Document:

Exhibit 10.3

DISTRIBUTOR AGREEMENT

BETWEEN:

Sunway Lighting Technology Co. Ltd, a company incorporated under the laws of the Peoples Republic of China

("Sunway")

AND:

Lions Gate Lighting Corp., a company incorporated under the laws of the State of Nevada,

("Distributor")

In consideration of the mutual covenants-and promises hereinafter set forth, the parties agree as follows:

	
            1.
 	
            APPOINTMENT - TERM - TERRITORY
 

	
            1.1
 	
            Appointment and Territory.  Subject to the terms of this Agreement, SUNWAY hereby appoints DISTRIBUTOR as its non-exclusive Distributor to market, sell and distribute in North and South America ("Territory") full product line of Sunway family of products
 

	
            1.2
 	
            Non-exclusivity.  DISTRIBUTOR acknowledges and agrees that SUNWAY has the right to appoint other Distributors, sales agents, representatives or other selling parties, or to make direct sales in the Territory, itself or through any subsidiary or affiliate of SUNWAY.  SUNWAY shall notify DISTRIBUTOR 60 days in advance of appointing any additional Distributor in the same non-exclusive territory.
 

	
            1.3
 	
            Term.  The term of this Agreement shall remain in affect until terminated which is only applicable if the conditions outlined in Section 4.4 are not satisfied.
 

	
            1.4
 	
            Reporting.  Lions Gate will report and liaison directly with Sunway with respect to marketing, support, and order approval.
 

	
            1.5
 	
            Product Availability.  SUNWAY does not warrant to DISTRIBUTOR the continued availability of the Products, and DISTRIBUTOR hereby expressly releases SUNWAY from liability for any direct or indirect loss or damage to DISTRIBUTOR by virtue of the failure of SUNWAY to accept or fill any orders due to particular product shortages or general product unavailability provided reasonable notice (60 days) has been given by SUNWAY to DISTRIBUTOR.  In the event of shortages because of economic, manufacturing or any other condition whatsoever, DISTRIBUTOR consents to any plan adopted by SUNWAY to allocate shipments among its various dealers.  Distributors and customers that SUNWAY in its sole discretion, determines to be fair and reasonable.
 

 

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            1.6
 	
            Modification of Product.  At its sole discretion, and providing SUNWAY gives DISTRIBUTOR a minimum of 60 day written notice, SUNWAY may also discontinue the production or sale or modify the design or material specifications of the Product or its parts without any liability or obligation to DISTRIBUTOR or its sub-Distributors, agents, representatives or customers, including, without limitation, any obligation to modify any Product previously ordered by DISTRIBUTOR.
 

	
            2.
 	
            DISTRIBUTOR RESPONSIBILITIES
 

	
            2.1
 	
            In consideration for the right to act as a SUNWAY Distributor, DISTRIBUTOR shall:
 

	
             
 	
            (a)
 	
            use its best efforts to sell, advertise and promote the sale and use of the Product throughout the Territory.
 

	
             
 	
            (b)
 	
            order and maintain at least the minimum stock of adequate samples of the Product which SUNWAY determines necessary to support DISTRIBUTOR's sales effort in the Territory as mutually agreed between DISTRIBUTOR and SUNWAY.
 

	
             
 	
            (c)
 	
            ensure that its appropriate personnel participate in Distributor training sessions that may be offered from time to time by SUNWAY at agreed locations.
 

	
             
 	
            (d)
 	
            furnish to SUNWAY information relating to orders, sales, service and inventory of Product and Product sales budgets and forecasts in such manner as SUNWAY may from time to time request;
 

	
             
 	
            (e)
 	
            furnish SUNWAY, upon SUNWAY's request, detailed market analysis and reports with respect to the Territory;
 

	
             
 	
            (f)
 	
            provide reasonable notice (60 days) of Distributor's intent to market and sell, within the Territory, products of another manufacturer that are identical or similar to the Product.
 

	
            3.
 	
            SUPPORT SERVICES
 

	
            3.1
 	
            Support Services By SUNWAY.  If requested by DISTRIBUTOR, in support of the sale of the Product, SUNWAY may, at its sole discretion, provide support services to DISTRIBUTOR such as systems engineering, programs management and field service engineers.  Standard Sales Support will be available to DISTRIBUTOR throughout regular working hours at SUNWAY offices.
 

	
            3.2
 	
            Support Services by Distributor.  If SUNWAY makes a sale into the Territory, DISTRIBUTOR agrees to provide support services for mutually agreed compensation if requested by SUNWAY.
 

 

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            4.
 	
            SALES VOLUME, PRICES AND PAYMENT
 

	
            4.1
 	
            Sales Volume.  During the term of this Agreement, DISTRIBUTOR shall use its best efforts to maximise the sales volume of the Product in the Territory, and will provide each month a rolling 3 month forecast to Sunway.
 

	
            4.2
 	
            Price.  DISTRIBUTOR shall pay for Products as per Appendix A in US Dollars.  This price per unit is subject to subsequent negotiation based upon market conditions and manufacturing costs.  DISTRIBUTOR acknowledges and agrees that the prices and charges set out in this section are based on the fact that Lions Gate shall pay all delivery, shipping and handling charges and all excise, sales, use, property and other taxes and duties that are levied.
 

	
            4.3
 	
            Initial Stocking Order:  DISTRIBUTOR shall pay in advance for its orders.  Sunway shall supply the Distributor demonstration units of some products.
 

	
            4.4
 	
            Minimum Volume Orders:  DISTRIBUTOR hereby agrees to purchase a minimum of 10,000 units within two (2) years of the signing of this agreement or forfeit all rights contained herein.
 

	
            4.5
 	
            Payment. With respect to future orders and concurrent with placement of each purchase order, Distributor shall pay SUNWAY one hundred percent (100%) of the value of the order (determined as Price multiplied by number of units ordered) in U.S. currency payable to SUNWAY, either via certified cheque or wire transfer to an account designated by SUNWAY.  Alternatively, DISTRIBUTOR may issue to SUNWAY an irrevocable, transferable letter of credit at sight for the same amount, in a form acceptable to SUNWAY and assignable by SUNWAY, or by any other means pre-approved in writing by SUNWAY in its sole discretion
 

	
            4.6
 	
            Interest Charges.  DISTRIBUTOR shall pay interest on all amounts due SUNWAY which are in default at a rate of 2 percent per month of the overdue amount.
 

	
            4.7
 	
            Return of Product.  Subject to section 7.1, DISTRIBUTOR shall be solely responsible for any unit of Product returned to it by its sub-Distributors, agents, representatives or customers whether for repair or replacement, for the issuance of refund or for any reason whatsoever.  SUNWAY will authorize and accept return of product if it is due to manufacturing defects during the warranty period of one (1) year providing it is returned in its original package, DISTRIBUTOR will return defective Product to SUNWAY or the factory location as instructed in its Return Merchandize Authorization form.  SUNWAY will either credit the DISTRIBUTOR account or replace the Products on mutually agreed upon terms, upon receipt of defective products.  Sunway will not be responsible for any shipping charges.  Sunway
will not authorize any Product return after the warranty period.  However, DISTRIBUTOR can provide in its own Territory incentive programs for trade in after the original factory warranty period.  For North American Territory, DISTRIBUTOR is responsible to train Distributors and retailers to return and exchange any defective units to SUNWAY.
 

 

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            5.
 	
            PACKAGING AND SHIPMENT
 

	
            5.1
 	
            Packaging.  SUNWAY shall package the Product in packaging designated by the DISTRIBUTOR and agreed to by Sunway, including marking as a stockable SKU.  SKU will be added when required for retail sale.
 

	
            5.2
 	
            SUNWAY shall include in each retail package a contact and information sheet for the Distributor's Technical and Customer support services.
 

	
            5.3
 	
            Shipment.  Ordered Products shall be shipped to DISTRIBUTOR or its customer, at the option of the DISTRIBUTOR.  DISTRIBUTOR shall provide shipping destination and method of shipping at time of ordering.
 

	
            5.4
 	
            Short-Shipments.  If Distributor receives a short-shipped order, Distributor will have 15 days to notify SUNWAY of short-shipment.  SUNWAY, in consultation with Distributor, will either complete shipment of short-shipped Product in the next shipment of Product to Distributor or will credit Distributor's Account equal to the Price for the short-shipped Products.
 

	
            5.5
 	
            Stock Rotation. Distributor may return Products (including end of life Products) to SUNWAY without paying any restocking or similar charges, provided that Distributor orders a corresponding dollar amount of other products within ten (10) days after the return shipment date of the returned Products.
 

	
            6.
 	
            TERMS AND CONDITIONS OF SALE
 

	
            6.1
 	
            Acceptance of Orders.  SUNWAY reserves the right in its sole discretion to accept or reject for any reason any order for Product received from DISTRIBUTOR.  No order is binding on SUNWAY until accepted.  An order is accepted by SUNWAY when shipped or when it is acknowledged in writing by a duly authorized officer or employee of SUNWAY, whichever occurs first.  Any terms, provisions or conditions in DISTRIBUTOR's purchase order or otherwise which vary from, or are inconsistent with, contrary to, or in addition to the terms, provisions and conditions of this Agreement shall be null and void.
 

	
            6.2
 	
            Title and Risk of Loss.  Title and risk of loss or damage to each unit of the Product ordered shall pass to DISTRIBUTOR at the time and date specified on the written notice from SUNWAY that the order has been received by the DISTRIBUTOR.
 

	
            7.
 	
            WARRANTY
 

	
            7.1
 	
            Product Warranty. A warranty period of ONE (1) year for each unit of the Product shall be offered by SUNWAY's manufacturer.  If any Product furnished hereunder is defective at the time of delivery to Distributor, Distributor's sole remedy shall be to return the Product to SUNWAY for replacement.  Any agreed returns must be returned in the original container and packing with all accessories and instructions.  SUNWAY agrees to furnish DISTRIBUTOR with packaging and other component parts of the Bill of 
 

 

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Materials in order to minimize the requirement of DISTRIBUTOR to return products to SUNWAY.

	
            7.2
 	
            Disclaimer of Other Warranties. The Warranty described in section 7.1 is in lieu of all other warranties, whether oral or written, express or implied, which are expressly disclaimed by SUNWAY and expressly waived by DISTRIBUTOR including but not limited to ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.  The agents and employees of SUNWAY are not authorized to make modifications of this warranty; any additional statements, whether oral or written, do not constitute warranties and should not be relied upon.  Product performance data as described in SUNWAY's catalogs, brochures, specifications or other such documents are typical data only and do not represent a warranty by SUNWAY. Such data shall not form part of this Agreement and may be altered by SUNWAY without
notice.
 

	
            7.3
 	
            Repair and Returns.  Distributor will provide to SUNWAY a monthly report detailing the number of Products returned to Distributor and the reason for returns.
 

	
            7.4
 	
            Third Party Products.  SUNWAY shall not be responsible in any way for any ancillary software, firmware or hardware not furnished by SUNWAY which is attached to or used in connection with the Product, and all such software, firmware and hardware are expressly excluded from this warranty.
 

	
            7.5
 	
            Exclusions.  THIS WARRANTY DOES NOT COVER:
 

	
             
 	
            (a)
 	
            defects or damage resulting from use of the Product in other than its normal and customary manner.
 

	
             
 	
            (b)
 	
            defects or damage from misuse, accident or neglect.
 

	
             
 	
            (c)
 	
            defects or damage from improper testing, operation, maintenance, installation, alteration, modification or adjustment.
 

	
            8.
 	
            FORCE MAJEURE
 

	
            8.1
 	
            SUNWAY shall not be liable to DISTRIBUTOR for any injury, loss, damage or expense resulting from or arising out of any failure to perform or any failure to fill or delay in filling orders received from DISTRIBUTOR and accepted by SUNWAY due to strikes, lock-outs, or other labour troubles, riot, fires, floods, typhoons, accidents, explosions or other catastrophes, energy curtailments, delays in delivery of raw materials or completed merchandise by the suppliers thereof, freight embargoes, delays occasioned by carriers, Acts of God, acts of government or any other cause beyond the reasonable control of SUNWAY, or because SUNWAY's volume of orders at any time renders deliveries impractical in the ordinary course of business.
 

 

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            9.
 	
            DISTRIBUTOR'S INDEPENDENT CONTRACTOR STATUS
 

	
            9.1
 	
            Nothing in this Agreement shall be deemed to create an agency, partnership or joint venture between SUNWAY and Distributor, nor shall DISTRIBUTOR in any manner assume or attempt to assume or create any obligation or liability of any kind, nature or sort, express or implied, on behalf of or in the name of SUNWAY or any of its subsidiaries or affiliates.
 

	
            10.
 	
            PATENTS, TRADEMARKS AND CONFIDENTIAL INFORMATION
 

	
            10.1
 	
            Trademarks.  DISTRIBUTOR acknowledges that the word "Sunway" is the dominant feature of the trade names of SUNWAY and its subsidiaries and affiliated companies which use "Sunway" in such names and that the mark "Sunway" and derivatives thereof are important trademarks for products manufactured or sold by SUNWAY and for services provided in connection with such products.  DISTRIBUTOR shall market, sell and distribute, and will cause its sub-Distributors to market, sell and distribute, the Product under the SUNWAY trade names, trademarks or service marks designated by SUNWAY and under no other trade names, trademarks or service marks.  If a wholesale or retail customer inquires of DISTRIBUTOR as to the use of an alternate trade name, trademark or service marks in connection with the Product,
DISTRIBUTOR shall refer such inquiry to SUNWAY for discussion and negotiation with such customer, and SUNWAY shall not be liable to DISTRIBUTOR whatsoever, including but not limited to lost sales or opportunity, if SUNWAY does not reach an agreement with such customer.  For purposes of this section 9, "SUNWAY" shall refer to SUNWAY and its subsidiaries and affiliates,
 

	
            10.2
 	
            Other Marks.  DISTRIBUTOR shall not remove, alter or obliterate any trademark appearing on the Product, not market, sell or distribute the Product under any trademark owned by DISTRIBUTOR or licensed by DISTRIBUTOR from a third party DISTRIBUTOR shall not have the right to use any SUNWAY originated trademark on any product, or in any advertising or sales promotion except as separately authorized by SUNWAY in writing.  DISTRIBUTOR shall not publish, cause to be published, encourage or approve any advertising or practice which might mislead or deceive the public or might be detrimental to the good name, trademark, trade name, service mark, goodwill or reputation of SUNWAY or SUNWAY's products.  DISTRIBUTOR shall discontinue any advertising, practice or use deemed by SUNWAY to have such
misleading, deceptive or detrimental effect.  DISTRIBUTOR shall not during or after the term of this Agreement use any SUNWAY trademark, trade name or service mark or any word likely to be confused with any such trademark, trade name or service mark, either alone or in combination with other words.  In the event that DISTRIBUTOR should acquire in the Territory or elsewhere any right to any trademark, trade name or service mark which SUNWAY owns or which originated with SUNWAY, it shall assign such rights including the goodwill associated therewith to SUNWAY on request.
 

	
            10.3
 	
            Proceedings.  Without prior written consent of SUNWAY, DISTRIBUTOR shall not have the right to institute proceedings for infringement of any SUNWAY trademarks or incur any cost or obligations on behalf of SUNWAY.  DISTRIBUTOR shall provide all 
 

 

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reasonable assistance, required by SUNWAY to enforce SUNWAY's rights in any of its trademarks, trade names or service marks.

	
            10.4
 	
            Non-Transfer of Rights.  Except for the expressed right to use the Product for the purposes provided herein, nothing contained in this Agreement shall be deemed to grant to DISTRIBUTOR either directly or by implication, estoppel, or otherwise, any license or right under any patents, copyrights, trademarks or trade secrets of SUNWAY or any third party.  DISTRIBUTOR acknowledges and agrees that SUNWAY owns and retains exclusive ownership of any and all rights, title, and interest in and to any and all patents, trademarks, copyrights, designs, ideas, discoveries, inventions, knowledge, know-how, trade secrets, formulae, drawings, specifications, prototypes, models, applications, designs, processes, techniques and any other proprietary information relating to the Product and includes without
limitation US Patent Application No, 6,088,220 and S/N 09/850,158 filed in the US, EU and PCT, including but not limited to any extensions, continuations, and divisions thereof. DISTRIBUTOR shall not reverse engineer, decompile or disassemble the Product nor utilize any of the knowledge gained from the proprietary information and material disclosed or provided by or through SUNWAY under this Agreement for incorporation into competitive products.
 

	
            10.5
 	
            Confidential Information.  During and after the term of this Agreement DISTRIBUTOR shall safeguard and not disclose to others and not use except in the performance of this Agreement any confidential business or technical information of SUNWAY, its subsidiaries and affiliates, which becomes available to DISTRIBUTOR and is not disclosed to the public.
 

	
            10.6
 	
            No Contest.  DISTRIBUTOR shall not contest the validity of SUNWAY's rights, title or interest in and to the trade names, trademarks or service marks described in section 10.1 and other intellectual property or proprietary rights described in section 10.4, whether or not they are registered.
 

	
            10.7
 	
            Cause for Termination.  DISTRIBUTOR agrees that violation of any provision of this section 10 shall constitute just cause for immediate termination of this Agreement by SUNWAY, and if DISTRIBUTOR shall refuse or neglect to keep and perform the provisions of this section 10, DISTRIBUTOR shall reimburse SUNWAY for all costs, attorney's fees (on a client and solicitor basis) and other expenses incurred by SUNWAY in connection with legal action required to have DISTRIBUTOR comply herewith.
 

	
            11.
 	
            TERMINATION
 

	
            11.1
 	
            Events of Default. Notwithstanding section 10.7, SUNWAY may immediately terminate the term of this Agreement, with or without notice, upon the occurrence of any of the following events:
 

	
             
 	
            (a)
 	
            a breach of any term or provision of section 10, 16, 17 or 18;
 

	
             
 	
            (b)
 	
            a change in the control of DISTRIBUTOR which is unacceptable to SUNWAY; DISTRIBUTOR ceases to function as a going concern, declares bankruptcy, has a receiver appointed for it, or otherwise takes advantage of any insolvency law;
 

 

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            (c)
 	
            the DISTRIBUTOR fails to meet minimum volume commitments as set out in Section 4.4;
 

	
             
 	
            (d)
 	
            DISTRIBUTOR fails to cure a breach of this Agreement other than a breach of Section 10, 16, 17 or 18 within thirty (30) days after SUNWAY's notification to DISTRIBUTOR of such breach; or
 

	
             
 	
            (e)
 	
            at the sole determination of SUNWAY, there is an undue risk to the intellectual or proprietary property of SUNWAY and the legal or enforcement environment does not allow for sufficient protection of such property.
 

	
            12.
 	
            OPTION TO REPURCHASE PRODUCTS
 

	
            12.1
 	
            Exercise of Option.  Upon termination of the term of this Agreement SUNWAY shall have the option, but not the obligation, to repurchase all or any part of the remaining inventory of the Product of DISTRIBUTOR at the net price paid to SUNWAY for such inventory, providing the Product is undamaged and in the original and unopened packaging.
 

	
            12.2
 	
            Payment.  SUNWAY shall pay DISTRIBUTOR for the inventory of the Product repurchased within forty-five (45) days after receipt thereof by SUNWAY.  SUNWAY shall have the right to offset against any monies payable hereunder that are due and owing from DISTRIBUTOR to SUNWAY as of the date any such payment is due.
 

	
            13.
 	
            EFFECT OF TERMINATION
 

	
            13.1
 	
            No Liability.  Neither SUNWAY nor DISTRIBUTOR shall be liable to the other, or to any other party, by virtue of the termination of the term of this Agreement or of the marketing, sale and distribution rights in the Territory, for any reason whatsoever, or by virtue of the cancellation of any orders for the Product that are undelivered on the effective date of any termination of the term of this Agreement, including, but not limited to, any claim for loss of profits or prospective profits for anticipated sales of Product, or on account of any expenditures, investments, leases, capital improvements or any other commitments made by either of the parties in connection with their respective businesses made in reliance upon or by virtue of DISTRIBUTOR's appointment as a Distributor of the Product or
otherwise.  Further, DISTRIBUTOR warrants that such claims shall never be lodged against SUNWAY or a potential new agent, representative or Distributor appointed by SUNWAY in the Territory.
 

	
            13.2
 	
            Outstanding Amounts.  All sums owed by either party to the other under this Agreement shall become due and payable immediately upon termination of the term of this Agreement.
 

	
            13.3
 	
            Delivery of Materials.  Upon termination of the term of this Agreement, DISTRIBUTOR shall immediately deliver to such address as SUNWAY specifies all catalogs, drawings, designs, engineering photographs, samples, literature, sales aids, customer lists, demonstration equipment and other confidential business information and trade secrets of SUNWAY in DISTRIBUTOR's possession or control.
 

 

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            13.4
 	
            Cancellation of Orders.  Upon termination, SUNWAY shall be relieved of any obligation to make any further shipments hereunder, and may cancel all of DISTRIBUTOR's unshipped orders for the Product, irrespective of previous acceptance by SUNWAY, SUNWAY shall have no obligation or liability to DISTRIBUTOR or its prospective sub Distributors or customers in connection with any such cancellations.
 

	
            13.5
 	
            Orders After Termination.  SUNWAY's acceptance of any order by DISTRIBUTOR for the Product after the termination of the term of this Agreement shall not be construed as a renewal or extension of this Agreement, nor as a waiver of termination.
 

	
            14.
 	
            TAXES AND FEES
 

	
            14.1
 	
            DISTRIBUTOR is solely responsible for and shall pay all applicable fees, customs duties, assessments and taxes which may be assessed or levied by the government of any applicable jurisdiction and any department or subdivision thereof, as a result of the performance of this Agreement or against any Product ordered by DISTRIBUTOR.
 

	
            15.
 	
            LIMITATION OF LIABILITY, REMEDIES AND INDEMNITY
 

	
            15.1
 	
            Shipment Deferred.  If DISTRIBUTOR is in default with respect to any of the terms and conditions of this Agreement, SUNWAY may, without incurring liability to DISTRIBUTOR or its sub-Distributors, customers or any other third party, and without prejudice to any other remedy of SUNWAY, defer further shipments of the Products to DISTRIBUTOR (whether or not SUNWAY has accepted purchase orders from DISTRIBUTOR with respect to any unshipped Product) until such default is remedied.
 

	
            15.2
 	
            Set-Off.  SUNWAY may apply any outstanding amount due to DISTRIBUTOR against any indebtedness owed by DISTRIBUTOR to SUNWAY, whether due or to become due.
 

	
            15.3
 	
            Indemnification by Distributor.  DISTRIBUTOR shall defend, indemnify and hold harmless each of SUNWAY and its subsidiaries, affiliates, successors, assigns, and Distributors and their respective officers, directors, shareholders, employees and agents from and against any and all claims, losses, obligations, liabilities, costs and expenses (including without limitation, legal and other fees) arising out of or relating to acts or omissions of DISTRIBUTOR or its employees. sub-Distributors, agents or representatives, including without limitation any such claims. losses, obligations, liabilities, costs and expenses arising out of any breach or failure to perform any of DISTRIBUTOR's representations, warranties, covenants and agreements herein.
 

	
            15.4
 	
            Limitation on Liability.  SUNWAY'S TOTAL LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER FOR BREACH OF CONTRACT, WARRANTY, SUNWAY'S NEGLIGENCE, STRICT LIABILITY IN TORT OF OTHERWISE, IS LIMITED TO THE PRICE OF THE PARTICULAR PRODUCT SOLD UNDER THIS AGREEMENT WITH RESPECT TO WHICH LOSSES OR DAMAGES ARE CLAIMED.
 

	
            15.5
 	
            Indirect Damages or Loss.  IN NO EVENT WHETHER FOR BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE OR OTHERWISE SHALL 
 

 

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SUNWAY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGE OR LOSS, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS OR REVENUES, COST OF CAPITAL, COST OF SUBSTITUTE PRODUCTS, FACILITIES OR SERVICES, DOWNTIME COSTS OR CLAIMS OF CUSTOMERS OR SUBDISTRIBUTORS FOR SUCH DAMAGES OR LOSS TO THE FULL EXTENT SUCH MAY BE DISCLAIMED BY APPLICABLE LAW.

	
            16.
 	
            COMPLIANCE WITH LAW
 

	
            16.1
 	
            DISTRIBUTOR shall at all times conduct its efforts under this Agreement in strict compliance with all applicable laws and regulations and with the highest commercial standards.  DISTRIBUTOR shall effect or secure at its own cost all necessary governmental permits, licenses and registrations required in connection with the execution or performance of this Agreement and the importation and resale of the Product in the Territory, and shall provide copies thereof to and upon the request of SUNWAY.  DISTRIBUTOR agrees to promptly comply with any notices received from SUNWAY regarding compliance with any applicable law and DISTRIBUTOR shall defend, indemnify and hold SUNWAY harmless from any action whatsoever for DISTRIBUTOR's failure to comply with any duty imposed on DISTRIBUTOR, shall not admit liability on the part of SUNWAY and
shall not enter into any settlement without the prior written consent of SUNWAY.
 

	
            17.
 	
            EXPORT CONTROLS
 

	
            17.1
 	
            Condition Precedent.  If, at the time or times of SUNWAY's performance under this Agreement, a validated export license is required for SUNWAY to lawfully export the Product or associated technical data, then the issuance of such license to SUNWAY shall constitute a condition precedent to SUNWAY's obligations under this Agreement.  Sunway has the option to use the licence from one of our subsidiaries to lawfully export certain goods.
 

	
            17.2
 	
            Compliance by Distributor.  DISTRIBUTOR agrees to comply with all applicable export laws and regulations of the Territory and that violation of any provision of this section 17 shall constitute just cause for immediate terminate on of this Agreement by SUNWAY.
 

	
            18.
 	
            SALES TO GOVERNMENTS
 

	
            18.1
 	
            In the event that DISTRIBUTOR elects to sell SUNWAY'S products or services to any government body within the Territory, or to a prime contractor for the benefit of such government body, DISTRIBUTOR does so solely at its own option and risk.  DISTRIBUTOR remains solely and exclusively responsible for compliance with all statutes and regulations governing sales to such government body.  SUNWAY makes no representations, certifications or warranties whatsoever with respect to the ability of its goods services or prices to satisfy any such statutes or regulations.  Failure of the DISTRIBUTOR to conduct any sales to a government body or prime contractors for the 
 

 

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benefit of a government body in strict accordance with applicable law shall constitute a material breach of this Agreement.

	
            19.
 	
            NOTICE
 

	
            19.1
 	
            Any notice, document or other communication required or permitted to be given by this Agreement shall be in writing and shall be sufficiently given if delivered personally or sent by courier (with confirmation of delivery) addressed as follows or to a facsimile at the number set out below (with confirmation of transmission):
 

	
            19.2
 	
            To SUNWAY:
 

Sunway Lighting Technology Co. Ltd.

Rm.4, 2 fl., Deyi Bldg. No.2 Penglai Rd. Daliang,

Shunde, Foshan City, Guangdong, P.R.C. 528300

Attention: Gordon Hicks

To DISTRIBUTOR:

Lions Gate Lighting Corp.

604 - 750 West Pender Street,

Vancouver, BC.  V6C - 2T7

Attention: Robert Fraser

	
            20.
 	
            GENERAL
 

	
            20.1
 	
            Press Release or Publicity.  Except as required by law, neither party shall use the name of the other party in any press release or publication without the prior written consent of the other party, whose consent shall not be unreasonably withheld.
 

	
            20.2
 	
            Entire Agreement.  This Agreement constitutes the entire agreement between the Parties respecting the subject matter hereof and supersedes all prior communications, representations, and agreements of any kind.  In the event that this Agreement is translated into any other language, the English language version hereof shall govern.
 

	
            20.3
 	
            Governing Law and Venue.  This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein without reference to its conflict of laws principles and to the application of the U.N. Convention on Contracts for the International Sale of Goods.  The parties hereby irrevocably attorn to the sole and exclusive jurisdiction of the courts of the Province of British Columbia and agree that the judgement of such courts shall be enforceable within and outside of the Province of British Columbia.
 

	
            20.4
 	
            Severability.  If any one or more of the provisions contained in the Agreement is invalid, illegal or unenforceable in any respect, or would render the Agreement as a whole invalid, illegal or unenforceable, then such provision shall be severable from the balance of the Agreement and not affect the validity, legality or enforceability of the balance of the Agreement,
 

 

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            20.5
 	
            Enurement and Assignment.  This Agreement is binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, legal representatives, successors and assigns, except that DISTRIBUTOR shall not assign all or part of this Agreement, or any interest herein including, without limitation, rights and duties of performance, without the prior written consent of SUNWAY.  No assignment made without SUNWAY's consent shall relieve DISTRIBUTOR from any of its obligations under this Agreement.  SUNWAY reserves the right to assign any of its rights or obligations under this Agreement to any of its subsidiaries or affiliates.
 

	
            20.6
 	
            Headings.  Headings of the sections in this Agreement are for convenience only and shall not be used to construe the provisions of this Agreement.
 

	
            20,7
 	
            Further Assurances.  The parties shall with reasonable diligence do all such things and provide all such reasonable assurances as may be required to consummate the transactions contemplated by this Agreement, and each party shall provide such further documents or instruments required by the other party as may be reasonably necessary or desirable to effect the purpose of this Agreement and carry out its provisions.
 

	
            20.8
 	
            Survival.  Sections 4.5, 7.1, 7.2, 7.4, 7.5, 9, 10, 12, 13, 14, 15, 17, 20.1, 20.3, 20.4, 20.5, 20.7 and 20.8 and all provisions of this Agreement which are expressly stated to survive the expiration or earlier termination of the term of this Agreement, and all indemnities, representations, warranties and other provisions which by their nature are intended to survive the expiration or earlier termination of the term of this Agreement, shall survive the expiration or earlier termination of the term of this Agreement.
 

IN WITNESS WHEREOF, SUNWAY and DISTRIBUTOR have executed this Agreement as of the day and year first above written.

Sunway Lighting Corp

by its duly authorized signatory

Per:  /s/ Peng Xue Wen

Name: Peng Xue Wen

Title: General Manager

Lions Gale Lighting Corp.

by its duly authorized signatory:

Per:  /s/ Robert Fraser

Name: Robert Fraser

Title: President

 

 

D/CZM/877048.1

 

 

 

	- 2 -Exhibit 10.1

 

[WELLS FARGO LETTERHEAD]

July 5, 2006

FTD, Inc.

3113 Woodcreek Drive

Downers Grove, Illinois  60515

Attention: Michael Soenen

Re:                               Acquisition
of Interflora Holdings Limited and Refinancing

Ladies and
Gentlemen:

You have advised us that FTD, Inc. (“Company”
or “FTD”) intends, through a newly formed UK subsidiary (“UK Newco”)
to acquire all or substantially all of the outstanding shares (the “Acquisition”)
of Interflora Holdings Limited (“Interflora”). You have also advised us that in
connection with such transaction, certain existing indebtedness of the Company
will be refinanced (the “Refinancing”) and related fees and expenses
(the “Fee and Expense Payments”) will be paid. The Acquisition,
Refinancing, Fee and Expense Payments and other related transactions are
collectively referred to herein as the “Transaction.”  The term “Credit Parties” as used
herein refers collectively to the Parent (as such term is defined in the
Summary of Terms, Senior Secured Credit Facilities (including all annexes and
schedules thereto, the “Term Sheet”) attached hereto as Annex A),
the Company, Interflora and all subsidiaries of such companies after giving
effect to the consummation of the Transaction.

We understand that the total cash proceeds (and credit
extensions) required to consummate the Transaction will be provided by the
proceeds (and credit extensions) of the $225.0 million Senior Secured Credit
Facilities described in the Term Sheet (the “Senior Credit Facilities”).

Wells Fargo Bank, National Association (“Wells
Fargo”) is pleased to inform you that it hereby commits to provide the
entire principal amount of the Senior Credit Facilities and to act as the sole
and exclusive administrative agent (the “Administrative Agent”) and sole
and exclusive lead arranger and book manager (the “Lead Arranger”) for
the Senior Credit Facilities and to use its reasonable commercial efforts to
arrange for syndicates of financial institutions and other “accredited
investors” (as defined in SEC regulations; each such financial institution and
accredited investor, including Wells Fargo, being a “Lender” and, collectively,
the “Lenders”) to participate in the Senior Credit Facilities. Our fees
for such services are set forth in the accompanying confidential fee letter
(the “Fee Letter”).

Wells Fargo’s commitment shall not be subject to
diligence, but shall remain subject to our not having discovered or otherwise
become aware of any information relating to conditions or events not previously
disclosed to Wells Fargo or constituting new information or additional 

 

developments concerning conditions or events
previously disclosed to Wells Fargo which, in our judgment, is inconsistent
with the information theretofore provided to Wells Fargo and which Wells Fargo
reasonably deems materially adverse in respect of the condition (financial or
otherwise), business, operations, properties, assets, Projections, accounting
treatment or liabilities (including environmental liabilities) of the Company
and its subsidiaries and Interflora and its subsidiaries (collectively, the “Subject
Companies”). In addition, the foregoing commitment and all undertakings and
agreements hereunder are expressly subject to (i) no material adverse
change in the business, assets, condition (financial or otherwise), operations,
liabilities (whether contractual, environmental or otherwise), properties or
Projections (as defined below) of the Credit Parties taken as a whole since
March 31, 2006 or in the facts and information as represented to date,
(ii) the satisfaction of the terms and conditions of this letter and the
Term Sheet attached hereto (together, this “Commitment Letter”) and the
Fee Letter in a manner acceptable to us, and (iii) the absence of any
competing offering, placement or arrangement for any debt security or bank
financing by or on behalf of any of the Credit Parties.

The Lead Arranger, in consultation with you, will
manage all aspects of the syndication, including decisions as to the selection
of institutions to be approached, when they will be approached, when their
commitments will be accepted, which institutions will participate, the
allocations of the commitments among potential Lenders, any titles offered to
potential Lenders and the amount and distribution of fees among the Lenders.
You agree that no other agents, co-agents or arrangers will be appointed, no
other titles will be awarded and no compensation other than as expressly set
forth in the Term Sheet and the Fee Letter will be paid in connection with the
Senior Credit Facilities unless you and we shall so agree. You agree actively
to assist the Lead Arranger in completing a syndication satisfactory to it.
Such assistance shall include: 
(i) your using commercially reasonable efforts to ensure that the
syndication efforts benefit materially from your lending and investment banking
relationships as well as those of the Credit Parties; (ii) your using
reasonable efforts to make certain members of the management of the Credit
Parties, as well as its consultants and advisors, are available during regular
business hours to answer questions regarding the Senior Credit Facilities;
(iii) the Credit Parties providing or causing to be provided to us all
information reasonably deemed necessary by us to complete syndication and the
Credit Parties assisting in the preparation of a confidential informational
memorandum to be used in connection with the syndication; (iv) the hosting
by you and the Credit Parties of meetings with prospective Lenders; and
(v) prior to the launch of the syndication, the hosting of meetings with
each of Standard & Poor’s Ratings Service (“S&P”) and
Moody’s Investors Service, Inc. (“Moody’s”) for the obtaining of
ratings for the Senior Credit Facilities therefrom. You further agree that
Wells Fargo’s commitment hereunder is conditioned upon the satisfaction of the
requirements set forth in clauses (i) through (iv) of the immediately
preceding sentence on or prior to the closing date and that thereafter you
shall continue to actively assist the Lead Arranger until the completion of a successful
syndication.

You hereby represent that:  (i) all information, other than
Projections, which has been or is hereafter made available to us or the other
Lenders by you, any of the Credit Parties or any of your or their representatives
in connection with the transactions contemplated hereby (the “Information”)
has been reviewed and analyzed by you in connection with the performance of
your own due diligence and is or will be, in the case of Information made
available after the date hereof, complete and correct in all material respects
and does not or will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements 

 2
 

 

contained therein not materially misleading in light
of the circumstances under which such statements were or are made, and
(ii) all financial projections concerning the Credit Parties that have
been or are hereafter made available to us or the other Lenders by you, any of
the Credit Parties or any of your or their representatives in connection with
the transactions contemplated hereby (the “Projections”) have been or
will be, in the case of Projections made available after the date hereof,
prepared in good faith based upon reasonable assumptions. You agree to
supplement the Information and the Projections from time to time until the
closing date so that the representation and warranty in the preceding sentence
is correct on the closing date. In arranging and syndicating the Senior Credit
Facilities, the Lead Arranger will be using and relying on the Information and
the Projections without independent verification thereof. The representations
and covenants contained in this paragraph shall remain effective until the
initial funding under a definitive financing agreement and thereafter the
disclosure representations contained herein shall be superseded by those
contained in such definitive financing agreement.

You hereby agree to pay our reasonable costs and
expenses (including the reasonable fees and expenses of counsel and reasonable
out-of-pocket expenses, including without limitation syndication expenses)
incurred before or after the date of this Commitment Letter arising in
connection with this Commitment Letter, the definitive financing agreement, the
syndication of the Senior Credit Facilities and the other transactions
contemplated hereby. You hereby further agree to indemnify and hold harmless
the Administrative Agent, the Lead Arranger and each Lender (including Wells
Fargo) and their respective affiliates and each director, officer, employee,
agent, attorney and affiliate thereof (each such person, an “indemnified
person”) from and against any losses, claims, damages, liabilities or other
expenses to which an indemnified person may become subject, insofar as such
losses, claims, damages, liabilities (or actions or other proceedings commenced
or threatened in respect thereof) or other expenses arise out of or in any way
relate to or result from the Transaction and the other transactions
contemplated by this Commitment Letter, the Fee Letter, the extension of the
financing contemplated hereby, the Senior Credit Facilities or any use or
intended use of the proceeds of any of the loans and other extensions of credit
contemplated hereby, and to reimburse each indemnified person for any reasonable
legal or other expenses incurred in connection with investigating, defending or
participating in any such investigation, litigation or other proceeding
(whether or not any such investigation, litigation or other proceeding involves
claims made between you, any of the Parent (as such term is defined in the Term
Sheet), its subsidiaries or any third party and any such indemnified person,
and whether or not any such indemnified person is a party to any investigation,
litigation or proceeding out of which any such expenses arise); provided,
however, that the indemnity contained herein shall not apply to the
extent that it is determined in a final nonappealable judgment by a court of
competent jurisdiction that such losses, claims, damages, liabilities or other
expenses result from the gross negligence or willful misconduct of such
indemnified person. No indemnified person shall be liable for any damages
arising from the use by others of Information or other materials obtained
through internet, Intralinks or similar information transmission systems in
connection with the Senior Credit Facilities. No indemnified person shall be
responsible or liable to any other party or any other person for any indirect,
consequential or special damages. The foregoing provisions of this paragraph
shall be in addition to any rights that any indemnified person may have at
common law or otherwise.

As you know, Wells Fargo or its affiliates may from
time to time effect transactions for its own account or for the accounts of customers,
and may hold positions in loans, options on 

 3
 

 

loans, securities and options on securities, of
companies that may be the subject of the transactions contemplated by this
Commitment Letter or otherwise relate to the Subject Companies.

You acknowledge and agree that in connection with all
elements of each transaction contemplated under this Commitment Letter and the
Fee Letter (i) neither Wells Fargo nor any of its affiliates has assumed
any advisory responsibility or any other obligation in favor of you or any of
the Credit Parties except the obligations expressly provided for under this
Commitment Letter and the Fee Letter and (ii) Wells Fargo and its
affiliates, on the one hand, and you and the Credit Parties, on the other hand,
have an arms-length business relationship that does not directly or indirectly
give rise to, nor do you or any of the Credit Parties rely on, any fiduciary
duty on the part of Wells Fargo or any of its affiliates.

This Commitment Letter and the Fee Letter are intended
solely for your benefit, and nothing in this Commitment Letter or the Fee
Letter, express or implied, shall give any person other than the parties hereto
any beneficial or legal right, remedy or claim hereunder. Neither this
Commitment Letter nor the Fee Letter is assignable by you, and neither may be
relied upon by any other person or entity. Each of this Commitment Letter and
the Fee Letter is confidential and shall not be disclosed by any of the parties
hereto to any person other than such party’s accountants, attorneys and other
advisors, and, in the case of Wells Fargo, its affiliates and prospective
Lenders, purchasers and assignees, and then only on a confidential basis and in
connection with the Transaction and the related transactions contemplated
herein. Any disclosure to an advisor may be made for the sole purpose of
evaluating and advising on the offer of financing made in this Commitment
Letter and may not be used by such advisor in formulating any offer of
financing by such advisor or an affiliate. Additionally, any of the parties
hereto may make such disclosures of this Commitment Letter as are required by
regulatory authority, law or judicial process or as may be required or
appropriate in response to any summons or subpoena or in connection with any litigation,
provided that such party will use its commercially reasonable efforts to notify
the other parties hereto of any such disclosure prior to making such
disclosure. We hereby consent to your disclosure of this Commitment Letter (but
not the Fee Letter) on a confidential basis to the Credit Parties and their
financial and legal advisors for their use in connection with their evaluation
of your proposal for the Transaction. If this Commitment Letter and the Fee
Letter are not accepted by you as provided for below, you agree to use
commercially reasonable efforts to return this Commitment Letter and the Fee
Letter (and any copies hereof and thereof) to the undersigned or confirm to the
undersigned that they have been destroyed.

You hereby agree that upon consummation of the
Transaction, Wells Fargo or any of its affiliates may place customary
“tombstone” advertisements (which may include any of your trade names or
corporate logos) in publications of its choice at its own expense. In addition,
you agree that Wells Fargo or any of its affiliates may disclose information
about the transaction to market data collectors and similar service providers
to the financing community.

Wells Fargo hereby notifies you that pursuant to the
requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed
into law October 26, 2001) (the “Act”), Lenders are required to
obtain, verify and record information that identifies each Credit Party, which 

 4
 

 

information includes the name and address of each
Credit Party and other information that will allow Lenders, as applicable, to
identify such Credit Party in accordance with the Act.

Our offer will terminate on July 7, 2006, unless
on or before that date you sign and return an enclosed counterpart of this
Commitment Letter and the Fee Letter to Wells Fargo at our address provided
above, to the attention of the person signing this letter on behalf of Wells
Fargo. The commitments herein provided for will also expire at the earliest
of:  (i) the termination of the
share purchase agreement (or any other analogous agreement) entered into in
connection with the Acquisition (the “SPA”); (ii) the closing of
the Transaction without the use of the Senior Credit Facilities; or
(iii) the close of business on September 1, 2006, if the closing of
the Transaction has not occurred by such time; provided, however,
that any term or provision hereof to the contrary notwithstanding all of your
obligations hereunder in respect of indemnification, confidentiality and fee
and expense reimbursement shall survive any termination of the commitments
pursuant to this paragraph.

THIS COMMITMENT LETTER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. Each
of the undersigned parties hereby knowingly, voluntarily and intentionally
waives any rights it may have to a trial by jury in respect of any litigation
based hereon, or arising out of or in connection with, this Commitment Letter
and the Fee Letter, and any course of conduct, course of dealing, statements (whether
oral or written) or actions of any of the undersigned parties in connection
herewith or therewith. The parties hereto submit to the nonexclusive
jurisdiction of the Federal and New York State courts located in the City of
New York in connection with any dispute related to this Commitment Letter, the
Fee Letter or any of the matters contemplated hereby or thereby. This
Commitment Letter and the Fee Letter constitute the entire understanding among
the parties hereto with respect to the subject matter hereof and replace and
supersede all prior agreements and understandings, both written and oral,
between the parties hereto with respect to the subject matter hereof. This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by each party hereto. This Commitment Letter may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.

[Remainder of
page intentionally left blank]

 

 5

 

 

 

We appreciate having been given the opportunity by you
to be involved in this transaction.

	
  ,

  	
   

  	
  Very truly yours

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ S. Michael St. Geme

  
	
   

  	
  Name:

  	
  S. Michael St. Geme

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 

	
  AGREED AND ACCEPTED

  	
   

  
	
  this 6th day of July, 2006

  	
   

  
	
   

  	
   

  
	
  FTD, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Becky Sheehan

  	
   

  
	
  Name:

  	
  Becky Sheehan

  	
   

  
	
  Title:

  	
  Chief Financial Officer

  	
   

  

 

 

 

ANNEX A

SUMMARY OF TERMS

SENIOR SECURED CREDIT FACILITIES

The following summarizes
selected terms of certain senior secured credit facilities (the “Senior
Credit Facilities”) to be utilized by FTD, Inc. in connection with the
proposed acquisition of all or substantially all of the outstanding shares (the
“Acquisition”) of Interflora Holdings Limited (“Interflora”), the
refinancing of certain indebtedness and the payment of related fees and
expenses.

This Summary of Terms is
intended merely as an outline of the material terms of the Senior Credit
Facilities. It does not include descriptions of all of the terms and other
provisions that are to be contained in the definitive documentation relating to
the Senior Credit Facilities and it is not intended to limit the scope of
discussion and negotiation of any matters not inconsistent with the specific
matters set forth herein. All terms defined in the commitment letter (the “Commitment
Letter”) to which this Summary of Terms is attached and not otherwise
defined herein shall have the same meanings when used herein.

	
  Borrower, Parent:

  	
   

  	
  FTD, Inc. (“Company” or “FTD”). The Company is
  a wholly-owned subsidiary of FTD Group, Inc. (“Parent”).

  
	
   

  	
   

  	
   

  
	
  Guarantors:

  	
   

  	
  The Parent, the Company and all other existing and
  future subsidiaries of the Borrower (the “Guarantors” and, together with the
  Borrower, the “Credit Parties”); provided, however, that non-U.S.
  subsidiaries shall not be required to deliver guaranties.

  
	
   

  	
   

  	
   

  
	
  Sole Lead Arranger, Book Manager and Administrative
  Agent for the Lenders:

  	
   

  	
  Wells Fargo (the “Lead Arranger” and “Administrative
  Agent”).

  
	
   

  	
   

  	
   

  
	
  Syndication Agent and/or Documentation Agent:

  	
   

  	
  At the Lead Arranger’s option, financial
  institutions to be identified by the Lead Arranger which are acceptable to
  the Borrower and the Lead Arranger (the “Syndication Agent” and the
  “Documentation Agent,” respectively, and together with the Administrative
  Agent, the “Agents”).

  
	
   

  	
   

  	
   

  
	
  Lenders:

  	
   

  	
  Wells Fargo and a syndicate of financial
  institutions and other accredited investors (the “Lenders”).

  
	
   

  	
   

  	
   

  
	
  Closing Date:

  	
   

  	
  The date the initial loans are made under the Senior
  Credit Facilities.

  
	
   

  	
   

  	
   

  

 A-1
 

 

 

	
  Type and Amount/
  Alternative Currencies:

  	
   

  	
  The Senior Credit Facilities shall consist of the Term
  Loan Facility and the Revolving Credit Facility.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Term Loan Facility. The Term Loans
  will have a final maturity date of seven years after the Closing Date and be
  in an original principal amount of up to $150,000,000. Quarterly amortization
  will be required in aggregate annual amounts equal to 1% of the original
  aggregate principal amount of the Term Loans with the balance payable on the
  maturity date. The Term Loan Facility will be made available in a single
  borrowing on the Closing Date. Once repaid, the Term Loans made under the
  Term Loan Facility may not be reborrowed.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Revolving Credit Facility. The
  Revolving Credit Facility will mature six years after the Closing Date and be
  in an original principal amount of up to $75,000,000 under which revolving
  loans may be made and under which letters of credit may be issued up to a
  sublimit in an amount equal to (a) up to $20,000,000 for general
  corporate purposes plus (b) up to an additional $40,000,000 (a portion
  of which, to the extent necessary under the SPA, to be available for letters
  of credit with tenors of up to two years) solely for the purpose of
  supporting bank guaranties of the loan notes of Parent and UK Newco
  evidencing deferred purchase price obligations under the SPA. A portion of the
  Revolving Credit Facility in an amount to be agreed upon shall be made
  available as a swingline facility. Borrowings (including the face amount of
  outstanding letters of credit) of up to $50,000,000 under the Revolving
  Credit Facility may be made on the Closing Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Alternative Currencies: A portion
  of the Senior Credit Facilities in an aggregate principal amount to be
  determined may be made available to Company in Euros, Pounds Sterling and
  U.S. dollars.

  
	
   

  	
   

  	
   

  
	
  Purpose:

  	
   

  	
  The Senior Credit Facilities will be used to finance
  the Acquisition, refinance certain existing indebtedness and pay certain
  related fees and expenses. In addition, the Revolving Credit Facility will
  provide for the working capital requirements and other corporate purposes of
  the Credit Parties after the consummation of the Transaction. As used herein,
  “Transaction” shall refer to the Acquisition, refinancing of existing
  indebtedness and fee and expense payments.

  
	
   

  	
   

  	
   

  

 A-2
 

 

 

	
  Security:

  	
   

  	
  The Senior Credit Facilities will be secured by
  first priority perfected liens on all existing and after-acquired property
  (tangible and intangible) of the Borrower and the Guarantors, including
  without limitation all accounts receivable, inventory, equipment,
  intellectual property and other personal property, and all fee-owned real
  property, whether owned or leased, and a pledge of the capital stock of the
  Borrower and its subsidiaries, subject in each case to such exceptions as may
  be agreed upon (the “Collateral”); provided, however, that no more
  than 66% of the equity interests of non-U.S. subsidiaries will be required to
  be pledged as security and no non-U.S. subsidiary will be required to pledge
  capital stock of any subsidiary. No appraisals, title insurance or surveys
  will be required with respect to real property mortgages.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The foregoing security shall ratably secure the
  Senior Credit Facilities and any permitted interest rate swap or similar
  hedging arrangements between the Credit Parties and a Lender or its
  affiliates under the Senior Credit Facilities. Negative pledge on all assets
  of the Credit Parties, subject to customary permitted liens to be agreed
  upon.

  
	
   

  	
   

  	
   

  
	
  Interest Rates:

  	
   

  	
  All amounts outstanding under the Senior Credit
  Facilities shall bear interest, at the Borrower’s option, at the Base Rate or
  at the reserve adjusted LIBOR Rate plus, in each case, an applicable margin
  as set forth in Schedule I attached hereto.

  
	
   

  	
   

  	
   

  
	
  Interest Payments:

  	
   

  	
  Quarterly for Base Rate Loans; on the last day of
  selected interest periods (which shall be one, two, three and six months) for
  LIBOR Loans (and at the end of every three months, in the case of interest
  periods of longer than three months); and upon prepayment, in each case
  payable in arrears and computed on the basis of a 360-day year;
  provided that interest on Base Rate Loans shall be calculated based upon
  365/366 day year for actual days elapsed.

  
	
   

  	
   

  	
   

  
	
  Letter of Credit Fees:

  	
   

  	
  A letter of credit fee equal to the applicable
  margin for LIBOR Loans under the Revolving Credit Facility, which shall be
  shared by all Lenders with commitments under the Revolving Credit Facility,
  and a fronting fee equal to the greater of (a) 0.25% per annum and
  (b) $500, which shall be retained by the Lender issuing the letter of
  credit, in each case based upon the applicable percentage multiplied by the
  amount available from time to time for drawing under such letter of credit
  and payable quarterly in arrears. Customary drawing and amendment fees will
  be charged by each issuing Lender.

  
	
   

  	
   

  	
   

  

 A-3
 

 

 

	
  Commitment Fees:

  	
   

  	
  Commitment fees equal to a percentage per annum as
  set forth in Schedule I attached hereto (the “commitment fee
  percentage”) times the daily average unused portion of the Revolving Credit
  Facility shall accrue from the Closing Date and shall be computed on the
  basis of a 360-day year and payable quarterly in arrears and upon the
  maturity or termination of the Revolving Credit Facility.

  
	
   

  	
   

  	
   

  
	
  Voluntary Prepayments and Commitment Reductions:

  	
   

  	
  The Senior Credit Facilities may be prepaid in whole
  or in part without premium or penalty (LIBOR Loans prepayable only on the
  last days of related interest periods or upon payment of any breakage costs)
  and the Lenders’ commitments relative thereto reduced or terminated upon such
  notice and in such amounts as may be agreed upon. Voluntary prepayments of
  the Term Loan Facility shall be applied to the remaining scheduled
  installments thereof on a pro rata basis.

  
	
   

  	
   

  	
   

  
	
  Mandatory Prepayments and Commitment Reductions:

  	
   

  	
  The Senior Credit Facilities will be prepaid by an
  amount equal to: (i) 100% of the net cash proceeds of all asset
  dispositions by the Credit Parties; (ii) 100% of the net cash proceeds
  from the issuance of debt by the Credit Parties; (iii) 50% (which
  percentage shall be reduced if the ratio of Total Debt (which shall include
  the face amount of outstanding letters of credit) to EBITDA is at a level to
  be determined) of the net cash proceeds from the issuance of equity by the
  Credit Parties (excluding equity contributed by the Sponsor); and
  (iv) 50% of Excess Cash Flow (to be defined) for each fiscal year
  (beginning with the fiscal year ending June 30, 2007), in which the
  ratio of Total Debt (which shall include the face amount of outstanding
  letters of credit) to EBITDA on the last day thereof is greater than or equal
  to 3.00 to 1.00. The foregoing mandatory prepayments will be subject to
  exceptions no less favorable to the Company than those contained in the
  Company’s Credit Agreement dated as of February 24, 2004, as amended (the
  “Existing Credit Agreement”).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All such amounts shall be applied first to the
  prepayment of the Term Loan Facility and thereafter to the prepayment of the
  Revolving Credit Facility and the reduction of the commitments thereunder.
  All such mandatory prepayments of the Term Loan Facility shall be applied to
  the remaining scheduled installments thereof in a manner to be agreed upon.

  
	
   

  	
   

  	
   

  
	
  Representations and Warranties:

  	
   

  	
  Substantially the same as, and no less favorable to
  the Company than, those contained in the Existing Credit Agreement.

  
	
   

  	
   

  	
   

  

 A-4
 

 

 

	
  Covenants:

  	
   

  	
  Substantially the same as, and no less favorable to
  the Company than, those contained in the Existing Credit Agreement. Financial
  performance covenants will be a minimum fixed charge coverage test and a
  maximum total leverage test. Negative covenants shall permit Parent and its
  subsidiaries to redeem the loan notes contemplated under the heading
  “Existing Debt” in Schedule II attached hereto with the proceeds of revolving
  loans or other available funds when such loan notes become redeemable.

  
	
   

  	
   

  	
   

  
	
  Events of Default:

  	
   

  	
  Substantially the same as, and no less favorable to
  the Company than, those contained in the Existing Credit Agreement.

  
	
   

  	
   

  	
   

  
	
  Conditions Precedent to Initial Funding:

  	
   

  	
  The Borrower shall have satisfied the conditions set
  forth in Schedule II attached hereto.

  
	
   

  	
   

  	
   

  
	
  Conditions to All Borrowings:

  	
   

  	
  In addition to the conditions precedent to the
  initial funding of the Senior Credit Facilities described in Schedule II
  attached hereto, the conditions to all borrowings will include requirements
  relating to prior written notice of borrowing, the accuracy of
  representations and warranties, and the absence of any event of default or
  potential event of default.

  
	
   

  	
   

  	
   

  
	
  Indemnification:

  	
   

  	
  The Borrower shall indemnify the Lead Arranger,
  Agents, each Lender (including Wells Fargo) and each of their respective
  affiliates, directors, officers, agents, attorneys and employees from and
  against any losses, claims, damages, liabilities and other expenses in a
  manner customary for financings of this type.

  
	
   

  	
   

  	
   

  
	
  Assignments/ Participations:

  	
   

  	
  The Lenders may assign all or in acceptable minimum
  amounts any part of their shares of the Senior Credit Facilities to their
  affiliates, to other Lenders, or to one or more financial institutions or
  other accredited investors that are Eligible Assignees (to be defined) which
  are acceptable to the Borrower (unless an event of default has occurred and
  is continuing) and the Administrative Agent, such consents not to be unreasonably
  withheld. The Lenders will have the right to sell participations, subject to
  customary limitations on voting rights, in their shares of the Senior Credit
  Facilities.

  
	
   

  	
   

  	
   

  

 A-5
 

 

 

	
  Waivers and
  Amendments:

  	
   

  	
  Amendments and waivers will require the approval of
  the Lenders holding in the aggregate more than 50% of the loans and
  commitments under the Senior Credit Facilities provided that (i) the
  consent of each Lender directly affected thereby shall be required for
  (a) increases in the commitment of such Lender, (b) reductions of
  principal, interest or fees, (c) extensions of final and interim
  scheduled maturities or times for payment of interest or fees,
  (d) releases of all or substantially all the Collateral and (e) releases
  of all or substantially all of the Guarantors, and (ii) the consent of
  the Lenders holding in the aggregate more than 50% of the loans and
  commitments of an affected class of the Lenders shall be required for changes
  in mandatory or voluntary prepayments or commitment reductions which
  disproportionately disadvantage such class.

  
	
   

  	
   

  	
   

  
	
  Taxes, Reserve Requirements and Indemnities:

  	
   

  	
  All payments are to be made free and clear of any
  present or future taxes (other than franchise taxes and taxes on overall net
  income), imposts, assessments, withholdings, or other deductions whatsoever.
  Foreign Lenders shall furnish to the Administrative Agent (for delivery to
  the Borrower) appropriate certificates or other evidence of exemption from
  U.S. federal income tax withholding. The Borrower shall indemnify the Lenders
  against all increased costs of capital resulting from reserve requirements or
  otherwise imposed, in each case subject to customary increased costs, capital
  adequacy and similar provisions.

  
	
   

  	
   

  	
   

  
	
  Governing Law and Jurisdiction:

  	
   

  	
  The Borrower will submit to the non-exclusive
  jurisdiction and venue of the federal and state courts of the State of New
  York and will waive any right to trial by jury. New York law shall govern the
  definitive loan documents.

  
	
   

  	
   

  	
   

  
	
  Lead Arranger’s and Administrative Agent’s Counsel:

  	
   

  	
  O’Melveny & Myers LLP.

  

 

 A-6

 

 

SCHEDULE I

INTEREST RATES AND FEES

Subject to the provisions of the Commitment Letter to
which this Schedule I is attached, the initial applicable margin for LIBOR
Loans and Base Rate Loans shall be as set forth below. 

	
  Interest Rates:

  	
   

  	
  The applicable margins for the Revolving Credit
  Facility and the applicable commitment fee percentage shall be determined on
  the basis of the Company’s Total Debt to EBITDA Ratio based on the following
  table; provided that, for the first two full fiscal quarters following the
  Closing Date, the applicable margin for the Revolving Credit Facility shall
  be set at 2.250% for LIBOR Rate loans and 1.250% for Base Rate loans and the
  applicable commitment fee percentage shall be set at 0.50%.

  

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Commitment Fee

  
	
  Total Leverage Ratio

  	
   

  	
  LIBOR Margin

  	
   

  	
  Base Rate Margin

  	
   

  	
  Percentage

  
	
  3
  4.50

  	
   

  	
  2.500%

  	
   

  	
  1.500%

  	
   

  	
  0.500%

  
	
  3
  4.00 < 4.50

  	
   

  	
  2.250%

  	
   

  	
  1.250%

  	
   

  	
  0.500%

  
	
  3
  3.50 < 4.00

  	
   

  	
  2.000%

  	
   

  	
  1.000%

  	
   

  	
  0.375%

  
	
  3
  3.00 < 3.50

  	
   

  	
  1.875%

  	
   

  	
  0.875%

  	
   

  	
  0.375%

  
	
  < 3.00

  	
   

  	
  1.750%

  	
   

  	
  0.750%

  	
   

  	
  0.250%

  

 

	
  

  	
   

  	
  The applicable margins for the Term Loans will
  be established on the closing date based on the credit ratings assigned to
  the Term Loan Facility B by Standard & Poor’s Ratings Service
  (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s”),
  in accordance with the following table:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

	
  Credit Ratings (Moody’s/ S&P) 

  	
   

  	
  LIBOR Margin 

  	
   

  	
  Base Margin

  
	
  Ba3 and BB- or higher*

  	
   

  	
   

  	
   

  	
   

  
	
  without negative outlook

  	
   

  	
  1.750%

  	
   

  	
  0.750%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B1 and B+ or lower*

  	
   

  	
   

  	
   

  	
   

  
	
  without negative outlook

  	
   

  	
  2.000%

  	
   

  	
  1.000%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  * (If split rated, the lower of the two ratings will
  prevail.)

  	
   

  	
   

  	
   

  	
   

  

 

 1
 

 

Loans outstanding under the swingline facility shall
bear interest at the rate applicable to loans under the Revolving Credit
Facility which are Base Rate Loans and such outstanding swingline loans shall
not constitute usage of the Revolving Credit Facility for purposes of
calculating the commitment fee.

The terms “Base Rate” and
“reserve adjusted LIBOR Rate” shall have meanings customary and appropriate for
financings of this type, and the basis for calculating accrued interest and the
interest periods for loans bearing interest at the reserve adjusted LIBOR Rate
(“LIBOR Loans”) shall be customary and appropriate for financings of
this type.

After the occurrence and
during the continuation of a payment or bankruptcy event of default, interest
shall accrue at a rate equal to the rate on loans bearing interest at the rate
determined by reference to the Base Rate (“Base Rate Loans”) plus an
additional 2.00% per annum.

 

 2

 

SCHEDULE II

INITIAL CONDITIONS PRECEDENT

Any obligation to make loans under the Senior Credit
Facilities is subject to the satisfaction of the following conditions precedent
(all terms defined in the Term Sheet or in the Commitment Letter to which this
Schedule II is attached and not otherwise defined herein having the same
meanings when used herein):

	
  Transaction Structure
  and Documentation:

  	
   

  	
  The structure utilized to consummate the Transaction
  and the definitive documentation relating thereto (the “Definitive
  Transaction Documents”) shall be in form and substance satisfactory to
  the Lead Arranger. The Definitive Transaction Documents shall be in full
  force and effect and in compliance in all material respects with applicable
  laws and regulations (it being agreed that the draft SPA dated July 3,
  2006 provided to the Administrative Agent, is satisfactory for the purposes
  hereof). All aspects of the Transaction shall be consummated in accordance
  with the Definitive Transaction Documents and no provision of the Definitive
  Transaction Documents shall have been amended, supplemented, waived or
  otherwise modified in any manner which is materially adverse to the Lender
  without the prior written consent of the Lead Arranger.

  
	
   

  	
   

  	
   

  
	
  Senior Credit Facilities Documentation:

  	
   

  	
  The definitive documentation evidencing the Senior
  Credit Facilities (the “Definitive Senior Financing Documents”) shall
  be prepared by counsel to the Lead Arranger, shall be consistent with the
  terms of this Commitment Letter and in form and substance satisfactory to the
  Lead Arranger and the Lenders and shall have been executed and delivered by
  the Credit Parties. Such Definitive Senior Financing Documents shall include
  (i) customary closing documentation, including without limitation legal
  opinions, officers’ certificates, solvency certificates, resolutions,
  corporate and public records, insurance certificates (and related
  endorsements) and the like and (ii) such documentation and actions as
  may be necessary to create a perfected, first priority lien in the Collateral
  described under “Security” in the Term Sheet, subject to customary permitted
  liens to be agreed upon.

  

 

 1
 

 

 

	
  

  	
   

  	
   

  
	
  Existing Debt:

  	
   

  	
  The Refinancing shall have been consummated, all
  existing debt for borrowed money shall have been repaid in full and all
  commitments relating thereto shall have been terminated, and all liens or
  security interests related thereto shall have been terminated or released, in
  each case on terms reasonably satisfactory to the Lead Arranger; provided
  that (i) the Borrower’s existing 7.75% senior subordinated notes in an
  aggregate principal amount not to exceed $170,117,000, (ii) Interflora’s
  existing loan notes in an aggregate principal amount not to exceed 2,900,000
  Pounds Sterling, and (iii) the Parent’s and UK Newco’s loan notes to be
  issued to certain selling shareholders and optionholders as part of the
  Transaction in an aggregate principal amount not to exceed $40,000,000
  representing deferred purchase price obligations to be supported by one or
  more letters of credit to be issued under the Revolving Loan Facility, in
  each case shall be permitted to remain outstanding.

  
	
   

  	
   

  	
   

  
	
  Certain Approvals and Agreements:

  	
   

  	
  All governmental, shareholder and third party
  approvals necessary in connection with the Transaction, the financings
  contemplated hereby and the continuing operations of the business of the
  Credit Parties shall have been obtained and be in full force and effect, and
  all applicable waiting periods shall have expired without any action being
  taken or threatened by any competent authority which would restrain, prevent
  or otherwise impose adverse conditions on the Transaction or the financing
  thereof and no law or regulation shall be applicable which could reasonably
  be expected to have such effect.

  
	
   

  	
   

  	
   

  
	
  Fees and Expenses:

  	
   

  	
  All fees and expenses to be paid on or prior to the
  Closing Date to the Administrative Agent, other Agents, the Lead Arranger and
  the Lenders as set forth in the Commitment Letter, the Fee Letter or otherwise
  shall have been paid in full.

  
	
   

  	
   

  	
   

  
	
  Pro Forma Balance Sheet:

  	
   

  	
  The Borrower shall have agreed to deliver to the
  Lenders not more than 30 days after the Closing Date a pro  forma
  balance sheet of the Credit Parties as of the Closing Date after giving effect
  to the Transaction and the financings contemplated hereby.

  
	
   

  	
   

  	
   

  
	
  Litigation:

  	
   

  	
  There shall not be pending or threatened any action,
  suit, investigation, litigation or proceeding in any court or before any
  arbitrator or governmental instrumentality that could reasonably be expected
  to have a material adverse effect on the Transaction, the Credit Parties, the
  Senior Credit Facilities or any of the other transactions contemplated
  hereby.

  
	
   

  	
   

  	
   

  

 2
 

 

 

	
  Maximum Closing Date
  Leverage Ratio:

  	
   

  	
  On the Closing Date, the Borrower shall deliver to
  the Lead Arranger and the Lenders a Closing Date Certificate signed by the
  Borrower’s chief financial officer, demonstrating in reasonable detail that
  the Borrower’s ratio of Total Debt (to be defined in a mutually agreeable
  manner and to include the face amount of outstanding letters of credit) on
  the Closing Date to Pro Forma Adjusted EBITDA (to be defined in a mutually
  agreeable manner) shall be no more than 4.75 to 1.00.

  

 

 

 3

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