Document:

Exhibit 10.11

 

FOURTH
AMENDMENT TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This FOURTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of January 4, 2006,
is entered into by and among the lenders party hereto (collectively, the “Lenders”),
Wachovia Bank, National Association, a national banking association, successor
by merger to Congress Financial Corporation, in its capacity as agent for the
Lenders (in such capacity, “Agent”), The CIT Group/Business Credit, Inc.,
a New York corporation, in its capacity as documentation agent (in such
capacity, “Documentation Agent”), Lerner New York, Inc., a Delaware
corporation (“Lerner”), and Lernco, Inc., a Delaware corporation (“Lernco”
and together with Lerner, “Borrowers” and individually each a “Borrower”).

 

RECITALS

 

WHEREAS, Borrowers, Agent, Documentation
Agent and Lenders have entered into financing arrangements pursuant to which
Agent and Lenders may make loans and advances and provide other financial
accommodations to Borrowers as set forth in the Amended and Restated Loan and
Security Agreement, dated March 16, 2004, among Agent, Documentation
Agent, Lenders and Borrowers, as amended by the First Amendment to Amended and
Restated Loan and Security Agreement, dated May 19, 2004, the Second Amendment
to Amended and Restated Loan and Security Agreement, dated as of December 17,
2004, and the Third Amendment to Amended and Restated Loan and Security
Agreement, dated as of July 19, 2005 (as the same now exists and may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced,
the “Loan Agreement”) and the other agreements, documents and instruments
referred to therein or any time executed and/or delivered in connection
therewith or related thereto, including this Amendment (all of the foregoing,
together with the Loan Agreement, as the same now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced,
being collectively referred to herein as the “Financing Agreements”);

 

WHEREAS, Borrowers have requested that (a) certain
Lenders make new term loans to Borrowers, which together with cash held by
Borrowers, will be used to repay the existing term loans from certain Lenders,
and (b) Agent and Lenders agree to make certain amendments to the Loan
Agreement and the other Financing Agreements related to such new term loans and
other matters, and such Lenders are willing to make such new term loans to
Borrowers and Agent and Lenders are willing to agree to such amendments,
subject to the terms and conditions contained herein; and

 

WHEREAS, the parties hereto desire to enter
into this Amendment to evidence and effectuate such amendments, subject to the
terms and conditions and to the extent set forth herein;

 

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the
premises and covenants set forth herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

 

1.     Definitions.

 

1.1   Additional
Definitions. As used herein, in the Loan Agreement or in any of the other
Financing Agreements, the following terms shall have the meanings given to them
below, and the Loan Agreement shall be deemed and is hereby amended to include,
in addition and not in limitation, the following definitions in their proper
alphabetical order:

 

(a)   “Existing Term
Loan” shall mean the term loan made by the parties to the Loan Agreement as Term
Loan Lenders to Borrowers pursuant to Section 2.3 of the Loan Agreement as
in effect immediately prior to the amendment of such Section as provided
for herein and the Fourth Amendment Effective Date.

 

(b)   “Fourth
Amendment” shall mean this Fourth Amendment to Amended and Restated Loan and
Security Agreement among Agent, Documentation Agent, Lenders and Borrowers.

 

(c)   “Fourth
Amendment Effective Date” shall mean the first date on which all of the
conditions precedent to the effectiveness of the Fourth Amendment shall have
been satisfied or waived in writing.

 

(d)   “Fourth Amendment
Fee Letter” shall mean the letter agreement, dated of even date herewith, by
and among Borrowers and Agent, setting forth certain fees payable by Borrowers
to Agent for the benefit of itself and Lenders, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.

 

(e)   “Net Cash
Proceeds” shall mean the aggregate cash proceeds received by any Borrower or
Guarantor (i) in respect of any sale, lease, transfer or other disposition
of any assets or properties, or interest in assets and properties, in each case
outside the ordinary course of business of such Borrower or Guarantor, or (ii) as
proceeds of any loans or other financial accommodations provided to any
Borrower or Guarantor (either of clause (i) or (ii) of this
definition, a “Specified Disposition”), in each case net of (A) the reasonable
costs relating to such Specified Disposition (including, without limitation,
legal, accounting and investment banking fees, and sales commissions), (B) the
portion of such proceeds deposited in an escrow account or otherwise required
to be reserved pursuant to the purchase agreements related to such Specified
Disposition for purchase price adjustments or indemnification payments payable
by such Borrower or Guarantor to the purchaser thereof (but only until such
time as such portion of such proceeds is received by such Borrower or
Guarantor), (C) taxes paid or estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements), and (D) amounts applied to the repayment of Indebtedness
secured by a valid and enforceable lien on the asset or assets that are the
subject of such Specified Disposition required to be repaid in connection with
such transaction. For purposes of

 

2

 

this definition, a Specified Disposition described in clause (i) above
shall exclude (x) sales, leases, transfers and other dispositions of Inventory
permitted under Section 9.7(b)(vi) hereof, and (y) sales and other
dispositions of defective, obsolete, out-of-season or slow moving Inventory to
a third-party off-price wholesaler, including Ben Elias and Value City, or any
other Person engaged in substantially the same business as Ben Elias or Value
City and permitted by Agent. Net Cash Proceeds shall exclude any non-cash
proceeds received by any Borrower or Guarantor from any Specified Disposition,
but shall include such proceeds when and as converted by any Borrower or
Guarantor to cash or other immediately available funds.

 

(f)    “Renewal Date”
shall have the meaning set forth in Section 14.1(a) hereof.

 

(g)   “Wachovia”
shall mean Wachovia Bank, National Association, a national banking association,
in its individual capacity, and its successors and assigns.

 

1.2   Amendments
to Definitions.

 

(a)   Ableco Related
Definitions. Each of Sections 1.1, 1.1.1, 1.1.2, 1.1.3, 1.1.4,
1.1.5, 1.122 and 1.123 of the Loan Agreement is hereby deleted in its entirety
and replaced with the following: “[Reserved]”.

 

(b)   Affiliate. The last
sentence of the definition of “Affiliate” set forth in Section 1.7 of the
Loan Agreement is hereby deleted in its entirety.

 

(c)   Agent. The
definition of “Agent” set forth in Section 1.8 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:

 

“1.8  “Agent” shall mean Wachovia Bank,
National Association, a national banking association, successor by merger to
Congress Financial Corporation, in its capacity as agent on behalf of Lenders
pursuant to the terms hereof, and any replacement or successor agent hereunder.”

 

(d)   Cash Equivalents. The
definition of Cash Equivalents set forth in Section 1.36 of the Loan
Agreement is hereby amended by deleting “and Ableco” from such definition.

 

(e)   Change of
Control. Clause (e) of the definition of “Change of Control” set forth in
Section 1.38 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following: “(e) [Reserved]”.

 

(f)    Congress. The
definition of “Congress” set forth in Section 1.44 of the Loan Agreement
is hereby deleted in its entirety and replaced with “Wachovia” and all
references to the term “Congress” in the Loan Agreement and in any of the other
Financing Agreements shall be deemed and each such reference is hereby amended
to mean Wachovia.

 

3

 

(g)   Eligible
Transferee. The definition of “Eligible Transferee” set forth
in Section 1.69 of the Loan Agreement is hereby deleted in its entirety
and replaced with the following:

 

“1.69  “Eligible Transferee” shall mean (a) any
Lender; (b) the parent company of any Lender and/or any Affiliate of such
Lender which is at least fifty percent (50%) owned by such Lender or its parent
company; (c) any person (whether a corporation, partnership, trust or
otherwise) that is engaged in the business of making, purchasing, holding or
otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or
with respect to any Lender that is a fund which invests in bank loans and
similar extensions of credit, any other fund that invests in bank loans and
similar extensions of credit and is managed by the same investment advisor as
such Lender or by an Affiliate of such investment advisor, and in each case
(unless otherwise provided herein with regard to the Term Loan) is approved by
Agent; and (d) any other commercial bank, financial institution or “accredited
investor” (as defined in Regulation D under the Securities Act of 1933)
approved by Agent, provided, that, (i) no Borrower, Obligor,
Affiliate of any Borrower or Obligor, BSMB or any Affiliate of BSMB shall
qualify as an Eligible Transferee, (ii) no Person to whom any Indebtedness
which is in any way subordinated in right of payment to any other Indebtedness
of any Borrower or Obligor shall qualify as an Eligible Transferee, except as
Agent may otherwise specifically agree and (iii) no Person that is
organized under the laws of a jurisdiction other than the United States or any
state thereof shall qualify as an Eligible Transferee.”

 

(h)   Maximum Credit. The
definition of “Maximum Credit” set forth in Section 1.129 of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:

 

“1.129  “Maximum Credit” shall mean the amount
of $127,500,000.”

 

(i)    Obligations. The
definition of “Obligations” set forth in Section 1.147 of the Loan
Agreement is hereby amended by deleting the proviso at the end of such
definition.

 

(j)    Qualified Cash. The
definition of “Qualified Cash” set forth in Section 1.165 of the Loan
Agreement is hereby amended by deleting the proviso at the end of such
definition.

 

(k)   Revolving Loan
Interest Rate. Clause (b) of the definition of “Revolving
Loan Interest Rate” set forth in Section 1.181 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:

 

“(b)  So long as no
Event of Default has occurred and is continuing, on a quarterly basis,
effective on the first day of the first month following receipt of Borrowers’
quarterly financial statements, the Revolving Loan Interest Rate as to
Revolving Loans that are Eurodollar Rate Loans will be adjusted to the then
applicable percentage set forth below plus the Adjusted Eurodollar Rate for
Eurodollar Rate Loans so as to reflect the lowest Revolving Loan Interest Rate
based on (i) Borrowers’ EBITDA during the twelve (12) month period
ending on the last day of the immediately preceding

 

4

 

fiscal quarter, and/or (ii) Borrowers’
Average Excess Availability for the immediately preceding fiscal quarter, as
set forth below:

 

	
  Tier

  	
   

  	
  EBITDA

  	
   

  	
  Average Excess

  Availability

  	
   

  	
  Adjusted Eurodollar

  Rate Basis

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  Greater than
  $125,000,000

  	
   

  	
  Greater than
  $30,000,000

  	
   

  	
  1.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Greater than
  $100,000,000 but equal to or less than $125,000,000

  	
   

  	
  Greater than
  $30,000,000

  	
   

  	
  1.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Greater than
  $75,000,000 but equal to or less than $100,000,000

  	
   

  	
  Greater than
  $30,000,000

  	
   

  	
  1.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Greater than
  $50,000,000 but equal to or less than $75,000,000

  	
   

  	
  Greater than
  $15,000,000 but equal to or less than $30,000,000

  	
   

  	
  1.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Equal to or
  less than $50,000,000

  	
   

  	
  Equal to or
  less than $15,000,000

  	
   

  	
  2.00

  	
  %

  

 

provided, that, (x)
in order for the percentages in Tier 1 or Tier 2 to be applicable, both the
EBITDA and the Average Excess Availability for the applicable periods must
satisfy the criteria set forth above, and (y) in order for the percentages in
Tier 3, Tier 4 or Tier 5 to be applicable, either the EBITDA or the Average
Excess Availability for the applicable periods must satisfy the criteria set
forth above.”

 

(l)    Revolving Loan
Maturity Date. The definition of “Revolving Loan Maturity Date”
set forth in Section 1.184 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following: 
“1.184  [Reserved].”

 

(m)  Term Loan
Commitment. The definition of “Term Loan Commitment” set forth
in Section 1.201 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following:

 

“1.201  “Term Loan Commitment” shall mean, as
to any Term Loan Lender: (a) at any time prior to the making of the Term
Loan, the amount of such Term Loan Lender’s term loan commitment as set forth
on Exhibit A to the Fourth Amendment or on Schedule 1 to the
Assignment and Acceptance Agreement pursuant to which such Term Loan Lender
became a Term Loan Lender under this Agreement, as such amount may be
adjusted from time to time in accordance with the provisions of Section 14.7
hereof, and (b) at any time after the making of the Term Loan, that
portion of the Term Loan made by and owing to such Term Loan Lender, in each
case as the same may be adjusted from time to time in accordance with the
terms hereof.”

 

5

 

(n)   Term Loan
Interest Rate. The definition of “Term Loan Interest Rate” set
forth in Section 1.202 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:

 

“1.202  “Term Loan Interest Rate” shall mean,
for any month during which any Obligations related to the Term Loan are
outstanding, a per annum rate equal to two and one-half (2.50%) percent per
annum in excess of the Adjusted Eurodollar Rate (when calculated using the
Eurodollar Rate existing as of the last day of the month ended immediately
prior to such month and an Interest Period of one month); provided, that,
(a) at Agent’s option or, upon the written direction of Required Term Loan
Lenders, the Term Loan Interest Rate shall be increased by two (2.0) percentage
points either (i) for the period on and after the date of termination or
non-renewal hereof until such time as all Obligations arising under the Term
Loan are indefeasibly paid and satisfied in full in immediately available funds,
or (ii) for the period from and after the date of the occurrence of any
Event of Default, and for so long as such Event of Default is continuing and (b) notwithstanding
anything to the contrary contained herein, if any of the conditions described
in Sections 3.3(b)(i), 3.3(b)(ii) or 3.3(b)(iii) hereof exist with
respect to Eurodollar Rate Loans, or if the adoption of or any change in any
law, treaty, rule or regulation or final, non-appealable determination of
an arbitrator or a court or other Governmental Authority or in the
interpretation or application thereof, in each case, occurring after the Fourth
Amendment Effective Date shall make it unlawful for a Term Loan Lender to
maintain loans based on the Adjusted Eurodollar Rate, then such Term Loan
Lender may, at its option, after notice to Agent and Borrowers, convert the
interest rate on the Term Loan owing to such Term Loan Lender on the last day
of the then-current Interest Period to the Prime Rate (or at the option of such
Term Loan Lender, after notice to Agent, for the period from and after the date
of the occurrence of any Event of Default, and for so long as such Event of
Default is continuing as determined by Agent, to two (2%) percent per annum in
excess of the Prime Rate).”

 

(o)   Term Loan
Maturity Date. The definition of “Term Loan Maturity Date” set
forth in Section 1.204 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:

 

“1.204  “Term Loan Maturity Date” shall mean March 17,
2009.”

 

(p)   Total
Commitment. The definition of “Total Commitment” set forth in Section 1.206
of the Loan Agreement is hereby deleted in its entirety and replaced with the
following:

 

“1.206  “Total Commitment” shall mean, as to
each Lender, the sum of such Lender’s Revolving Loan Commitment, if any, plus
such Lender’s Term Loan Commitment, if any, as set forth on Exhibit A to
the Fourth Amendment, or on Schedule 1 to the Assignment and Acceptance
Agreement pursuant to which such Lender became a Lender under this Agreement,
as such amounts may be adjusted from time to time in accordance with the
provisions of Section 14.7 hereof.”

 

6

 

1.3   Interpretation.
Capitalized terms used herein which are not otherwise defined herein shall have
the respective meanings ascribed thereto in the Loan Agreement.

 

2.     New
Term Loan. Section 2.3 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:

 

“2.3  Term Loan.

 

(a)  On the Fourth
Amendment Effective Date, subject to the terms and conditions contained herein,
in the Fourth Amendment and in the other Financing Agreements, each Term Loan
Lender party to this Agreement on such date severally (and not jointly) agrees
to make an additional term loan to Borrowers in an amount equal to such Term
Loan Lender’s Pro Rata Share of $37,500,000 (collectively referred to
hereinafter as the “Term Loan”). Except as Agent and Term Loan Lenders may otherwise
agree, each Term Loan Lender shall make the amount of such Term Loan Lender’s
Term Loan available to Agent in immediately available funds by no later than
12:00 noon New York time on the Fourth Amendment Effective Date. After Agent’s
receipt of the proceeds, Agent shall make the proceeds of the Term Loan
available to Borrowers as provided in Section 6.5 hereof. The Term Loan
shall be (i) repaid, together with all accrued and unpaid interest thereon
and all other Obligations outstanding with respect thereto (other than
contingent indemnification obligations and other contingent Obligations related
thereto which expressly survive the repayment of the Term Loan), in accordance
with this Agreement, any Registered Term Note, and the other Financing
Agreements, and (ii) secured by all of the Collateral.

 

(b)  The proceeds of
the Term Loan, together with cash held by Borrowers, shall be used on the Fourth
Amendment Effective Date to repay in full the Existing Term Loan and all
accrued interest and fees related thereto. Borrower hereby authorizes and
directs the disbursement of the proceeds of the Term Loan, together with cash
it has in its deposit accounts on the Fourth Amendment Effective Date, to make
the payments to the parties set forth on Exhibit B to the Fourth Amendment.

 

(c)  On and after the Fourth
Amendment Effective Date, the principal amount of the Term Loan shall be repaid
in thirteen (13) consecutive quarterly installments (or earlier as provided
herein) payable on the first day of each calendar quarter commencing April 1,
2006, of which (i) the first twelve (12) installments shall each be in the
amount of $1,500,000 and (ii) the last installment shall be in the amount
of the entire unpaid principal amount of the Term Loan, together with all
accrued and unpaid interest thereon and all other Obligations with respect
thereto (other than contingent indemnification obligations and other contingent
Obligations related thereto which expressly survive the repayment of the Term
Loan), shall be due and payable on the earlier of (A) the Term Loan Maturity
Date, or (B) the date of termination of this Agreement, whether by its
terms, by prepayment, or by acceleration. Subject to the provisions of Sections
2.6(d) and (e) below, the Term Loan may be prepaid in whole or
in part at any time without premium or penalty, but once repaid may not
be reborrowed.

 

7

 

(d)  Borrowers may, at
their option, make a prepayment of all or any portion of the outstanding
balance of the Term Loan:

 

(i)  so long as: (A) at
all times during the thirty (30) day period immediately prior to such payment
and after giving effect to such payment, Borrowers have Excess Availability
plus Qualified Cash of no less than $40,000,000; (B) Borrowers’ EBITDA for
the twelve (12) month period most recently ended is $55,000,000 or more; and (C) both
before and after giving effect to such payment, no Default or Event of Default
exists or would occur;

 

(ii)  with the net cash
proceeds of any issuance or sale of, or capital contribution in respect of, any
Capital Stock of NY&Co after the date hereof in each case, to the extent
the transaction giving rise to such proceeds is not prohibited under the terms
of the Financing Agreements or is otherwise consented to by Agent in writing;
or

 

(iii)  with the net
cash proceeds of a refinancing of the Term Loan on terms and conditions
satisfactory to Agent.

 

(e)  Agent, on behalf
of Borrowers, agrees to record the Term Loan on the Register. The Term Loan
recorded on the Register (the “Registered Term Loan”) may not be evidenced
by promissory notes other than a Registered Term Note (as defined below). Upon
the registration of a Term Loan, any promissory note (other than a Registered
Term Note) evidencing the same shall be null and void and shall be returned to
Borrowers. Borrowers agree, at the request of the Required Term Loan Lenders,
to execute and deliver to Term Loan Lenders a promissory note in registered form to
evidence such Registered Term Loan (i.e., containing registered note language)
and registered as provided in Section 14.7(b) hereof (a “Registered
Term Note”), payable to the order of each Term Loan Lender and otherwise duly
completed. Once recorded on the Register, the Obligations evidenced by such
Registered Term Note may not be removed from the Register so long as it
remains outstanding, and a Registered Term Note may not be exchanged for a
promissory note that is not a Registered Term Note.

 

(f)  Within ten (10) days
following the receipt by Borrowers of the Net Cash Proceeds from the incurrence
or issuance by Borrowers of any Indebtedness for borrowed money described in
clause (a) of the definition of Indebtedness on or after the date of the Fourth
Amendment (which shall exclude for purposes of this Section 2.3(f) the
Indebtedness permitted under Sections 9.9(e), (f), (g), (h) and (i)), Borrowers
shall, absolutely and unconditionally and without notice or demand, prepay the
then outstanding principal amount of the Term Loan in an amount equal to fifty
(50%) percent of the amount by which such Net Cash Proceeds exceed $20,000,000;
provided, that, in the event that all or a portion of the Net
Cash Proceeds from the incurrence or issuance of such Indebtedness is used by
Borrowers to build a distribution center, such prepayment shall be in an amount
equal to fifty (50%) percent of the amount by which such Net Cash Proceeds
exceed the sum of (x) the amount of such Net Cash Proceeds used by Borrowers to
build such distribution center (up to $30,000,000), and (y) $20,000,000.

 

8

 

(g)  Within ten (10) days
following the receipt by Borrowers of the Net Cash Proceeds from the sale by
Borrowers of any assets or properties of Borrowers (other than as permitted in Section 9.7(b) hereof)
on or after the date of the Fourth Amendment, Borrowers shall, absolutely and
unconditionally and without notice or demand, prepay the then outstanding
principal amount of the Term Loan in an amount equal to fifty (50%) percent of
the amount of such Net Cash Proceeds; provided, that, (i) in
the event of a sale of the trademarks listed on Exhibit C to the Fourth
Amendment, such prepayment shall be in an amount equal to such percentage of
the Net Cash Proceeds in excess of $5,000,000; and (ii) so long as no
Default or an Event of Default has occurred and is continuing, on the date any
Borrower receives Net Cash Proceeds from the sale of any Equipment or Real
Property of such Borrower, such Net Cash Proceeds may, at the option of such
Borrower, be applied to acquire replacement property or assets of a like kind
to the property or assets so disposed, provided, that (A) Agent
shall have a first priority, valid and perfected security interest in such
replacement property or assets, and (B) such Borrower shall deliver to
Agent a certificate within ten (10) days after the date of receipt of such
Net Cash Proceeds stating that such Net Cash Proceeds shall be used to acquire
such replacement property or assets of a like kind to the property or assets so
disposed within one hundred eighty (180) days after the date of receipt of such
Net Cash Proceeds (which certificate shall set forth an estimate of the Net
Cash Proceeds to be so expended), (C) if all or any portion of such Net
Cash Proceeds are not so used within such one hundred eighty (180) day period,
such unused Net Cash Proceeds shall be applied to prepay the Term Loan and the
Obligations related thereto in accordance with this Section 2.3(g), and (D) pending
such reinvestment, such Net Cash Proceeds shall be applied as a prepayment of
Revolving Loans.

 

(h)  In the event that at
any time on or after July 1, 2006 (i) the sum of Borrowers’ Excess
Availability and Qualified Cash is at any time less than $50,000,000, and (ii) EBITDA
of Borrowers when calculated for the twelve (12) consecutive fiscal month
period most recently ended for which Agent has received financial statements of
Borrowers is less than $65,000,000, within ten (10) days thereafter, Borrowers
shall, absolutely and unconditionally without notice or demand, prepay the then
outstanding principal amount of the Term Loan in an amount such that, after
giving effect thereto, the outstanding principal amount of the Term Loan shall
be equal to $25,000,000, provided, that,

 

(A)  in the event that
as of any date that such mandatory prepayment is due as set forth above, the
conditions to optional prepayments by Borrowers in respect of the Term Loan set
forth in Section 2.3(d)(i) above would not be satisfied after giving
effect to such mandatory prepayment, then payments in respect of such mandatory
prepayment shall instead be due and payable on each date thereafter that all or
any portion of such mandatory prepayment otherwise due on the date set forth
above may be made to the extent that after giving effect thereto the
conditions to optional prepayments in Section 2.3(d)(i) would be
satisfied, and Borrowers shall make such payments in respect of such mandatory
prepayment until the aggregate amount of all of such payments equals the amount
required to have been paid as of the original due date for such mandatory
prepayment;

 

9

 

(B)  in the event that
Borrowers are not required to make a mandatory prepayment under this Section 2.3(h) on
the due date as set forth above, then on and after such due date, the amount of
the minimum Excess Availability that Borrowers are required to maintain under Section 9.17
hereof shall be increased by the amount of the mandatory prepayment that would
have otherwise been paid under this Section 2.3(h) on the such due
date, provided, that, (1) the amount of the minimum Excess Availability
required to be maintained under Section 9.17 shall thereafter be reduced
to the extent of payments received by Agent in respect of such mandatory
prepayment as provided in clause (A) above, and (2) in no event shall
the amount of the minimum Excess Availability that Borrowers are required to
maintain under Section 9.17 hereof be reduced to less than $7,500,000.

 

(i)  Each such
prepayment required pursuant to clauses (f) and (g) of this Section 2.3
shall be accompanied by a certificate signed by each Borrower’s chief financial
officer certifying the manner in which the Net Cash Proceeds from the
transactions described in (f) and (g) of this Section 2.3 and
the resulting prepayment were calculated.

 

(j)  Each prepayment of principal under this Section 2.3
shall be made together with accrued and unpaid interest thereon to the date of
such prepayment. Each prepayment set forth in this Section 2.3 shall be
applied against the remaining installments (if any) of principal due on the
Term Loan in the inverse order of maturity, and to the extent that the Term
Loan has been repaid in full, Agent shall apply such amounts to the
Obligations, whether or not then due, in such order or manner as Agent shall
determine, or at Agent’s option, to be held as cash collateral for the
Obligations. Nothing contained in this Section 2.3 shall be construed to
constitute a consent, implied or otherwise, to any such issuance, incurrence or
sale otherwise prohibited by the terms and conditions of this Agreement.”

 

3.     Servicing
Fees. Section 3.2(b)(ii) of the Loan Agreement is hereby amended
by deleting such Section in its entirety and replacing it with the
following:  “(ii) [Reserved]”.

 

4.     Conditions
Precedent to All Loans and Letter of Credit Accommodations. Section 4.2(d) of
the Loan Agreement is hereby amended by deleting the reference to “$7,500,000”
and replacing it with “$7,500,000, subject to adjustment pursuant to Section 2.3(h) hereof,”.

 

5.     Payments.
Section 6.4(b)(i) of the Loan Agreement is hereby amended by deleting
the reference to “Ableco” and replacing it with “Wachovia”.

 

6.     Representations
and Warranties.

 

6.1   Financial
Statements; No Material Adverse Change. Section 8.3 of the Loan
Agreement is hereby amended by deleting “and Ableco” from such Section.

 

6.2   Restrictions
on Subsidiaries. Section 8.14 of the Loan Agreement is hereby amended
by deleting “the Ableco Loan Documentation” from such Section.

 

10

 

6.3   Material
Contracts. Section 8.15 of the Loan Agreement is hereby amended by
deleting any reference to “the Ableco Loan Documentation” from such Section.

 

7.     Affirmative
and Negative Covenants

 

7.1   Financial
Statements and Other Information.

 

(a)  Section 9.6(a) of the Loan Agreement is hereby
amended by deleting each reference to “and Ableco” from such Section.

 

(b)  Section 9.6(f) of the Loan Agreement is hereby
amended by deleting such Section in its entirety and replacing it with the
following: “(f) [Reserved]”.

 

7.2   Encumbrances.
Section 9.8(m) of the Loan Agreement is hereby amended by deleting such Section in
its entirety and replacing it with the following: “(m)  [Reserved]”.

 

7.3   Indebtedness.

 

(a)  Section 9.9(c) of
the Loan Agreement is hereby amended by deleting the reference to “and Ableco”
from such Section.

 

(b)  Section 9.9(d) of the Loan Agreement is hereby amended
by deleting such Section in its entirety and replacing it with the
following:  “(d)  [Reserved]”.

 

7.4   Prepayments
and Amendments; Loans, Investments, Etc. Section 9.10(a)(ii) of
the Loan Agreement is hereby amended by deleting such Section in its
entirety and replacing it with the following: 
“(ii) [Reserved]”.

 

7.5   Dividends
and Redemptions. Section 9.11(i) of the Loan Agreement is hereby amended
by deleting such Section in its entirety and replacing it with the
following:  “(i) [Reserved]”.

 

7.6   Limitation
of Restrictions Affecting Subsidiaries. Section 9.16(d)(vii) of
the Loan Agreement is hereby amended by deleting such Section in its
entirety and replacing it with the following: 
“(vii) [Reserved]”.

 

7.7   Minimum
Excess Availability. Section 9.17 of the Loan Agreement is hereby
amended by deleting the reference to “$7,500,000” and replacing it with “$7,500,000,
subject to adjustment pursuant to Section 2.3(h) hereof,”.

 

7.8   After
Acquired Real Property. Sections 9.20 of the Loan Agreement is hereby
amended by deleting the references to “and Ableco” and “and Ableco’s” from such
Section.

 

7.9   Costs
and Expenses. Section 9.21 of the Loan Agreement is hereby amended by
deleting the reference to “and Ableco” from such Section.

 

8.     Events
of Default. Section 10.1(d) of the Loan Agreement is hereby
amended by deleting the reference to “Ableco and” from such Section.

 

11

 

9.     Remedies.
Section 10.2(d) of the Loan Agreement is hereby amended by deleting
such Section in its entirety and replacing it with the following:  “(d)  [Reserved]”.

 

10.   Amendments
and Waivers.

 

10.1 Section 11.3(a)(iii)(E) of
the Loan Agreement is hereby amended by deleting the reference to “Ableco or”
from such Section.

 

10.2 Section 11.3(a)(iv)(B) of
the Loan Agreement is hereby amended by deleting the reference to “Ableco,”
from such Section.

 

11.   Successor
Agent. Section 12.13(b) of the Loan Agreement is hereby amended
by deleting such Section in its entirety and replacing it with the
following:  “(b)  [Reserved]”.

 

12.   Term.
Sections 14.1(a) and (b) of the Loan Agreement are hereby deleted in
their entirety and replaced with the following:

 

“(a)  This Agreement
and the other Financing Agreements shall become effective as of the date set
forth on the first page hereof and shall continue in full force and effect
for a term ending on March 17, 2009 (the “Renewal Date”), and from year to
year thereafter, unless sooner terminated pursuant to the terms hereof. Notwithstanding
the foregoing, the entire unpaid principal amount of the Term Loan, together
with all accrued and unpaid interest thereon and all other Obligations with
respect thereto, shall be due and payable on the Term Loan Maturity Date,
unless this Agreement and the other Financing Agreements are sooner terminated
pursuant to the terms hereof. Agent may, at its option (or shall at the
direction of any Revolving Loan Lender in writing received by Agent at least
sixty (60) days prior to the Renewal Date or the anniversary of any Renewal
Date, as the case may be), terminate this Agreement and the other
Financing Agreements, or Borrowers may terminate this Agreement and the
other Financing Agreements, in each case, effective on the Renewal Date or on
the anniversary of the Renewal Date in any year by giving to the other party at
least sixty (60) days prior written notice; provided, that, this
Agreement and all other Financing Agreements still in effect on such date, if
any, must be terminated simultaneously. In addition, Borrowers may terminate
this Agreement at any time upon ten (10) days prior written notice to
Agent (which notice shall be irrevocable) and Agent may, at its option, and
shall at the direction of Required Revolving Loan Lenders, terminate this
Agreement at any time on or after the occurrence and during the continuance of
an Event of Default, subject to any cure periods specified in Section 10.1
hereof. Upon the Renewal Date or any other effective date of termination of the
Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid
Obligations (other than contingent indemnification obligations and other
contingent Obligations which expressly survive the termination of this
Agreement and the other Financing Agreements) and shall furnish cash collateral
to Agent (or at Agent’s option, a letter of credit issued for the account of
Borrowers and at Borrowers’ expense, in form and substance satisfactory to
Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in
such amounts as Agent determines are reasonably necessary to secure Agent,
Lenders and Issuing Bank from loss, cost, damage or expense, including
attorneys’ fees and expenses, in connection with any contingent

 

12

 

Obligations, including
issued and outstanding Letter of Credit Accommodations and checks or other
payments provisionally credited to the Obligations and/or as to which Agent or
any Lender has not yet received final payment and any continuing obligations of
Agent or any Lender pursuant to any Deposit Account Control Agreement. The
amount of such cash collateral (or letter of credit, as Agent may determine)
as to any Letter of Credit Accommodations shall be in the amount equal to one
hundred ten (110%) percent of the amount of the Letter of Credit Accommodations
plus the amount of any fees and expenses payable in connection therewith
through the end of the latest expiration date of the Letters of Credit giving
rise to such Letter of Credit Accommodations. Such payments in respect of the
Obligations and cash collateral shall be remitted by wire transfer in Federal
funds to the Agent Payment Account or such other bank account of Agent, as
Agent may, in its discretion, designate in writing to Borrowers for such
purpose. Interest shall be due until and including the next Business Day, if
the amounts so paid by Borrowers to the Agent Payment Account or other bank
account designated by Agent are received in such bank account later than 12:00
noon, New York time.

 

(b)  [Reserved]”.

 

13.   Notices.
Section 14.3 of the Loan Agreement is hereby amended by deleting such Section in
its entirety and replacing it with the following:

 

“14.3  Notices. Except as otherwise provided
herein, all notices, requests and demands hereunder shall be in writing and
deemed to have been given or made:  if
delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with
instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, five (5) days
after mailing. All notices, requests and demands upon the parties are to be
given to the following addresses (or to such other address as any party may designate
by notice in accordance with this Section):

 

If to Borrowers:                    Lerner New York, Inc.

Lernco, Inc.

450 West 33rd Street

New York, NY 10001

Attention:  Chief Financial Officer

Telephone No.: (212) 884-2110

Telecopy No.: (212) 884-2103

 

with a copy to:                      Kirkland & Ellis LLP

Citigroup Center

153 East 53rd Street

New York, NY 10022

Attention:  Michael T. Edsall, Esq.

Telephone No.: (212) 446-4800

Telecopy No.:  (212) 446-4900

 

13

 

If to
Agent:                           Wachovia
Bank, National Association, as Agent

1133 Avenue of the Americas

New York, New York 10036

Attention:  Portfolio Manager — Lerner
New York, Inc.

Telephone No.: (212) 545-4280

Telecopy No.: (212) 545-4283”

 

14.   Effect
of Ableco Intercreditor Agreement. Section 14.10 of the Loan Agreement
is hereby amended by deleting such Section in its entirety and replacing
it with the following:  “14.10 [Reserved]”.

 

15.   Schedules
to Loan Agreement and Information Certificates.

 

15.1 Schedules
to Loan Agreement. Schedules 5.2(d), 5.2(e), 8.13, 8.15 and 8.16 to the
Loan Agreement are hereby deleted in their entirety and replaced with the
information set forth on Schedule 1 hereto.

 

15.2 Schedules
to Information Certificates.

 

(a)   Schedules 5, 6,
16, 18 and 25 to the Information Certificate of Lerner are hereby deleted in
their entirety and replaced with the information set forth on Schedule 2
hereto.

 

(b)   Schedule 18
to the Information Certificate of Lernco is hereby deleted in its entirety and
replaced with the information set forth on Schedule 3 hereto.

 

16.   Amendment
Fees. Borrowers shall pay to Agent the fees and amounts set forth in the Fourth
Amendment Fee Letter in the amounts and at the times specified therein. To the
extent payment in full of the applicable fee is received by Agent from
Borrowers on or about the date hereof, Agent shall pay to each Lender its share
of such fees in accordance with the terms of the arrangements of Agent with
such Lender.

 

17.   Conditions
Precedent. The provisions contained herein shall be effective as of the
date hereof, but only upon the satisfaction of each of the following conditions
precedent, in a manner satisfactory to Agent:

 

17.1 Agent
shall have received an original of this Amendment, duly authorized, executed
and delivered by Borrowers and Lenders, and an original of the attached
Acknowledgment, duly authorized, executed and delivered by Guarantors;

 

17.2 Agent
shall have received an original of the Fourth Amendment Fee Letter, duly
authorized, executed and delivered by Borrowers,

 

17.3 the
representations and warranties set forth herein and in the Loan Agreement (as
amended hereby) that are qualified as to materiality or Material Adverse Effect
shall be true and correct and the representations and warranties that are not
so qualified shall be true and correct in all material respects, in each case
with the same effect as though such representations and warranties had been
made on and as of the date hereof and after giving effect thereto, except to
the extent that any such representations or warranties expressly relate solely
to an earlier date

 

14

 

(in which case such
representations or warranties shall have been true and correct on and as of
such earlier date);

 

17.4 Agent
shall have received, in form and substance satisfactory to Agent, all
consents, waivers, acknowledgments and other agreements from Fourth persons
which Agent may deem necessary or desirable in order to effectuate the
provisions or purposes of this Amendment; and

 

17.5 as
of the date of this Amendment, no Default or Event of Default shall exist or
shall have occurred and be continuing.

 

18.   Additional
Representations, Warranties and Covenants. Each Borrower, jointly and
severally, represents, warrants and covenants with and to Agent and Lenders as
follows, which representations, warranties and covenants are continuing and
shall survive the execution and delivery hereof, and the truth and accuracy of,
or compliance with each, together with the representations, warranties and
covenants in the other Financing Agreements, being a continuing condition of
the making of Loans by Lenders to Borrowers:

 

18.1 Prepayment
of Existing Term Loan. On the Fourth Amendment Effective Date, all of the
conditions set forth in Section 2.3(d) of the Loan Agreement (as in
effect immediately prior to the amendment of such Section as provided for
herein and the Fourth Amendment Effective Date) have been satisfied.

 

18.2 Delivery
of Tradename Appraisal. Within ninety (90) days of the date hereof,
Borrowers shall deliver or cause to be delivered to Agent a written current
appraisal of the “New York & Company” tradename valued under the
relief from royalty method, which appraisal shall be in form and scope
reasonably acceptable to Agent and prepared by Valuation Research, Inc. or
such other appraiser acceptable to Agent, addressed to Agent and Lenders and
upon which Agent and Lenders are expressly permitted to rely.

 

18.3 Authority.
Each Borrower has the requisite corporate power and authority to execute and
deliver this Amendment, and to perform its obligations hereunder and under
the Financing Agreements (as amended or modified hereby) to which it is a
party, and the execution, delivery and performance by each Borrower of this
Amendment have been duly approved by all necessary corporate action and no
other corporate proceedings are necessary to consummate such transactions.

 

18.4 Enforceability.
This Amendment has been duly executed and delivered by each Borrower and this
Amendment and each Financing Agreement (as amended or modified hereby) is the
legal, valid and binding obligation of each Borrower, enforceable against each
Borrower in accordance with its terms, and is in full force and effect.

 

18.5 Due
Execution. The execution, delivery and performance of this Amendment are
within the power of each Borrower, have been duly authorized by all necessary
corporate action, have received all necessary governmental approval, if any,
and do not contravene any law or any contractual restrictions binding on any
Borrower.

 

15

 

18.6 Absence
of Defaults. No Default or Event of Default exists or has occurred and is continuing
as of the date of this Amendment.

 

19.   Choice
of Law. The validity of this Amendment, its construction, interpretation
and enforcement, the rights of the parties hereunder, shall be governed by the
internal laws of the State of New York but excluding any principles of
conflicts of law or other rule of law that would cause the application of
the law of any jurisdiction other than the laws of the State of New York.

 

20.   Counterparts.
This Amendment may be executed in any number of counterparts and by
different parties and separate counterparts, each of which when so executed and
delivered, shall be deemed an original, and all of which, when taken together,
shall constitute one and the same instrument. Delivery of an executed counterpart of
a signature page to this Amendment by telefacsimile or other method of
electronic transmission shall be effective as delivery of a manually executed
counterpart of this Amendment.

 

21.   Reference
to and Effect on the Financing Agreements.

 

21.1 Upon
and after the effectiveness of this Amendment, each reference in the Loan
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import
referring to the Loan Agreement, and each reference in the other Financing
Agreements to “the Loan Agreement”, “thereof’ or words of like import referring
to the Loan Agreement, shall mean and be a reference to the Loan Agreement as
modified and amended hereby.

 

21.2 Except
as specifically amended pursuant hereto, no other changes or modifications to
the Financing Agreements are intended or implied and the Loan Agreement and all
of the other Financing Agreements, are and shall continue to be in full force
and effect and are hereby in all respects ratified and confirmed and shall
constitute the legal, valid, binding and enforceable obligations of Borrowers
to Agent, Documentation Agent and the Lenders.

 

21.3 The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
Agent, Documentation Agent or any Lender under any of the Financing Agreements,
nor constitute a waiver of any provision of any of the Financing Agreements.

 

21.4 To
the extent that any terms and conditions in any of the Financing Agreements
shall contradict or be in conflict with any terms or conditions of the Loan
Agreement, after giving effect to this Amendment, such terms and conditions are
hereby deemed modified or amended accordingly to reflect the terms and
conditions of the Loan Agreement as modified or amended hereby.

 

22.   Ratification.
Each Borrower hereby restates, ratifies and reaffirms each and every term and
condition set forth in the Loan Agreement, as amended hereby, and the Financing
Agreements effective as of the date hereof.

 

23.   Integration.
This Amendment, together with the other Financing Agreements, incorporates all
negotiations of the parties hereto with respect to the subject matter hereof
and is the final expression and agreement of the parties hereto with respect to
the subject matter hereof.

 

16

 

24.   Severability.
In case any provision in this Amendment shall be invalid, illegal or
unenforceable, such provision shall be severable from the remainder of this
Amendment and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

 

25.   Binding
Effect. This Amendment shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors and assigns.

 

26.   Headings.
The headings listed herein are for convenience only and do not constitute
matters to be construed in interpreting this Amendment.

 

27.   Further
Assurances. The parties hereto shall execute and deliver such additional
documents and take such additional action as may be reasonably necessary
or desirable to effectuate the provisions and purposes of this Amendment.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

17

 

IN WITNESS WHEREOF, the parties hereto have
caused this Amendment to be executed on the day and year first written.

 

 

	
   

  	
  LERNER NEW YORK, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald W. Ristau

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  COO, CFO & Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
  LERNCO, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald W. Ristau

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
									

 

 

[SIGNATURES CONTINUED ON NEXT
PAGE]

 

 

[SIGNATURES CONTINUED FROM
PREVIOUS PAGE]

 

 

	
  AGREED AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, successor by merger to

  Congress Financial Corporation, as Agent

  and as a Lender

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Williammee, Jr.

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  
	
   

  	
   

  
	
  THE CIT GROUP/BUSINESS CREDIT,

  INC., as Documentation Agent and as a

  Lender

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Manuel Borges

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  
	
   

  	
   

  
	
  LASALLE RETAIL FINANCE, a division

  of LaSalle Business Credit, Inc., as agent

  for Standard Federal Bank, National

  Association, as a Lender

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Mark Twomey

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  Assistant Vice President

  	
   

  	
   

  
														

 

 

EXHIBIT A

TO

FOURTH AMENDMENT TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

Commitments

 

	
  Lender

  	
   

  	
  Revolving Loan

  Commitment

  	
   

  	
  Term Loan

  Commitment

  	
   

  	
  Total

  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia
  Bank, National Association

  	
   

  	
  $

  	
  37,500,000

  	
   

  	
  $

  	
  37,500,000

  	
   

  	
  $

  	
  75,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The CIT
  Group/Business Credit, Inc.

  	
   

  	
  $

  	
  30,000,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LaSalle
  Retail Finance, a division of LaSalle Business Credit, Inc., as agent
  for Standard Federal Bank, National Association

  	
   

  	
  $

  	
  22,500,000

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  22,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Commitments:

  	
   

  	
  $

  	
  90,000,000

  	
   

  	
  $

  	
  37,500,000

  	
   

  	
  $

  	
  127,500,000

  	
   

  

 

 

EXHIBIT B

TO

FOURTH AMENDMENT

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

Payees

 

Ableco Finance LLC

Azure Funding

Bernard National Loan Investors, Ltd

Fortress Credit Opportunities I LP

Oak Hill Credit Partners I, Limited

Oak Hill Credit Partners II, Limited

Oak Hill Credit Partners II, Limited

 

 

EXHIBIT C

TO

FOURTH AMENDMENT

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

Trademarks

 

	
  Name of Trademark

  	
   

  	
  Registration Numbers and Jurisdictions

  
	
   

  	
   

  	
   

  
	
  Lerner

  	
   

  	
  See Schedule 29
  to the Information Certificate of Lernco

  
	
   

  	
   

  	
   

  
	
  Lerner New York

  	
   

  	
  See Schedule 29
  to the Information Certificate of Lernco

  

 

 

SCHEDULE 1

TO

FOURTH AMENDMENT

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

Schedules
5.2(d), 5.2(e), 8.13, 8.15 and 8.16 to Loan Agreement

 

 

See attached

 

 

AMENDED AND RESTATED SCHEDULE 5.2(e) 

TO THE LOAN AGREEMENT

 

Investment Property

 

1.     Lerner
New York, Inc. Citifunds Investment Cash Reserve – Class S (money market
account)

 

2.     Lerner
New York, Inc. Federated Tax-Free Obligation – Institutional Fund (Bear
Stearns)

 

 

AMENDED AND RESTATED SCHEDULE 8.13 

TO THE LOAN AGREEMENT

 

Collective Bargaining Agreements

 

1.             Collective
Bargaining Agreement between Local 1102, RWDSU, UFCW AFL-CIO and Lerner Stores,
Inc. and New York & Company (New York City Metropolitan Area, Maryland,
Pennsylvania and Upstate New York), dated September 1, 2002. The Agreement is
under renegotiation. A signed extension agreement in effect until March 31,
2006.

 

2.             Collective
Bargaining Agreement, dated January 15, 2004, between Lerner New York, Inc. and
International Union, United Automobile, Aerospace and Agricultural Implement
Workers of America, UAW-AFL-CIO, and its Local Union 2179. The Agreement is
effective from January 15, 2004 to January 14, 2007.

 

3.             Agreement,
dated February 6, 2003, by and between Lerner New York, Inc. and the New
England Joint Board, affiliated with the Retail, Wholesale and Department Store
Union/UFCW, AFL-CIO, CLC. The Agreement is effective from February 6, 2003
through February 5, 2006.

 

 

AMENDED AND RESTATED SCHEDULE 8.15 

TO THE LOAN AGREEMENT

 

Material Contracts

 

1.              Amended
and Restated Private Label Credit Card Program Agreement Between World
Financial Network National Bank and New York & Company, Inc. Dated as of
November 1, 2004.

 

2.             Transition
Services Agreement, dated as of November 27, 2002, by and between Lerner New
York Holdings, Inc. and Limited Brands, Inc.

 

3.             Information
Technology:

 

a)     Master
Services Agreement, dated April 8, 2003 between Infocrossing, Inc. and NY &
Co. Group, Inc.

 

b)    Database
Service Agreement, dated September 1, 2003 between ADS Alliance Data Systems,
Inc. and NY & Co. Group, Inc.

 

 

AMENDED AND RESTATED SCHEDULE 8.16 

 

TO THE LOAN AGREEMENT

 

Credit Card Agreements

 

1.             Merchant
Services Bankcard Agreement, dated September 11, 2002, between Limited Brands,
Inc., Lerner New York, Inc. (as a Customer listed in Attachment I), JP Morgan
Chase Bank and Chase Merchant Services L.L.C.

 

2.             American
Express Service Agreement by and among American Express Travel Related
Services, Inc., The Limited, Inc. and its subsidiaries.

 

3.             Merchant
Services Agreement, dated June 21, 1991, between Lerner New York, Inc. and
Discover Card Services, Inc.

 

4.             Amended and
Restated Private Label Credit Card Program Agreement Between World Financial
Network National Bank and New York & Company, Inc. Dated as of November 1,
2004.

 

5.             Co-Branded
Credit Card Program Agreement Between World Financial Network National Bank and
New York & Company, Inc. Dated as of November 1, 2005.

 

 

SCHEDULE 2

TO

FOURTH AMENDMENT

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

Schedules 5,
6, 16, 18 and 25 to Information Certificate of Lerner

 

 

See attached

 

 

AMENDED AND RESTATED SCHEDULE 5 TO THE

INFORMATION CERTIFICATE OF LERNER NEW YORK,
INC.

 

Alabama

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

Florida

Georgia

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Virginia

Washington

West Virginia

Wisconsin

 

 

AMENDED AND RESTATED SCHEDULE 6 TO THE

INFORMATION CERTIFICATE OF LERNER NEW YORK,
INC.

 

Alabama

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

Florida

Georgia

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Virginia

Washington

West Virginia

Wisconsin

 

 

AMENDED AND RESTATED SCHEDULE 16 TO THE 

INFORMATION CERTIFICATE OF LERNER NEW YORK,
INC.

 

1. Custom Brokers

 

a) Barthco

 

COLUMBUS OFFICE

6431 Alum Creek Drive

Suite H

Groveport, OH 43125

Phone: 614-409-9460  Fax:
614-409-9540

 

CHICAGO OFFICE

1255-1285 Mark Street

Bensenville, IL 60106

Phone: 630-694-1250   Fax:
630-694-1407

 

NEW YORK OFFICE

JFK International Airport

390 Franklin Avenue

Franklin Square, NY 11010

Phone: 516-616-2900  Fax:
516-616-2999

 

MIAMI OFFICE

1825 NW 87 Ave

Miami, FL 33172

Phone: 305-471-0071  Fax:
305-471-1161

 

SEATTLE OFFICE

18900 8th Avenue South

Suite 400

SeaTac, WA 98148

Phone: 206-243-4004  Fax:
206-244-0378

 

b) Exel Global Logistics

 

COLUMBUS OFFICE

2144A John Glenn Avenue

Columbus, OH  43217

Phone:  614-409-4500  Fax: 
614-409-2701

 

CHICAGO OFICE

90 Division Street, Suite 105

Bensenville

Illinois 60106

Phone:  630-616-6800  Fax: 
630-595-2239

 

 

2. Freight Forwarders - OCEAN CARRIERS

 

a) Maersk Line

 

Elizabeth Hassert

Strategic Account Manager

Maersk, Inc.

2021 Spring Road Suite 500 Oak Brook, IL 60523-1859

PH: 630-645-3622

FX: 630-645-3667

 

b) Mitsui

Thomas M. Kelly

Vice President, Midwest

Mitsui OSK Lines (America), Inc.

188 Undustrial Drive

Suite 300

Elmhurst, IL 60126

PH: 630-592-7301

FX: 630-592-7402

 

c) P&O Nedlloyd

Chris Dombalis

Senior Vice President

Sales and Marketing, North America

P&O Nedlloyd Limited

One Meadowlands Plaza

East Rutherford, NJ 07073

PH: 201-896-6769

FX 201-896-6371

 

d) APL

Tom Egold

Account Executive

APL Liner

8332 Forward Pass Road,

Indianapolis, IN 46217

PH: 317-887-6456

FX: 317-887-6457

 

e) NYK Lines

Gary Garback

NYK Line (North America) Inc.

377 East Butterfield Road

Fifth Floor

Lombard, IL 60148

PH: 630-435-7803

FX: 630-435-3100

 

f) APL-Logistics (ocean consolidator)

Tony Zasimovich

Vice President, North America Sales and Customer Service

APL-Logistics

1111 Broadway

Oakland, CA 94607

PH:  510-272-8843

FX:  510-272-2462

 

 

3. Freight Forwarders - AIRFREIGHT FORWARDERS

 

a) Morrison Express

Doug Haring

Vice President

USA Sales and marketing

Morrison Express Corp (USA)

2000 Hughes Way

El Segundo, CA 90245

PH:  310-322-8999 ext 230

FX: 310-322-6688

 

b) BAX Global

Brady Borycki

BAX Global

11101 Metro Airport Center Drive Ste. 108

Romulus, MI 48174

PH: 734-229-3349

FX: 734-955-2010

 

c) STAR Trans International Ltd

Anthony Chan

Star Airfreight Co. Ltd

149-35  177th Street

Jamaica, New York  11434

PH: 718-656 5360

FX: 718-656 2597

 

d) EGL – United States

Eagle Global Logistics

Attn: Ron Scott

6700 Port Road

Groveport, Ohio 43125

PH: 614-489-5177

FX: 614-489-5171

 

e) FedEX Corporation

942 South Shady Grove Road

Memphis, TN 38120

PH: 901-369-3600

 

f) Panalpina

950 Tower Lane, Suite 1600

Foster City, CA 94404

PH: 650-653-6600

FX: 650-653-6735

Email: info.noram@panalpina.com

 

 

g) Sovereign

4348 Albany Post Road

Hyde Park, NY 12538

PH: 845-229-8808

FX: 845-229-8828

 

h) Expo

29, Josier Street, Nungambakkam,

Chennai 600 034

PH: + 91 44 28223458

FX: + 91 44 28223463

Email: cs@expofreight.com

 

i) Speedmark

1525 Adrian Road,

Burlingame, CA 94010

PH: 650-652-0288

FX: 650-652-0290

Email: info.uac@speedmark.com

 

 

SCHEDULE 18 TO THE INFORMATION

CERTIFICATE OF LERNER NEW YORK, INC.

 

The following replaces Section 18 of the Information Certificate of
Lerner New York, Inc. dated March 16, 2004:

 

	
  Name of Entity

  	
   

  	
  Chief Executive Office

  	
   

  	
  Jurisdiction of

  Incorporation

  	
   

  	
  Ownership Percentage

  or Relationship

  	
   

  
	
  NY & Co.
  Group, Inc.

  	
   

  	
  450 West 33rd
  Street

  New York, NY 10001

  	
   

  	
  Delaware

  	
   

  	
  Ultimate
  Parent / 100%

  	
   

  
	
  Lerner New
  York Holding, Inc.

  	
   

  	
  450 West 33rd
  Street

  New York, NY 10001

  	
   

  	
  Delaware

  	
   

  	
  Parent /
  100%

  	
   

  
	
  Lernco, Inc.

  	
   

  	
  1105 North
  Market Street

  Wilmington, DE 19899

  	
   

  	
  Delaware

  	
   

  	
  Subsidiary
  of Parent / 100%

  	
   

  
	
  Nevada
  Receivable Factoring, Inc.

  	
   

  	
  3800 Howard
  Hughes

  Parkway, 7th Floor

  Las Vegas, Nevada

  	
   

  	
  Nevada

  	
   

  	
  Subsidiary
  of Parent / 100%

  	
   

  
	
  Associated
  Lerner Shops of America, Inc.

  	
   

  	
  450 West 33
  Street

  New York, NY 10001

  	
   

  	
  New York

  	
   

  	
  Subsidiary /
  100%

  	
   

  
	
  Lerner New
  York GC, LLC

  	
   

  	
  10 West
  Broad Street,

  Suite 2100

  Columbus, Ohio 43215

  	
   

  	
  Ohio

  	
   

  	
  Subsidiary /
  100%

  	
   

  
	
  Jasmine
  Company, Inc

  	
   

  	
  450 West 33rd
  Street

  New York, NY 10001

  	
   

  	
  Massachusetts

  	
   

  	
  100%

  	
   

  

 

 

AMENDED AND RESTATED SCHEDULE 25 TO THE 

INFORMATION CERTIFICATE OF LERNER NEW YORK,
INC.

 

Litigation

 

A case has been filed by
the Center for Environmental Health against Lerner New York, Inc. and
several other retailers of jewelry products in California. It alleges that lead
in one of Lerner New York, Inc.’s jewelry products (a metal charm necklace
suspended on a flexible cord) sold in California violates the state’s
Proposition 65 statute, which precludes the sale of products in California that
results in exposure to listed chemicals absent a specified warning label. The
case is a companion case to two similar cases filed by the California Attorney
General and an organization called As You Sow against several retail outlets
selling such jewelry.

 

The Company was not
named as a party in either of the companion cases, but the matters have been
consolidated for pre-trial purposes. Violation of the statute exposes the
seller to fines as well as injunctive relief. The complaint does not include a
request for a specific fine amount. The case against Lerner New York, Inc.
is in the process of mediation that is intended to resolve the case without
substantial additional litigation.

 

There are other various
claims, lawsuits and pending actions against the Company arising in the normal
course of the Company’s business. It is the opinion of management that the
ultimate resolution of these matters will not have a material effect on the
Company’s financial condition, results of operations or cash flows.

 

 

SCHEDULE 3

TO

FOURTH AMENDMENT

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

Schedule 18
to Information Certificate of Lernco

 

 

See attached

 

 

SCHEDULE 18 TO THE INFORMATION

CERTIFICATE OF LERNCO, INC

 

The following replaces Section 18 of the Information Certificate of
Lernco, Inc. dated March 16, 2004:

 

	
  Name of Entity

  	
   

  	
  Chief Executive Office

  	
   

  	
  Jurisdiction of

  Incorporation

  	
   

  	
  Ownership Percentage

  or Relationship

  	
   

  
	
  NY & Co. Group, Inc.

  	
   

  	
  450 West 33rd Street

  New York, NY  10001

  	
   

  	
  Delaware

  	
   

  	
  Ultimate Parent / 100%

  	
   

  
	
  Lerner New York Holding, Inc.

  	
   

  	
  450 West 33rd Street

  New York, NY 10001

  	
   

  	
  Delaware

  	
   

  	
  Parent / 100% 

  	
   

  
	
  Lerner New York, Inc

  	
   

  	
  450 West 33rd Street

  New York, NY 10001

  	
   

  	
  Delaware

  	
   

  	
  Subsidiary of Parent / 100%

  	
   

  
	
  Nevada Receivable Factoring, Inc.

  	
   

  	
  3800 Howard Hughes Parkway, 7th Floor

  Las Vegas, Nevada

  	
   

  	
  Nevada

  	
   

  	
  Subsidiary of Parent / 100%

  	
   

  
	
  Associated Lerner Shops of America, Inc.

  	
   

  	
  450 West 33 Street 

  New York, NY 10001.

  	
   

  	
  New York

  	
   

  	
  Subsidiary / 100%

  	
   

  
	
  Lerner New York GC, LLC

  	
   

  	
  10 West Broad Street, Suite 2100

  Columbus, Ohio  43215

  	
   

  	
  Ohio

  	
   

  	
  Subsidiary / 100%

  	
   

  
	
  Jasmine Company, Inc

  	
   

  	
  450 West 33rd Street

  New York, NY  10001

  	
   

  	
  Massachusetts

  	
   

  	
  100%

  	
   

  

 

 

ACKNOWLEDGMENT
BY GUARANTORS

 

Dated as of January 4, 2006

 

Each of the undersigned, being a Guarantor
(each a “Guarantor” and collectively, the “Guarantors”) under their respective
Amended and Restated Guaranty and Security Agreements, each dated as of March 16,
2004, as heretofore amended, made in favor of Agent (as amended, modified or
supplemented, each a “Guaranty” and collectively, the “Guaranties”), hereby (a) acknowledges
and agrees to the foregoing Fourth Amendment to Amended and Restated Loan and
Security Agreement, dated of even date herewith (the “Amendment”), and (b) confirms
and agrees that its Guaranty is and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects except that upon
the effectiveness of and on and after the date of the Amendment, each reference
in such Guaranty to the Loan Agreement (as defined in the Amendment), “thereunder”,
“thereof’ or words of similar import referring to the “Loan Agreement”, shall
mean and be a reference to the Loan Agreement as amended or modified by the
Amendment. Although Agent has informed Guarantors of the amendments to the Loan
Agreement as set forth above, and Guarantors have acknowledged the same, each
Guarantor understands and agrees that none of Agent, Documentation Agent or any
Lender has any duty under the Loan Agreement, the Guaranties or any other
agreement with any Guarantor to so notify any Guarantor or to seek such an acknowledgement,
and nothing contained herein is intended to or shall create such a duty as to
any advances or transaction hereafter.

 

 

	
  NEW YORK & COMPANY, INC.

  	
  NEVADA RECEIVABLE FACTORING, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ronald W. Ristau

  	
   

  	
  By:

  	
  /s/ Ronald W. Ristau

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  COO, CFO & Secretary

  	
   

  	
  Title:

  	
  Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LERNER NEW YORK HOLDING, INC.

  	
  LERNER NEW YORK GC, LLC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ronald W. Ristau

  	
   

  	
  By:

  	
  /s/ Ronald W. Ristau

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  COO & Secretary

  	
   

  	
  Title:

  	
  COO, CFO & Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ASSOCIATED LERNER SHOPS OF

  AMERICA, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ronald W. Ristau

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  SecretaryExhibit 4.4

 

IVOW, INC.

 

February 22, 2006

 

Dawson James Securities,
Inc.

925 South Federal Highway

6th Floor

Boca Raton, FL 33432

 

Re:  Selling Agreement (the “Agreement”)

 

Dear
Mr. Keyser:

 

iVow, Inc., a Delaware
corporation (the “Seller”), proposes to offer and sell (the “Offering”), to
selected investors, upon the terms set forth herein and in the Subscription
Agreement and the Confidential Private Placement Memorandum (which
collectively, together with the attachments and exhibits thereto, is referred to
as the “Offering Document”), a copy of which has been delivered to you, up to
290,000 units (the “Units”) at
a price per Unit equal to 70% of the
Company’s common stock price, based on the average closing price of the Company’s
common stock for the ten (10) trading days immediately preceding the First
Closing (the “Per Unit Price”); each Unit consisting of one share of common stock (the “Common
Stock”) and a warrant to purchase one-half of a share of common stock
(the “Warrants”). The Warrants shall have an exercise price equal to the Per
Unit Price, a term of five years, and be in the form attached to the Offering
Document. (The Units are sometimes referred to hereafter as the “Offered
Securities”). Dawson James Securities, Inc. (the “Selling Agent”) agrees to
offer and sell on an exclusive “best efforts, all or none” basis, that number
of Units that results in an aggregate sales price of at least $500,000  (the “Minimum Number”), and on a best efforts
basis with respect to additional Units up to a maximum of 290,000 Units during
the offering period described in the Offering Document (the “Offering Period”).
Capitalized terms used and not otherwise defined herein shall have the
respective meanings set forth in the Offering Document. It is intended that the
offer, offer for sale and sale of the Offered Securities will be made only to “accredited
investors” (as such term is defined in Rule 501(a) of Regulation D of the
Securities Act of 1933, as amended (the “1933 Act”) and will be exempt from the
federal registration requirements of the 1933 Act, pursuant to
Regulation D promulgated under Section 3(b) and/or Section 4(2),
respectively, of the 1933 Act and will qualify for an exemption from
registration, if necessary, under the applicable state securities laws and
regulations.

 

The Seller hereby
confirms its agreement with Selling Agent as follows:

 

1.             Offer
and Sale of Offered Securities by Selling Agent; Compensation; Closing.

 

1.1           On the basis of Selling Agent’s
representations, covenants and warranties, the Seller appoints Selling Agent
the exclusive agent of the Seller for the period commencing on the date of the
completion of the Offering Document and ending on February

 

 

17, 2006, unless extended by the Seller and Selling Agent by their
mutual agreement for a period not to exceed an additional thirty (30) days (“Offering
Termination Date”), to use Selling Agent’s best efforts to offer and sell, on
the terms and conditions set forth in this Agreement (and the Term Sheet
attached hereto as Exhibit A) and in the Offering Document, subject only
to Selling Agent’s right to engage participating broker-dealers pursuant to
Section 2 hereof. The Selling Agent hereby accepts such appointment and
agrees pursuant to the terms and conditions set forth herein and in the
Offering Document to use its best efforts to offer and sell the Offered
Securities as agent for the Seller during the period specified above, and to
attempt to find suitable accredited purchasers for the Offered Securities
acceptable to the Seller.

 

1.2           Prior to and subject to the closing,
subscription proceeds from the sale of the Offered Securities will be deposited
in an escrow account with an escrow agent to be mutually agreeable to Seller
and the Selling Agent (the “Escrow Agent”). The Seller will be responsible for
setting up the Escrow Account, pursuant to an escrow agreement among the
Seller, the Selling Agent and the Escrow Agent, which escrow agreement will be
approved by the Selling Agent. Subscribers will be instructed to make their
checks payable to the Escrow Agent for the benefit of iVow, Inc., or shall
cause the wire transfer of immediately available funds in favor of the Escrow
Agent for iVow, Inc., in accordance with instructions provided by the Selling
Agent. Unless at least the Minimum Number of Units have been sold during the
Offering Period (as the same may be extended by the mutual agreement of the
Selling Agent and the Seller), the Offering will be terminated at the end of
the Offering Period, no Offered Securities will be sold in the Offering and all
subscription proceeds will be refunded to subscribers by the Escrow Agent,
without interest thereon. If subscriptions for at least the Minimum Number of
Units are received by the end of the Offering Period (as the same may be
extended by the mutual agreement of the Selling Agent and the Seller), a
closing (the “First Closing”) will occur as soon as possible after
subscriptions for the Minimum Number have been accepted by the Seller and all
other conditions precedent to closing have occurred to the sole satisfaction of
the Selling Agent. After the First Closing, one or more subsequent closings
(the “Additional Closings”) may occur thereafter on such dates as mutually
determined by the Seller and the Selling Agent, but in no event later than ten
(10) days after the end of the Offering Period. (The First Closing and any
Additional Closing shall each be referred to herein as a “Closing” and the last
of the Closings shall be referred to as the “Final Closing”).

 

1.3           For purposes hereof, the Minimum
Number of Units shall not be deemed to have been sold unless (x) subscription
agreements, completed and fully executed by subscribers who are accredited
investors have been received covering the Minimum Number of the Units and (y)
all checks, drafts and wire transfers submitted by such subscribers in payment
of the purchase price of such Units have been received by the Escrow Agent and
have cleared so that there are “good funds” in the Escrow Account at least
equal to the aggregate purchase price of the Minimum Number of Units.

 

1.4           As compensation for the Selling Agent’s
services hereunder, the Seller shall pay to Selling Agent in cash a selling
commission (“Commission”) upon each Closing, in an amount equal to eight
percent (8%) of the aggregate offering price of the Offered Securities sold by
the Selling Agent or its authorized agent at such Closing. At each Closing of
the

 

2

 

Offering, the Seller shall pay the Selling Agent its Commission
relating to the sale of the Offered Securities that are subject of the Closing
provided that the Seller or counsel for the Seller has received all documents,
including but not limited to, an executed Subscription Agreement for each
investor (“Subscription Documents”) previously furnished to Selling Agent which
the Selling Agent is required to deliver to the Seller or counsel for the
Seller prior to Closing. All or any portion of such Commission may be re-allowed
to Participating Broker-Dealers (as hereinafter defined). No Offered Securities
shall be considered to have been sold by Selling Agent or any Participating
Broker-Dealer selected by Selling Agent unless the purchaser is acceptable to
the Seller, and no compensation will be payable with respect to any agreement
for the purchase of Offered Securities if the Subscription Agreement therefor
is not actually accepted by the Seller. Anything in this Agreement to the
contrary notwithstanding, the Seller shall not be required to pay a Commission
to Selling Agent and Selling Agent shall not be entitled to a Commission,
pursuant to this Section 1.4 or any other provision, if to do so would
cause the Seller to violate federal or state securities laws, regulations or
rules or any other law applicable to the Offering. For purposes of clarity, the
Selling Agent shall not be entitled to any Commission upon the future exercise
of the Warrants sold as part of the Units.

 

1.5           The Seller will pay all of its costs
relating to the Offering contemplated hereby, including, without limitation,
audit expenses, issuance costs and taxes, counsel fees for the preparation of
the Offering Documents, filing fees and disbursements of counsel relating to
the qualification of the Offered Securities under federal securities laws, and
legal fees and expenses of counsel in connection with qualifying the Offered
Securities under the state blue sky laws. To the extent required by law, the
Seller shall qualify the Offered Securities for offer and sale in those
jurisdictions designated by the Selling Agent and reasonably acceptable to the
Seller. The Seller’s counsel shall be responsible for state blue sky securities
laws compliance by the Seller.

 

1.6           The Seller shall pay the Selling
Agent at the First Closing a non-accountable expense allowance (the “Expense
Allowance”) of $25,000, $10,000 of which shall be advanced to Selling Agent
contemporaneous with the execution of this Agreement.

 

1.7           Once the Offered Securities are sold,
or the Offering Period terminates, the agency between the Seller and the
Selling Agent shall terminate. The Selling Agent, on the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, accepts such appointment as the limited agent of
the Seller and agrees to use its best efforts to find purchasers for the
Offered Securities.

 

1.8           Upon each Closing of the sale of the
Offered Securities offered by the Seller hereunder, the Seller will issue to
the Selling Agent at a purchase price of $.001 per warrant, a warrant to
purchase that number of Units equal to eight percent (8%) of the Units sold at
such Closing (the “Selling Agent’s Warrants”). The Selling Agent’s Warrants
shall be exercisable at any time during the five (5) years from the date of
First Closing at an exercise price equal to the Per Unit Price. The Selling
Agent’s Warrants shall be in the form and shall contain the provisions set
forth in Exhibit B attached hereto.

 

3

 

1.9           Each Closing shall be held at the
offices of the Selling Agent, 925 S. Federal Highway, 6th Floor, Boca Raton, FL
33432, or in an alternative location and at such time and date as Selling Agent
and the Seller may mutually agree.

 

1.10         The holders of the Units will be provided
with registration rights with respect to the shares of common stock underlying
the Warrants and the Common Stock. The Company shall file a Registration
Statement on Form S-1 or S-3, as may be applicable, covering the Common Shares
and Warrant Shares no later than 45 days after the Final Closing, and have the
Registration Statement declared effective within one hundred fifty (150) days
after the Closing.

 

2.             Participating
Broker-Dealers. The Seller hereby authorizes Selling Agent to engage other
qualified broker-dealers (the “Participating Broker-Dealers”) to assist the
Selling Agent in the placement of the Offered Securities; provided that during
all times that each such Participating Broker-Dealer shall offer and sell the
Offered Securities, each such Participating Broker-Dealer shall be registered
as a broker-dealer under the Securities Exchange Act of 1934 (the “1934 Act”),
shall be a member in good standing of the National Association of Securities
Dealers, Inc. (“NASD”), and shall be authorized to offer and sell the Offered
Securities under the laws of the jurisdictions in which the Offered Securities
will be offered and sold by such Participating Broker-Dealer. All Participating
Broker-Dealers will be required to execute a Participating Broker-Dealer
Agreement, the form of which is subject to the reasonable approval of the
Seller, with Selling Agent containing substantially the same terms and
conditions as this Agreement, including, without limitation, the
representations and warranties contained in Section 3.2 below and provisions
for indemnification of the Seller to the same extent as your indemnification
provided in Section 7 below. Any commissions, fees, or expenses payable to
such Participating Broker-Dealers will be paid by the Selling Agent and not by
the Seller.

 

3.             Representations,
Warranties and Covenants.

 

3.1           The
Seller represents, warrants and covenants to Selling Agent that, except as set
forth in Schedule 3.1 hereof or in the Offering Document:

 

(a)           The
Seller and each subsidiary is a corporation duly formed and validly existing
and in good standing under the laws of the jurisdiction of its incorporation as
in effect on the date of this Agreement, with adequate power and authority to
enter into and perform this Agreement and to own its property and to conduct
its business as described in the Offering Document and in Seller’s reports
required to be filed by it with the SEC pursuant to the 1933 Act, the 1934 Act
or otherwise (“SEC Reports”); and the Seller and each subsidiary is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which it owns or leases substantial properties or in
which the conduct of its business requires such qualification except for such
jurisdictions in which the failure to qualify in the aggregate would not have
material and adverse effect on the earnings, affairs or business prospects of
the Seller or any such subsidiary (a “Material Adverse Effect”) and in which
jurisdictions such failure may be cured without such Material Adverse Effects;
the execution and delivery of this Agreement by the Seller has been duly and
validly authorized and will not result in a breach of its Certificate of
Incorporation or By-laws; and when executed and 

 

4

 

delivered by both
parties hereto, this Agreement will be a valid and binding obligation of the
Seller, assuming the due execution by the Selling Agent, enforceable in
accordance with its terms (except to the extent that enforceability of the
indemnification provisions may be limited under applicable securities laws and
except as enforcement may be limited by bankruptcy, moratorium or other laws
affecting creditors’ rights or general principles of equity); and the execution
and delivery of this Agreement, the consummation of the transactions herein
contemplated and compliance with the terms of this Agreement by the Seller do
not and will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any agreement or any applicable
law, rule, regulation, judgment, order or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Seller, to which the Seller is a party or by which it is bound;

 

(b)           The Offering Document and the SEC
Reports do not contain and will not contain, at any time between the date
hereof and to and including the date of each Closing, any untrue statement of a
material fact and does not omit nor during such period will omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;

 

(c)           Except as is otherwise disclosed in
the Offering Document or the SEC Reports, there is no litigation or
governmental proceeding pending or, to the best of its knowledge, threatened
against or involving the property or business of the Seller or any subsidiary
of the Seller that would result in a Material Adverse Effect;

 

(d)           Except as is otherwise disclosed in
the Offering Document or the SEC Reports, no material defaults exist in the due
performance and observance of any material obligation, term, covenant or
condition of any agreement or instrument to which the Seller or any subsidiary
is a party or by which they are bound that would result in a Material Adverse
Effect;

 

(e)           The
offer, offer for sale, and sale of the Offered Securities have not been and
will not be registered with the Securities and Exchange Commission (the “SEC”)
except as contemplated in the Offering Document. The Company’s actions with
respect to the offer, offer for sale and sale of the Offered Securities will be
pursuant to the exemptions from the registration requirements of Section 5
of the 1933 Act provided by Section 4(2) thereof and/or by
Regulation D thereunder;

 

(f)            To the best of its knowledge and
belief, assuming the offer, offer for sale and sale of the Offered Securities
is made in compliance with the terms of the Offering Document, the applicable
filings with the SEC and any applicable Blue Sky laws, and subject to the
performance of the Selling Agent’s obligations hereunder, the Seller will have
complied in all material respects with the 1933 Act and with all state
securities laws and regulations applicable to it in connection with the offer,
offer for sale, and sale of the Offered Securities. The Seller has not taken
and will not take any action in conflict with the 1933 Act or applicable state
or foreign securities or Blue Sky laws, or which would make the exemption,
qualification or registration pursuant to applicable federal or state
securities or Blue Sky laws unavailable with respect to the offer, offer for
sale and sale of the Offered Securities. The Seller and its officers, directors
or partners are not subject to any disqualification, including

 

5

 

but not limited to any judgment, decree, order or decision issued by
the SEC, any state or foreign securities regulatory authority, any court of
competent jurisdiction or the United States Postal Service. In offering the
Offered Securities, the Seller will comply with all applicable federal, state
or foreign securities laws, including the rules covering exemptions from
registration;

 

(g)           Subject
to the performance of the Selling Agent’s obligations hereunder, the Offered
Securities, upon the payment therefor and issuance thereof, will conform to all
statements and descriptions in relation thereto contained in the Offering
Document and will have the rights set forth in the Seller’s Certificate of
Incorporation;

 

(h)           To
the best of the Seller’s knowledge, the Seller has neither been engaged in, nor
been the subject of, any of the actions or proceedings specified in
subsection (a) of Rule 262 promulgated under Section 3(b) of the
1933 Act, or any substantially similar provisions under the securities laws of
any state in which the Offered Securities are to be sold, such that no
exemption from registration would be available for the offering of the Offered
Securities by the Seller under applicable federal or state securities laws;

 

(i)            Since
the respective dates as of which information is given in the SEC Reports, (i)
there has been no material adverse change in the condition, business, property,
capital commitments, working capital and liabilities or prospects of the Seller
or any subsidiary, financial or otherwise; (ii) the property and business of
the Seller materially conform to the descriptions thereof contained in the SEC
Reports; (iii) there have been no material liabilities or obligations incurred
or material transactions entered into by the Seller or any subsidiary other
than those in the ordinary course of business; (iv) there have been no
dividends or distributions of any kind declared, paid or made by the Seller on
its capital stock; (v) there has not been any change in the capital stock, or
any material increase in the current or long-term debt except as disclosed in
the SEC Reports, or any issuance of options, warrants, convertible securities
or other rights to purchase the capital stock of the Seller or any subsidiary;
and (vi) there have been no transactions between the Seller, shareholders
owning five percent (5%) or more of its issued and outstanding capital stock,
the Seller’s officers and/or directors, nor have there been any corporate
opportunities taken or assumed by controlling shareholders, officers or
directors, that are not fully disclosed in the SEC Reports.

 

(j)            The
Seller will notify the Selling Agent immediately and confirm the notice in
writing (i) of the issuance by the SEC or by any state attorney general or
securities administrator of any order enjoining the sale of the Offered
Securities or suspending the effectiveness of any qualification of the Offered
Securities for sale or (ii) of the initiation of any proceedings for that
purpose. The Seller will make every reasonable effort to prevent the issuance
of any such order and, if any such order shall at any time be issued, to obtain
the lifting thereof at the earliest possible moment;

 

(k)           The
audited and unaudited combined financial statements of the Seller (including
the related notes) included in the SEC Reports present fairly the financial
position of the Seller and its subsidiaries at the dates indicated; said
financial statements have been prepared in conformity with United States
generally accepted accounting principles

 

6

 

applied on a
consistent basis, except as expressly qualified therein, and are in conformity
with Regulation S-X promulgated under the Act;

 

(l)            Except
as set forth in the SEC Reports, the Seller does not have any subsidiaries and
does not own any interest in any other corporation, partnership, joint venture
or other entity;

 

(m)          As
of the date of this Agreement, the Seller and its subsidiaries have not agreed,
or agreed in principle, to any merger or acquisition, or combination with, of
any other corporation, partnership, person, party, entity or trust or the sale
of its business or assets to any other corporation, partnership, person, party,
entity or trust;

 

(n)           The
Seller and its subsidiaries have not, directly or indirectly, at any time
during their existence (i) made any unlawful contribution to any candidate for
political office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal, state or foreign governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof;

 

(o)           To
the best of Seller’s knowledge, the Seller and its subsidiaries have filed all
necessary federal, state, local, foreign and other tax returns required to be
filed by them and have paid all taxes shown as due thereon; the Seller and its
subsidiaries have not been notified, either orally or in writing, that any
state, local, federal or foreign taxing authority is conducting or intends to
conduct an audit of any tax return or report filed by the Seller and its
subsidiaries or concerning their business or properties; and the Seller has no
knowledge of any tax deficiency which has been asserted or threatened against
the Seller and any subsidiary which would materially and adversely affect the
business, properties, financial condition, results of operations, liabilities
or working capital of the Seller;

 

(p)           The
Seller and its subsidiaries make and keep accurate books and records and
maintain internal accounting controls which provide reasonable assurance that
(i) transactions are executed in accordance with management’s authorization,
(ii) transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (iii)
access to their assets is permitted only in accordance with management’s
authorization, and (iv) the reported assets are compared with existing assets
at reasonable intervals;

 

(q)           There are no pre-emptive rights
applicable to any of the Seller’s outstanding securities, or granted by the
Seller to any person or party;

 

(r)            The
capitalization of the Seller is as described in the SEC Reports and the Seller
has outstanding no more than 2,367,726 
shares of its Common Stock as of the date hereof; all presently
outstanding shares of the Seller’s Common Stock are duly and validly authorized
and issued, fully paid and non-assessable and contain no preemptive rights; the
Seller has not contracted for the issuance of any additional equity securities
other than as set forth herein or as contemplated or described in the Offering Document
and no shares of any other classes of equity securities are issued and
outstanding except as follows: 
outstanding

 

7

 

options to
purchase 416,877 shares of common stock; outstanding warrants to purchase
1,417,753 shares of common stock and up to 45,607 shares of common stock
issuable to the prior stockholders of Sound Health Solutions, Inc. (“SHS”).

 

(s)           The Seller agrees that, for a period of Twelve
months (12) months from the date hereof, it shall not solicit any offer to buy
from or offer to sell to any person introduced to the Seller by the Selling
Agent in connection with the Offering, any securities of the Seller or provide
the name of any such person to any other securities broker or dealer or selling
agent. For purposes of this subsection, a person shall be considered to have
been “introduced to the Seller” by the Selling Agent only so long as Seller
delivers an investment presentation to such person as part of the “road show”
for the Offering as arranged by the Selling Agent, each of whose name(s) shall
be thereafter listed and set forth on a schedule to this Agreement, which shall
be updated from time to time. In the event that the Seller or any of its
affiliates, directly or indirectly, solicits, offers to buy from or offers to
sell to any such person any such securities, or provides the name of any such
person to any other securities broker or dealer or selling agent, and such
person purchases such securities or purchases securities of the Seller from any
other securities broker or dealer or selling agent, the Seller shall pay to the
Selling Agent an amount equal to eight percent (8.0%) of the aggregate purchase
price of the securities so purchased by such person.

 

(t)            The Seller
is currently in compliance with (i) all applicable, material provisions of the
Sarbanes-Oxley Act of 2002, and the rules and regulations promulgated
thereunder, and (ii) all listing standards and rules promulgated by the NASD,
except to the extent that non-compliance with such requirements in subsections
(i) or (ii) would not result in a Material Adverse Effect.

 

3.2           The
Selling Agent represents and warrants to the Seller as follows:

 

(a)           The
Selling Agent is, has been and will be at all times during the Offering Period,
a Delaware corporation duly organized and validly existing under the laws of
the state of its incorporation, with all requisite power and authority to enter
into and perform this Agreement; the execution and delivery of this Agreement
by the Selling Agent has been duly and validly authorized; and when executed
and delivered by the Seller, this Agreement will be a valid and binding
obligation of the Selling Agent enforceable in accordance with its terms
subject to:  (i) due authorization,
execution and delivery hereof by the Seller; (ii) the enforcement of remedies
under applicable bankruptcy, insolvency and other laws affecting creditors’
rights generally and moratorium laws from time to time in effect; (iii) general
equitable principles which may limit the right to obtain the remedy of specific
performance; and (iv) the public policy limitation on indemnification under the
federal securities laws;

 

(b)           The
Selling Agent shall not offer or sell the Offered Securities in any state or
states without the approval of the Seller and completion by the Seller of all,
or any, Blue Sky filings for such states and shall not offer or sell the
Offered Securities in any state or states in which it is not qualified or
registered as a broker-dealer or authorized to engage in the brokerage
business; and

 

8

 

(c)           The
Selling Agent is (i) a broker-dealer registered with the SEC pursuant to the
1934 Act, and no proceeding has been initiated to revoke such registration;
(ii) a member in good standing of the NASD; and (iii) a broker-dealer
registered with the securities authorities of each jurisdiction in which it is
required to be registered in connection with the offers or sales of the Offered
Securities, and all such offers or sales will be made only by individuals
licensed as required by all applicable federal and state securities laws. The
Selling Agent agrees to maintain each of the foregoing memberships and
registrations in good standing throughout the Offering Period.

 

4.             Sale
and Delivery of Offered Securities.

 

4.1           No sale of Offered Securities shall
take place or be regarded as effective unless and until accepted by the Seller,
such acceptance to occur at Closing, and the Seller reserves the right in its
sole and absolute discretion to refuse to sell Offered Securities to any or all
persons at any time. Selling Agent shall send to the Seller and to the Escrow
Agent designated in Section 1.2, with copies to counsel for the Seller, all
acceptable executed Subscription Documents, promptly upon receipt of the same,
subject to any reasonable delay occasioned by further inquiry as to a
prospective purchaser’s qualification or requests by the Seller or Selling
Agent for further information from a prospective purchaser. The Seller shall notify
Selling Agent as to whom to send the originals of such executed Subscription
Documents and to whom to send copies. Selling Agent shall promptly send each
such prospective purchaser’s payment for his Offered Securities to the Escrow
Agent. Subject to review by counsel for the Seller, the Seller shall notify
Selling Agent whether such prospective purchaser will be accepted by the Seller
at Closing within ten (10) business days after receipt of the executed
subscription documents for each prospective purchaser of Offered Securities,
but in no event later than the earlier of (i) the date the parties have agreed
to for Closing or (ii) the Offering Termination Date. For every prospective
purchaser of Offered Securities whose subscription is rejected, the Seller will
promptly return all of such prospective purchaser’s executed Subscription
Documents to Selling Agent for return to the prospective purchaser, and will
notify the Escrow Agent to return the funds received to such prospective
purchaser without interest and without deduction.

 

5.             Conditions
to the Obligations of the Seller.

 

The
obligations of the Seller hereunder are subject to the accuracy of Selling
Agent’s representations and warranties, to the observance and performance by
Selling Agent of its obligations hereunder, and to the following further
conditions (any of which may be waived in writing in whole or in part by the
Seller):

 

(a)           Selling Agent shall not have taken or
failed to take any action at any time at or prior to Closing, which, in the opinion
of the Seller or counsel for Seller, conflicts or would conflict with, or
otherwise make unavailable, the exemption from registration requirements for
the offer and sale of the Offered Securities under applicable securities laws
and regulations.

 

(b)           If any of the conditions specified in
this Section 5 shall not have been fulfilled when and as required by this
Agreement to be fulfilled, all the obligations of the

 

9

 

Seller under this Agreement may be terminated in writing at any time at
or prior to Closing, and any such termination shall be without liability to the
parties, and further provided that the obligations under Section 7 and
Section 9.1 shall nevertheless survive and continue thereafter.

 

6.             Conditions
of the Obligations of the Selling Agent.

 

The obligations of the
Selling Agent to act as agent hereunder, to find purchasers for the Offered
Securities, and to attend and to deliver documents at Closing shall be subject
to the following conditions:

 

(a)           Between the date hereof and Closing,
the Seller and its subsidiaries shall not have sustained any loss on account of
fire, explosion, flood, accident, calamity or other cause, of such character as
results in a Material Adverse Effect on the Seller and its subsidiaries,
whether or not such loss is covered by insurance.

 

(b)           Between the date hereof and Closing,
there shall be no material litigation instituted or threatened against the
Seller or any subsidiary (other than as set forth in the Offering Document) and
there shall be no material proceeding instituted or threatened before or by any
federal or state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially adversely affect the business, franchises,
licenses, permits, operations or financial condition or income of the Seller.

 

(c)           Except as contemplated herein or as
set forth in the Offering Document, during the period subsequent to the date
hereof, and prior to Closing, the Seller and each subsidiary:  (i) shall have conducted its business in the
usual and ordinary manner as the same was being conducted on the date hereof,
and (ii) except in the ordinary course of its business, the Seller and each
subsidiary shall not have incurred any liabilities or obligations (direct or
contingent), or disposed of any assets, or entered into any material
transaction or suffered or experienced any substantially adverse change in its
condition, financial or otherwise, or in its working capital position. At
Closing, the capitalization of the Seller shall be substantially the same as
set forth in the Offering Document.

 

(d)           The authorization for the issuance
and delivery of the Offered Securities and the Offering Document and related
materials, and for the execution and delivery of this Agreement, and all other
legal matters incident thereto, shall be reasonably satisfactory in all
respects to counsel for Selling Agent.

 

(e)           The Seller shall have furnished to
the Selling Agent the opinion, dated the Closing Date, of its counsel, which
opinion shall be reasonably acceptable to the Selling Agent and its counsel

 

(f)            The representations and warranties
of the Seller made in this Agreement or in any document or certificate
delivered to the Selling Agent pursuant hereto shall be true and correct on and
as of the Closing with the same force and effect as though such representations
and warranties have been made on and as of the Closing, and the Selling Agent

 

10

 

shall have
received a certificate, dated the Closing Date, to such effect executed by the
Chairman of the Board or President of the Seller.

 

(g)           The Seller shall have performed and
complied in all material respects with all covenants, terms and agreements to
be performed and complied with by the Seller on or before the Closing.

 

(h)           The Seller shall have provided such
certificates as the Selling Agent shall reasonably request.

 

(i)            The Seller and its President shall
provide certificates to the Selling Agent certifying that the proceeds of the
Offering will be used in accordance with the uses designated in “Use of
Proceeds” in the Offering Document.

 

7.             Indemnification.

 

7.1           The
Seller agrees to indemnify and hold harmless Selling Agent and each person, if
any, who controls Selling Agent within the meaning of the 1933 Act or the 1934
Act (together, the “Acts”), the Selling Agent’s affiliated entities, partners,
employees, legal counsel and agents (the “SA Indemnified Parties”) against any
losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses and disbursements (and any and all actions, suits,
proceedings and investigations in respect thereof and any and all legal and
other costs, expenses and disbursements in giving testimony or furnishing
documents in response to a subpoena or otherwise), joint or several, to which
Selling Agent or such person may be subject, under the Acts or otherwise,
including, without limitation, the costs, expenses and disbursements, as and
when incurred, of investigating, preparing or defending any such action, suit,
proceeding or investigation (whether or not in connection with litigation in
which the Selling Agent is a party), directly or indirectly, caused by,
relating to, based upon, arising out of, or in connection with (i) the
violation or breach of any representation, warranty or covenant or agreement of
the Seller set forth in this Agreement or in any instrument, document,
agreement or certificate delivered by the Seller in connection herewith; (ii)
any untrue statement or omission or any alleged untrue statement or omission in
the Offering Document or selling material, excluding information contained in
or omitted from the Offering Document or selling material in reliance upon, and
in conformity with, information furnished to the Seller by Selling Agent or any
Participating Broker-Dealer specifically for use in preparation of the Offering
Document or selling material, as the case may be; (iii) any information
provided by or on behalf of Seller in order to qualify or exempt the Offered
Securities for sale in any jurisdiction; or (iv) the failure of the Seller to
comply with the provisions of the Acts and the regulations thereunder,
including Regulation D; and will reimburse the SA Indemnified Parties for
any legal or other expenses reasonably incurred by the SA Indemnified Parties
in connection with investigation of or defending against any such loss, claim,
expense, damage, liability, (or actions in respect thereof); provided, however,
that the Seller shall not be required to indemnify the SA Indemnified Parties
for any payment made to any claimant in settlement of any suit or claim unless
such payment is agreed to by the Seller (which agreement shall not be
unreasonably withheld) or by a court having jurisdiction of the controversy. This
indemnity agreement shall remain in full force and effect notwithstanding any
investigation made by Selling Agent or on Selling Agent’s behalf, shall

 

11

 

survive
consummation of the sale of the Offered Securities hereunder and shall be in
addition to any liability which the Seller may otherwise have.

 

7.2           Selling
Agent agrees to indemnify and hold harmless the Seller and each person, if any,
who controls the Seller within the meaning of the Acts, Seller’s affiliated
entities, partners, employees, legal counsel and agents (the “Seller
Indemnified Parties”) against any losses, claims, damages, obligations,
penalties, judgments, awards, liabilities, costs, expenses and disbursements
(and any and all actions, suits, proceedings and investigations in respect
thereof and any and all legal and other costs, expenses and disbursements in
giving testimony or furnishing documents in response to a subpoena or
otherwise), joint or several (including, without limitation, the costs,
expenses and disbursements, as and when incurred, of investigating, preparing
or defending any such action, suit, proceeding or investigation (whether or not
in connection with litigation in which the Seller is a party)), to which the
Seller or any such person may be subject, under the Acts or otherwise, insofar
as such losses, claims, expenses, damages or liabilities (or actions in respect
thereof) which (i) arise out of or are based upon any untrue statement or
omission or any alleged untrue statement or omission in the Offering Document
contained in or omitted from the Offering Document in reliance upon, and in
conformity with, information furnished to the Seller by Selling Agent or any
Participating Broker-Dealer or either of them specifically for use in
preparation of the Offering Document or selling material, as the case may be or
(ii) are directly or indirectly, caused by, relating to, based upon, arising
out of, or in connection with the violation or breach of any representation,
warranty or covenant or agreement of the Selling Agent set forth in this
Agreement or in any instrument, document, agreement or certificate delivered by
the Selling Agent in connection herewith); and will reimburse the Seller
Indemnified Parties for any legal or other expenses reasonably incurred by them
in connection with investigating or defending against any such loss, claim,
expense, damage, liability, (or actions in respect thereof); provided, however,
that Selling Agent shall not be required to indemnify the Seller Indemnified
Parties for any payment made to any claimant in settlement of any suit or claim
unless such payment is approved by a court having jurisdiction over the
controversy or Selling Agent agrees to such settlement (which agreement shall
not be unreasonably withheld); and provided further that Selling Agent shall
not be liable under this Section 7.2 for any losses, claims, expenses,
damages or liabilities arising out of any act or failure to act on the part of
any other person except Selling Agent, its partners, employees and agents
(including registered representatives) or any Participating Broker-Dealer. This
indemnity agreement shall remain in full force and effect notwithstanding any
investigation made by or on behalf of the Seller and shall survive consummation
of the sale of the Offered Securities hereunder and the termination of this
Agreement, and shall be in addition to any liability which Selling Agent may
otherwise have. Notwithstanding the foregoing, in no event shall the amount
that the Selling Agent is required to indemnify the Seller Indemnified Parties,
exceed in the aggregate the compensation received by the Selling Agent
hereunder, except in the case of fraud on the part of the Selling Agent.

 

7.3           The indemnified party shall notify
the indemnifying party in writing promptly after the summons or other first
legal process giving information of the nature of any and all claims which have
been served upon the indemnified party. In case any action is brought against
any indemnified party upon any such claim, the indemnifying party shall be
entitled to participate at its own expense in the defense, or if it so elects,
in accordance with

 

12

 

arrangements
satisfactory to any other indemnifying party or parties similarly notified, to
assume the defense thereof, with counsel who shall be satisfactory to such
indemnified party and other indemnified parties who are defendants in such
action; and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and the retaining of such
counsel by the indemnifying party, the indemnifying party shall not be liable to
such indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than the reasonable costs of investigation, unless the
indemnified party shall have reasonably concluded that there are or may be
defenses available to it which are different from or in addition to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to direct the defense of such action on behalf of the
indemnified party), in any of which circumstances such expenses shall be borne
by the indemnifying party.

 

8.             Termination
of Agreement.

 

8.1           This
Agreement shall terminate:

 

(a)           If
at any time after commencement of the Offering, any material condition of
Seller’s obligations hereunder shall not have been met or shall cease to be met
and Selling Agent shall have given to the Seller notice of Selling Agent’s
desire to terminate this Agreement on account of the nonfulfillment of such
condition; or

 

(b)           At
such time as all of the Offered Securities shall have been sold and the
subscriptions therefor have been accepted or the Offering Termination Date has
been reached, whichever shall first occur.

 

Notwithstanding the termination of this Agreement in
accordance with the foregoing provisions of this Section 8, the respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Seller and Selling Agent set forth in or made pursuant to
this Agreement will remain operative and in full force and effect.

 

8.2           If this Agreement is terminated
pursuant to Section 8.1(a) above, the Selling Agent shall have no
liability to the Seller, and if this Agreement is terminated pursuant to
Section 8.1(b) above, the Seller shall have no liability to the Selling
Agent.

 

9.             Miscellaneous.

 

9.1           Except as otherwise specifically
provided in this Agreement or as may be otherwise agreed between the parties
hereto, Selling Agent, on the one hand, and the Seller, on the other, shall
each pay their respective expenses incident to this Agreement and the
transactions contemplated hereby (including, without limitation, the fees and
disbursements of their respective counsel), and no party to the Agreement shall
have any liability for such expenses incurred by any other party.

 

9.2           It is understood and agreed that
Selling Agent’s relationship to the Seller is that of an independent contractor
and that nothing herein shall be construed to create a

 

13

 

relationship of
partners, affiliates, joint venturers or employer and employee between Selling
Agent or either of them and the Seller.

 

9.3           No rights or interests arising
hereunder may be assigned except with the prior written consent of both the
Seller and the Selling Agent. Subject to this limitation, this Agreement shall
inure to the benefit and be binding upon Selling Agent and the Seller and their
respective successors and assigns. This Agreement is intended to be and is for
the sole and exclusive benefit of the parties hereto, and their respective
successors and assigns and for the benefit of no other person. Except as
provided in this Agreement, nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, other than the parties to it
and their respective successors and assigns, any legal or equitable right,
remedy or claim under or with respect to this Agreement or any of its
provisions. No purchaser of Offered Securities shall be construed as a
successor or assign merely by reason of such purchase.

 

9.4           If any portion of this Agreement
shall be held invalid or inoperative, then so far as is reasonable and
possible:

 

(a)           the
remainder of this Agreement shall be considered valid and operative; and

 

(b)           to the extent possible under
applicable law, effect shall be given to the intent manifest by the portion
held invalid or inoperative.

 

9.5           This Agreement may be executed in a
number of identical counterparts and by facsimile, each of which shall be
deemed to be an original, but all of which constitute, collectively, one and
the same Agreement; but, in making proof of this Agreement, it shall not be
necessary to produce or account for more than one counterpart.

 

9.6           This Agreement may not be modified or
amended except by written agreement executed by each of the parties to this
Agreement.

 

9.7           Whenever the context so requires, the
masculine shall include the feminine and neuter, and the singular shall include
the plural, and conversely. The words “shall” and “will” and “agrees” are
mandatory, “may” is permissive.

 

9.8           The parties to this Agreement
covenant and agree that they will execute any other and further instruments and
documents which reasonably are or may become necessary or convenient to
effectuate and carry out this Agreement.

 

9.9           This Agreement (and the other
documents and agreements referenced herein) contains the entire understanding
between the parties and supersedes prior understandings or written or oral
agreements between the parties with respect to the subject matter of this
Agreement.

 

9.10         This Agreement shall be construed and
governed by the laws of the State of Florida. Each party hereby consents to any
and all actions or controversies arising from

 

14

 

this agreement shall be have venue in the exclusive jurisdiction of the
state and federal courts located in Palm Beach County, Florida. Any terms and
conditions of this Agreement which are inconsistent with the terms and
conditions of the Offering Document, shall be modified to conform to the terms
and conditions set forth in the Offering Document.

 

9.11         All notices or communications, except
as otherwise specifically provided, shall be in writing, and, if sent to any
party, shall be mailed, delivered or telegraphed and confirmed to that party at
the address set forth below:

 

	
  If to the Seller:

  	
   

  	
  iVow, Inc.

  
	
   

  	
   

  	
  11455
  El Camino Real

  
	
   

  	
   

  	
  San
  Diego, CA 92130

  
	
   

  	
   

  	
  Attn: Michael H. Owens, President & CEO

  
	
   

  	
   

  	
   

  
	
  With a copy
  contemporaneously

  	
   

  	
   

  
	
   

  	
   

  	
  by like means:

  
	
   

  	
   

  	
  Heller Ehrman LLP

  
	
   

  	
   

  	
  4350
  La Jolla Village Drive, 7th Floor

  
	
   

  	
   

  	
  San
  Diego, CA 92122

  
	
   

  	
   

  	
  Attn:
  Jeffrey C. Thacker, Esq.

  

 

15

 

	
  If to Selling Agent,
  to:

  	
   

  	
  Dawson James
  Securities,

  
	
   

  	
   

  	
  925 S. Federal Highway

  
	
   

  	
   

  	
  6th Floor

  
	
   

  	
   

  	
  Boca Raton, FL 33432

  
	
   

  	
   

  	
  Attention: Robert
  Keyser

  
	
   

  	
   

  	
   

  
	
  With a copy
  contemporaneously

  	
   

  	
   

  
	
   

  	
   

  	
  by like means:

  
	
   

  	
   

  	
  Blank Rome LLP

  
	
   

  	
   

  	
  1200 North Federal
  Highway, Suite 417

  
	
   

  	
   

  	
  Boca Raton, FL 33432

  
	
   

  	
   

  	
  Attention: Bruce C.
  Rosetto, Esq.

  

 

9.12         All of the terms of this Agreement,
including all representations, warranties, covenants and agreements of Selling
Agent and the Seller, shall survive completion of the Offering for three years.

 

9.13         Section titles or captions contained in
this Agreement are inserted only as a matter of convenience and for reference. Those
titles in no way define, limit, extend or describe the scope of this Agreement,
or the intent of any provision of this Agreement.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

16

 

If the foregoing
correctly sets forth the understanding between us, please indicate acceptance
by signing in the space provided below for that purpose and return to us a
counterpart hereof so signed, whereupon this letter and Selling Agent’s
acceptance shall constitute a binding agreement between us.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  IVOW, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael H. Owens

  	
   

  
	
   

  	
   

  	
  (Authorized Officer)

  

 

The foregoing Selling
Agreement for iVow, Inc. is hereby accepted and agreed to as of the date first
above written.

 

	
  DAWSON JAMES
  SECURITIES, INC.

  
	
  As Selling Agent 

  
	
   

  
	
  By:

  	
  /s/ Robert D. Keyser

  	
   

  
	
   

  	
  (Authorized Officer) 

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ David H. Weinstein

  	
   

  
	
   

  	
  (Authorized Officer)

  
					

 

17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]