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                                                               EXHIBIT 10.3

                             CELEBRATE EXPRESS, INC.
                        2004 EMPLOYEE STOCK PURCHASE PLAN

      1.    ESTABLISHMENT OF PLAN.

      Celebrate Express, Inc. (the "COMPANY") proposes to grant options for
purchase of the Company's Common Stock (the "COMMON STOCK") to eligible
employees of the Company and its Participating Subsidiaries (as hereinafter
defined) pursuant to this 2004 Employee Stock Purchase Plan (this "PLAN"). For
the purposes of this Plan, "Parent Corporation" and "Subsidiary" shall have the
same meanings as "parent corporation" and "subsidiary corporation" in Sections
424(e) and 424(f), respectively, of the Internal Revenue Code of 1986, as
amended (the "CODE"). "Participating Subsidiaries" are Parent Corporations or
Subsidiaries that the Board of Directors of the Company (the "BOARD") designates
from time to time as corporations that shall participate in this Plan. The
Company intends this Plan to qualify as an "employee stock purchase plan" under
Section 423 of the Code (including any amendments to or replacements of such
Section), and this Plan shall be so construed. Any term not expressly defined in
this Plan but defined for purposes of Section 423 of the Code shall have the
same definition herein.

      2.    NUMBER OF SHARES.

      The total number of shares of Common Stock initially reserved and
available for issuance pursuant to this Plan shall be 200,000 (the "SHARE
LIMIT"), subject to adjustments effected in accordance with Section 15 of this
Plan. Notwithstanding the foregoing and subject to Section 15, the Share Limit
shall automatically increase on June 1, 2006, and June 1 of each year
thereafter until and including January 1, 2010 (unless the Plan is terminated
earlier in accordance with the provisions hereof) by the "ANNUAL INCREASE" which
shall consist of a number of shares equal to the lesser of (i) 200,000, (ii) two
percent (2%) of the number of shares of common stock of the Company issued and
outstanding on the immediately preceding December 31, or (iii) a lesser number
determined by the Committee, (as hereinafter defined) prior to such January 1;
provided, however, that the total number of shares available for issuance under
the Plan shall not exceed the initial Share Limit plus the maximum potential
cumulative Annual Increase. The Board may at such time as it deems necessary
implement a substantially similar plan for employees resident outside the United
States ("FOREIGN PLAN") in which case the Share Limit shall be reduced by the
number of shares issued under the Foreign Plan. Shares issued under this Plan
may consist, in whole or in part, of authorized and unissued shares or treasury
shares reacquired in private transactions or open market purchases, but all
shares issued under this Plan and the Foreign Plan shall be counted against the
Share Limit.

      3.    PURPOSE.

      The purpose of this Plan is to provide eligible employees of the Company
and Participating Subsidiaries with a convenient means of acquiring an equity
interest in the Company through payroll deductions, to enhance such employees'
sense of participation in the affairs of the Company and Participating
Subsidiaries, and to provide an incentive for continued employment. For the
purposes of this Plan, "employee" shall mean any individual who is an employee
of the Company or a Participating Subsidiary. Whether an individual qualifies as
an employee shall be determined by the Committee, in its sole discretion.

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The Committee shall be guided by the provisions of Treasury Regulation Section
1.421-7 and Section 3401(c) of the Code and the Treasury Regulations thereunder,
with the intent that the Plan cover all "employees" within the meaning of those
provisions other than those who are not eligible to participate in the Plan;
provided, however, that any determinations regarding whether an individual is an
"employee" shall be prospective only, unless otherwise determined by the
Committee (as hereinafter defined). Unless the Committee makes a contrary
determination, the employees of the Company shall, for all purposes of this
Plan, be those individuals who are carried as employees of the Company or a
Participating Subsidiary for regular payroll purposes or are on a leave of
absence for not more than 90 days. Any inquiries regarding eligibility to
participate in the Plan shall be directed to the Committee, whose decision shall
be final.

      4.    ADMINISTRATION.

      This Plan shall be administered by the Compensation Committee of the Board
(the "COMMITTEE"). Subject to the provisions of this Plan and the limitations of
Section 423 of the Code or any successor provision in the Code, all questions of
interpretation or application of this Plan shall be determined by the Committee
and its decisions shall be final and binding upon all participants. Members of
the Committee shall receive no compensation for their services in connection
with the administration of this Plan, other than standard fees as established
from time to time by the Board for services rendered by Board members serving on
Board committees. All expenses incurred in connection with the administration of
this Plan shall be paid by the Company.

      5.    ELIGIBILITY.

      Any employee of the Company or the Participating Subsidiaries is eligible
to participate in an Offering Period (as hereinafter defined) under this Plan
except the following:

            (a)   employees who are not employed by the Company or a
Participating Subsidiary prior to the beginning of such Offering Period or prior
to such other time period as specified by the Committee, except that employees
who are employed on the effective date of the registration statement filed by
the Company with the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended (the "SECURITIES ACT") registering the
initial public offering of the Company's Common Stock shall be eligible to
participate in the first Offering Period under the Plan;

            (b)   employees who are customarily employed for twenty (20) hours
or less per week;

            (c)   employees who are customarily employed for five (5) months or
less in a calendar year;

            (d)   employees who, together with any other person whose stock
would be attributed to such employee pursuant to Section 424(d) of the Code, own
stock or hold options to purchase stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the Company
or any of its Participating Subsidiaries or who, as a result of being granted an
option under this Plan with respect to such Offering Period, would own stock

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or hold options to purchase stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or
any of its Participating Subsidiaries;

            (e)   individuals who provide services to the Company or any of its
Participating Subsidiaries as independent contractors who are reclassified as
common law employees for any reason except for federal income and employment tax
purposes; and

            (f)   employees who reside in countries for whom such employees'
participation in the Plan would result in a violation under any corporate or
securities laws of such country of residence.

      6.    OFFERING DATES.

      Except as otherwise provided below, the offering periods of this Plan
(each, an "OFFERING PERIOD") shall be of six (6) months duration commencing on
April 1 and October 1 of each year and ending on March 31 and September 30 of
each year; provided, however, that the first such Offering Period shall commence
on the first business day on which price quotations for the Company's Common
Stock are available on the Nasdaq National Market (the "FIRST OFFERING DATE")
and shall end on March 31, 2005 (the "FIRST OFFERING PERIOD") and there will
therefore be no Offering Period commencing on October 1, 2004. The first
business day of each Offering Period is referred to as the "OFFERING DATE." The
last business day of each Offering Period is referred to as the "PURCHASE DATE."
The Committee shall have the power to change the Offering Dates, the Purchase
Dates and the duration of Offering Periods without shareholder approval if such
change is announced prior to the relevant Offering Period or prior to such other
time period as specified by the Committee; provided, however, that no Offering
Period shall have a duration of more than twenty-seven (27) months.

      7.    PARTICIPATION IN THIS PLAN.

      Eligible employees may become participants in an Offering Period under
this Plan on the Offering Date, after satisfying the eligibility requirements,
by delivering a subscription agreement to the Company prior to such Offering
Date, or such other time period as specified by the Committee; provided,
however, that all eligible employees employed on the First Offering Date shall
be automatically enrolled in the First Offering Period. Notwithstanding the
foregoing, (i) after the filing of an effective Registration Statement pursuant
to Form S-8 for shares under the Plan, an eligible employee may elect to
decrease the number of shares of Common Stock that such employee would otherwise
be permitted to purchase pursuant to Section 8 below for the First Offering
Period and/or may elect or may as a condition to remaining in the Plan be
required to elect to purchase shares of Common Stock for the First Offering
Period through payroll deductions by delivering a subscription agreement to the
Company within thirty (30) days following the First Offering Date; and (ii) the
Committee may set a later time for delivering the subscription agreement
authorizing payroll deductions for all eligible employees with respect to a
given Offering Period. Except as provided above with respect to the First
Offering Period, an eligible employee who does not deliver a subscription
agreement to the Company after becoming eligible to participate in an Offering
Period shall not participate in that Offering Period or any subsequent Offering
Period unless such employee enrolls in this Plan by delivering a subscription
agreement with the Company prior to such Offering Period, or such other time
period as specified by the Committee. Once an employee becomes a participant in
an Offering Period by filing a subscription agreement, such employee shall
automatically participate in the Offering Period commencing immediately
following the last day of the prior Offering Period unless the employee
withdraws or is deemed to withdraw from this Plan or terminates further
participation in the Offering Period as set forth in Section 12 below. Such
participant is not required to file any additional subscription agreement in
order to continue participation in this Plan.

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      8.    GRANT OF OPTION ON ENROLLMENT.

      Enrollment by an eligible employee in this Plan with respect to an
Offering Period shall constitute the grant (as of the Offering Date) by the
Company to such employee of an option to purchase on the Purchase Date up to
that number of shares of Common Stock determined by a fraction, the numerator of
which is the amount accumulated in such employee's payroll deduction account
during such Offering Period and the denominator of which is the lower of (i)
eighty-five percent (85%) of the fair market value of a share of the Company's
Common Stock on the Offering Date (but in no event less than the par value of a
share of the Company's Common Stock), or (ii) eighty-five percent (85%) of the
fair market value of a share of Common Stock on the Purchase Date (but in no
event less than the par value of a share of the Company's Common Stock);
provided, however, that for the First Offering Period the numerator shall be
fifteen percent (15%) of the eligible employee's compensation for such Offering
Period, unless the employee otherwise elects to decrease the percentage of such
employee's compensation as provided in Section 7 above; and provided, further,
that the number of shares of Common Stock subject to any option granted pursuant
to this Plan shall not exceed the lesser of (x) the maximum number of shares set
by the Committee pursuant to Section 11(c) below with respect to the applicable
Purchase Date, or (y) the maximum number of shares which may be purchased
pursuant to Section 11(b) below with respect to the applicable Purchase Date.
The fair market value of a share of the Company's Common Stock shall be
determined as provided in Section 9 below. Notwithstanding the foregoing, in the
event of a change in generally accepted accounting principles which would
adversely affect the accounting treatment applicable to any current Offering
Period, the Committee may make such changes to the number of Shares purchased at
the end of the Offering Period or the purchase price paid as are allowable under
generally accepted accounting principles and as it deems necessary in the sole
discretion of the Committee to avoid or minimize adverse accounting
consequences.

      9.    PURCHASE PRICE.

      The purchase price per share at which a share of Common Stock shall be
sold in any Offering Period shall be eighty-five percent (85%) of the lesser of:

            (a)   the fair market value on the Offering Date; or

            (b)   the fair market value on the Purchase Date.

      For the purposes of this Plan, the term "FAIR MARKET VALUE" means, as of
any date, the value of a share of the Company's Common Stock determined as
follows:

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            (a)   if such Common Stock is then quoted on the Nasdaq National
Market, its closing price on the Nasdaq National Market on the date of
determination as reported in The Wall Street Journal;

            (b)   if such Common Stock is publicly traded and is then listed on
a national securities exchange, its closing price on the date of determination
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading as reported in The Wall Street Journal; or

            (c)   if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on the date
of determination as reported in The Wall Street Journal.

      Notwithstanding the foregoing, for purposes of the First Offering Date,
fair market value shall be the price per share at which shares of the Company's
Common Stock are initially offered for sale to the public by the Company's
underwriters in the initial public offering of the Company's Common Stock
pursuant to a registration statement filed with the SEC under the Securities
Act.

      10.   PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE
            OF SHARES.

            (a)   The purchase price of the shares is accumulated by regular
payroll deductions made during each Offering Period; provided, however, that for
the First Offering Period, the purchase price of the shares shall be paid by the
eligible employee in cash on the Purchase Date for the First Offering Period
unless the eligible employee elects to purchase such shares through payroll
deductions, after the filing of an effective Form S-8 registration statement
pursuant to the second sentence of Section 7 above, within thirty (30) days
following the First Offering Date. The deductions are made as a percentage of
the participant's compensation in one percent (1%) increments, not less than one
percent (1%), nor greater than fifteen percent (15%), or such lower limit set by
the Committee. Compensation shall mean all W-2 cash compensation, including, but
not limited to, base salary, wages, bonuses, incentive compensation,
commissions, overtime and shift premiums, plus draws against commissions;
provided, however that compensation shall not include any long term disability
or workmens compensation payments, car allowances, relocation payments or
expense reimbursements; and further provided, however, that for purposes of
determining a participant's compensation, any election by such participant to
reduce his or her regular cash remuneration under Sections 125 or 401(k) of the
Code shall be treated as if the participant did not make such election. Payroll
deductions shall commence on the first payday of the Offering Period and shall
continue to the end of the Offering Period unless sooner altered or terminated
as provided in this Plan.

            (b)   A participant may increase or decrease the rate of payroll
deductions during an Offering Period by filing with the Company a new
authorization for payroll deductions, in which case the new rate shall become
effective for the next payroll period commencing after the Company's receipt of
the authorization and shall continue for the remainder of the Offering Period
unless changed as described below. Such change in the rate of payroll deductions
may be made at any time during an Offering Period, but not more than one (1)
change to increase and one (1) change to decrease deductions may be made
effective during any Purchase Period; provided, however, that a change to
decrease payroll deductions to zero shall be governed by Section 10(c) below. A
participant may increase or decrease the rate of payroll deductions for any
subsequent Offering Period by filing with the Company a new authorization for
payroll deductions prior to the beginning of such Offering Period, or such other
time period as specified by the Committee.

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            (c)   A participant may reduce his or her payroll deduction
percentage to zero during an Offering Period by filing with the Company a
request for cessation of payroll deductions. Such reduction shall be effective
beginning with the next payroll period after the Company's receipt of the
request and no further payroll deductions shall be made for the duration of the
Offering Period. Payroll deductions credited to the participant's account prior
to the effective date of the request shall be used to purchase shares of Common
Stock of the Company in accordance with Section 10(e) below. A participant may
not resume making payroll deductions during the Offering Period in which he or
she reduced his or her payroll deductions to zero.

            (d)   All payroll deductions made for a participant are credited to
his or her account under this Plan and are deposited with the general funds of
the Company. No interest accrues on the payroll deductions. All payroll
deductions received or held by the Company may be used by the Company for any
corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.

            (e)   On each Purchase Date, for so long as this Plan remains in
effect and provided that the participant has not submitted a signed and
completed withdrawal form before that date, which notifies the Company that the
participant wishes to withdraw from that Offering Period under this Plan and
have all payroll deductions accumulated in the account maintained on behalf of
the participant, as of that date returned to the participant, the Company shall
apply the funds then in the participant's account to the purchase of whole
shares of Common Stock reserved under the option granted to such participant
with respect to the Offering Period to the extent that such option is
exercisable on the Purchase Date. The purchase price per share shall be as
specified in Section 9 of this Plan. Any cash remaining in a participant's
account after such purchase of shares shall be refunded to such participant in
cash, without interest; provided, however, that any amount remaining in such
participant's account on a Purchase Date which is less than the amount necessary
to purchase a full share of Common Stock shall be carried forward, without
interest, into the next Offering Period, as the case may be. In the event that
this Plan has been oversubscribed, all funds not used to purchase shares on the
Purchase Date shall be returned to the participant, without interest. No Common
Stock shall be purchased on a Purchase Date on behalf of any employee whose
participation in this Plan has terminated prior to such Purchase Date.

            (f)   As soon as practicable after the Purchase Date, the Company
shall issue shares for the participant's benefit representing the shares
purchased upon exercise of his or her option.

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            (g)   During a participant's lifetime, his or her option to purchase
shares hereunder is exercisable only by him or her. The participant shall have
no interest or voting rights in shares covered by his or her option until such
option has been exercised.

      11.   LIMITATIONS ON SHARES TO BE PURCHASED.

            (a)   No participant shall be entitled to purchase stock under this
Plan at a rate which, when aggregated with his or her rights to purchase stock
under all other employee stock purchase plans of the Company or any Subsidiary,
exceeds $25,000 in fair market value, determined as of the Offering Date (or
such other limit as may be imposed by the Code) for each calendar year in which
the employee participates in this Plan. The Company shall automatically suspend
the payroll deductions of any participant as necessary to enforce such limit
provided that when the Company automatically resumes such payroll deductions,
the Company must apply the rate in effect immediately prior to such suspension.

            (b)   No participant shall be entitled to purchase more than the
Maximum Share Amount (as defined below) on any Purchase Date. Prior to the
commencement of any Offering Period or prior to such time period as specified by
the Committee, the Committee may, in its sole discretion, specify a maximum
number of shares which may be purchased by any employee at any single Purchase
Date (hereinafter the "MAXIMUM SHARE AMOUNT") or change the Maximum Share
Amount. The initial Maximum Share Amount under the Plan shall be 4,000 shares.
If a new Maximum Share Amount is set, then all participants must be notified of
such Maximum Share Amount prior to the commencement of the next Offering Period.
The Maximum Share Amount shall continue to apply with respect to all succeeding
Offering Periods unless revised by the Committee as set forth above.

            (c)   If the number of shares to be purchased on a Purchase Date by
all employees participating in this Plan exceeds the number of shares then
available for issuance under this Plan, then the Company shall make a pro rata
allocation of the remaining shares in as uniform a manner as shall be reasonably
practicable and as the Committee shall determine to be equitable. In such event,
the Company shall give written notice of such reduction of the number of shares
to be purchased under a participant's option to each participant affected.

            (d)   Any payroll deductions accumulated in a participant's account
which are not used to purchase stock due to the limitations in this Section 11
shall be returned to the participant as soon as practicable after the end of the
applicable Purchase Period, without interest.

      12.   WITHDRAWAL.

            (a)   Each participant may withdraw from an Offering Period under
this Plan by signing and delivering to the Company a written notice to that
effect on a form provided for such purpose. Such withdrawal may be elected at
any time prior to the end of an Offering Period, or such other time period as
specified by the Committee.

            (b)   Upon withdrawal from this Plan, the accumulated payroll
deductions shall be returned to the withdrawn participant, without interest, and
his or her interest in this Plan shall terminate. In the event a participant
voluntarily elects to withdraw from this Plan, he or she may

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not resume his or her participation in this Plan during the same Offering
Period, but he or she may participate in any Offering Period under this Plan
which commences on a date subsequent to such withdrawal by filing a new
authorization for payroll deductions in the same manner as set forth in Section
7 above for initial participation in this Plan.

      13.   TERMINATION OF EMPLOYMENT.

      Termination of a participant's employment for any reason, including
retirement, death or the failure of a participant to remain an eligible employee
of the Company or of a Participating Subsidiary, shall immediately terminate his
or her participation in this Plan. In such event, the payroll deductions
credited to the participant's account shall be returned to him or her or, in the
case of his or her death, to his or her legal representative, without interest.
For purposes of this Section 13, an employee shall not be deemed to have
terminated employment or failed to remain in the continuous employ of the
Company or of a Participating Subsidiary in the case of sick leave, military
leave, or any other leave of absence approved by the Board, provided, however
that such leave is for a period of not more than ninety (90) days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.

      14.   RETURN OF PAYROLL DEDUCTIONS.

      In the event a participant's interest in this Plan is terminated by
withdrawal, termination of employment or otherwise, or in the event this Plan is
terminated by the Board, the Company shall deliver to the participant all
payroll deductions credited to such participant's account. No interest shall
accrue on the payroll deductions of a participant in this Plan.

      15.   CAPITAL CHANGES.

      Subject to any required action by the shareholders of the Company, the
number and type of shares of Common Stock covered by each option under this Plan
which has not yet been exercised and the number and type of shares of Common
Stock which have been authorized for issuance under this Plan, including the
Annual Increase, but have not yet been placed under option (collectively, the
"RESERVES"), as well as the price per share of Common Stock covered by each
option under this Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock of the Company resulting from a stock
split or the payment of a stock dividend (but only on the Common Stock), any
other increase or decrease in the number of issued and outstanding shares of
Common Stock effected without receipt of any consideration by the Company or
other change in the corporate structure or capitalization affecting the
Company's present Common Stock; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Committee, whose determination shall be final, binding and conclusive. Except as
expressly provided herein, no issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option.

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      In the event of the proposed dissolution or liquidation of the Company,
the Offering Period shall terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Committee. The Committee
may, in the exercise of its sole discretion in such instances, declare that this
Plan shall terminate as of a date fixed by the Committee and give each
participant the right to purchase shares under this Plan prior to such
termination. In the event of (i) a merger or consolidation in which the Company
is not the surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in
the shareholders of the Company or their relative stock holdings and the options
under this Plan are assumed, converted or replaced by the successor corporation,
which assumption shall be binding on all participants), (ii) a merger in which
the Company is the surviving corporation but after which the shareholders of the
Company immediately prior to such merger (other than any shareholder that
merges, or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest in
the Company, (iii) the sale of all or substantially all of the assets of the
Company, or (iv) the acquisition, sale, or transfer of more than 50% of the
outstanding shares of the Company by tender offer or similar transaction, the
Plan shall continue with regard to Offering Periods that commenced prior to the
closing of the proposed transaction and shares shall be purchased based on the
Fair Market Value of the surviving corporation's stock on an upcoming Purchase
Date, unless otherwise provided by the Committee.

      The Committee may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, or in the event of the Company being consolidated with or merged into any
other corporation.

      16.   NONASSIGNABILITY.

      Neither payroll deductions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive shares under this
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by the laws of descent and distribution or as provided in Section 23
below) by the participant. Any such attempt at assignment, transfer, pledge or
other disposition shall be void and without effect.

      17.   REPORTS.

      Individual accounts shall be maintained for each participant in this Plan.
Each participant shall receive, as soon as practicable after the end of each
Offering Period, a report of his or her account setting forth the total payroll
deductions accumulated, the number of shares purchased, the per share price
thereof and the remaining cash balance, if any, carried forward to the next
Offering Period.

      18.   NOTICE OF DISPOSITION.

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      Each participant shall notify the Company in writing if the participant
disposes of any of the shares purchased in any Offering Period pursuant to this
Plan if such disposition occurs within two (2) years from the Offering Date or
within one (1) year from the Purchase Date on which such shares were purchased
(the "NOTICE PERIOD"). The Company may, at any time during the Notice Period,
place a legend or legends on any certificate representing shares acquired
pursuant to this Plan requesting the Company's transfer agent to notify the
Company of any transfer of the shares. The obligation of the participant to
provide such notice shall continue notwithstanding the placement of any such
legend on the certificates.

      19.   NO RIGHTS TO CONTINUED EMPLOYMENT.

      Neither this Plan nor the grant of any option hereunder shall confer any
right on any employee to remain in the employ of the Company or any
Participating Subsidiary, or restrict the right of the Company or any
Participating Subsidiary to terminate such employee's employment.

      20.   EQUAL RIGHTS AND PRIVILEGES.

      All eligible employees shall have equal rights and privileges with respect
to this Plan so that this Plan qualifies as an "employee stock purchase plan"
within the meaning of Section 423 or any successor provision of the Code and the
related regulations. Any provision of this Plan which is inconsistent with
Section 423 or any successor provision of the Code shall, without further act or
amendment by the Company, the Committee or the Board, be reformed to comply with
the requirements of Section 423. This Section 20 shall take precedence over all
other provisions in this Plan.

      21.   NOTICES.

      All notices or other communications by a participant to the Company under
or in connection with this Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.

      22.   TERM; SHAREHOLDER APPROVAL.

      After this Plan is adopted by the Board, this Plan shall become effective
on the First Offering Date (as defined above). This Plan shall be approved by
the shareholders of the Company, in any manner permitted by applicable corporate
law, within twelve (12) months before or after the date this Plan is adopted by
the Board. No purchase of shares pursuant to this Plan shall occur prior to such
shareholder approval. This Plan shall continue until the earlier to occur of (a)
termination of this Plan by the Board (which termination may be effected by the
Board at any time), (b) issuance of all of the shares of Common Stock reserved
for issuance under this Plan, or (c) twenty (20) years from the adoption of this
Plan by the Board.

      23.   DESIGNATION OF BENEFICIARY.

            (a)   A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under this Plan in the event of such participant's death subsequent to the end
of an Purchase Period but prior to delivery to him

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of such shares and cash. In addition, a participant may file a written
designation of a beneficiary who is to receive any cash from the participant's
account under this Plan in the event of such participant's death prior to a
Purchase Date.

            (b)   Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under this
Plan who is living at the time of such participant's death, the Company shall
deliver such shares or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver such
shares or cash to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

      24.   CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES.

      Shares shall not be issued with respect to an option unless the exercise
of such option and the issuance and delivery of such shares pursuant thereto
shall comply with all applicable provisions of law, domestic or foreign,
including, without limitation, the Securities Act, the Securities Exchange Act
of 1934, as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange or automated quotation system upon which the
shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

      25.   APPLICABLE LAW.

      The Plan shall be governed by the substantive laws (excluding the conflict
of laws rules) of the State of Washington.

      26.   AMENDMENT OR TERMINATION.

      The Board may at any time amend, terminate or extend the term of this
Plan, except that any such termination cannot affect options previously granted
under this Plan, nor may any amendment make any change in an option previously
granted which would adversely affect the right of any participant, nor may any
amendment be made without approval of the shareholders of the Company obtained
in accordance with Section 22 above within twelve (12) months of the adoption of
such amendment (or earlier if required by Section 22) if such amendment would:

            (a)   increase the number of shares that may be issued under this
Plan; or

            (b)   change the designation of the employees (or class of
employees) eligible for participation in this Plan; or

            (c)   otherwise require shareholder approval under applicable law or
the requirements of any stock exchange or consolidated listing system on which
the Company's stock is then listed.

                                      -11-

<PAGE>

      Notwithstanding the foregoing, the Board may make such amendments to the
Plan as the Board determines to be advisable and which do not cause unfavorable
accounting treatment, including changes with respect to current Offering
Periods, if the continuation of the Plan or any Offering Period would result in
financial accounting treatment for the Plan that is different from the financial
accounting treatment in effect on the date this Plan is adopted by the Board.

                                      -12-

<PAGE>

                             CELEBRATE EXPRESS, INC.

                        2004 EMPLOYEE STOCK PURCHASE PLAN
                             SUBSCRIPTION AGREEMENT

                                                             New Election ______
                                                       Change of Election ______

      1.    I, ________________________, hereby elect to participate in the
Celebrate Express, Inc. 2004 Employee Stock Purchase Plan (the "Plan") for the
Offering Period commencing ______________, ____ , and subscribe to purchase
shares of the Company's Common Stock in accordance with this Subscription
Agreement and the terms of the Plan.

      2.    I elect to have Contributions in the amount of ____% of my
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount must not be less than 1% and not more than 15% of
my Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).

      3.    I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription Agreement. I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into such
account. I understand that all payments made by me shall be accumulated for the
purchase of shares of Common Stock at the applicable purchase price determined
in accordance with the Plan, and that no interest shall accrue on such amounts
at any time. I further understand that, except as otherwise set forth in the
Plan, shares will be purchased for me automatically on the Purchase Date of each
Offering Period unless I become ineligible to continue participating in the Plan
or I otherwise withdraw from the Plan by giving written notice to the Company
for such purpose.

      4.    I understand that I may discontinue at any time prior to the
Purchase Date my participation in the Plan as provided in Section 10 of the
Plan. I understand that I may change the rate of deductions for future Offering
Periods by filing a new Subscription Agreement, and any such change will be
effective as of the beginning of the next Offering Period. In addition, I
acknowledge that, unless I withdraw from the Plan as provided in Section 12 of
the Plan or otherwise become ineligible to participate in the Plan, my election
as set forth above will continue to be effective for each successive Offering
Period.

      5.    I have received a copy of the Company's most recent description of
the Plan and a copy of the complete "Celebrate Express, Inc. 2004 Employee Stock
Purchase Plan." I understand that my participation in the Plan is in all
respects subject to the terms of the Plan, which governs the terms of this
Subscription Agreement.

      6.    Shares purchased for me under the Plan should be issued in the
name(s) of (name of employee or employee and spouse only):

<PAGE>

            _________________________________

            _________________________________

      7.    I understand that this tax summary is only a summary and is subject
to change. I further understand that I should consult a tax advisor concerning
the tax implications of the purchase and sale of stock under the Plan.

      Early Disposition (Prior to Expiration of Holding Periods): I understand
that if I dispose of any shares received by me pursuant to the Plan within 2
years after the Offering Date (the first day of the Offering Period during which
I purchased such shares) or within 1 year after the Purchase Date, I will be
treated for federal income tax purposes as having received ordinary compensation
income at the time of such disposition in an amount equal to the excess of the
fair market value of the shares on the Purchase Date over the price which I paid
for the shares, regardless of whether I disposed of the shares at a price less
than their fair market value at the Purchase Date. The remainder of the gain or
loss, if any, recognized on such disposition will be treated as capital gain or
loss.

      I hereby agree to notify the Company in writing within 30 days after the
date of any such disposition, and I will make adequate provision for federal,
state or other tax withholding obligations, if any, which arise upon the
disposition of the Common Stock. The Company shall be entitled, to the extent
required by applicable law, to withhold from my Compensation any amount
necessary to comply with applicable tax withholding requirements with respect to
the purchase or sale of shares under the Plan.

      Disposition After Holding Periods: If I dispose of such shares at any time
after expiration of the 2-year and 1-year holding periods, I understand that I
will be treated for federal income tax purposes as having received compensation
income only to the extent of an amount equal to the lesser of (a) the excess of
the fair market value of the shares at the time of such disposition over the
purchase price which I paid for the shares under the option, or (b) 15% of the
fair market value of the shares on the Offering Date. The remainder of the gain
or loss, if any, recognized on such disposition will be treated as capital gain
or loss.

      8.    I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.

NAME (print): _________________________

SIGNATURE:    _________________________

SOCIAL SECURITY #: ____________________

DATE: _________________________________

SPOUSE'S SIGNATURE (necessary
if beneficiary is not spouse):

                                      -2-

<PAGE>

___________________________________
(Signature)
___________________________________
(Print name)

                                      -3-

<PAGE>

                             CELEBRATE EXPRESS, INC.

                        2004 EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL

      I, __________________________, hereby elect to withdraw my participation
in the Celebrate Express, Inc. 2004 Employee Stock Purchase Plan (the "Plan")
for the Offering Period that began on _________ ___, _____. This withdrawal
covers all Contributions credited to my account and is effective on the date
designated below.

      I understand that all Contributions credited to my account will be paid to
me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for such Offering Period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during such Offering Period.

      I further understand and agree that I shall be eligible to participate in
succeeding offering periods only by delivering to the Company a new Subscription
agreement.

Dated:___________________

      ___________________________________
      Signature of Employee
      ___________________________________
      Social Security Number

<PAGE>

                             CELEBRATE EXPRESS, INC.

                        2004 EMPLOYEE STOCK PURCHASE PLAN

                             BENEFICIARY DESIGNATION

      In the event of my death, I hereby designate the following as my
beneficiary to receive all payments and shares due to me under the Celebrate
Express, Inc. 2004 Employee Stock Purchase Plan. I understand that my
Beneficiary Designation will be effective upon acknowledgement of receipt by
Celebrate Express, Inc.

BENEFICIARY:

NAME:  (Please print)

_____________________________________       Relationship: __________________

(First) (Middle) (Last)

_____________________________________
 (Address)

_____________________________________

SIGNATURE: _____________________________          DATE: ____________________

Print Name: ____________________________

SOCIAL SECURITY #:______________________

SPOUSE'S SIGNATURE (necessary if beneficiary is not Employee's spouse):

______________________________
(Signature)
______________________________
(Print name)

MAIL OR DELIVER THIS FORM TO:

<PAGE>

             ACKNOWLEDGEMENT OF RECEIPT BY CELEBRATE EXPRESS, INC.:

By: _______________________________ Dated: _____________________
Title:

                                       2<PAGE>

                                                                    EXHIBIT 10.4

[ORIX LOGO]

                           LOAN AND SECURITY AGREEMENT

BORROWER: CELEBRATEEXPRESS.COM, INC., A WASHINGTON CORPORATION
ADDRESS:  11220 120TH AVE. NE
          KIRKLAND, WASHINGTON  98033

DATE: MAY 21, 2004

This Loan and Security Agreement is entered into on the above date between ORIX
Venture Finance LLC, a Delaware limited liability company ("ORIX"), successor in
interest to ORIX USA Corporation, with an address at 151 Lytton Avenue, Palo
Alto, CA 94301, and the borrower named above ("Borrower"), whose chief executive
office is located at the above address ("Borrower's Address"). The Schedule to
this Loan and Security Agreement being signed concurrently (the "Schedule") is
an integral part of this Agreement. (Definitions of certain terms used in this
Agreement are set forth in Section 7 below.)

1.    LOANS.

      1.1 LOANS. Subject to the terms and conditions in this Agreement, ORIX
shall make a loan to Borrower (the "Loan"), in the amount shown on the Schedule.
The Loan shall be evidenced by a Secured Promissory Note made by Borrower to
ORIX, on ORIX's standard form (the "Note") and shall be repayable as therein set
forth, provided that the entire unpaid principal balance of the Loan and any
accrued and unpaid interest thereon shall be due and payable on the Maturity
Date set forth in the Schedule. The Loan may not be repaid and reborrowed.

      1.2 CONDITIONS. The making of the Loan is subject to the satisfaction of
the following conditions precedent, which Borrower agrees to satisfy * : (i) all
filings have been completed that are necessary or advisable to perfect the
security interest of ORIX in the Collateral, including without limitation
filings in the United States Copyright Office and United States Patent and
Trademark Office (subject to the provisions of the Intellectual Property
Security Agreement of even date between Borrower and ORIX), (ii) all documents
relating to this Agreement have been executed and delivered, (iii) ORIX has
confirmed to its satisfaction that there has been no Material Adverse Change
since the date of the last financial statements provided to ORIX, (iv) UCC and
other searches deemed necessary by ORIX have been completed and the results
thereof are satisfactory to ORIX, and (v) all other matters relating to the Loan
have been completed to ORIX's satisfaction.

      *PRIOR TO THE EXECUTION OF THE INITIAL NOTE BY BORROWER

      1.3 INTEREST. The Loan and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement or in another written agreement signed by ORIX
and Borrower. Borrower shall pay interest on the Loan accrued for each month no
later than the 15th day of the following month, and at maturity.

      1.4 FEES. Borrower shall pay ORIX the fees shown on the Schedule, which
are in addition to all interest and other sums payable to ORIX and are not
refundable.

      1.5 LATE FEE. If any payment of accrued interest for any month is not made
by the 15th day of the following month, or if any payment of principal or any
other payment is not made within five Business Days after the date due, Borrower
shall pay ORIX a late payment fee equal to 5% of the amount of such late
payment. The provisions of this paragraph shall not be construed as ORIX's
consent to Borrower's failure to pay any amounts when due, and ORIX's acceptance
of any such late payments shall not restrict ORIX's exercise of any remedies
arising out of any such failure.

2.    SECURITY INTEREST.

      2.1 SECURITY INTEREST. To secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to ORIX a security interest in all
of the following (collectively, the "Collateral"): all right, title and interest
of Borrower in and to the following, whether now owned or hereafter arising or
acquired and wherever located: all Accounts; all Inventory; all Equipment; all
General Intangibles (including without limitation all

                                      -1-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

Intellectual Property and Deposit Accounts); all Investment Property; all Other
Property; and any and all claims, rights and interests in any of the above, and
all guaranties and security for any of the above, and all substitutions and
replacements for, additions, accessions, attachments, accessories, and
improvements to, and proceeds (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties) of, any and all of the
above, and all Borrower's books relating to any of the above, including without
limitation the assets identified in the Representations. *

*     NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION 2, THE GRANT,
ASSIGNMENT AND TRANSFER OF A SECURITY INTEREST AS PROVIDED HEREIN SHALL NOT
EXTEND TO, AND THE TERM "COLLATERAL" SHALL NOT INCLUDE: (a) "INTENT-TO-USE"
TRADEMARKS AT ALL TIMES PRIOR TO THE FIRST USE THEREOF, WHETHER BY THE ACTUAL
USE THEREOF IN COMMERCE, THE RECORDING OF A STATEMENT OF USE WITH THE UNITED
STATES PATENT AND TRADEMARK OFFICE OR OTHERWISE OR (b) ANY OF THE FOLLOWING
("NON-ASSIGNABLE CONTRACTS": ANY CONTRACT, INSTRUMENT OR CHATTEL PAPER IN WHICH
BORROWER HAS ANY RIGHT, TITLE OR INTEREST IF AND TO THE EXTENT SUCH CONTRACT,
INSTRUMENT OR CHATTEL PAPER INCLUDES A PROVISION CONTAINING A RESTRICTION ON
ASSIGNMENT SUCH THAT THE CREATION OF A SECURITY INTEREST IN THE RIGHT, TITLE OR
INTEREST OF BORROWER THEREIN WOULD BE PROHIBITED AND WOULD, IN AND OF ITSELF,
CAUSE OR RESULT IN A DEFAULT THEREUNDER ENABLING ANOTHER PERSON PARTY TO SUCH
CONTRACT, INSTRUMENT OR CHATTEL PAPER TO ENFORCE ANY REMEDY WITH RESPECT
THERETO; PROVIDED THAT THE FOREGOING EXCLUSION SHALL NOT APPLY IF (i) SUCH
PROHIBITION HAS BEEN WAIVED OR SUCH OTHER PERSON HAS OTHERWISE CONSENTED TO THE
CREATION HEREUNDER OF A SECURITY INTEREST IN SUCH CONTRACT, INSTRUMENT OR
CHATTEL PAPER OR (ii) SUCH PROHIBITION WOULD BE RENDERED INEFFECTIVE PURSUANT TO
SECTIONS 9-407(a) OR 9-408(a) OF THE CODE, AS APPLICABLE AND AS THEN IN EFFECT
IN ANY RELEVANT JURISDICTION, OR ANY OTHER APPLICABLE LAW (INCLUDING THE
BANKRUPTCY CODE) OR PRINCIPLES OF EQUITY); PROVIDED FURTHER THAT IMMEDIATELY
UPON THE INEFFECTIVENESS, LAPSE OR TERMINATION OF ANY SUCH PROVISION, THE
COLLATERAL SHALL INCLUDE, AND BORROWER SHALL BE DEEMED TO HAVE GRANTED A
SECURITY INTEREST IN, ALL ITS RIGHTS, TITLE AND INTERESTS IN AND TO SUCH
CONTRACT, INSTRUMENT OR CHATTEL PAPER AS IF SUCH PROVISION HAD NEVER BEEN IN
EFFECT; AND PROVIDED FURTHER THAT THE FOREGOING EXCLUSION SHALL IN NO WAY BE
CONSTRUED SO AS TO LIMIT, IMPAIR OR OTHERWISE AFFECT ORIX'S UNCONDITIONAL
CONTINUING SECURITY INTEREST IN AND TO ALL RIGHTS, TITLE AND INTERESTS OF
BORROWER IN OR TO ANY PAYMENT OBLIGATIONS OR OTHER RIGHTS TO RECEIVE MONIES DUE
OR TO BECOME DUE UNDER ANY SUCH CONTRACT, INSTRUMENT OR CHATTEL PAPER AND IN ANY
SUCH MONIES AND OTHER PROCEEDS OF SUCH CONTRACT, INSTRUMENT OR CHATTEL PAPER.
BORROWER REPRESENTS AND WARRANTS THAT THERE ARE NO NON-ASSIGNABLE CONTRACTS
WHICH ARE MATERIAL TO BORROWER'S BUSINESS, AND IN THE EVENT, IN THE FUTURE,
BORROWER ENTERS INTO ANY NON-ASSIGNABLE CONTRACT WHICH IS MATERIAL TO ITS
BUSINESS, OR ANY NON-ASSIGNABLE CONTRACT BECOMES MATERIAL TO ITS BUSINESS,
BORROWER SHALL GIVE ORIX PROMPT WRITTEN NOTICE OF THE SAME AND SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO HAVE THE OTHER PARTY TO THE CONTRACT CONSENT
TO THE GRANT OF A SECURITY INTEREST THEREIN TO ORIX PURSUANT TO THIS AGREEMENT.

3.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

      In order to induce ORIX to enter into this Agreement and to make the Loan,
Borrower represents and warrants to ORIX as follows, and Borrower covenants that
the following representations will continue to be true, and that Borrower will
at all times comply with all of the following covenants:

      3.1 CORPORATE EXISTENCE AND AUTHORITY. Borrower is and will continue to
be, duly organized, validly existing and in good standing under the laws of the
State of WASHINGTON. Borrower is and will continue to be qualified and licensed
to do business in all jurisdictions in which any failure to do so would result
in a Material Adverse Change. The execution, delivery and performance by
Borrower of this Agreement, and all other documents contemplated hereby (i) have
been duly and validly authorized, (ii) are enforceable against Borrower in
accordance with their terms (except as enforcement may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors' rights generally), (iii) do not violate Borrower's
articles or certificate of incorporation, or Borrower's by-laws, or any law or
any material agreement or instrument which is binding upon Borrower or its
property, and (iv) do not constitute grounds for acceleration of any
indebtedness or obligation under any agreement or instrument which is binding
upon Borrower or its property.

      3.2 NAME; TRADE NAMES AND STYLES. The full correct name of Borrower and
its state of incorporation are set forth in the heading to this Agreement.
Listed on the Representations are all prior names of Borrower and all of
Borrower's present and prior trade names. Borrower shall give ORIX * days' prior
written notice before changing its name or doing business under any other name.
Borrower has complied, and will in the future comply, with all laws relating to
the conduct of business under a fictitious business name.

      *10

      3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in
the heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth in the Representations. Borrower will give ORIX at least 15 days prior
written notice before opening any additional place of business, changing its
chief executive office, or moving any of the Collateral to a location other than
Borrower's Address or one of the locations set forth on the Schedule.

                                      -2-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

      3.4 TITLE TO COLLATERAL. Borrower is now, and will at all times in the
future be, the sole owner of all the Collateral*, except for specific items of
Equipment which are leased by Borrower. ** The Collateral now is and will remain
free and clear of any and all liens, charges, security interests, encumbrances
and adverse claims, except for the security interest in favor of ORIX and
Permitted Liens. ORIX now has, and will continue to have, a first-priority
perfected and enforceable security interest in all of the Collateral, subject
only to Permitted Liens, and Borrower will at all times defend ORIX and the
Collateral against all claims of others. None of the Collateral now is or will
be affixed to any real property in such a manner, or with such intent, as to
become a fixture. Borrower will keep in full force and effect, and will comply
with all the terms of, any lease of real property where any of the Collateral
now or in the future may be located.

      * OR, WITH RESPECT TO INTELLECTUAL PROPERTY LICENSED FROM OTHER PERSONS,
THE LICENSEE OF SUCH LICENSED ITEM OF COLLATERAL,

      **BORROWER REPRESENTS AND WARRANTS THAT IT IS NOT THE LICENSEE UNDER ANY
LICENSES THE ROYALTIES UNDER WHICH EXCEED $250,000 IN ANY YEAR, AND, IN THE
EVENT, IN THE FUTURE, THE ROYALTIES UNDER ANY LICENSE UNDER WHICH THE BORROWER
IS THE LICENSEE EXCEED $250,000 IN ANY YEAR, BORROWER SHALL PROVIDE PROMPT
WRITTEN NOTICE OF THE SAME TO ORIX.

      3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in
good working condition, ordinary wear and tear excepted, and Borrower will not
use the Collateral for any unlawful purpose. Borrower will immediately advise
ORIX in writing of any material loss or damage to the Collateral.

      3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with GAAP.

      3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements
now or in the future delivered to ORIX have been, and will be, prepared in
conformity with GAAP and now and in the future will completely and fairly
reflect the financial condition of Borrower, at the times and for the periods
therein stated. Between the last date covered by any such statement provided to
ORIX and the date hereof, there has been no Material Adverse Change. Borrower is
now and will continue to be solvent.

      3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all tax returns and reports required by applicable
law, and Borrower has timely paid, and will timely pay, all applicable taxes,
assessments, deposits and contributions now or in the future owed by Borrower.

      3.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all
material respects, with all provisions of all applicable laws and regulations,
including, but not limited to, those relating to Borrower's ownership of real or
personal property, the conduct and licensing of Borrower's business,
compensation and benefits payable or provided to Borrower's employees, and all
environmental matters. Proceeds of all Loans shall be used solely to repay the
Prior Note (as defined in Section 1 of the Schedule) without prepayment fee and
for other lawful business purposes.

      3.10 LITIGATION. * there is no claim, suit, litigation, proceeding or
investigation pending or threatened against or affecting Borrower involving more
than ** . Borrower will promptly inform ORIX in writing of any claim,
proceeding, litigation or investigation in the future threatened or instituted
by or against Borrower involving any claim of * or more.

      *THE BORROWER HAS BEEN SUED BY BRENDA TALAVERA IN KANSAS CITY, MO. FEDERAL
COURT, TALAVERA V. CELEBRATEEXPRESS.COM, INC. CASE NO. 2-03-CV-2366. PLAINTIFF
IS CLAIMING THAT THE BORROWER HAS INFRINGED ON PLAINTIFF'S COPYRIGHT TO A
UNICORN DESIGN. THE BORROWER IS TAKING THESE ALLEGATIONS SERIOUSLY, BUT DENIES
THE CLAIMS OF INFRINGEMENT. EXCEPT FOR THE FOREGOING,

      **$50,000

4.    ADDITIONAL DUTIES OF THE BORROWER.

      4.1 INSURANCE. Borrower shall, at all times, insure all of the Collateral
and carry such other business insurance, with insurers reasonably acceptable to
ORIX, in such form and amounts as ORIX may reasonably require, and Borrower
shall provide evidence of such insurance to ORIX, so that ORIX is satisfied that
such insurance is, at all times, in full force and effect. All such insurance
policies shall name ORIX as the exclusive additional loss payee, and shall
contain a lenders loss payee endorsement in form reasonably acceptable to ORIX.
Upon receipt of the proceeds of any such insurance, ORIX shall apply such
proceeds in reduction of the Obligations as ORIX shall determine in its sole
discretion, except that, provided no Default or Event of Default has occurred
and is continuing, ORIX shall release to Borrower insurance proceeds with
respect to Equipment totaling less than $100,000, which shall be utilized by
Borrower for the replacement of the Equipment with respect to which the
insurance proceeds were paid. ORIX may require reasonable assurance that the
insurance proceeds so released will be so used. If Borrower fails to provide or
pay for any insurance, ORIX may, but is not obligated to, obtain the same at
Borrower's expense. Borrower shall promptly deliver to ORIX copies of all
reports made to insurance companies.

      4.2 REPORTS. Borrower, at its expense, shall provide ORIX with the written
reports set forth in the Schedule, and such other written reports with respect
to Borrower (including budgets, sales projections, operating plans and other
financial documentation), as ORIX shall from time to time reasonably specify.

                                      -3-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

      4.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on
three Business Day's notice (except if a Default or Event of Default has
occurred and is continuing or if ORIX in its good faith business judgment
believes or suspects that Borrower has engaged in defalcation, intentional
misrepresentation, or fraud, in which case then ORIX may do the following at any
time and without any notice), ORIX, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy Borrower's books and
records. The foregoing inspections and audits shall be at Borrower's expense and
the charge therefor shall be at ORIX's then standard charge for the same, plus
all other reasonable out-of-pockets costs and expenses incurred by ORIX in
connection therewith.

      4.4 REMITTANCE OF PROCEEDS. All proceeds arising from the sale or other
disposition of any Collateral (other than (i) the proceeds of the sale of
Inventory in the ordinary course of business or the non-exclusive licensing of
Intellectual Property in the ordinary course of business, or (ii) proceeds of
dispositions of obsolete or unneeded Equipment in the ordinary course of
business in an amount not in excess of * in any fiscal year) shall be delivered,
in kind, by Borrower to ORIX in the original form in which received by Borrower
not later than the following Business Day after receipt by Borrower, to be
applied to the Obligations in such order as ORIX shall determine. Nothing in
this Section limits the restrictions on disposition of Collateral set forth
elsewhere in this Agreement.

      *$100,000

      4.5 NEGATIVE COVENANTS. Borrower shall not, without ORIX's prior written
consent, do any of the following: (i) merge or consolidate with another
corporation or entity; (ii) acquire any assets, except in the ordinary course of
business; (iii) enter into any other transaction outside the ordinary course of
business; (iv) sell or transfer any Collateral (except that, provided no Default
or Event of Default has occurred and is continuing, Borrower may do the
following in good faith arm's length transactions, in the ordinary course of
business: (A) sell Inventory; (B) enter into non-exclusive licenses with respect
to its Intellectual Property; and (C) trade-in or dispose of obsolete or
unneeded Equipment); (v) store any Inventory or other Collateral with any
warehouseman or other third party; (vi) make any loans of any money or other
assets to, or purchase the stock or other securities of, or make any other
investment in, any other Person *; (vii) guarantee or otherwise become liable
with respect to the obligations of another Person; (viii) pay or declare any
dividends on Borrower's stock (other than dividends payable solely in shares of
stock of Borrower); (ix) redeem, retire, purchase or otherwise acquire, directly
or indirectly, any of Borrower's stock **; (x) make any change in Borrower's
capital structure; (xi) reincorporate in another state; or (xii) dissolve or
elect to dissolve; or (xiii) agree to do any of the foregoing.

      *OTHER THAN (A) INVESTMENTS EXISTING ON THE DATE HEREOF AND DISCLOSED IN
THE REPRESENTATIONS, (B) (i) MARKETABLE DIRECT OBLIGATIONS ISSUED OR
UNCONDITIONALLY GUARANTEED BY THE UNITED STATES OF AMERICA OR ANY AGENCY OR ANY
STATE THEREOF MATURING WITHIN ONE (1) YEAR FROM THE DATE OF ACQUISITION THEREOF,
(ii) COMMERCIAL PAPER MATURING NO MORE THAN ONE (1) YEAR FROM THE DATE OF
CREATION THEREOF AND CURRENTLY HAVING THE HIGHEST RATING OBTAINABLE FROM EITHER
STANDARD & POOR'S CORPORATION OR MOODY'S INVESTORS SERVICE, INC., AND (iii)
CERTIFICATES OF DEPOSIT MATURING NO MORE THAN ONE (1) YEAR FROM THE DATE OF
INVESTMENT THEREIN ISSUED BY BORROWER'S DEPOSITARY INSTITUTIONS; (C) EXTENSIONS
OF CREDIT IN THE NATURE OF ACCOUNTS RECEIVABLE OR NOTES RECEIVABLE ARISING FROM
THE SALE OR LEASE OF GOODS OR SERVICES IN THE ORDINARY COURSE OF BORROWER'S
BUSINESS; (D) INVESTMENTS CONSISTING OF THE ENDORSEMENT OF NEGOTIABLE
INSTRUMENTS FOR DEPOSIT OR COLLECTION OR SIMILAR TRANSACTIONS IN THE ORDINARY
COURSE OF BORROWER'S BUSINESS; (E) INVESTMENTS (INCLUDING DEBT OBLIGATIONS)
RECEIVED IN CONNECTION WITH THE BANKRUPTCY OR REORGANIZATION OF CUSTOMERS OR
SUPPLIERS AND IN SETTLEMENT OF DELINQUENT OBLIGATIONS OF, AND OTHER DISPUTES
WITH, CUSTOMERS OR SUPPLIERS ARISING IN THE ORDINARY COURSE OF BORROWER'S
BUSINESS; (F) INVESTMENTS CONSISTING OF LOANS AND ADVANCES TO BORROWER'S
EMPLOYEES, OFFICERS AND DIRECTORS IN THE ORDINARY COURSE OF BUSINESS OR AS
OTHERWISE APPROVED BY THE BOARD OF DIRECTORS OF BORROWER NOT IN EXCESS OF ONE
HUNDRED THOUSAND DOLLARS ($100,000) IN THE AGGREGATE; AND (G) OTHER INVESTMENTS
NOT DESCRIBED ABOVE AGGREGATING NOT IN EXCESS OF TWENTY-FIVE THOUSAND DOLLARS
($25,000) AT ANY TIME

      **EXCEPT THAT BORROWER MAY REPURCHASE STOCK FROM FORMER EMPLOYEES,
CONSULTANTS, OR INDEPENDENT CONTRACTORS OF BORROWER IN ACCORDANCE WITH THE TERMS
OF REPURCHASE OR SIMILAR AGREEMENTS BETWEEN BORROWER AND SUCH EMPLOYEES,
CONSULTANTS, OR INDEPENDENT CONTRACTORS, FOR A TOTAL PURCHASE PRICE FOR ALL SUCH
REPURCHASES IN ANY FISCAL YEAR NOT TO EXCEED $150,000, PROVIDED THAT NO DEFAULT
OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING BEFORE, AND AFTER
GIVING EFFECT TO, SUCH REPURCHASE

      4.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against ORIX with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to ORIX, make available
Borrower and its officers, employees and agents, and Borrower's books and
records, without charge, to the extent that ORIX may deem them reasonably
necessary in order to prosecute or defend any such suit or proceeding*.

      * EXCEPT INSOFAR AND TO THE EXTENT THAT BORROWER'S INTERESTS WITH RESPECT
THERETO MAY BE ADVERSE TO ORIX'S, AS DETERMINED BY BORROWER IN BORROWER'S GOOD
FAITH BUSINESS JUDGMENT.

                                      -4-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

      4.7 NOTIFICATION OF CHANGES. Borrower will promptly notify ORIX in writing
of any change in its officers or directors, the opening of any new bank account
or other Deposit Account, and any Material Adverse Change.

      4.8 FINANCIAL COVENANTS. Borrower shall comply with all of the Financial
Covenants set forth in the Schedule, and all other covenants and provisions set
forth in the Schedule.

      4.9 LANDLORD AGREEMENTS. Borrower shall, from time to time, upon ORIX's
request, use its best efforts to obtain written waivers and agreements from
Borrower's landlords, on such form and containing such provisions as ORIX shall
specify.

      4.10 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
ORIX, to execute all documents and take all actions, as ORIX may deem reasonably
necessary or useful in order to perfect and maintain ORIX's perfected security
interest in the Collateral, and in order to fully consummate the transactions
contemplated by this Agreement.

      4.11 INDEMNITY. Borrower hereby agrees to indemnify the following Persons
(collectively, the "Indemnitees"): ORIX and its affiliates, subsidiaries,
parent, directors, officers, employees, agents, and attorneys, and to hold them
harmless from and against any and all claims, debts, liabilities, demands,
obligations, actions, causes of action, penalties, costs and expenses (including
* attorneys' fees and expenses), of every nature, character and description,
which any Indemnitee may sustain or incur based upon or arising out of any of
the Obligations, any relationship or agreement between ORIX and Borrower, or any
other matter, cause or thing whatsoever occurred, done, omitted or suffered to
be done by any Indemnitee relating to Borrower or the Obligations; provided that
the indemnity hereunder to an Indemnitee shall not extend to damages ** such
Indemnitee's own gross negligence or willful misconduct. Notwithstanding any
provision in this Agreement to the contrary, the indemnity agreement set forth
in this Section shall survive any termination of this Agreement and shall for
all purposes continue in full force and effect.

      *REASONABLE

      **RESULTING FROM

      4.12 BOARD OBSERVATION RIGHTS. Borrower shall notify ORIX at least two
weeks in advance of the time and place of any regularly scheduled meeting, or as
soon as reasonably possible of any unscheduled meeting, of the Board of
Directors of Borrower (including without limitation telephone, conference call
and video meetings), and ORIX shall have the right to have a representative
attend all meetings of the Board of Directors of Borrower (including without
limitation telephone, conference call and video meetings), in a
nonvoting-observer capacity. Borrower shall give ORIX copies of all notices,
minutes, consents and other materials the Borrower provides to its directors in
connection with said meetings. Any information provided to ORIX shall be subject
to the confidentiality agreement in Section 8.2 of this Agreement.

5.    TERM.

      5.1 MATURITY DATE. On the maturity date set forth on the Schedule (the
"Maturity Date") or any earlier occurrence of any Event of Default*, Borrower
shall pay and perform in full all Obligations, whether evidenced by installment
notes or otherwise, and whether or not all or any part of such Obligations are
otherwise then due and payable.

      *AS PROVIDED IN SECTION 6.2 HEREOF

      5.2 PREPAYMENT. Borrower shall have the option of prepaying the principal
amount of the Note, prior to the Maturity Date, in whole or in part, provided
that Borrower concurrently pays ORIX (i) all accrued and unpaid interest on the
principal so prepaid and (ii) a prepayment fee equal to 1% of the amount prepaid
if prepayment occurs prior to April 30, 2005, and 2% of the amount prepaid if
prepayment occurs on or after April 30, 2005. Said prepayment fee shall be due
from Borrower to ORIX upon any prepayment of the principal of the Note,
including without limitation any prepayment as a result of an Event of Default
or the exercise of any rights or remedies by ORIX following the same. Borrower
shall not pay any prepayment fee on the repayment of the Prior Note (as defined
in Section 1 of the Schedule), with the proceeds of the Loan made pursuant to
this Agreement.

      5.3 TERMINATION STATEMENTS. Upon payment and performance in full of all
the Obligations, ORIX shall promptly deliver to Borrower UCC termination
statements and such other documents as may be reasonably required to terminate
ORIX's security interests in the Collateral.

6.    EVENTS OF DEFAULT AND REMEDIES.

      6.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and Borrower shall give
ORIX immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to ORIX by Borrower or any of
Borrower's officers, employees or agents, now or in the future, shall be untrue
or misleading in a material respect*; or (b) Borrower shall fail to pay the
principal of and accrued interest on the Loan which is due on the Maturity Date,
on the date due; or (c) Borrower shall fail to pay any other principal or
interest payment on any Loan or any other monetary Obligation, within three
Business Days after the date due; or (d) Borrower shall fail to comply with any
of the Financial Covenants set forth in the Schedule or with any provision under
Subsection 4.5 hereof; or (e) Borrower shall fail to perform any non-monetary
Obligation within ** Business Days after the date due; or (f) any levy,
assessment, attachment, seizure, lien or encumbrance (other than a Permitted
Lien) is made on all or any part of the Collateral which is not cured within

                                      -5-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

10 days after the occurrence of the same; or (g) Borrower breaches any material
contract or obligation, which has or may reasonably be expected to have a
material adverse effect on Borrower's business or financial condition ***; or
(h) dissolution, termination of existence, insolvency, business failure or
temporary or permanent suspension of business of Borrower; or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by or against Borrower under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect ****; or (i)
revocation or termination of, or limitation or denial of liability upon, any
guaranty of the Obligations or any attempt to do any of the foregoing; or (j)
revocation or termination of, or limitation or denial of liability upon, any
pledge of any certificate of deposit, securities, money or other property or
asset pledged by any third party to secure any or all of the Obligations, or any
attempt to do any of the foregoing, or commencement of proceedings by or against
any such third party under any bankruptcy or insolvency law; or (k) there shall
be a change in the record or beneficial ownership of an aggregate of more than
30% of the outstanding shares of stock or other equity ownership interest in
Borrower, in one or more transactions, compared to the ownership of outstanding
shares of stock of Borrower in effect on the date hereof, without the prior
written consent of ORIX; or (l) Borrower shall generally not pay its debts as
they become due, or Borrower shall conceal, remove or transfer any part of its
property, with intent to hinder, delay or defraud its creditors, or make or
suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or (m) a Material Adverse
Change shall occur; or (n) Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement, or if any Person
who has subordinated such indebtedness or obligations terminates or in any way
limits his subordination agreement; or (o) an event of default shall occur and
be continuing under any other Loan Document (after giving effect to, but without
duplication of, grace periods under such other Loan Document applicable
thereto).

      *AS OF THE DATE MADE OR DELIVERED OR DEEMED MADE OR DELIVERED

      ** FIVE

      ***PROVIDED, HOWEVER, THAT THE EVENT OF DEFAULT UNDER THIS SECTION 6.1(g)
CAUSED BY THE BREACH OF ANOTHER MATERIAL AGREEMENT OR OBLIGATION DESCRIBED IN
THIS SECTION SHALL BE AUTOMATICALLY CURED FOR PURPOSES OF THIS AGREEMENT UPON
THE PERMITTED CURE OR WAIVER OF THE BREACH UNDER SUCH OTHER MATERIAL AGREEMENT
OR OBLIGATION

      **** PROVIDED THAT IN THE CASE OF AN INVOLUNTARY BANKRUPTCY PROCEEDING
FILED AGAINST BORROWER, BORROWER SHALL HAVE 30 DAYS TO HAVE SUCH PROCEEDING
DISMISSED

      6.2 REMEDIES. Upon the occurrence and during the continuance of any Event
of Default, ORIX, at its option, and without notice or demand of any kind (all
of which are hereby expressly waived by Borrower), may do any one or more of the
following: (a) Cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other document or agreement; (b) Accelerate and
declare all or any part of the Obligations to be immediately due, payable, and
performable, notwithstanding any deferred or installment payments allowed by any
instrument evidencing or relating to any Obligation; (c) Accelerate or extend
the time of payment of, compromise, issue credits on, or bring suit on the
Accounts and other Collateral (in the name of Borrower or ORIX), settle or
adjust disputes or claims directly with Account Debtors for amounts and upon
terms which it considers advisable, and notify Account Debtors on the Accounts
and other Collateral that the Accounts and Collateral have been assigned to
ORIX, and that payments in respect thereof shall be made directly to ORIX, and
otherwise administer and collect the Accounts and other Collateral; (d) Collect,
receive, dispose of and realize upon any Investment Property, including
withdrawal of any and all funds from any securities accounts; (e) Take
possession of any or all of the Collateral wherever it may be found, and for
that purpose Borrower hereby authorizes ORIX without judicial process to enter
onto any of Borrower's premises without interference to search for, take
possession of, keep, store, or remove any of the Collateral, and remain on the
premises or cause a custodian to remain on the premises in exclusive control
thereof, without charge for so long as ORIX deems it reasonably necessary in
order to complete the enforcement of its rights under this Agreement or any
other agreement; provided, however, that should ORIX seek to take possession of
any of the Collateral by court process, Borrower hereby irrevocably waives: (i)
any bond and any surety or security relating thereto required by any statute,
court rule or otherwise as an incident to such possession; (ii) any demand for
possession prior to the commencement of any suit or action to recover possession
thereof; and (iii) any requirement that ORIX retain possession of, and not
dispose of, any such Collateral until after trial or final judgment; (f) Require
Borrower to assemble any or all of the Collateral and make it available to ORIX
at places designated by ORIX which are reasonably convenient to ORIX and
Borrower, and to remove the Collateral to such locations as ORIX may deem
advisable; (g) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, ORIX shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (h) Sell, lease or otherwise dispose of any of the Collateral, in its
condition

                                      -6-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

at the time ORIX obtains possession of it or after further manufacturing,
processing or repair, at one or more public and/or private sales, in lots or in
bulk, for cash, exchange or other property, or on credit, and to adjourn any
such sale from time to time without notice other than oral announcement at the
time scheduled for sale. ORIX shall have the right to conduct such disposition
on Borrower's premises without charge, for such time or times as ORIX deems
reasonable, or on ORIX's premises, or elsewhere and the Collateral need not be
located at the place of disposition. ORIX may directly or through any affiliated
company purchase or lease any Collateral at any such public disposition, and if
permissible under applicable law, at any private disposition. Any sale or other
disposition of Collateral shall not relieve Borrower of any liability Borrower
may have if any Collateral is defective as to title or physical condition or
otherwise at the time of sale. All reasonable attorneys' fees, expenses, costs,
liabilities and obligations incurred by ORIX with respect to the foregoing shall
be added to and become part of the Obligations, shall be due on demand, and
shall bear interest at a rate equal to the highest interest rate applicable to
any of the Obligations. Without limiting any of ORIX's rights and remedies, from
and after the occurrence of any Event of Default, the interest rate applicable
to the Obligations shall be increased by an additional two percent per annum.

      6.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and ORIX
agree that a sale or other disposition (collectively, "sale") of any Collateral
which complies with the following standards will conclusively be deemed to be
commercially reasonable: (i) Notice of the sale is given to Borrower at least
seven days prior to the sale, and, in the case of a public sale, notice of the
sale is published at least seven days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted; (ii) Notice of the
sale describes the collateral in general, non-specific terms; (iii) The sale is
conducted at a place designated by ORIX, with or without the Collateral being
present; (iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m.;
(v) Payment of the purchase price in cash or by cashier's check or wire transfer
is required; (vi) With respect to any sale of any of the Collateral, ORIX may
(but is not obligated to) direct any prospective purchaser to ascertain directly
from Borrower any and all information concerning the same. ORIX shall be free to
employ other methods of noticing and selling the Collateral, in its discretion,
if they are commercially reasonable.

      6.4 INVESTMENT PROPERTY. If a Default or an Event of Default has occurred
and is continuing, Borrower shall hold all payments on, and proceeds of, and
distributions with respect to, Investment Property in trust for ORIX, and
Borrower shall deliver all such payments, proceeds and distributions to ORIX,
immediately upon receipt, in their original form, duly endorsed, to be applied
to the Obligations in such order as ORIX shall determine. Borrower recognizes
that ORIX may be unable to make a public sale of any or all of the Investment
Property, by reason of prohibitions contained in applicable securities laws or
otherwise, and expressly agrees that a private sale to a restricted group of
purchasers for investment and not with a view to any distribution thereof shall
be considered a commercially reasonable sale thereof.

      6.5 POWER OF ATTORNEY. Borrower grants to ORIX an irrevocable power of
attorney coupled with an interest, authorizing and permitting ORIX (acting
through any of its employees, attorneys or agents) at any time, at its option,
but without obligation, with or without notice to Borrower, and at Borrower's
expense, to do any or all of the following, in Borrower's name or otherwise, but
ORIX agrees to exercise the following powers in a commercially reasonable
manner: (a) Execute on behalf of Borrower any documents that ORIX may, in its
good faith business judgment, deem advisable in order to perfect and maintain
ORIX's security interest in the Collateral, or in order to exercise a right of
Borrower or ORIX, or in order to fully consummate all the transactions
contemplated under this Agreement, or under any and all other present and future
agreements, to execute and deliver to any securities intermediary or other
Person any entitlement order, account control agreement or other notice,
document or instrument with respect to any Investment Property constituting
Collateral, to make any payment or take any action necessary or desirable to
protect or preserve any Collateral or ORIX's security interest therein or the
priority thereof, or in order to fully consummate all the transactions
contemplated under this Agreement or any other Loan Document; (b) After the
occurrence and during the continuance of any Event of Default, without limiting
ORIX's other rights and remedies, do any of the following: (i) Take control in
any manner of any cash or non-cash items of payment or proceeds of Collateral;
endorse the name of Borrower upon any instruments, or documents, evidence of
payment or Collateral that may come into ORIX's possession; (ii) Grant
extensions of time to pay, compromise claims and settle Accounts, General
Intangibles and Other Property for less than face value and execute all releases
and other documents in connection therewith; (iii) Pay any sums required on
account of Borrower's taxes or to secure the release of any liens therefor; and
(iv) Settle and adjust, and give releases of, any insurance claim that relates
to any of the Collateral and obtain payment therefor.

      6.6 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale or other disposition of the Collateral shall be applied by ORIX first to
the reasonable costs, expenses, liabilities, obligations and * attorneys' fees
incurred by ORIX in the exercise of its rights under this Agreement, second to
the interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as ORIX shall determine in its sole discretion. Any
surplus shall be paid to Borrower or other Persons legally entitled thereto;
Borrower shall remain liable to ORIX for any deficiency. If ORIX, in its sole
discretion, directly or indirectly enters into a deferred

                                      -7-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

payment or other credit transaction with any purchaser at any sale of
Collateral, ORIX shall have the option, exercisable at any time, in its sole
discretion, of either reducing the Obligations by the principal amount of
purchase price or deferring the reduction of the Obligations until the actual
receipt by ORIX of the cash therefor.

      *REASONABLE

      6.7 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth
in this Agreement, ORIX shall have all the other rights and remedies accorded a
secured party under the Code and under all other applicable laws, and under any
other instrument or agreement now or in the future entered into between ORIX and
Borrower, and all of such rights and remedies are cumulative and none is
exclusive. Exercise or partial exercise by ORIX of one or more of its rights or
remedies shall not be deemed an election, nor bar ORIX from subsequent exercise
or partial exercise of any other rights or remedies. The failure or delay of
ORIX to exercise any rights or remedies shall not operate as a waiver thereof,
but all rights and remedies shall continue in full force and effect until all of
the Obligations have been fully paid and performed.

7.    DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:

      "Accounts" means all of the following, now owned and hereafter acquired by
Borrower: all "accounts" as defined in the Code in effect on the date hereof
with such additions to such term as may hereafter be made (whether or not earned
by performance), and all guaranties and other security therefor, and all rights
of stoppage in transit and all other rights or remedies of an unpaid vendor,
lienor or secured party.

      "Account Debtor" means the obligor on an Account.

      "Agreement" and "this Agreement" means this Loan and Security Agreement
and all Exhibits and Schedules hereto and all modifications and amendments to,
extensions of, and replacements for this Agreement.

      "Business Day" means any day other than a Saturday, Sunday or any other
day on which commercial banks in Los Angeles, California or New York, New York
are required or permitted by law to close.

      "Code" means the Uniform Commercial Code as adopted and in effect in the
State of California on the date hereof.

      "Collateral" has the meaning set forth in Section 2.1 above.

      "continuing" when used with reference to a Default or an Event of Default
means that the Default or Event of Default has occurred and has not been either
waived in writing by ORIX or cured within any applicable cure period.

      "Default" means any event which with notice or passage of time or both,
would constitute an Event of Default.

      "Deposit Account" means all of the following, now owned and hereafter
acquired by Borrower: all "deposit accounts" as defined in the Code in effect on
the date hereof with such additions to such term as may hereafter be made, and
includes without limitation all general and special bank accounts, demand
accounts, checking accounts, savings accounts and certificates of deposit.

      "Equipment" means all of the following, now owned and hereafter acquired
by Borrower: all "equipment" as defined in the Code in effect on the date hereof
with such additions to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles, and any interest in any of
the foregoing.

      "Event of Default" means any of the events set forth in Section 6.1 of
this Agreement.

      "GAAP" means generally accepted accounting principles consistently
applied.

      "General Intangibles" means all of the following, now owned and hereafter
acquired by Borrower: all "general intangibles" as defined in the Code in effect
on the date hereof with such additions to such term as may hereafter be made,
and includes without limitation all Intellectual Property, Deposit Accounts,
royalties, contract rights, goodwill, franchise agreements, purchase orders,
customer lists, route lists, telephone numbers, licenses, permits, domain names,
claims, income tax refunds, security and other deposits, options to purchase or
sell real or personal property, rights in all litigation presently or hereafter
pending (whether in contract, tort or otherwise), insurance policies (including
without limitation key man, property damage, and business interruption
insurance), payments of insurance and rights to payment of any kind.

      "Intellectual Property" means all of the following, now owned and
hereafter acquired by Borrower: all (a) copyrights, copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work thereof, whether published or unpublished, (b)
trade secret rights, including all rights to unpatented inventions and know-how,
and confidential information; (c) mask work or similar rights available for the
protection of semiconductor chips; (d) patents, patent applications and like
protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same; (e)
trademarks, servicemarks, trade styles, and trade names, whether or not any of
the foregoing are registered, and all applications to register and registrations
of the same and like protections, and the entire goodwill of the business of
Borrower connected with and symbolized by any such trademarks; (f) computer
software and computer software products; (g) designs and design rights; (h)
technology; (i) all claims for damages by way of past, present and future
infringement of any of the

                                      -8-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

rights included above; (j) all licenses or other rights to use any property or
rights of a type described above.

      "Inventory" means all of the following, now owned and hereafter acquired
by Borrower: all "inventory" as defined in the Code in effect on the date hereof
with such additions to such term as may hereafter be made, and includes without
limitation all merchandise, raw materials, parts, supplies, packing and shipping
materials, work in process and finished products, including without limitation
such inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returned goods and any documents of title representing
any of the above.

      "Investment Property" means all of the following, now owned and hereafter
acquired by Borrower: all investment property, securities, stocks, bonds,
debentures, debt securities, partnership interests, limited liability company
interests, options, security entitlements, securities accounts, commodity
contracts, commodity accounts, and all financial assets held in any securities
account or otherwise, wherever located, and all other securities of every kind,
whether certificated or uncertificated.

      "Material Adverse Change" means (i) a material adverse change in the
business, operations, results of operations, assets, liabilities, condition or
prospects of Borrower, (ii) the impairment of Borrower's ability to perform the
Obligations, or of ORIX to enforce the Obligations or realize upon the
Collateral, or (iii) a material adverse change in the value of the Collateral or
the amount which ORIX would be likely to receive in the liquidation of the
Collateral.

      "Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower or any of its subsidiaries or affiliates to ORIX or its
parent or any of its subsidiaries or affiliates, whether evidenced by this
Agreement or any note or other instrument or document, whether arising from an
extension of credit, loan, guaranty, indemnification or otherwise, whether
direct or indirect (including, without limitation, those acquired by assignment
and any participation by ORIX in Borrower's indebtedness or obligations owing to
others), absolute or contingent, due or to become due, including, without
limitation, all interest, charges, expenses, fees, attorney's fees, expert
witness fees, audit fees, loan fees, prepayment fees, and any other sums
chargeable to Borrower under this Agreement or under any other present or future
instrument or agreement between Borrower and ORIX.

      "Other Property" means all of the following, now owned and hereafter
acquired by Borrower: all of the following as defined in the Code in effect on
the date hereof with such additions to such term as may hereafter be made, and
all rights relating thereto: "documents", "instruments", "chattel paper",
"letters of credit", "fixtures", and "money", and all other tangible and
intangible personal property and rights of any other kind which are not included
in the other items of Collateral, whether or not covered by the Code.

      "Permitted Liens" shall mean the following: * (iii) liens for taxes, fees,
assessments or other governmental charges or levies, either not delinquent or
being contested in good faith by appropriate proceedings, provided the same have
no priority over any of ORIX's security interests; (iv) liens of materialmen,
mechanics, warehousemen, carriers, or other similar liens arising in the
ordinary course of business and securing obligations which are not delinquent or
are being contested in good faith by appropriate proceedings, (v) liens which
constitute banker's liens, rights of set-off or similar rights as to deposit
accounts or other funds maintained with a bank or other financial institution
(but only to the extent such banker's liens, rights of set-off or other rights
are in respect of customary service charges relative to such deposit accounts
and other funds, and not in respect of any loans or other extensions of credit
by such bank or other financial institution to Borrower), (vi) cash deposits or
pledges of an aggregate amount not to exceed $100,000 to secure the payment of
worker's compensation, unemployment insurance or other social security benefits
or obligations, public or statutory obligations, surety or appeal bonds, bid or
performance bonds, or other obligations of a like nature incurred in the
ordinary course of business **.

      *(i) LIENS (A) UPON OR IN ANY EQUIPMENT ACQUIRED OR HELD BY BORROWER TO
SECURE THE PURCHASE PRICE OF SUCH EQUIPMENT OR INDEBTEDNESS INCURRED SOLELY FOR
THE PURPOSE OF FINANCING THE ACQUISITION OF SUCH EQUIPMENT OR (B) EXISTING ON
SUCH EQUIPMENT AT THE TIME OF ITS ACQUISITION, PROVIDED THAT THE LIEN IS
CONFINED SOLELY TO THE EQUIPMENT SO ACQUIRED, IMPROVEMENTS THEREON AND THE
PROCEEDS OF SUCH EQUIPMENT; (ii) LIENS SECURING CAPITAL LEASE OBLIGATIONS ON
ASSETS SUBJECT TO SUCH CAPITAL LEASES AND LIENS ON EQUIPMENT LEASED BY BORROWER
PURSUANT TO AN OPERATING LEASE IN THE ORDINARY COURSE OF BORROWER'S BUSINESS
(INCLUDING PROCEEDS THEREOF AND ACCESSIONS THERETO), ALL INCURRED SOLELY FOR THE
PURPOSE OF FINANCING THE LEASE OF SUCH EQUIPMENT (INCLUDING LIENS ARISING FROM
FINANCING STATEMENTS REGARDING SUCH LEASES)

      ** AND (vii) LIENS INCURRED IN CONNECTION WITH THE EXTENSION, RENEWAL OR
REFINANCING OF THE INDEBTEDNESS SECURED BY LIENS OF THE TYPE DESCRIBED IN
CLAUSES (i), (ii), AND (iii) ABOVE, PROVIDED THAT ANY EXTENSION, RENEWAL OR
REPLACEMENT LIEN SHALL BE LIMITED TO THE PROPERTY ENCUMBERED BY THE EXISTING
LIEN AND THE PRINCIPAL AMOUNT OF THE INDEBTEDNESS BEING EXTENDED, RENEWED OR
REFINANCED DOES NOT INCREASE

      "Person" means any individual, sole proprietorship, partnership, joint
venture, trust, limited liability company, unincorporated organization,
association, corporation,

                                      -9-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

government, or any agency or political division thereof, or any other entity.

      "Prime Rate" means the rate of interest per annum publicly announced from
time to time by Citibank N.A., or, if not available, another major money center
bank in New York City selected by ORIX in its sole discretion, as its prime rate
in effect (said prime rate not being intended to be the lowest rate of interest
charged by the referenced bank in connection with extensions of credit), or if
such rate is not available, by a reasonable alternative means of determining the
rate of interest selected by ORIX in its sole discretion.

      "Representations" means the written Representations and Warranties
previously delivered by Borrower to ORIX dated June 4, 2002.

      "Warrant" means the warrant to purchase stock of the Borrower being issued
to ORIX, and all extensions and renewals thereof and replacements therefor.

      Other Terms. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with GAAP.
All other terms contained in this Agreement, unless otherwise indicated, shall
have the meanings provided by the Code, to the extent such terms are defined
therein.

8.    GENERAL PROVISIONS.

      8.1 APPLICATION OF PAYMENTS. All payments with respect to the Obligations
may be applied, and in ORIX's sole discretion reversed and re-applied, to the
Obligations, in such order and manner as ORIX shall determine in its good faith
business judgment.

      8.2 CONFIDENTIALITY. ORIX agrees to use the same degree of care that it
exercises with respect to its own proprietary information, to maintain the
confidentiality of any and all proprietary, trade secret or confidential
information provided to or received by ORIX from the Borrower, which indicates
that it is confidential, including business plans and forecasts, non-public
financial information, confidential or secret processes, formulae, devices and
contractual information, customer lists, and employee relation matters, provided
that ORIX may disclose such information to its officers, directors, employees,
attorneys, accountants, affiliates, participants, prospective participants,
assignees and prospective assignees, and such other Persons to whom ORIX shall
at any time be required to make such disclosure in accordance with applicable
law, and provided, that the foregoing provisions shall not apply to disclosures
made by ORIX in its good faith business judgment in connection with the
enforcement of its rights or remedies after an Event of Default. The
confidentiality agreement in this Section supersedes any prior confidentiality
agreement of ORIX relating to Borrower.

      8.3 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, or certified mail return receipt
requested, addressed as follows: (a) if to Borrower, at its address shown in the
heading to this Agreement; and (b) if to ORIX, at ORIX USA CORPORATION, 1177
Avenue of the Americas, 10th Floor, New York, NY 10036, Attention: Legal
Department, with a copy to ORIX USA CORPORATION, 228 Hamilton Avenue, 3rd Floor,
Palo Alto, CA 94301, Attention: Mr. Michael David. The parties hereto may change
the address at which they are to receive notices hereunder, by notice in writing
in the foregoing manner given to all other parties. All notices shall be deemed
to have been given upon delivery in the case of notices personally delivered, or
at the expiration of one Business Day following delivery to the private delivery
service, or two Business Days following the deposit thereof in the United States
mail, with postage prepaid.

      8.4 ATTORNEYS FEES AND COSTS. Borrower shall reimburse ORIX for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by ORIX, pursuant to, or
in connection with, or relating to this Agreement (whether or not a lawsuit is
filed), including, but not limited to, all reasonable attorneys' fees and costs
ORIX incurs in order to do the following: prepare and negotiate this Agreement
and the documents relating to this Agreement; obtain legal advice in connection
with this Agreement or Borrower; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, Account Debtors; commence,
intervene in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; protect, obtain
possession of, lease, dispose of, or otherwise enforce ORIX's security interest
in, the Collateral; and otherwise represent ORIX in any litigation relating to
Borrower. If either ORIX or Borrower files any lawsuit against the other
predicated on a breach of this Agreement, the prevailing party in such action
shall be entitled to recover its reasonable costs and attorneys' fees, including
(but not limited to) reasonable attorneys' fees and costs incurred in the
enforcement of, execution upon or defense of any order, decree, award or
judgment.

      8.5 WAIVERS. The failure of ORIX at any time or times to require Borrower
to strictly comply with any of the provisions of this Agreement or any other
present or future agreement between Borrower and ORIX shall not waive or
diminish any right of ORIX later to demand and receive strict compliance
therewith. Any waiver of any default shall not waive or affect any other
default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to ORIX shall be deemed to have been waived
by any act or knowledge of ORIX or its agents or employees, but only by a
specific written waiver signed by an authorized officer of ORIX and delivered to
Borrower. Borrower waives the benefit of all statutes of limitations relating to

                                      -10-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

any of the Obligations or this Agreement or any other Loan Document, and
Borrower waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, account, Account,
General Intangible, document or guaranty at any time held by ORIX on which
Borrower is or may in any way be liable, and notice of any action taken by ORIX,
unless expressly required by this Agreement. NEITHER ORIX NOR ITS PARENT, NOR
ANY OF ITS AFFILIATES, SUBSIDIARIES, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR
ATTORNEYS SHALL BE RESPONSIBLE OR LIABLE TO BORROWER OR TO ANY OTHER PARTY FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF ANY FINANCIAL ACCOMMODATION HAVING BEEN EXTENDED, SUSPENDED OR
TERMINATED UNDER THIS AGREEMENT OR ANY OTHER OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

      8.6 GENERAL. The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective successors, assigns, heirs, beneficiaries
and representatives of Borrower and ORIX; provided, however, that Borrower may
not assign or transfer any of its rights under this Agreement without the prior
written consent of ORIX, and any prohibited assignment shall be void. No consent
by ORIX to any assignment shall release Borrower from its liability for the
Obligations. If Borrower consists of more than one Person, their liability shall
be joint and several, and the compromise of any claim with, or the release of,
any Borrower shall not constitute a compromise with, or a release of, any other
Borrower. This Agreement and all acts, transactions disputes and controversies
arising hereunder or relating hereto, and all rights and obligations of ORIX and
Borrower shall be governed by, and construed in accordance with the internal
laws (and not the conflict of laws rules) of the State of California. Borrower
(i) agrees that all actions and proceedings relating directly or indirectly to
this Agreement shall, at ORIX's option, be litigated in courts located within
California, and that the exclusive venue therefor shall be Los Angeles County;
(ii) consents to the jurisdiction and venue of any such court and consents to
service of process in any such action or proceeding by personal delivery or any
other method permitted by law; and (iii) waives any and all rights Borrower may
have to object to the jurisdiction of any such court, or to transfer or change
the venue of any such action or proceeding. Paragraph headings are only used in
this Agreement for convenience, and shall not be used in any manner to construe,
limit, define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against ORIX or Borrower under any rule of
construction or otherwise. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect. This Agreement may be executed and delivered by the signing and
delivery of this Agreement with original signatures or by facsimile copy. This
Agreement and such other written agreements, documents and instruments as may be
executed in connection herewith, including without limitation the
Representations, are the final, entire and complete agreement between Borrower
and ORIX and supersede all prior and contemporaneous negotiations and oral
representations and agreements, all of which are merged and integrated in this
Agreement. There are no oral understandings, representations or agreements
between the parties which are not set forth in this Agreement or in other
written agreements signed by the parties in connection herewith. The terms and
provisions of this Agreement may not be waived or amended, except in a writing
executed by Borrower and a duly authorized officer of ORIX. Time is of the
essence in the performance by Borrower of each and every obligation under this
Agreement.

      8.7 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND ORIX EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN ORIX AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF ORIX OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH ORIX OR BORROWER, IN ALL
OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

      BORROWER:

            CELEBRATEEXPRESS.COM, INC.

            BY  /s/ DARIN WHITE
                ----------------------------------
                PRESIDENT OR VICE PRESIDENT

            BY  /s/ DARIN WHITE
                ---------------------------------
                SECRETARY OR ASS'T SECRETARY

                                      -11-
<PAGE>

      ORIX                                  LOAN AND SECURITY AGREEMENT

ORIX:

      ORIX VENTURE FINANCE LLC

      BY    /s/ KEVIN P. SHEEHAN
            -----------------------------------
            KEVIN P. SHEEHAN,
            PRESIDENT AND CEO

                                      -12-
<PAGE>

[ORIX LOGO]

                                   SCHEDULE TO

                           LOAN AND SECURITY AGREEMENT

BORROWER: CELEBRATEEXPRESS.COM, INC.
ADDRESS:  11220 120TH AVE. NE
          KIRKLAND, WASHINGTON  98033

DATE: MAY __, 2004

This Schedule is an integral part of the Loan and Security Agreement between
ORIX Venture Finance LLC ("ORIX") and the above-borrower ("Borrower") of even
date.

1.    LOAN AMOUNT (Section 1.1): $5,000,000

                        The Loan shall be made in two disbursements, as follows:

                        (1)   The first disbursement of the Loan (the "First
                              Disbursement") shall be in the amount of
                              $3,333,333.33 and shall be made concurrently
                              herewith. The proceeds of the first disbursement
                              of the Loan shall be applied by ORIX to the
                              payment of the unpaid principal balance of that
                              certain Secured Promissory Note dated July 17,
                              2002, made by Borrower to the order of ORIX, in
                              the original principal amount of $5,000,000 (the
                              "Prior Note"). Accrued and unpaid interest on the
                              Prior Note shall be paid concurrently herewith.

                        (2)   The second disbursement of the Loan in the amount
                              of $1,666,666.67 (the "Second Disbursement") shall
                              be made by ORIX within five Business Days
                              following ORIX' receipt of written request
                              therefor from the Borrower, in one disbursement,
                              provided that (i) at the date the Second
                              Disbursement is to be made, and after giving
                              effect thereto, no Default or Event of Default
                              shall have occurred and be continuing, and (ii)
                              the Second Disbursement shall not be made after
                              June 30, 2004. The Borrower shall not be obligated
                              to request the second disbursement of the Loan.

                                      -1-
<PAGE>

      ORIX                          SCHEDULE TO LOAN AND SECURITY AGREEMENT

2.    INTEREST.

                        The interest rate in effect throughout each calendar
                        month shall be the highest Prime Rate in effect during
                        such month, plus 2.75% per annum, provided that the
                        interest rate in effect in each month shall not be less
                        than 7.75% per annum. Interest shall be calculated on
                        the basis of a 360-day year for the actual number of
                        days elapsed. Prime Rate has the meaning set forth in
                        Section 7 above.

3.    FEES (Section 1.4):

      Loan Fee:         $25,000, payable concurrently herewith.

4.  MATURITY DATE
      (Section 5.1):    APRIL 30, 2006.

5.    REPORTING
      (Section 4.2):    Borrower, at its expense, shall provide ORIX with the
                        reports shown in Section 4.2 of the Loan Agreement and
                        the following:

                        (a)   Monthly financial statements within 30 days after
                              the end of each month;

                        (b)   Quarterly financial statements within 45 days
                              after the end of each fiscal quarter;

                        (c)   Annual, unqualified financial statements, audited
                              by independent certified public accountants
                              acceptable to ORIX, within 90 days after the end
                              of each fiscal year of Borrower;

                        (d)   Compliance certificates, showing compliance with
                              the financial covenants set forth in this
                              Agreement and confirming that no Defaults have
                              occurred, at such intervals and times as the ORIX
                              shall specify;

6.    FINANCIAL COVENANTS.
      (Section 4.8):    Borrower shall have positive EBITDA during each fiscal
                        quarter of Borrower, commencing with the fiscal quarter
                        ending May 31, 2004.

                        As used herein, "EBITDA" means, on a consolidated basis,
                        Borrower's earnings before interest, taxes, depreciation
                        and other non-cash

                                      -2-
<PAGE>

      ORIX                          SCHEDULE TO LOAN AND SECURITY AGREEMENT

                        amortization expenses and other non-cash expenses of
                        Borrower, determined in accordance with GAAP.

7.    ADDITIONAL PROVISIONS.

                              (a)   WARRANTS. Borrower shall concurrently
                                    issue to ORIX a seven-year Warrant to
                                    purchase 10,000 shares of common stock of
                                    Borrower, at $1.10 per share, and
                                    otherwise in the form being executed by
                                    Borrower and ORIX concurrently (the "New
                                    Warrant"). In addition, if for any reason
                                    the Note and all accrued interest thereon
                                    is not prepaid in full prior to May 15,
                                    2005, then Borrower shall, on May 15,
                                    2005, issue and deliver to ORIX an
                                    additional seven-year Warrant to purchase
                                    an additional 10,000 shares of common
                                    stock of Borrower, at $1.10 per share, on
                                    the same terms as the New Warrant, and any
                                    failure to issue and deliver to ORIX said
                                    additional Warrant on said date shall
                                    constitute an immediate Event of Default
                                    hereunder. The Warrants provided for
                                    hereunder are not refundable, and are in
                                    addition to the warrants previously issued
                                    by the Borrower to ORIX. Borrower agrees
                                    to use its reasonable best efforts to
                                    permit ORIX to sell the stock subject to
                                    the Warrant in a public market as soon as
                                    practically possible.

                              (b)   DEPOSIT ACCOUNTS. Borrower represents and
                                    warrants that all banks and other
                                    institutions where its Deposit Accounts
                                    are maintained have entered into control
                                    agreements with ORIX sufficient to perfect
                                    ORIX's first-priority security interest in
                                    said Deposit Accounts, except that the
                                    Company's payroll account at Wells Fargo
                                    Bank is not currently subject to a control
                                    agreement.

                              (c)   STOCK. Borrower hereby grants ORIX the
                                    right to purchase shares of Borrower's
                                    preferred stock, in its next preferred
                                    stock offering (the "Next Offering"), at
                                    the same purchase price per share being
                                    paid by the other purchasers (provided
                                    that, if more than one price per share is
                                    being paid by the purchasers, the price to
                                    ORIX shall be the lowest of such prices).
                                    The number of shares to be purchased by
                                    ORIX shall be determined by ORIX in its
                                    discretion, provided that the total
                                    purchase price may not exceed $1,000,000.
                                    Borrower shall give ORIX written notice of
                                    the date of the Next Offering and details
                                    as to the terms thereof at least 30 days
                                    prior to the date the Next Offering is to
                                    be consummated, and ORIX may exercise its
                                    right to purchase

                            -3-
<PAGE>

      ORIX                          SCHEDULE TO LOAN AND SECURITY AGREEMENT

                                    said preferred stock by written notice to
                                    Borrower within 60 days after the date
                                    said notice is given to ORIX (but in no
                                    event prior to the date the Next Offering
                                    is consummated). Within five business days
                                    after the date the Next Offering is
                                    consummated, Borrower shall give ORIX
                                    written notice thereof and such
                                    information concerning the same as ORIX
                                    shall reasonably request. Promptly
                                    following the exercise of such right by
                                    ORIX, the Borrower shall issue such
                                    preferred stock to ORIX, and ORIX shall
                                    concurrently pay the purchase price
                                    thereof. In connection with its purchase
                                    of Series C preferred stock, ORIX shall
                                    enter into the same stock purchase
                                    agreement and shareholders agreement that
                                    the Borrower enters into with the other
                                    purchasers of such stock, provided the
                                    terms thereof are reasonably acceptable to
                                    ORIX, but notwithstanding the terms of
                                    such agreements, ORIX shall be entitled to
                                    receive "piggy-back" registration rights
                                    and S-3 registration rights, on terms
                                    reasonably acceptable to ORIX, even if the
                                    other purchasers of such preferred stock
                                    are given more or less extensive rights.
                                    The rights of ORIX to purchase stock
                                    hereunder and its related rights may be
                                    exercised by ORIX or its designees, and
                                    any designees shall also enter into the
                                    foregoing stock purchase agreement and
                                    shareholders agreement.

                              (d)   SUBSIDIARY. Borrower represents and
                                    warrants that its sole subsidiary is List
                                    Selector & Processing, Inc., and that said
                                    subsidiary is, and throughout the term of
                                    this Agreement will continue to be, a
                                    shell corporation which has no assets and
                                    does not engage in business.

Borrower:                                           ORIX:

      CelebrateExpress.com, Inc.                    ORIX Venture Finance LLC

      By /s/ Darin White                            By /s/ Kevin P. Sheehan
         ---------------------------------             -------------------------
         President or Vice President                   Kevin P. Sheehan,
                                                       President and CEO

      By /s/ Darin White
         ---------------------------------
         Secretary or Ass't Secretary

                                      -4-

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