevocable until this Agreement has been terminated and you have fully and
indefeasibly paid and discharged all Obligations (a) to sign and/or endorse
your name on all remittances and all papers, bills of lading, receipts,
instruments and documents relating to the Receivables and the transactions
between us; (b) to deposit any checks or other remittances received relating to
the Receivables regardless of notations or conditions placed thereon by your
customers or deductions reflected thereby and to charge the amount of any such
deductions to your account; and (c) to sign your name to any and all documents
necessary to cure or eliminate any lack of capacity that we may now or hereafter
have, by reason of your acts or omissions, to maintain an action in the courts
of any state to enforce payment of Receivables due from Customers located in
such state and to file such documents with the appropriate public officials or
agencies.

7, Collection Agency

          10.2.
If any payment or recovery is received from or on behalf of a Customer which is
a Customer on both Credit Approved Receivables and CR Receivables, any such
payment or recovery may be first applied to the Credit Approved Receivables
notwithstanding (i) any notation to the contrary on or with respect thereto;
(ii) the payment terms thereof; (iii) the due date thereof; or (iv) whether
such payments were made in the ordinary course of business or otherwise.

11 SECURITY INTEREST; FINANCING STATEMENTS:

          11.1.
To secure the Obligations, and effective upon our purchase of Receivables
pursuant to the terms hereof, you sell and assign to us, and grant to us a
security interest in, all of your right, title and interest in such Purchased
Receivables and the Inventory represented by such Purchased Receivables, as
well as Inventory returned by or repossessed from Customers, all of your rights
as an unpaid vendor or lienor, all of your rights of stoppage in transit,
replevin and reclamation relating thereto, and all of your rights against third
parties with respect thereto. You will cooperate with us in exercising any
rights with respect to any of the foregoing.

          11.2.
You authorize us to file financing statements and any and all other documents
that may now or hereafter be provided for by the UCC to reflect and/or perfect
our interest as purchaser of Purchased Receivables and any security interest
now or hereafter granted by you to us in any of your presently owned or hereafter
acquired property. In the event that any jurisdiction requires a debtor’s
signature on such financing statements and/or such other documents, you
authorize us to file such financing statements and/or other documents on your
behalf as your attorney in fact, which such power being coupled with an
interest, shall be irrevocable until this Agreement has been terminated and you
have fully and indefeasibly paid and discharged all of the Obligations.

12 BOOKS AND RECORDS/FINANCIAL STATEMENTS:

          We
and our representatives shall, at all reasonable times, have the right to
examine all of your books and records, provided, however that unless and until
the occurrence of a Default, such examinations shall not occur more than once
in any Contract Year. You agree to prepare and furnish to us within forty five
(45) days after the close of each of your fiscal quarters, financial statements
reviewed and in such form and detail as we may reasonably require. You also
agree to have prepared, and to furnish to us within ninety (90) days after the
close of each of your fiscal years, financial statements, in accordance with
GAAP, which have been reviewed by an independent certified public accountant
satisfactory to us.

13 TERM:

          This
Agreement shall commence on the date hereof, shall continue for one Contract
Period and shall automatically renew at the end of each Contract Period for an
additional Contract Period. Notwithstanding the foregoing, this Agreement may
be terminated (i) by us at any time, on not less than sixty (60) days prior
written notice to you by registered or certified mail; (ii) by you, effective
at the end of the first Contract Period, provided you give us notice in
writing, by registered or certified mail, not less than sixty (60) days prior
to the expiration of the first Contract Period, of your intention to terminate
this Agreement as at the end of such Contract Period; (iii) by you effective
any time after the expiration of the first Contract Period, provided you give
us notice in writing, by registered or certified mail, not less than sixty (60)
days prior to the Effective Termination Date set forth in such notice; or (iv)
by you, effective at any time prior to the expiration of the first Contract
Period, upon your written request to us to terminate this Agreement effective
as of the date set forth in such request provided that you pay to us an Early
Termination Fee upon the Effective Termination Date of such termination. In the
event of a Default, we shall have the right to terminate this Agreement at any
time upon written notice, and you shall owe us an Early Termination Fee
calculated as of the date of such termination in the event the Effective
Termination Date occurs during the first Contract Year. The Early Termination
Fee shall become automatically due and payable in the event a petition is filed
by or against you under any provision of Title 11 of the 

8, Collection Agency

United States
Code during the first Contract Year. Our rights and the Obligations arising out
of transactions having their inception prior to the termination date shall not
be affected by any termination or notice thereof, nor shall any transaction
which by its terms survives termination. Termination of this Agreement shall
not become effective in respect of the liens and security interests granted to
us hereunder until you have fully and indefeasibly paid and discharged all
Obligations, and until such time, you shall continue to furnish schedules of
Receivables to us and deliver and pay over to us all Proceeds in respect thereof.
After the giving of any notice of termination hereunder and until the full
liquidation of your account and the indefeasible payment in full of all
Obligations, you shall not be entitled to receive any equities or payments from
us, to the extent we are obligated to make payments to you under this
Agreement. From and after the Effective Termination Date, all amounts charged
or chargeable to your account hereunder (including, without limitation, (i) if
the Effective Termination Date occurs during the first Contract Year, the Early
Termination Fee and (ii) if the Effective Termination Date occurs at any time
thereafter, the pro-rated amount of any deficiency (after giving effect to the
commissions payable under Section 6.1) in the earned minimum aggregate Base
Commission for the portion of such Contract Year elapsed prior to the Effective
Termination Date), and all other Obligations, shall become immediately due and
payable without further notice or demand.

14 GOVERNING LAWS/JURY TRIAL
WAIVER/JURISDICTION/VENUE AND MISCELLANEOUS PROVISIONS:

          This
Agreement is deemed made in the State of New York and shall be governed,
interpreted and construed in accordance with the laws of the State of New York,
applicable to contracts made and to be performed within such state. No
modification, waiver or discharge of this Agreement shall be binding upon us
unless in writing and signed by us. Our failure, at any time, to exercise any
right or remedy hereunder, shall not constitute a waiver on our part with respect
to such right or remedy, nor shall such failure preclude us from exercising the
same or any other right or remedy at any subsequent time. If any taxes are
imposed upon us, or if we shall be required to withhold or pay any tax or
penalty because of or in connection with any transactions between us under this
Agreement, you shall indemnify us and hold us harmless in respect thereof. This
Agreement, together with all other agreements delivered concurrently herewith
or hereafter, including, without limitation, the Combined Charges Agreement and
that certain Confidentiality Agreement between Steven Madden, Ltd. and
Rosenthal & Rosenthal, Inc., dated on or about the date hereof, embodies
our entire agreement as to the subject matter hereof and supersedes all prior
agreements (whether oral or written) as to the subject matter hereof. TRIAL BY JURY IS HEREBY WAIVED BY EACH OF US IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF US AGAINST THE OTHER ON
ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT OR THE RELATIONSHIP CREATED HEREBY (WHETHER SOUNDING IN TORT OR
CONTRACT). YOU HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE SUPREME
COURT OF THE STATE OF NEW YORK (OR THE CIVIL COURT OF THE CITY OF NEW YORK IF
SUCH MATTERS BE WITHIN ITS JURISDICTION), AND OF ANY FEDERAL COURT IN SUCH
STATE, FOR A DETERMINATION OF ANY DISPUTE AS TO ANY SUCH MATTERS. IN CONNECTION
THEREWITH, YOU HEREBY WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS AND AGREE THAT SERVICE THEREOF MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL DIRECTED TO YOU AT YOUR ADDRESS SET FORTH ABOVE, OR SUCH OTHER ADDRESS AS
SHALL HAVE PREVIOUSLY BEEN COMMUNICATED TO US BY REGISTERED OR CERTIFIED MAIL.
WITHIN THIRTY DAYS AFTER SUCH MAILING, YOU SHALL APPEAR OR ANSWER TO SUCH
SUMMONS, COMPLAINT OR OTHER PROCESS. SHOULD YOU FAIL TO APPEAR OR ANSWER WITHIN
SAID THIRTY DAY PERIOD, YOU SHALL BE DEEMED IN DEFAULT AND JUDGMENT MAY BE
ENTERED BY US AGAINST YOU FOR THE AMOUNT AS DEMANDED IN ANY SUMMONS, COMPLAINT
OR OTHER PROCESS SO SERVED. In the event we shall retain attorneys
for the purpose of enforcing the performance, payment or collection of any of
the Obligations, then and in that event you agree to pay the reasonable fees of
such attorneys, plus any and all reasonable expenses and disbursements incurred
in connection therewith and/or incidental thereto. Our books and records shall
be admissible as prima facie evidence of the status of the account

9, Collection Agency

between us,
absent manifest error. The use of “including” or “include” means “including (or
“include”), without limitation.” The use of “or” means “and/or” if the context
so permits or requires. The term “satisfactory to us” as used herein shall mean
“satisfactory to us in our sole and absolute discretion”. The term “our sole
discretion” as used herein shall mean “our sole and absolute discretion”. You
will not seek advice or counsel from us or any of our representatives with
respect to the management or operation of your business and if you deem such
advice or counsel to have been offered, directly or indirectly, you will
evaluate it and act or decline to act upon it based upon your own analysis
and/or the advice or counsel of your own independent expert(s) or
consultant(s). You agree that there is no fiduciary relationship between us or
our representatives and you or any other entity, affiliated or controlled by
you, and that you will not seek or attempt to establish any such fiduciary
relationship. You hereby expressly waive any right to assert, now or in the
future, that there was or is a fiduciary relationship between you and us and/or
our representatives in any action, proceeding or claim for damages. If any
provision of this Agreement shall for any reason be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provisions
hereof, and this Agreement shall be construed as if such invalid or
unenforceable provision had never been contained herein. This Agreement shall
be binding upon and inure to the benefit of each of us and our respective
heirs, executors, administrators, successors and assigns, provided, however,
that you may not assign this Agreement or your rights hereunder without our
prior written consent.

15 DEFINITIONS:

          As
used in this Agreement, these terms shall have the following meanings which
shall be applicable to both the singular and plural forms of such terms.

          “Accounts” shall have the meaning set
forth
in Article 9 of the UCC.

          “Affiliate” of a Person shall mean any
entity controlling, controlled by, or under common control with, the Person and
the term “controlling” and such variations thereof shall mean ownership of a
majority of the voting power of a Person, or the contractual power to control
such Person’s affairs.

          “Agreement” shall mean this Collection
Agency Agreement, as amended, modified or supplemented.

          “Availability under a Credit Line” shall
mean the unused amount of a Credit Line, unless otherwise suspended by us at
any time (e.g., when Receivables due from the Customer under a Credit Line are
a certain number of days past due) and communicated to you in writing or by
such electronic means as may be designated by us to you.

          “Bank” shall mean JPMorgan Chase Bank or
any
successor thereto.

          “Base Commission”shall have the meaning
set forth in Section 6.1 hereof.

          “Business Day” shall mean a day on which
we
and major banks in New York City are open for the regular transaction of
business.

          “Chattel Paper” shall have the meaning
set
forth in Article 9 of the UCC.

          “Collateral” shall mean any property or
rights in property whenever arising which now or hereafter secure any of the
Obligations.

          “Combined
Charges Agreement” shall mean that certain letter
agreement, dated as of the date hereof, among us, you, Daniel M. Friedman
Associates, Inc., Diva Acquisition Corp., Steven Madden Retail, Inc., Stevies,
Inc. and SML Acquisition Corp, aggregating (i) the minimum aggregate Base Commission
payable and (ii) the maximum outstanding advances and undrawn letters of
credit available, under this Agreement and each of those certain other
Collection Agency Agreements between us and such other parties.

          “Contract Period” shall mean (i) the
consecutive twelve month period following the last day of the month in which
the Effective Date falls; and (ii) each consecutive twelve month period
thereafter.

10, Collection Agency

          “Contract Year” shall mean the
consecutive
twelve month period following the last day of the month in which the Effective
Date falls and each consecutive twelve month period thereafter.

          “Credit Approval” shall mean either (i) a
notice from us to you, in writing or by such electronic means as may be designated
by us, that we have approved all or a portion of an Order; or (ii) Availability
under a Credit Line.

          “Credit Approved Receivable” shall mean a
Receivable for which we have assumed the Credit Risk.

          “Credit Line” shall mean a line of
credit,
established by us and communicated from time to time to you in writing or by
such electronic means as may be designated by us to you, granting approval for
sales by you, or rendition of services by you to a Customer, billed at a
specified location or locations, up to a specified aggregate available amount.

          
“Credit Risk” shall mean the risk
of loss resulting from a Customer’s failure to pay a Credit Approved Receivable
on the due date solely because of the Customer’s financial inability to make
such payment.

          “CR Receivable” shall mean any Receivable
which is not a Credit Approved Receivable.

          “Current Assets” shall mean all amounts
which would, in conformity with GAAP, be included under current assets on your
balance sheet, as at such date, provided, however, that such amounts shall not
include any amounts for any indebtedness owing by any Affiliate to you.

          “Current Liabilities” shall mean all
amounts
which would, in conformity with GAAP, be included under current liabilities on
your balance sheet, as at such date, but in any event including the amounts of
(a) all indebtedness payable on demand, or at the option of the Person to whom
such indebtedness is owed, not more than twelve (12) months after such date, (b)
any payments in respect of any indebtedness (whether installment, serial,
maturity, sinking fund payment or otherwise) required to be made not more than
twelve (12) months after such date, (c) all reserves in respect of liabilities
or indebtedness payable on demand or, at the option of the Person to whom such
indebtedness is owed, not more than twelve (12) months after such date, the
validity of which is not contested to such date, (d) all accruals for federal
or other taxes measured by income payable within twelve (12) months of such
date and (e) all outstanding indebtedness to us.

          “Customer” shall mean any Person
obligated
on a Receivable.

          “Default” shall mean the occurrence of
any
of the following events: (1.) nonpayment, after ten (10) days, when due of any
amount payable on any of the Obligations; (2.) failure to perform any agreement
or meet any obligation in this Agreement or in any agreement out of which any
of the Obligations arose, after ten (10) days notice (provided that you shall
only be entitled to such notice and opportunity to cure not more than twice in
any Contract Year); (3.) breach or failure to continue to be true and accurate
in all material respects of any covenants, representation, warranty or
agreement whenever made by you to us, pursuant to this Agreement after 10 days
notice (provided that you shall only be entitled to such notice and opportunity
to cure not more than twice in any Contract Year); (4.) default beyond any
applicable notice or cure period by you in repayment, when due, of any
indebtedness in excess of $2,000,000, now or hereafter owed for monies borrowed
from anyone other than us, unless the same is being contested in good faith and
adequate reserves therefor have been established;

11, Collection Agency

(5.) any
material statement, or warranty of yours made in writing or in any other
writing in or in connection with this Agreement or statement at any time
furnished or made by you to us is untrue in any material respect as of the date
furnished or made; (6.) suspension of the operation of your business; (7.) any
Obligor becomes insolvent or unable to pay debts as they mature, makes an
assignment for the benefit of creditors, or a proceeding is instituted by or
against any Obligor alleging that such Obligor is insolvent or unable to pay
debts as they mature, or a petition under any provision of Title 11 of the
United States Code, as amended, is brought by or against any Obligor, and the
same is not discharged within sixty (60) days; (8.) appointment of a receiver
for any collateral pledged for the Obligations or for any of your property, or
the property of any Obligor, in which we have an interest; or (9.) the Pension
Benefit Guaranty Corporation shall commence proceedings under Section 4042 of
the Employee Retirement Income Security Act of 1974 (ERISA) to terminate any of
your employee pension benefit plans.

          “Default Rate” shall mean the rate which
is
one percent (1%) per annum in excess of the Overadvance Rate.

          “Deposit Account” shall have the meaning
set
forth in Article 9 of the UCC

          “Deposit
Date” shall mean with respect to a payment of a
Receivable from or on behalf of a Customer, (i) in the case of a payment that
is received by a banking institution and deposited into our account with it (x)
prior to 12:00 noon on any day the date such banking institution makes such
deposit into our account; (y) after 12:00 noon on any day, the following
Business Day; and (ii) in all other cases, the Business Day following the date
that the payment is actually received by us.

          “Dispute” shall mean (i) any dispute,
claim,
offset, defense, counterclaim or any other reason for nonpayment of all or a
portion of any Receivable (including, merchandise returns) other than a
Customer’s financial inability to pay, regardless of whether the same is in an
amount greater than, equal to or less than the Receivable concerned, whether
bona fide or not, and regardless of whether the same, in part or whole, relates
to an unpaid Receivable or any other Receivable; and (ii) an act of God, force
majeure, the acts of restraint of public authorities whether domestic or
foreign, civil strife, war or currency restrictions or fluctuations resulting
in nonpayment of all or any portion of any Receivable. 

          “Documents” shall have the meaning set
forth
in Article 9 of the UCC.

          “Early Termination Fee” shall mean the
amount that you and we agree will compensate us for the damages we will sustain
if this contract is terminated by you prior to the end of the first Contract
Period or by us due to a termination event in the first Contract Period. The
Early Termination Fee, which you and we have agreed represents a reasonable
approximation of the amount of such damages (due to the impossibility of calculating
such amount in advance), shall be equal to the greater of: (i) 100% of the
monthly average of all fees and charges that would have been payable by you to
us on an actual basis under Sections 6.1 (as adjusted by Section 6.2) or 6.2,
as applicable, of this Agreement had it been in effect for the twelve month
period prior to the effective date of such termination or filing of such
petition, multiplied by the number of whole or partial calendar months
remaining during the unexpired portion of the first Contract Year; and
(ii) the minimum factoring commission pursuant to Section 6.2 hereof, for
the first Contract Year.

          “Effective Date” shall have the meaning
set
forth in the paragraph immediately preceeding Section 1 hereof.

          “Effective Termination Date” shall mean
the
date of termination specified in any duly delivered notice of termination of
this Agreement, or, with respect to any automatic termination of this
Agreement, the effective date of such automatic termination.

          “Effective
LIBOR Rate Loan” shall have the meaning set forth in
Section 8.3 hereof.

          “Effective Prime Rate” shall have the
meaning set forth in Section 8.2 hereof.

12, Collection Agency

          “Eligible Receivables” shall mean, at the
time of the calculation thereof all Receivables less (i) any Receivables
subject to a Dispute, (ii) any CR Receivables, (iii) any Receivables owing from
a Customer whose total obligations to you exceed forty percent (40%) of all
Eligible Receivables; and (iv) any Receivables which we in our sole discretion
deem not to be Eligible Receivables.

          “Excluded Receivables” shall mean (i) all
international sales and commission invoices to foreign customers, (ii) all
“first cost” sales and commissions invoices to domestic customers, (iii) all
invoices to employees and affiliates, (iv) all sample billings to sales
representatives and others; (vi) all invoices to Shoe Mania, Inc.; and (vii)
all other invoices as we may agree in writing in our sole discretion (not to be
unreasonably withheld).

          “GAAP” shall mean generally accepted
accounting principles in the United States of America as in effect from time to
time as set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
the statements and pronouncements of the Financial Accounting Standards Board
which are applicable to the circumstances as of the date of the determination
consistently applied.

          “General Intangibles” shall have the
meaning
set forth in Article 9 of the UCC (and shall include tradenames, trademarks,
tradestyles, service marks, copyrights and patents and all your rights and
claims against us hereunder or otherwise).

          “Instruments” shall have the meaning set
forth in Article 9 of the UCC.

          “Inventory” shall have the meaning set
forth
in Article 9 of the UCC.

          “Investment Property” shall have the
meaning
set forth in Article 9 of the UCC.

          “L/C
Bank” shall mean the Bank or any other national
banking association.

          “Letter of Credit Rights” shall have the
meaning set forth in Article 9 of the UCC.

          “LIBOR”
shall mean London Interbank Offered Rate, compiled by the British Bankers
Association.

          “LIBOR
Rate” shall mean the LIBOR rate as published in the
“Money Rates” section of The Wall Street Journal (Eastern Edition). If The Wall
Street Journal ceases to be published or goes on strike or is otherwise not
published for any period of time, or if it ceases to publish an applicable
LIBOR Rate, then we shall use the LIBOR rate as reflected by the British
Bankers Association on Bloomberg Professional Services page BBAM1 (“Bloomberg”)
during such period. If more than one LIBOR rate is published by The Wall Street
Journal or, if applicable; Bloomberg, for such period on any applicable date,
the “highest” LIBOR rate shall be selected.

          “Net
Cash Balances” shall mean cash balances in your favor
with us arising from the purchase of Receivables by us which, at your option,
remain with us past the Payment Date to which such cash balances relate.

          “Net Amount of Receivables” shall mean
the
gross amount of Receivables, less maximum discount, less returns, less credits
or allowances of any nature at any time issued, owing, granted or outstanding,
and less also our commission as set forth herein.

          “Obligations” shall mean all obligations,
advances, liabilities and indebtedness of you or your Affiliates to us or any
of our Affiliates, however evidenced, arising under this Agreement, whether now
existing or incurred from time to time hereafter and whether before or after
termination hereof, absolute or contingent, joint or several, matured or
unmatured, direct or indirect, primary or secondary, liquidated or
unliquidated, and including, all of our charges, commissions, fees, interest,
expenses, costs and attorneys’ fees chargeable to you in connection therewith,
and all of your obligations to us as an indemnitor pursuant to the terms of
this Agreement.

13, Collection Agency

          “Obligor” shall mean you and each other
Person (including, any Guarantor or direct or indirect provider of collateral)
primarily or secondarily, directly or indirectly, liable on, or providing
collateral for, any of the Obligations.

          “Order” shall mean any purchase order or
equivalent document for the sale by you of goods or the rendition by you of
services.

          “Overadvance”
shall have the meaning set forth in Section 8.8 hereof.

          “Overadvance Rate” shall mean the rate
which
is three percent (3%) per annum in excess of the Effective Prime Rate.

          “Payment
Date” with respect to a Receivable shall mean the date
which is three (3) Business Days after the Deposit Date thereof

          “Permitted Lien” shall mean a lien or
security interest in our favor, or to which we have specifically consented in
writing, subject to any limitation set forth in such writing.

          “Person” shall mean any individual, sole
proprietorship, partnership, joint venture, trust, non-registered organization,
association, corporation, limited liability company, government or any
subdivision, agency or political subdivision thereof or any other entity.

          “Prime Rate” shall mean the rate of
interest
from time to time publicly announced in New York City by the Bank as its prime
rate. The Prime Rate may not be the lowest or best rate charged by the Bank.

          “Prime
Rate Loan” shall have the meaning set forth in Section
8.2 hereof.

          “Proceeds” shall mean all proceeds (as
set
forth in Article 9 of the UCC), products, rents and profits of or from any and
all of the Collateral and, to the extent not otherwise included in the
foregoing; (i) all payments under any insurance, indemnity, warranty or guaranty
with respect to any of the collateral, (ii) all payments in connection with any
requisition, condemnation, seizure or forfeiture with respect to any of the
Collateral, (iii) all claims and rights to recover for any past, present or
future infringement or dilution of or injury to any Collateral; and (iv) all
other amounts from time to time paid or payable under or with respect to any of
the Collateral, including licensing and royalty fees.

          “Purchased
Receivable” shall mean a Receivable that we purchase from you
pursuant to Section 7.2 hereof.

          “Receivable Availability” shall have the
meaning set forth in Section 8.1 hereof.

          
“Receivables” shall mean all
Accounts, Instruments, Chattel Paper, Documents, Investment Property and General
Intangibles arising from your sales of Inventory or performance of services,
and the Proceeds thereof, and all Supporting Obligations, whether now existing
or hereafter created, excepting only for Excluded Receivables.

          “Reserves” shall mean any reasonable set
asides, reductions or reserves which we may establish, from time to time, in
our sole option and in our sole discretion in connection with any financial
accommodations which we may make available to you in connection with this Agreement.

          “Special Account Schedule” shall mean a
schedule issued, from time to time, listing thereon surcharge commissions
applicable to Receivables owing from the Customers listed thereon.

14, Collection Agency

          “Standard Examiner Rate” shall mean the
per
diem rate per examiner established by us from time to time. The Standard
Examiner Rate on the date hereof is $850

          “Supporting Obligations” shall have the
meaning set forth in Article 9 of the UCC.

          “UCC” shall mean the Uniform Commercial
Code
as the same may be in effect (subject to revision, from time to time) in the
State of New York.

          “Working Capital” shall mean the amount,
if
any, by which Current Assets exceed Current Liabilities.

          YOU
ACKNOWLEDGE THAT WE HAVE ADVISED YOU TO CONSULT WITH AN ATTORNEY PRIOR TO YOUR
EXECUTION OF THIS AGREEMENT.

ROSENTHAL
& ROSENTHAL, INC.

	
 

	
 

	
 

	
By:

	
/s/ J.
  Michael Stanley

	
 

	
 

	 

	
 

	
 

	
J. Michael
  Stanley

	
 

	
 

	
Managing
  Director

	
 

	
 

	
 

	
AGREED:

	
 

	
STEVEN
  MADDEN, LTD.

	
 

	
 

	
 

	
By: 

	
/s/ Arvind
  Dharia

	
 

	
 

	 

	
 

	
 

	
Arvind
  Dharia

	
 

	
 

	
C.F.O./Secretary

	
 

15, Collection Agency

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