Document:

CREDIT
                AND SECURITY AGREEMENT

               

              BY
                AND BETWEEN

               

              uBID.COM
                HOLDINGS, INC.

               

              AND

               

              UBID,
                INC.

               

              AND

               

              WELLS
                FARGO BANK,
                NATIONAL ASSOCIATION

               

              Acting
                through its WELLS FARGO BUSINESS CREDIT operating
                division

               

            
	
              May
                9, 2006

            
	  

    

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
      OF CONTENTS

     

    

      
        	
                ARTICLE
                  I
                  DEFINITIONS

              	
                4

              
	
                Section
                  1.1

              	
                Definitions

              	
                4

              
	
                Section
                  1.2

              	
                Other
                  Definitional Terms; Rules of Interpretation

              	
                13

              
	 	 	 
	
                ARTICLE
                  II
                  AMOUNT AND TERMS OF THE CREDIT FACILITY

              	
                13

              
	 	 
	
                Section
                  2.1

              	
                Revolving
                  Advances

              	
                13

              
	
                Section
                  2.2

              	
                Procedures
                  for Requesting Advances

              	
                13

              
	
                Section
                  2.3

              	
                LIBOR
                  Advances

              	
                14

              
	
                Section
                  2.4

              	
                Letters
                  of Credit

              	
                15

              
	
                Section
                  2.5

              	
                Special
                  Account

              	
                16

              
	
                Section
                  2.6

              	
                Interest;
                  Minimum Interest Charge; Default Interest Rate; Application of
                  Payments;
                  Participations; Usury

              	
                16

              
	
                Section
                  2.7

              	
                Fees

              	
                18

              
	
                Section
                  2.8

              	
                Time
                  for Interest Payments; Payment on Non-Business Days; Computation
                  of
                  Interest and Fees

              	
                20

              
	
                Section
                  2.9

              	
                Collateral
                  Account; Sweep of Funds

              	
                20

              
	
                Section
                  2.10

              	
                Voluntary
                  Prepayment; Termination of the Credit Facility by the
                  Borrower

              	
                21

              
	
                Section
                  2.11

              	
                Mandatory
                  Prepayment

              	
                21

              
	
                Section
                  2.12

              	
                Revolving
                  Advances to Pay Obligations

              	
                21

              
	
                Section
                  2.13

              	
                Use
                  of Proceeds

              	
                22

              
	
                Section
                  2.14

              	
                Liability
                  Records

              	
                22

              
	 	 	 
	
                ARTICLE
                  III
                  SECURITY INTEREST; OCCUPANCY; SETOFF

              	
                22

              
	 	 
	
                Section
                  3.1

              	
                Grant
                  of Security Interest

              	
                22

              
	
                Section
                  3.2

              	
                Notification
                  of Account Debtors and Other Obligors

              	
                23

              
	
                Section
                  3.3

              	
                Assignment
                  of Insurance

              	
                23

              
	
                Section
                  3.4

              	
                Occupancy

              	
                24

              
	
                Section
                  3.5

              	
                License

              	
                24

              
	
                Section
                  3.6

              	
                Financing
                  Statement

              	
                24

              
	
                Section
                  3.7

              	
                Setoff

              	
                25

              
	
                Section
                  3.8

              	
                Collateral

              	
                25

              
	 	 	 
	
                ARTICLE
                  IV
                  CONDITIONS OF LENDING

              	
                25

              
	 	 
	
                Section
                  4.1

              	
                Conditions
                  Precedent to the Initial Advances and Letter of Credit

              	
                25

              
	
                Section
                  4.2

              	
                Conditions
                  Precedent to All Advances and Letters of Credit

              	
                28

              

      

       

       

      
        
           

        

        
          i

          
            

          

        

        
           

        

      

       

      
        	
                ARTICLE
                  V
                  REPRESENTATIONS AND WARRANTIES

              	
                28

              
	 	 
	
                Section
                  5.1

              	
                Existence
                  and Power; Name; Chief Executive Office; Inventory and Equipment
                  Locations; Federal Employer Identification Number and Organizational
                  Identification Number

              	
                28

              
	
                Section
                  5.2

              	
                Capitalization

              	
                28

              
	
                Section
                  5.3

              	
                Authorization
                  of Borrowing; No Conflict as to Law or Agreements

              	
                28

              
	
                Section
                  5.4

              	
                Legal
                  Agreements

              	
                29

              
	
                Section
                  5.5

              	
                Subsidiaries

              	
                29

              
	
                Section
                  5.6

              	
                Financial
                  Condition; No Adverse Change

              	
                29

              
	
                Section
                  5.7

              	
                Litigation

              	
                29

              
	
                Section
                  5.8

              	
                Regulation U

              	
                29

              
	
                Section
                  5.9

              	
                Taxes

              	
                29

              
	
                Section
                  5.10

              	
                Titles
                  and Liens

              	
                30

              
	
                Section
                  5.11

              	
                Intellectual
                  Property Rights

              	
                30

              
	
                Section
                  5.12

              	
                Plans

              	
                31

              
	
                Section
                  5.13

              	
                Default

              	
                31

              
	
                Section
                  5.14

              	
                Environmental
                  Matters

              	
                31

              
	
                Section
                  5.15

              	
                Submissions
                  to Lender

              	
                32

              
	
                Section
                  5.16

              	
                Financing
                  Statements

              	
                32

              
	
                Section
                  5.17

              	
                Rights
                  to Payment

              	
                32

              
	
                Section
                  5.18

              	
                Financial
                  Solvency

              	
                33

              
	 	 	 
	
                ARTICLE
                  VI
                  COVENANTS

              	
                33

              
	 	 
	
                Section
                  6.1

              	
                Reporting
                  Requirements

              	
                33

              
	
                Section
                  6.2

              	
                Financial
                  Covenants

              	
                36

              
	
                Section
                  6.3

              	
                Permitted
                  Liens; Financing Statements

              	
                37

              
	
                Section
                  6.4

              	
                Indebtedness

              	
                37

              
	
                Section
                  6.5

              	
                Guaranties

              	
                38

              
	
                Section
                  6.6

              	
                Investments
                  and Subsidiaries

              	
                38

              
	
                Section
                  6.7

              	
                Dividends
                  and Distributions

              	
                38

              
	
                Section
                  6.8

              	
                Salaries

              	
                38

              
	
                Section
                  6.9

              	
                Key
                  Person Life Insurance

              	
                38

              
	
                Section
                  6.10

              	
                Books
                  and Records; Collateral Examination; Inspection and
                  Appraisals

              	
                39

              
	
                Section
                  6.11

              	
                Account
                  Verification

              	
                39

              
	
                Section
                  6.12

              	
                Compliance
                  with Laws

              	
                39

              
	
                Section
                  6.13

              	
                Payment
                  of Taxes and Other Claims

              	
                49

              
	
                Section
                  6.14

              	
                Maintenance
                  of Properties

              	
                40

              
	
                Section
                  6.15

              	
                Insurance

              	
                40

              
	
                Section
                  6.16

              	
                Preservation
                  of Existence

              	
                41

              
	
                Section
                  6.17

              	
                Delivery
                  of Instruments, etc.

              	
                41

              
	
                Section
                  6.18

              	
                Sale
                  or Transfer of Assets; Suspension of Business Operations

              	
                41

              
	
                Section
                  6.19

              	
                Consolidation
                  and Merger; Asset Acquisitions

              	
                41

              
	
                Section
                  6.20

              	
                Sale
                  and Leaseback

              	
                41

              
	
                Section
                  6.21

              	
                Restrictions
                  on Nature of Business

              	
                41

              

      

       

       

      
        
           

        

        
          ii

          
            

          

        

        
           

        

      

       

      
        	
                Section
                  6.22

              	
                Accounting

              	
                42

              
	
                Section
                  6.23

              	
                Discounts,
                  etc.

              	
                42

              
	
                Section
                  6.24

              	
                Plans

              	
                42

              
	
                Section
                  6.25

              	
                Place
                  of Business; Name

              	
                42

              
	
                Section
                  6.26

              	
                Constituent
                  Documents; S Corporation Status

              	
                42

              
	
                Section
                  6.27

              	
                Performance
                  by the Lender

              	
                42

              
	 	 	 
	
                ARTICLE
                  VII
                  EVENTS OF DEFAULT, RIGHTS AND REMEDIES

              	
                43

              
	 	 
	
                Section
                  7.1

              	
                Events
                  of Default

              	
                43

              
	
                Section
                  7.2

              	
                Rights
                  and Remedies

              	
                45

              
	
                Section
                  7.3

              	
                Certain
                  Notices

              	
                46

              
	 	 	 
	
                ARTICLE
                  VIII
                  MISCELLANEOUS

              	
                46

              
	 	 
	
                Section
                  8.1

              	
                No
                  Waiver; Cumulative Remedies; Compliance with Laws

              	
                46

              
	
                Section
                  8.2

              	
                Amendments,
                  Etc.

              	
                46

              
	
                Section
                  8.3

              	
                Notices;
                  Communication of Confidential Information; Requests for
                  Accounting

              	
                46

              
	
                Section
                  8.4

              	
                Further
                  Documents

              	
                47

              
	
                Section
                  8.5

              	
                Costs
                  and Expenses

              	
                47

              
	
                Section
                  8.6

              	
                Indemnity

              	
                47

              
	
                Section
                  8.7

              	
                Participants

              	
                48

              
	
                Section
                  8.8

              	
                Execution
                  in Counterparts; Telefacsimile Execution

              	
                48

              
	
                Section
                  8.9

              	
                Retention
                  of Borrower’s Records

              	
                48

              
	
                Section
                  8.10

              	
                Binding
                  Effect; Assignment; Complete Agreement; Sharing
                  Information

              	
                49

              
	
                Section
                  8.11

              	
                Severability
                  of Provisions

              	
                49

              
	
                Section
                  8.12

              	
                Headings

              	
                49

              
	
                Section
                  8.13

              	
                Governing
                  Law; Jurisdiction, Venue; Waiver of Jury Trial

              	
                49

              
	
                Section
                  8.14

              	
                Servicing
                  of Credit Facility

              	
                49

              

      

    

    

    

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    CREDIT
      AND SECURITY AGREEMENT

     

    Dated
      as
      of May 9, 2006

     

    uBID.COM
      HOLDINGS, INC., a Delaware corporation (“uBid.Com”), and UBID, INC., a Delaware
      corporation (“uBid”), each Borrower are hereafter, unless referenced
      individually, collectively referred to as the (“Borrower”) and WELLS FARGO BANK,
      NATIONAL ASSOCIATION (“Lender”) through its WELLS FARGO BUSINESS CREDIT
      operating division, hereby agree as follows:

     

    ARTICLE
      I

     

    DEFINITIONS

     

    Section
      1.1 Definitions.
      Except
      as otherwise expressly provided in this Agreement, the following terms shall
      have the meanings given them in this Section:

     

    “Accounts”
      shall have the meaning given it under the UCC.

     

    “Accounts
      Advance Rate” means up to eighty-five percent (85%), or such lesser rate as the
      Lender in its sole discretion may deem appropriate from time to
      time.

     

    “Advance”
      means a Revolving Advance .

     

    “Affiliate”
      or “Affiliates” means any Person controlled by, controlling or under common
      control with the Borrower, including any Subsidiary of the Borrower. For
      purposes of this definition, “control,” when used with respect to any specified
      Person, means the power to direct the management and policies of such Person,
      directly or indirectly, whether through the ownership of voting securities,
      by
      contract or otherwise.

     

    “Agreement”
      means this Credit and Security Agreement.

     

    “Availability”
      means the amount, if any, by which the Borrowing Base exceeds the sum of
      (i) the outstanding principal balance of the Revolving Note, (ii) any
      reserves, and (iii) the L/C Amount.

     

    “Book
      Net
      Worth” means the aggregate of the common and preferred shareholders’ equity in
      the Borrower, determined in accordance with GAAP.

     

    “Borrowing
      Base” means at any time the lesser of:

     

    (a) The
      Maximum Line Amount; or

     

    (b) Subject
      to change from time to time in the Lender’s sole discretion, the sum
      of:

     

    (i) The
      lesser of (A) the product of the Accounts Advance Rate times Eligible Accounts
      or (B) $25,000,000.00, plus

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (ii) The
      lesser of (A) the product of the Inventory Advance Rate times Eligible
      Inventory; or (B) 85% of the Net Orderly Liquidation Value of Eligible
      Inventory; or (C) $20,000,000.00, less  

     

    (iii) The
      Borrowing Base Reserve, less 

     

    (iv) Obligations
      that the Borrower owes to the Lender that have not yet been advanced on the
      Revolving Note, and the dollar amount that the Lender in its discretion believes
      is a reasonable determination of the Borrower’s credit exposure with respect to
      Wells Fargo Affiliate Obligations and obligations owed to Wells Fargo Merchant
      Services, LLC.  

     

    “Borrowing
      Base Reserve” means, as of any date of determination, such amounts (expressed as
      either a specified amount or as a percentage of a specified category or item)
      as
      the Lender may from time to time establish and adjust in reducing Availability
      (a) to reflect events, conditions, contingencies or risks which, as determined
      by the Lender, do or may affect (i) the Collateral or its value, (ii) the
      assets, business or prospects of the Borrower, or (iii) the security interests
      and other rights of the Lender in the Collateral (including the enforceability,
      perfection and priority thereof), or (b) to reflect the Lender’s judgment that
      any collateral report or financial information furnished by or on behalf of
      the
      Borrower to the Lender is or may have been incomplete, inaccurate or misleading
      in any material respect, or (c) in respect of any state of facts that the Lender
      determines constitutes a Default or an Event of Default. 

     

    "Business
      Day" means a day on which the Federal Reserve Bank of New York is open for
      business and, if such day relates to a LIBOR Advance, a day on which dealings
      are carried on in the London interbank eurodollar market. 

    

    “Capital
      Expenditures” means for a period, any expenditure of money during such period
      for the lease, purchase or other acquisition of any capital asset, or for the
      lease of any other asset whether payable currently or in the future.

     

    “Change
      of Control” means the occurrence of any of the following events:

     

    During
      any consecutive two-year period, individuals who at the beginning of such period
      constituted the board of Directors of the Borrower (together with any new
      Directors whose election to such board of Directors, or whose nomination for
      election by the Owners of the Borrower, was approved by a vote of two thirds
      of
      the Directors then still in office who were either Directors at the beginning
      of
      such period or whose election or nomination for election was previously so
      approved) cease for any reason to constitute a majority of the board of
      Directors of the Borrower then in office.
      

     

    “Collateral”
      means all of the Borrower’s Accounts, chattel paper and electronic chattel
      paper, deposit accounts, documents, Equipment, General Intangibles, goods,
      instruments, Inventory, Investment Property, letter-of-credit rights, letters
      of
      credit, all sums on deposit in any Collateral Account, and any items in any
      Lockbox; together with (i) all substitutions and replacements for and
      products of any of the foregoing; (ii) in the case of all goods, all
      accessions; (iii) all accessories, attachments, parts, equipment and
      repairs now or hereafter attached or affixed to or used in connection with
      any
      goods; (iv) all warehouse receipts, bills of lading and other documents of
      title now or hereafter covering such goods; (v) all collateral subject to
      the Lien of any Security Document; (vi) any money, or other assets of the
      Borrower that now or hereafter come into the possession, custody, or control
      of
      the Lender; (vii) all sums on deposit in the Special Account;
      (viii) proceeds of any and all of the foregoing; (ix) books and records of
      the Borrower, including all mail or electronic mail addressed to the Borrower;
      and (x) all of the foregoing, whether now owned or existing or hereafter
      acquired or arising or in which the Borrower now has or hereafter acquires
      any
      rights.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    “Collateral
      Account” means the “Collection Account” as defined in the Collection Account
      Agreement. 

     

    “Collection
      Account Agreement” means the Collection Account Agreement by and between the
      Borrower and the Lender, dated the same date as this Agreement.

     

    “Commercial
      Letter of Credit Agreement” means an agreement governing the issuance of
      documentary letters of credit by the Lender, entered into between the Borrower
      as applicant and the Lender as issuer.

     

    “Commitment”
      means the Lender’s commitment to make Advances to, and to issue Letters of
      Credit for the account of, the Borrower.

     

    “Constituent
      Documents” means with respect to any Person, as applicable, such Person’s
      certificate of incorporation, articles of incorporation, by-laws, certificate
      of
      formation, articles of organization, limited liability company agreement,
      management agreement, operating agreement, shareholder agreement, partnership
      agreement or similar document or agreement governing such Person’s existence,
      organization or management or concerning disposition of ownership interests
      of
      such Person or voting rights among such Person’s owners.

     

    “Copyright
      Security Agreement” means each and every Copyright Security Agreement now or
      hereafter executed by the Borrower in favor of the Lender.

     

    “Credit
      Facility” means the credit facility under which Revolving Advances and Letters
      of Credit may be made available to the Borrower by the Lender under Article
      II.

     

    “Cut-off
      Time” means 11:00 a.m. Milwaukee, Wisconsin time.

    

    “Debt”
      means of a Person as of a given date, all items of indebtedness or liability
      which in accordance with GAAP would be included in determining total liabilities
      as shown on the liabilities side of a balance sheet for such Person and shall
      also include the aggregate payments required to be made by such Person at any
      time under any lease that is considered a capitalized lease under
      GAAP.

     

    “Default”
      means an event that, with giving of notice or passage of time or both, would
      constitute an Event of Default.

     

    “Default
      Period” means any period of time beginning on the day a Default or Event of
      Default occurs and ending on the date identified by the Lender in writing as
      the
      date that such Default or Event of Default has been cured or
      waived.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    “Default
      Rate” means an annual interest rate in effect during a Default Period or
      following the Termination Date, which interest rate shall be equal to three
      percent (3%) over the applicable Floating Rate or the LIBOR Advance Rate, as
      the
      case may be, as such rate may change from time to time.

    

    “Deposit
      Account Control Agreement” means the Deposit Account Control Agreement of even
      date herewith, executed by the Borrower in the Lender’s favor.

    

    “Director”
      means a director if the Borrower is a corporation, a governor or manager if
      the
      Borrower is a limited liability company, or a general partner if the Borrower
      is
      a partnership.

     

     “ERISA”
      means the Employee Retirement Income Security Act of 1974, as amended from
      time
      to time.

     

    “ERISA
      Affiliate” means any trade or business (whether or not incorporated) that is a
      member of a group which includes the Borrower and which is treated as a single
      employer under Section 414 of the IRC.

     

    “Earnings
      Before Taxes” means pretax earnings from operations, excluding extraordinary
      gains, but including extraordinary losses, excluding any adjustments related
      to
      FASB 123R.

     

    “Eligible
      Accounts” means all unpaid Accounts of the Borrower arising from the sale or
      lease of goods or the performance of services, net of any credits, but excluding
      any such Accounts having any of the following characteristics:

     

    (i) That
      portion of Accounts unpaid 90 days or more after the invoice date or, if
      the Lender in its discretion has determined that a particular dated Account
      may
      be eligible, that portion of such Account which is unpaid more than 60 days
      past
      the stated due date or more than 90 days past the invoice date; 

     

    (ii) That
      portion of Accounts related to goods or services with respect to which the
      Borrower has received notice of a claim or dispute, which are subject to a
      claim
      of offset or a contra account, or which reflect a reasonable reserve for
      warranty claims or returns;

     

    (iii) That
      portion of Accounts not yet earned by the final delivery of goods or rendition
      of services, as applicable, by the Borrower to the customer, including progress
      billings, and that portion of Accounts for which an invoice has not been sent
      to
      the applicable account debtor;

     

    (iv) Accounts
      constituting (i) proceeds of copyrightable material unless such copyrightable
      material shall have been registered with the United States Copyright Office,
      or
      (ii) proceeds of patentable inventions unless such patentable inventions have
      been registered with the United States Patent and Trademark Office;

     

    (v) Accounts
      owed by any unit of government, whether foreign or domestic (provided,
      however,
      that
      there shall be included in Eligible Accounts that portion of Accounts owed
      by
      such units of government for which the Borrower has provided evidence
      satisfactory to the Lender that (A) the Lender has a first priority
      perfected security interest and (B) such Accounts may be enforced by the
      Lender directly against such unit of government under all applicable
      laws);

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (vi) Accounts
      denominated in any currency other than United States dollars;

     

    (vii) Accounts
      owed by an account debtor located outside the United States which are not
      (A) backed by a bank letter of credit naming the Lender as beneficiary or
      assigned to the Lender, in the Lender’s possession or control, and with respect
      to which a control agreement concerning the letter-of-credit rights is in
      effect, and acceptable to the Lender in all respects, in its sole discretion,
      or
      (B) covered by a foreign receivables insurance policy acceptable to the
      Lender in its sole discretion;

     

    (viii) Accounts
      owed by an account debtor that is insolvent, the subject of bankruptcy
      proceedings or has gone out of business;

     

    (ix) Accounts
      owed by an Owner, Subsidiary, Affiliate, Officer or employee of the
      Borrower;

     

    (x) Accounts
      not subject to a duly perfected security interest in the Lender’s favor or which
      are subject to any Lien in favor of any Person other than the
      Lender;

     

    (xi) That
      portion of Accounts that has been restructured, extended, amended or
      modified;

     

    (xii) That
      portion of Accounts that constitutes advertising, finance charges, service
      charges or sales or excise taxes;

     

    (xiii) Accounts
      owed by an account debtor, regardless of whether otherwise eligible, to the
      extent that the aggregate balance of such Accounts exceeds 15% of the aggregate
      amount of all Eligible Accounts; 

     

    (xiv) Accounts
      owed by an account debtor, regardless of whether otherwise eligible, if 25%
      or
      more of the total amount of Accounts due from such debtor is ineligible under
      clauses (i), (ii), or (x) above; and

     

    (xv) Accounts,
      or portions thereof, otherwise deemed ineligible by the Lender in its sole
      discretion. 

    

    “Eligible
      Inventory” means all Inventory of the Borrower, valued at the lower of cost or
      market in accordance with GAAP; but excluding any Inventory having any of the
      following characteristics:

     

    (i) Inventory
      that is: in-transit; located at any warehouse, job site or other premises not
      approved by the Lender in writing; not subject to a duly perfected first
      priority security interest in the Lender’s favor; subject to any lien or
      encumbrance that is subordinate to the Lender’s first priority security
      interest; covered by any negotiable or non-negotiable warehouse receipt, bill
      of
      lading or other document of title; on consignment from any Person; on
      consignment to any Person or subject to any bailment unless such consignee
      or
      bailee has executed an agreement with the Lender; provided;
      however,
      that
      Inventory that is in-transit and is supported by documentation acceptable to
      Lender in its sole discretion may be deemed by Lender to be Eligible Inventory;
      provided,
      further,
      however,
      that
      Inventory which is supported by documentation acceptable to Lender in its sole
      discretion and that is (i) in-transit from an offshore supplier limited to
      $5,000,000.00 (ii) considered to be re-work Inventory not stored at Borrower’s
      premises or (iii) in-transit or located at a domestic supplier where said
      Inventory is paid for via a wire transfer initiated through Lender and that
      said
      Inventory is received by Borrower at Borrower’s Naperville facility within seven
      (7) days from the ealier of payment or transfer of title may be deemed by Lender
      in its sole discretion to be Eligible Inventory; 

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (ii) Supplies,
      packaging, maintenance parts or sample Inventory, or customer supplied parts
      or
      Inventory;

     

    (iii) Work-in-process
      Inventory;

     

    (iv) Inventory
      that is damaged, defective, obsolete, slow moving or not currently saleable
      in
      the normal course of the Borrower’s operations, or the amount of such Inventory
      that has been reduced by shrinkage;

     

    (v) Inventory
      that the Borrower has returned, has attempted to return, is in the process
      of
      returning or intends to return to the vendor thereof;

     

    (vi) Inventory
      that is perishable or live;

     

    (vii) Inventory
      manufactured by the Borrower pursuant to a license unless the applicable
      licensor has agreed in writing to permit the Lender to exercise its rights
      and
      remedies against such Inventory;

     

    (viii) Inventory
      that is subject to a Lien in favor of any Person other than the Lender;

     

    (ix) Inventory
      stored at locations holding less than 5% of the aggregate value of Borrower’s
      Inventory; 

     

    (x) Inventory
      not located at Borrower’s premises in Chicago, Illinois except as provided in
      (i) above; and

     

    (xi) Inventory
      otherwise deemed ineligible by the Lender in its sole discretion. 

     

    “Environmental
      Law” means any federal, state, local or other governmental statute, regulation,
      law or ordinance dealing with the protection of human health and the
      environment.

     

    “Equipment”
      shall have the meaning given it under the UCC.

     

    “Event
      of
      Default” is defined in Section 7.1.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    “Financial
      Covenants” means the covenants set forth in Section 6.2. 

     

    “Floating
      Rate” means an annual interest rate equal to the Prime Rate, which interest rate
      shall change when and as the Prime Rate changes. 

     

    “Floating
      Rate Advance” means an Advance bearing interest at the Floating Rate.

     

    “Funding
      Date” is defined in Section 2.1.

     

    “GAAP”
      means generally accepted accounting principles, applied on a basis consistent
      with the accounting practices applied in the financial statements described
      in
      Section 5.6.

     

    “General
      Intangibles” shall have the meaning given it under the UCC.

     

    “Guarantor(s)”
      means any Person now or in the future guaranteeing the Obligations.

     

    “Guaranty”
      means each unconditional continuing guaranty or unconditional continuing
      guaranty by corporation executed by a Guarantor in favor of the Lender
      (collectively, the “Guaranties”)

     

    “Hazardous
      Substances” means pollutants, contaminants, hazardous substances, hazardous
      wastes, petroleum and fractions thereof, and all other chemicals, wastes,
      substances and materials listed in, regulated by or identified in any
      Environmental Law.

     

    “Indemnified
      Liabilities” is defined in Section 8.6

     

    “Indemnitees”
      is defined in Section 8.6. 

     

    “IRC”
      means the Internal Revenue Code of 1986, as amended from time to
      time.

     

    “Infringement”
      or “Infringing” when used with respect to Intellectual Property Rights means any
      infringement or other violation of Intellectual Property Rights.

     

     “Intellectual
      Property Rights” means all actual or prospective rights arising in connection
      with any intellectual property or other proprietary rights, including all rights
      arising in connection with copyrights, patents, service marks, trade dress,
      trade secrets, trademarks, trade names or mask works.

     

    “Interest
      Payment Date” is defined in Section 2.8(a). 

    

    "Interest
      Period" means the period that commences on (and includes) the Business Day
      on
      which either a LIBOR Advance is made or continued pursuant to Sections 2.2(a)
      or
      2.3(b), or on which a Floating Rate Advance is converted to a LIBOR Advance
      pursuant to Section 2.3(a), and ending on (but excluding) the Business Day
      numerically corresponding to such date that is thirty, sixty or ninety days
      thereafter as designated by the Borrower, during which period the outstanding
      principal balance of the LIBOR Advance shall bear interest at the LIBOR Advance
      Rate; provided,
      however,
      that:

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

       

    

    (a) No
      Interest Period may be selected for an Advance for a principal amount less
      than
      One Million Dollars ($1,000,000.00) for the initial Advance and Five Hundred
      Thousand Dollars ($500,000.00) for each Advance thereafter, and no more than
      four (4) different Interest Periods may be outstanding at any one
      time; 

     

    (b) If
      an
      Interest Period would otherwise end on a day which is not a Business Day, then
      the Interest Period shall end on the next Business Day thereafter, unless that
      Business Day is the first Business Day of a month, in which case the Interest
      Period shall end on the last Business Day of the preceding month);

     

    (c) No
      Interest Period applicable to a Revolving Advance may end later than the
      Maturity Date; and

     

    (d) In
      no
      event shall the Borrower select Interest Periods with respect to Advances which,
      in the aggregate, would require payment of a contracted funds breakage fee
      under
      Section 2.7(g) in order to make required principal payments. 

     

    “Inventory”
      shall have the meaning given it under the UCC.

     

    “Inventory
      Advance Rate” means up to sixty-five percent (65%), or such lesser rate as the
      Lender in its sole discretion may deem appropriate from time to
      time.

     

    “Investment
      Property” shall have the meaning given it under the UCC.

     

    “L/C
      Amount” means the sum of (i) the aggregate amount available for drawing
      under any issued and outstanding Letters of Credit and (ii) the unpaid
      amount of the Obligation of Reimbursement.

     

    “L/C
      Application” means an application for the issuance of documentary letters of
      credit pursuant to the terms of a Commercial Letter of Credit Agreement, in
      form
      acceptable to the Lender. 

     

    “Letter
      of Credit” is defined in Section 2.4(a). 

    

    "LIBOR"
      means the rate per annum (rounded upward, if necessary, to the nearest whole
      1/8
      of 1%) determined pursuant to the following formula:

    

    
      	
              LIBOR
                =

            	
              Base
                LIBOR

            	 
	 	
              100%
                - LIBOR Reserve Percentage

            	 

    

    

    (i)
      "Base
      LIBOR" means the rate per annum for United States dollar deposits quoted by
      the
      Lender as the Inter-Bank Market Offered Rate, with the understanding that such
      rate is quoted by the Lender for the purpose of calculating effective rates
      of
      interest for loans making reference thereto, on the first day of a Interest
      Period for delivery of funds on said date for a period of time approximately
      equal to the number of days in such Interest Period and in an amount
      approximately equal to the principal amount to which such Interest Period
      applies. The Borrower understands and agrees that the Lender may base its
      quotation of the Inter-Bank Market Offered Rate upon such offers or other market
      indicators of the Inter-Bank Market as the Lender in its discretion deems
      appropriate including the rate offered for U.S. dollar deposits on the London
      Inter-Bank Market.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    (ii)
      "LIBOR
      Reserve Percentage" means the reserve percentage prescribed by the Board of
      Governors of the Federal Reserve System (or any successor) for "Eurocurrency
      Liabilities" (as defined in Regulation D of the Federal Reserve Board, as
      amended), adjusted by the Lender for expected changes in such reserve percentage
      during the applicable Interest Period.

    

    “LIBOR
      Advance” means an Advance bearing interest at the LIBOR Advance Rate.

     

    “LIBOR
      Advance Rate” means an annual interest rate equal to the sum of LIBOR plus two
      and one half percent (2.50%).

     

    “Licensed
      Intellectual Property” is defined in Section 5.11(c).

     

    “Lien”
      means any security interest, mortgage, deed of trust, pledge, lien, charge,
      encumbrance, title retention agreement or analogous instrument or device,
      including the interest of each lessor under any capitalized lease and the
      interest of any bondsman under any payment or performance bond, in, of or on
      any
      assets or properties of a Person, whether now owned or subsequently acquired
      and
      whether arising by agreement or operation of law.

     

    “Loan
      Documents” means this Agreement, the Revolving Note, any L/C Applications and
      the Security Documents, together with every other agreement, note, document,
      contract or instrument to which the Borrower now or in the future may be a
      party
      and which is required by the Lender.

     

    “Loan
      Year” is defined in Section 2.6(b). 

     

    “Material
      Adverse Effect” means any of the following:

     

    (i) A
      material adverse effect on the business, operations, results of operations,
      prospects, assets, liabilities or financial condition of the
      Borrower;

     

    (ii) A
      material adverse effect on the ability of the Borrower to perform its
      obligations under the Loan Documents;

     

    (iii) A
      material adverse effect on the ability of the Lender to enforce the Obligations
      or to realize the intended benefits of the Security Documents, including a
      material adverse effect on the validity or enforceability of any Loan Document
      or of any rights against any Guarantor, or on the status, existence, perfection,
      priority (subject to Permitted Liens) or enforceability of any Lien securing
      payment or performance of the Obligations; or

     

    (iv) Any
      claim
      against the Borrower or threat of litigation which if determined adversely
      to
      the Borrower would cause the Borrower to be liable to pay an amount exceeding
      $100,000.00 or would result in the occurrence of an event described in
      clauses (i), (ii) and (iii) above.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    “Maturity
      Date” means April 28, 2009. 

     

    “Maximum
      Line Amount” means $25,000,000.00. 

     

    “Minimum
      Interest Charge” is defined in Section 2.6(b). 

     

    “Multiemployer
      Plan” means a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to
      which the Borrower or any ERISA Affiliate contributes or is obligated to
      contribute.

     

    “Net
      Cash
      Proceeds” means in connection with any asset sale, the cash proceeds (including
      any cash payments received by way of deferred payment whether pursuant to a
      note, installment receivable or otherwise, but only as and when actually
      received) from such asset sale, net of (i) attorneys’ fees, accountants’ fees,
      investment banking fees, brokerage commissions and amounts required to be
      applied to the repayment of any portion of the Debt secured by a Lien not
      prohibited hereunder on the asset which is the subject of such sale, and (ii)
      taxes paid or reasonably estimated to be payable as a result of such asset
      sale.

     

    “Net
      Earnings” means, excluding any adjustments related to FASB 123R, the excess
      of:

     

    (a) All
      revenues and income derived from operations in the ordinary course of business
      (excluding extraordinary gains and gains and profits upon the disposition of
      investments and fixed assets) 

    

    Over:

    

    (b) All
      expenses and other proper charges against income (including all applicable
      taxes, but excluding extraordinary losses and losses upon the disposition of
      investments and fixed assets), all as determined in accordance with
      GAAP.

    

    “Net
      Income” means fiscal year-to-date after-tax net income from continuing
      operations, including
      extraordinary losses but excluding extraordinary gains, all as determined in
      accordance with GAAP, excluding any adjustments related to FASB
      123R. 

    

    “Net
      Loss” means fiscal year-to-date after-tax net loss from continuing operations as
      determined in accordance with GAAP, excluding any adjustments related to FASB
      123R.  

    

    “Net
      Orderly Liquidation Value” means a professional opinion of the estimated most
      probable Net Cash Proceeds which could typically be realized at a properly
      advertised and professionally managed liquidation sale, conducted under orderly
      sale conditions for an extended period of time (usually six to nine months),
      under the economic trends existing at the time of the appraisal. 

     

    “Obligation
      of Reimbursement” means the obligation of the Borrower to reimburse the Lender
      pursuant to the terms of the Commercial Letter of Credit Agreement and any
      applicable L/C Application.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    “Obligations”
      means the Revolving Note, the Obligation of Reimbursement and each and every
      other debt, liability and obligation of every type and description which the
      Borrower may now or at any time hereafter owe to the Lender, whether such debt,
      liability or obligation now exists or is hereafter created or incurred, whether
      it arises in a transaction involving the Lender alone or in a transaction
      involving other creditors of the Borrower, and whether it is direct or indirect,
      due or to become due, absolute or contingent, primary or secondary, liquidated
      or unliquidated, or sole, joint, several or joint and several, and including
      all
      indebtedness of the Borrower arising under any Loan Document or guaranty between
      the Borrower and the Lender, whether now in effect or subsequently entered
      into,
      and all Wells Fargo Affiliate Obligations and indebtedness owed by the Borrower
      to Wells Fargo Merchant Services, L.L.C. 

    

    “Officer”
      means with respect to the Borrower, an officer if the Borrower is a corporation,
      a manager if the Borrower is a limited liability company, or a partner if the
      Borrower is a partnership.

     

    “OFAC”
is
      defined in Section 6.12(c).

     

    "Overadvance"
      means the amount, if any, by which the outstanding principal balance of the
      Revolving Note, plus the L/C Amount, is in excess of the then-existing Borrowing
      Base. 

    

    “Owned
      Intellectual Property” is defined in Section 5.11(a).

     

    “Owner”
      means with respect to the Borrower, each Person having legal or beneficial
      title
      to an ownership interest in the Borrower or a right to acquire such an
      interest.

     

    “Patent
      and Trademark Security Agreement” means each and every Patent and Trademark
      Security Agreement now or hereafter executed by the Borrower in favor of the
      Lender.

     

    “Pension
      Plan” means a pension plan (as defined in Section 3(2) of ERISA) maintained for
      employees of the Borrower or any ERISA Affiliate and covered by Title IV of
      ERISA.

     

    “Permitted
      Lien” and “Permitted Liens” are defined in Section 6.3(a) .

     

    “Person”
      means any individual, corporation, partnership, joint venture, limited liability
      company, association, joint-stock company, trust, unincorporated organization
      or
      government or any agency or political subdivision thereof.

     

    “Plan”
      means an employee benefit plan (as defined in Section 3(3) of ERISA) maintained
      for employees of the Borrower or any ERISA Affiliate.

     

    “Premises”
      means all locations where the Borrower conducts its business or has any rights
      of possession, including the locations legally described in Exhibit C attached
      hereto.

     

    “Prime
      Rate” means at any time the rate of interest most recently announced by the
      Lender at its principal office as its Prime Rate, with the understanding that
      the Prime Rate is one of the Lender’s base rates, and serves as the basis upon
      which effective rates of interest are calculated for those loans making
      reference thereto, and is evidenced by the recording thereof in such internal
      publication or publications as the Lender may designate. Each change in the
      rate
      of interest shall become effective on the date each Prime Rate change is
      announced by the Lender. 

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

    “Reportable
      Event” means a reportable event (as defined in Section 4043 of ERISA), other
      than an event for which the 30-day notice requirement under ERISA has been
      waived in regulations issued by the Pension Benefit Guaranty
      Corporation.

     

    “Revolving
      Advance” is defined in Section 2.1.

     

    “Revolving
      Note” means the Borrower’s revolving promissory note, payable to the order of
      the Lender in substantially the form of Exhibit A hereto, as same may be renewed
      and amended from time to time, and all replacements thereto.

     

    “Security
      Documents” means this Agreement, the Collection Account Agreement, the Deposit
      Account Control Agreement, the Patent and Trademark Security Agreement, and
      the
      Copyright Security Agreement, and any other document delivered to the Lender
      from time to time to secure the Obligations. 

     

    “Security
      Interest” is defined in Section 3.1.

     

    “Special
      Account” means a specified cash collateral account maintained with Lender or
      another financial institution acceptable to the Lender in connection with
      Letters of Credit, as contemplated by Section 2.5. 

     

    “Subsidiary”
      means any Person of which more than 50% of the outstanding ownership interests
      having general voting power under ordinary circumstances to elect a majority
      of
      the board of directors or the equivalent of such Person, regardless of whether
      or not at the time ownership interests of any other class or classes shall
      have
      or might have voting power by reason of the happening of any contingency, is
      at
      the time directly or indirectly owned by the Borrower, by the Borrower and
      one
      or more other Subsidiaries, or by one or more other Subsidiaries.

     

    “Termination
      Date” means the earliest of (i) the Maturity Date, (ii) the date the Borrower
      terminates the Credit Facility, or (iii) the date the Lender demands payment
      of
      the Obligations, following an Event of Default, pursuant to Section
      7.2.

     

    “Trademark
      Security Agreement” means each and every Trademark Security Agreement now or
      hereafter executed by the Borrower in favor of the Lender dated the same date
      as
      this Agreement.

     

    “UCC”
      means the Uniform Commercial Code in effect in the state designated in this
      Agreement as the state whose laws shall govern this Agreement, or in any other
      state whose laws are held to govern this Agreement or any portion of this
      Agreement.

     

    “Unused
      Amount” is defined in Section 2.7(b). 

    

    “Wells
      Fargo Affiliate Obligations” means all obligations, liabilities, contingent
      reimbursement obligations, fees, and expenses owing by the Borrower or its
      Subsidiaries to any Person that is owned in material part by the Lender, and
      that relates to any service or facility extended to the Borrower or its
      Subsidiaries, including: (a) credit cards, (b) credit card processing services,
      (c) debit cards, and (d) purchase cards, as well as any other services or
      facilities from time to time specified by the Lender, whether direct or
      indirect, absolute or contingent, due or to become due, and whether existing
      now
      or in the future. 

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

    Section
      1.2 Other
      Definitional Terms; Rules of Interpretation.
      The
      words “hereof”, “herein” and “hereunder” and words of similar import when used
      in this Agreement shall refer to this Agreement as a whole and not to any
      particular provision of this Agreement. All accounting terms not otherwise
      defined herein have the meanings assigned to them in accordance with GAAP.
      All
      terms defined in the UCC and not otherwise defined herein have the meanings
      assigned to them in the UCC. References to Articles, Sections, subsections,
      Exhibits, Schedules and the like, are to Articles, Sections and subsections
      of,
      or Exhibits or Schedules attached to, this Agreement unless otherwise expressly
      provided. The words “include”, “includes” and “including” shall be deemed to be
      followed by the phrase “without limitation”. Unless the context in which used
      herein otherwise clearly requires, “or” has the inclusive meaning represented by
      the phrase “and/or”. Defined terms include in the singular number the plural and
      in the plural number the singular. Reference to any agreement (including the
      Loan Documents), document or instrument means such agreement, document or
      instrument as amended or modified and in effect from time to time in accordance
      with the terms thereof (and, if applicable, in accordance with the terms hereof
      and the other Loan Documents), except where otherwise explicitly provided,
      and
      reference to any promissory note includes any promissory note which is an
      extension or renewal thereof or a substitute or replacement therefor. Reference
      to any law, rule, regulation, order, decree, requirement, policy, guideline,
      directive or interpretation means as amended, modified, codified, replaced
      or
      reenacted, in whole or in part, and in effect on the determination date,
      including rules and regulations promulgated thereunder.

     

    ARTICLE
      II

     

    AMOUNT
      AND TERMS OF THE CREDIT FACILITY

     

    Section
      2.1 Revolving
      Advances.
      The
      Lender agrees, subject to the terms and conditions of this Agreement, to make
      advances (“Revolving Advances”) to the Borrower from time to time from the date
      that all of the conditions set forth in 4.1 are satisfied (the “Funding Date”)
      to and until (but not including) the Termination Date in an amount not in excess
      of the Maximum Line Amount. The Lender shall have no obligation to make a
      Revolving Advance to the extent that the amount of the requested Revolving
      Advance exceeds Availability. The Borrower’s obligation to pay the Revolving
      Advances shall be evidenced by the Revolving Note and shall be secured by the
      Collateral. Within the limits set forth in this Section 2.1, the Borrower may
      borrow, prepay pursuant to Section 2.10, and reborrow. 

     

    Section
      2.2 Procedures
      for Requesting Advances.
      The
      Borrower shall comply with the following procedures in requesting Revolving
      Advances:

     

    (a) Type
      of Advances. Each
      Advance shall be funded as either a Floating Rate Advance or a LIBOR Advance,
      as
      the Borrower shall specify in a request delivered to the Lender conforming
      to
      the requirements of Section 2.2(b); Floating Rate Advances and LIBOR Advances
      may be outstanding at the same time. Each request for a LIBOR Advance shall
      be
      in multiples of $500,000, with a minimum initial request of at least $1,000,000.
      LIBOR Advances shall not be available during Default Periods.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    (b) Time
      for Requests.
      The
      Borrower shall request each Floating Rate Advance not later than the cut-off
      time on the Business Day on which the Floating Rate Advance is to be made,
      and
      each LIBOR Advance not later than the Cut-off Time on the Business Day that
      is
      three (3) days preceding the Business Day on which the
      LIBOR
      Advance is to be made.
      Each
      request that conforms to the terms of this Agreement shall be effective upon
      receipt by the Lender, shall be in writing or by telephone or telecopy
      transmission, and shall be confirmed in writing by the Borrower if so requested
      by the Lender,
      by
      (i) an Officer of the Borrower; or (ii) a Person designated as the
      Borrower’s agent by an Officer of the Borrower in a writing delivered to the
      Lender; or (iii) a Person whom the Lender reasonably believes to be an
      Officer of the Borrower or such a designated agent, which confirmation shall
      specify whether the Advance shall be a Floating Rate Advance or a LIBOR Advance
      and, with respect to any LIBOR Advance, shall specify the principal amount
      of
      the LIBOR Advance and the Interest Period applicable thereto. The Borrower
      shall
      repay all Advances even if the Lender does not receive such confirmation and
      even if the Person requesting an Advance was not in fact authorized to do so.
      Any request for an Advance, whether written or telephonic, shall be deemed
      to be
      a representation by the Borrower that the conditions set forth in Section 4.2
      have been satisfied as of the time of the request.

     

    (c) Disbursement.
      Upon
      fulfillment of the applicable conditions set forth in Article IV, the
      Lender shall disburse the proceeds of the requested Advance by crediting the
      same to the Borrower’s demand deposit account maintained with the Lender unless
      the Lender and the Borrower shall agree in writing to another manner of
      disbursement.

     

    Section
      2.3 LIBOR
      Advances.

     

    (a) Converting
      Floating Rate Advances to LIBOR Advances; Procedures. So
      long
      as no Default Period is in effect, the Borrower may convert all or any part
      of
      the principal amount of any outstanding Floating Rate Advance into a LIBOR
      Advance by requesting that the Lender convert same no later than the Cut-off
      Time on the Business Day that is three (3) days preceding the Business Day
      on
      which the Borrower wishes the conversion to become effective. Each request
      that
      conforms to the terms of this Agreement shall be effective upon receipt by
      the
      Lender and shall be confirmed in writing by the Borrower if the Lender so
      requests by any Officer or designated agent identified in Section 2.2(b) or
      Person reasonably believed by the Lender to be such an Officer or designated
      agent, which request shall specify the Business Day on which the conversion
      is
      to occur, the total amount of the Floating Rate Advance to be converted, and
      the
      applicable Interest Period. Each such conversion shall occur on a Business
      Day,
      and the aggregate amount of Floating Rate Advances converted to LIBOR Advances
      shall be in multiples of $500,000, with a minimum conversion amount of at least
      $1,000,000. 

     

    (b) Procedures
      at End of an Interest Period. Unless
      the Borrower requests a new LIBOR Advance in accordance with the procedures
      set
      forth below, or prepays the principal of an outstanding LIBOR Advance at the
      expiration of an Interest Period, the Lender shall automatically and without
      request of the Borrower convert each LIBOR Advance to a Floating Rate Advance
      on
      the last day of the relevant Interest Period. So long as no Default exists,
      the
      Borrower may cause all or any part of any maturing LIBOR Advance to be renewed
      as a new LIBOR Advance by requesting that the Lender continue the maturing
      Advance as a LIBOR Advance no later than the Cut-off Time on the Business Day
      that is three (3) days preceding the Business Day constituting the first day
      of
      the new Interest Period. Each such request shall be confirmed in writing by
      the
      Borrower upon the Lender’s request by any Officer or designated agent identified
      in Section 2.2(b), which confirmation shall be effective upon receipt by the
      Lender, and which shall specify the amount of the expiring LIBOR Advance to
      be
      continued and the applicable Interest Period. Each new Interest Period shall
      begin on a Business Day and the amount of each LIBOR Advance shall be in
      multiples of $500,000, with a minimum initial Advance of at least $1,000,000.
      

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    (c) Setting
      and Notice of Rates.
      The
      Lender shall, with respect to any request for a LIBOR Advance under Section
      2.2
      or a conversion or renewal of a LIBOR Advance under this Section 2.3, provide
      the Borrower with a LIBOR quote for each Interest Period identified by the
      Borrower on the Business Day on which the request was made, if the request
      is
      received by the Lender prior to the Cut-off Time, or for requests received
      by
      the Lender after the Cut-off Time, on the next Business Day or on the Business
      Day on which the Borrower has requested that the LIBOR Advance be made
      effective. If the Borrower does not immediately accept a LIBOR quote, the quoted
      rate shall expire and any subsequent request from Borrower for a LIBOR quote
      shall be subject to redetermination by the Lender of the applicable LIBOR for
      the LIBOR Advance. 

     

    (d) Taxes
      and Regulatory Costs. The
      Borrower shall pay the Lender with respect to any Advance, upon demand and
      in
      addition to any other amounts due or to become due hereunder, any and all (i)
      withholdings, interest equalization taxes, stamp taxes or other taxes (except
      income and franchise taxes) imposed upon banks generally by any domestic or
      foreign governmental authority and related in any manner to LIBOR, and (ii)
      future, supplemental, emergency or other changes in the LIBOR Reserve
      Percentage, assessment rates imposed by the Federal Deposit Insurance
      Corporation, or similar requirements or costs imposed upon banks generally
      by
      any domestic or foreign governmental authority or resulting from compliance
      by
      the Lender with any request or directive (whether or not having the force of
      law) upon banks generally from any central bank or other governmental authority
      and related in any manner to LIBOR to the extent they are not included in the
      calculation of LIBOR. In determining which of the foregoing are attributable
      to
      any LIBOR option available to the Borrower hereunder, any reasonable allocation
      made by the Lender among its operations shall be conclusive and binding upon
      the
      Borrower. 

    

    Section
      2.4 Letters
      of Credit.

     

    (a) The
      Lender agrees, subject to the terms and conditions of this Agreement, to issue,
      at any time after the Funding Date and prior to the Termination Date, one or
      more irrevocable standby or documentary letters of credit (each, a “Letter of
      Credit”) for the Borrower’s account. The Lender will not issue any Letter of
      Credit if the face amount of the Letter of Credit to be issued would exceed
      the
      lesser of:

     

    (i) $7,000,000.00
      less the L/C Amount, or

     

    
      
         

      

      
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    (ii) Availability.

     

    Each
      Letter of Credit, if any, shall be issued pursuant to a separate L/C Application
      made by the Borrower to the Lender, which must be completed in a manner
      satisfactory to the Lender. The terms and conditions set forth in each such
      L/C
      Application shall supplement the terms and conditions of the Commercial Letter
      of Credit Agreement. 

     

    (b) No
      Letter
      of Credit shall be issued with an expiry date later than one (1) year from
      the
      date of issuance or the Maturity Date in effect as of the date of issuance,
      whichever is earlier. 

     

    (c) Any
      request for issuance of a Letter of Credit shall be deemed to be a
      representation by the Borrower that the conditions set forth in Section 4.2
      have
      been satisfied as of the date of the request.

     

    (d) If
      a
      draft is submitted under a Letter of Credit when the Borrower is unable, because
      a Default Period exists or for any other reason, to obtain a Revolving Advance
      to pay the Obligation of Reimbursement, the Borrower shall pay to the Lender
      on
      demand and in immediately available funds, the amount of the Obligation of
      Reimbursement together with interest, accrued from the date of the draft until
      payment in full at the Default Rate. Notwithstanding the Borrower’s inability to
      obtain a Revolving Advance for any reason, the Lender is irrevocably authorized,
      in its sole discretion, to make a Revolving Advance in an amount sufficient
      to
      discharge the Obligation of Reimbursement and all accrued but unpaid interest
      thereon.

     

    Section
      2.5 Special
      Account.
      If the
      Credit Facility is terminated for any reason while any Letter of Credit is
      outstanding, the Borrower shall thereupon pay the Lender in immediately
      available funds for deposit in the Special Account an amount equal to the L/C
      Amount plus any anticipated fees and costs. If the Borrower fails to promptly
      make any such payment in the amount required hereunder, then the Lender may
      make
      a Revolving Advance against the Credit Facility in an amount sufficient to
      fulfill this obligation and deposit the proceeds to the Special Account. The
      Special Account shall be an interest bearing account either maintained with
      the
      Lender or with a financial institution acceptable to the Lender. Any interest
      earned on amounts deposited in the Special Account shall be credited to the
      Special Account. The Lender may apply amounts on deposit in the Special Account
      at any time or from time to time to the Obligations in the Lender’s sole
      discretion. The Borrower may not withdraw any amounts on deposit in the Special
      Account as long as the Lender maintains a security interest therein. The Lender
      agrees to transfer any balance in the Special Account to the Borrower when
      the
      Lender is required to release its security interest in the Special Account
      under
      applicable law.

     

    Section
      2.6 Interest;
      Minimum Interest Charge; Default Interest Rate; Application of Payments;
      Participations; Usury.

     

    (a) Interest.
      Except
      as provided in Section 2.3, Section 2.6(c) and Section 2.6(f), the principal
      amount of each Advance shall bear interest as a Floating Rate
      Advance.

     

    (b) Minimum
      Interest Charge. Notwithstanding
      any other terms of this Agreement to the contrary, the Borrower shall pay to
      the
      Lender annually in arrears interest of not less than $120,000.00 per Loan Year
      (the “Minimum Interest Charge”) during the term of this Agreement, and the
      Borrower shall pay any deficiency between the Minimum Interest Charge and the
      amount of interest otherwise calculated under Section 2.6(a) following each
      anniversary of the Funding Date and on the Termination Date. When calculating
      this deficiency, the Default Rate, if applicable, shall be disregarded, and
      any
      interest that accrues on a payment following its receipt on those days specified
      in Section 2.6(d) shall be excluded in determining the total amount of interest
      otherwise calculated under Section 2.6(a). As used in this subsection (c),
“Loan
      Year” means each one-year period ending on an anniversary of the Funding
      Date. 

     

    
      
         

      

      
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    (c) Default
      Interest Rate.
      At any
      time during any Default Period or following the Termination Date, in the
      Lender’s sole discretion and without waiving any of its other rights or
      remedies, the principal of the Revolving Note shall bear interest at the Default
      Rate or such lesser rate as the Lender may determine, effective as of the first
      day of the month in which any Default Period begins through the last day of
      such
      Default Period, or any shorter time period that the Lender may determine. The
      decision of the Lender to impose a rate that is less than the Default Rate
      or to
      not impose the Default Rate for the entire duration of the Default Period shall
      be made by the Lender in its sole discretion and shall not be a waiver of any
      of
      its other rights and remedies, including its right to retroactively impose
      the
      full Default Rate for the entirety of any such Default Period or following
      the
      Termination Date. 

    

    (d) Application
      of Payments. Payments
      shall be applied to the Obligations on the Business Day of receipt by the Lender
      in the Lender’s general account, but the amount of principal paid shall continue
      to accrue interest at the interest rate applicable under the terms of this
      Agreement from the calendar day the Lender receives the payment, and continuing
      through the end of the first Business Day following receipt of the
      payment.

    

    (e) Participations.
      If any
      Person shall acquire a participation in the Advances or the Obligation of
      Reimbursement, the Borrower shall be obligated to the Lender to pay the full
      amount of all interest calculated under this Section 2.6, along with all other
      fees, charges and other amounts due under this Agreement, regardless if such
      Person elects to accept interest with respect to its participation at a lower
      rate than that calculated under this Section 2.6, or otherwise elects to accept
      less than its prorata share of such fees, charges and other amounts due under
      this Agreement.

     

    (f) Usury.
      In any
      event no rate change shall be put into effect which would result in a rate
      greater than the highest rate permitted by law. Notwithstanding anything to
      the
      contrary contained in any Loan Document, all agreements which either now are
      or
      which shall become agreements between the Borrower and the Lender are hereby
      limited so that in no contingency or event whatsoever shall the total liability
      for payments in the nature of interest, additional interest and other charges
      exceed the applicable limits imposed by any applicable usury laws. If any
      payments in the nature of interest, additional interest and other charges made
      under any Loan Document are held to be in excess of the limits imposed by any
      applicable usury laws, it is agreed that any such amount held to be in excess
      shall be considered payment of principal hereunder, and the indebtedness
      evidenced hereby shall be reduced by such amount so that the total liability
      for
      payments in the nature of interest, additional interest and other charges shall
      not exceed the applicable limits imposed by any applicable usury laws, in
      compliance with the desires of the Borrower and the Lender. This provision
      shall
      never be superseded or waived and shall control every other provision of the
      Loan Documents and all agreements between the Borrower and the Lender, or their
      successors and assigns. 

     

    
      
         

      

      
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    Section
      2.7  Fees.

     

    (a) Origination
      Fee.
      The
      Borrower shall pay the Lender a fully earned and non-refundable origination
      fee
      of $100,000.00, due and payable upon the execution of this Agreement.

     

    (b) Unused
      Line Fee. For
      the
      purposes of this Section 2.7(b), “Unused Amount” means the Maximum Line Amount
      reduced by outstanding Revolving Advances and the L/C Amount. The Borrower
      agrees to pay to the Lender quarterly an unused line fee at the rate of
      one-fifth of one percent (0.20%) per annum on the average daily Unused Amount
      from the date of this Agreement to and including the Termination Date, due
      and
      payable quarterly on the first day of the month immediately following the end
      of
      the respective quarter and on the Termination Date. 

    

    (c) Collateral
      Exam Fees.
      The
      Borrower shall pay the Lender fees in connection with any collateral exams,
      audits or inspections conducted by or on behalf of the Lender of any Collateral
      or the Borrower’s operations or business at the rates established from time to
      time by the Lender as its collateral exam fees (which fees are currently $950.00
      per day per collateral examiner), together with all actual out-of-pocket costs
      and expenses incurred in conducting any such collateral examination or
      inspection; provided,
      however,
      that
      during Default Periods, the Borrower shall reimburse the Lender for such fees,
      costs and expenses as the Lender deems necessary. 

     

    (d) Letter
      of Credit Fees.
      The
      Borrower shall pay to the Lender a fee with respect to each Letter of Credit
      that has been issued, if any, which fee shall be calculated on a per diem basis
      at an annual rate equal to one and one half percent (1.50%) of the aggregate
      amount that may then be drawn under the Letter of Credit, assuming compliance
      with all conditions for drawing (the “Aggregate Face Amount”), from and
      including the date of issuance of the Letter of Credit until the date that
      the
      Letter of Credit terminates or is returned to the Lender, which fee shall be
      due
      and payable monthly in arrears on the first day of each month and on the date
      that the Letter of Credit terminates or is returned to the Lender; provided,
      however,
      effective as of the first day of the month in which any Default Period begins
      through the last day of such Default Period, or any shorter time period that
      the
      Lender may determine, in the Lender’s sole discretion and without waiving any of
      its other rights and remedies, such fee shall increase to four and one half
      percent (4.50%) of the Aggregate Face Amount. The foregoing fee shall be in
      addition to any and all other fees, commissions and charges imposed by Lender
      with respect to or in connection with such Letter of Credit. 

     

    (e)
       Letter
      of Credit Administrative Fees.
      The
      Borrower shall pay all administrative fees charged by Lender in connection
      with
      the honoring of drafts under any Letter of Credit, amendments thereto, transfers
      thereof and all other activity with respect to the Letters of Credit at the
      then
      - current rates published by Lender for such services rendered on behalf of
      customers of Lender generally. 

     

    
      
         

      

      
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    (f) Termination
      Fees.
      If (i)
      the Lender terminates the Credit Facility during a Default Period, or if (ii)
      the Borrower terminates the Credit Facility on a date prior to the Maturity
      Date, then the Borrower shall pay the Lender as liquidated damages and not
      as a
      penalty a termination fee in an amount equal to a percentage of the Maximum
      Line
      Amount calculated as follows: (A) two percent (2.0%) if the termination occurs
      on or before the first anniversary of the Funding Date; (B) one and one half
      percent (1.50%) if the termination occurs after the first anniversary of the
      Funding Date, but on or before the second anniversary of the Funding Date;
      and
      (C) one half of one percent (0.50%) if the termination occurs after the second
      anniversary of the Funding Date. 

     

    (g) Contracted
      Funds Breakage Fees.
      The
      Borrower may prepay the principal amount of the Revolving Note at any time,
      whether voluntarily or by acceleration, provided,
      however,
      that if
      the principal amount of any Revolving Note LIBOR Advance is prepaid, the
      Borrower shall pay to the Lender immediately upon demand a contracted funds
      breakage fee equal to the sum of the discounted monthly differences for each
      month from the month of prepayment through the month in which such Interest
      Period matures, calculated as follows for each such month:

     

    
      	
            	(i)	
              Determine
                the amount of interest which would have accrued each month on the
                amount
                prepaid at the interest rate applicable to such amount had it remained
                outstanding until the last day of the applicable Interest
                Period.

            

    

    

    
      	
            	(ii)	
              Subtract
                from the amount determined in (i) above the amount of interest which
                would
                have accrued for the same month on the amount prepaid for the remaining
                term of such Interest Period at LIBOR in effect on the date of prepayment
                for new loans made for such term in a principal amount equal to the
                amount
                prepaid.

            

    

    

    
      	
            	(iii)	
              If
                the result obtained in (ii) for any month is greater than zero, discount
                that difference by LIBOR used in (ii)
                above.

            

    

    

    The
      Borrower acknowledges that a prepayment of the Revolving Note may result in
      the
      Lender incurring additional costs, expenses or liabilities, and that it is
      difficult to ascertain the full extent of such costs, expenses or liabilities.
      The Borrower therefore agrees to pay the above-described contracted funds
      breakage fee and agrees that this fee represents a reasonable estimate of the
      contracted funds breakage costs, and any expenses or liabilities of the
      Lender.

     

    (h) Overadvance
      Fees.
      The
      Borrower shall pay an Overadvance fee in the amount of $1,000.00 for each day
      or
      portion thereof during which an Overadvance exists, regardless of how the
      Overadvance arises or whether or not the Overadvance has been agreed to in
      advance by the Lender; provided,
      further,
      however,
      that
      from the date on which any Default or Event of Default occurs or exists at
      any
      time, the Borrower shall pay an Overadvance fee in the amount of $2,000.00
      for
      each day or portion thereof during which an Overadvance exists, regardless
      of
      how the Overadvance arises or whether or not the Overadvance has been agreed
      to
      in advance by the Lender. The acceptance of payment of an Overadvance fee by
      the
      Lender shall not be deemed to constitute either consent to the Overadvance
      or a
      waiver of the resulting Event of Default, unless the Lender specifically
      consents to the Overadvance in writing and waives the Event of Default on
      whatever conditions the Lender deems appropriate.

     

    
      
         

      

      
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    (i) Processing
      Fees.
      Accounts receivable agings and Inventory reports shall be submitted
      electronically by Borrower to Lender via Collateral Services, Inc. A set-up
      fee
      of $750.00, in addition to a monthly processing fee of less than $100 per month,
      shall be charged by Lender to Borrower.

    

    (j) Other
      Fees and Charges.
      The
      Lender may from time to time impose additional fees and charges as consideration
      for Advances made in excess of Availability or for other events that constitute
      an Event of Default or a Default hereunder, including fees and charges for
      the
      administration of Collateral by the Lender, and fees and charges for the late
      delivery of reports, which may be assessed in the Lender’s sole discretion on
      either an hourly, periodic, or flat fee basis, and in lieu of or in addition
      to
      imposing interest at the Default Rate.

      

    Section
      2.8 Time
      for Interest Payments; Payment on Non-Business Days; Computation of Interest
      and
      Fees.

     

    (a) Time
      For Interest Payments.
      Accrued
      and unpaid interest accruing on Floating Rate Advances shall be due and payable
      on the first day of each month and on the Termination Date (each an "Interest
      Payment Date"), or if any such day is not a Business Day, on the next succeeding
      Business Day. Interest will accrue from the most recent date to which interest
      has been paid or, if no interest has been paid, from the date of advance to
      the
      Interest Payment Date. If an Interest Payment Date is not a Business Day,
      payment shall be made on the next succeeding Business Day. Interest
      accruing on each LIBOR Advance shall be due and payable on the last day of
      the
      applicable Interest Period; provided,
      however,
      for
      Interest Periods that are longer than one month, interest shall nevertheless
      be
      due and payable monthly on the last day of each month, and on the last day
      of
      the Interest Period.

    

    (b) Payment
      on Non-Business Days.
      Whenever any payment to be made hereunder shall be stated to be due on a day
      which is not a Business Day, such payment may be made on the next succeeding
      Business Day, and such extension of time shall in such case be included in
      the
      computation of interest on the Advances or the fees hereunder, as the case
      may
      be.

     

    (c) Computation
      of Interest and Fees.
      Interest accruing on the outstanding principal balance of the Advances and
      fees
      hereunder outstanding from time to time shall be computed on the basis of actual
      number of days elapsed in a year of 360 days.

     

    Section
      2.9 Collateral
      Account; Sweep
      of Funds.

     

    (a) Collateral
      Account.

     

    (i) The
      Borrower shall wire transfer payments on Accounts it receives and shall deposit
      such payments into the Collateral Account. The Borrower shall also deposit
      all
      other cash proceeds of Collateral regardless of source or nature directly into
      the Collateral Account. Until so deposited, the Borrower shall hold all such
      payments and cash proceeds in trust for and as the property of the Lender and
      shall not commingle such property with any of its other funds or property.
      All
      deposits in the Collateral Account shall constitute proceeds of Collateral
      and
      shall not constitute payment of the Obligations.

     

    
      
         

      

      
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    (ii) All
      items
      deposited in the Collateral Account shall be subject to final payment. If any
      such item is returned uncollected, the Borrower will immediately pay the Lender,
      or, for items deposited in the Collateral Account, the bank maintaining such
      account, the amount of that item, or such bank at its discretion may charge
      any
      uncollected item to the Borrower’s commercial account or other account. The
      Borrower shall be liable as an endorser on all items deposited in the Collateral
      Account, whether or not in fact endorsed by the Borrower.

     

    (b) Sweep
      of Funds.
      The
      Lender shall from time to time, in accordance with the Collection Account
      Agreement, cause funds in the Collateral Account to be transferred to the
      Lender’s general account for payment of the Obligations. Amounts deposited in
      the Collateral Account shall not be subject to withdrawal by the Borrower,
      except after payment in full and discharge of all Obligations. 

     

    Section
      2.10 Voluntary
      Prepayment; Termination of the Credit Facility by the Borrower.
      Except
      as otherwise provided herein, the Borrower may prepay the Advances in whole
      at
      any time or from time to time in part. The Borrower may terminate the Credit
      Facility at any time if it (i) gives the Lender at least 90 days advance
      written notice prior to the proposed Termination Date, and (ii) pays the
      Lender applicable termination and contracted funds breakage fees in accordance
      with Section 2.7(f) and Section 2.7(g). If the Borrower terminates the Credit
      Facility, all Obligations shall be immediately due and payable, and if the
      Borrower gives the Lender less than the required 90 days advance written notice,
      then the interest rate applicable to borrowings evidenced by Revolving Note
      shall be the Default Rate for the period of time commencing 90 days prior to
      the
      proposed Termination Date through the date that the Lender actually receives
      such written notice. If the Borrower does not wish the Lender to consider
      renewal of the Credit Facility on the next Maturity Date, then the Borrower
      shall give the Lender at least 90 days written notice prior to the Maturity
      Date
      that it will not be requesting renewal. If the Borrower fails to give the Lender
      such timely notice, then the interest rate applicable to borrowings evidenced
      by
      the Revolving Note shall be the Default Rate for the period of time commencing
      90 days prior to the Maturity Date through the date that the Lender actually
      receives such written notice. 

     

    Section
      2.11 Mandatory
      Prepayment.
      Without notice or demand, if the sum of the outstanding principal balance of
      the
      Revolving Advances plus the L/C Amount shall at any time exceed the Borrowing
      Base, the Borrower shall (i) first, immediately prepay the Revolving
      Advances to the extent necessary to eliminate such excess; and (ii) if
      prepayment in full of the Revolving Advances is insufficient to eliminate such
      excess, pay to the Lender in immediately available funds for deposit in the
      Special Account an amount equal to the remaining excess. Any payment received
      by
      the Lender hereunder or under Section 2.10 may be applied to the Obligations,
      in
      such order and in such amounts as the Lender in its sole discretion may
      determine from time to time.

     

    Section
      2.12 Revolving
      Advances to Pay Obligations.
      Notwithstanding the terms of Section 2.1, the Lender may, in its discretion
      at
      any time or from time to time, without the Borrower’s request and even if the
      conditions set forth in Section 4.2 would not be satisfied, make a Revolving
      Advance in an amount equal to the portion of the Obligations from time to time
      due and payable,
      and may
      deliver the proceeds of any such Revolving Advance to any affiliate of the
      Lender in satisfaction of any Wells Fargo Affiliate Obligations and may deliver
      the proceeds of any such Revolving Advance to Wells Fargo Merchant Services,
      L.L.C. in satisfaction of any unpaid obligations due to that entity.

     

    
      
         

      

      
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    Section
      2.13 Use
      of
      Proceeds.
      The Borrower shall use the proceeds of Advances and each Letter of Credit for
      ordinary working capital purposes.

     

    Section
      2.14  Liability
      Records.
      The Lender may maintain from time to time, at its discretion, records as to
      the
      Obligations. All entries made on any such record shall be presumed correct
      until
      the Borrower establishes the contrary. Upon the Lender’s demand, the Borrower
      will admit and certify in writing the exact principal balance of the Obligations
      that the Borrower then asserts to be outstanding. Any billing statement or
      accounting rendered by the Lender shall be conclusive and fully binding on
      the
      Borrower unless the Borrower gives the Lender specific written notice of
      exception within 60 days after receipt.

     

    Section
      2.15 Lender’s
      Election.
      Each
      Borrower hereby acknowledges and agrees that such Borrower is jointly and
      severally liable for, and hereby absolutely and unconditionally obligated to
      the
      Lender for the full and prompt payment of all Obligations owed or hereafter
      owed
      to the Lender by each Borrower. Notwithstanding any provision contained herein
      to the contrary, uBid.com’s liability to Lender shall be limited to the amount
      which could be claimed by the Lender from uBid.com under this section without
      rendering such claim voidable or avoidable under Section 548 of the Bankruptcy
      Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
      Fraudulent Conveyance Act or similar statute or common law after taking into
      account, among other things, its right of contribution and indemnification
      from
      other parties.

     

    This
      section is intended only to define the relative rights of uBid.com and UBid
      and
      nothing set forth in this section is intended to nor shall impair the
      Obligations of the Borrower, jointly and severally, to pay any amounts as and
      when the same shall become due and payable in accordance with the terms of
      this
      Credit Agreement including without limitation any provision herein. Nothing
      contained herein shall limit the liability of any Borrower to pay Advances,
      Obligations and reimbursement to Lender of letters of credit or any other
      instrument, interest, fees, expenses and all other amounts with respect thereto
      for which such Borrower shall be liable.

     

    This
      section shall only be in effect in the event the Lender, in its sole discretion,
      declares this section to be effective.

     

    ARTICLE
      III

     

    SECURITY
      INTEREST; OCCUPANCY; SETOFF

     

    Section
      3.1 Grant
      of Security Interest.
      The
      Borrower hereby pledges, assigns and grants to the Lender, for the benefit
      of
      itself and as agent for Wells Fargo Merchant Services, LLC and for the benefit
      of itself and as agent for any affiliate of the Lender that may provide credit
      or services to the Borrower that constitute Wells Fargo Affiliate Obligations,
      a
      lien and security interest (collectively referred to as the “Security Interest”)
      in the Collateral, as security for the payment and performance of the
      Obligations. Upon request by the Lender, the Borrower will grant the Lender,
      for
      the benefit of itself and as agent for Wells Fargo Merchant Services, LLC and
      for the benefit of itself and as agent for any affiliate of the Lender that
      may
      provide credit or services to the Borrower that constitute Wells Fargo Affiliate
      Obligations, a security interest in all commercial tort claims that the Borrower
      may have against any Person. 

     

    
      
         

      

      
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    Section
      3.2 Notification
      of Account Debtors and Other Obligors.
      The Lender may at any time (as long as a Default Period then exists) notify
      any
      account debtor or other Person obligated to pay the amount due that such right
      to payment has been assigned or transferred to the Lender for security and
      shall
      be paid directly to the Lender. The Borrower will join in giving such notice
      if
      the Lender so requests. At any time after the Borrower or the Lender gives
      such
      notice to an account debtor or other obligor, the Lender may, but need not,
      in
      the Lender’s name or in the Borrower’s name, demand, sue for, collect or receive
      any money or property at any time payable or receivable on account of, or
      securing, any such right to payment, or grant any extension to, make any
      compromise or settlement with or otherwise agree to waive, modify, amend or
      change the obligations (including collateral obligations) of any such account
      debtor or other obligor. The Lender may, in the Lender’s name or in the
      Borrower’s name, as the Borrower’s agent and attorney-in-fact, notify the United
      States Postal Service to change the address for delivery of the Borrower’s mail
      to any address designated by the Lender, otherwise intercept the Borrower’s
      mail, and receive, open and dispose of the Borrower’s mail, applying all
      Collateral as permitted under this Agreement and holding all other mail for
      the
      Borrower’s account or forwarding such mail to the Borrower’s last known
      address.

     

    Section
      3.3 Assignment
      of Insurance.
      As additional security for the payment and performance of the Obligations,
      the
      Borrower hereby assigns to the Lender any and all monies (including proceeds
      of
      insurance and refunds of unearned premiums) due or to become due under, and
      all
      other rights of the Borrower with respect to, any and all policies of insurance
      now or at any time hereafter covering the Collateral or any evidence thereof
      or
      any business records or valuable papers pertaining thereto, and the Borrower
      hereby directs the issuer of any such policy to pay all such monies directly
      to
      the Lender. At any time, whether or not a Default Period then exists, the Lender
      may (but need not), in the Lender’s name or in the Borrower’s name, execute and
      deliver proof of claim, receive all such monies, endorse checks and other
      instruments representing payment of such monies, and adjust, litigate,
      compromise or release any claim against the issuer of any such
      policy.
      Any
      monies received as payment for any loss under any insurance policy mentioned
      above (other than liability insurance policies) or as payment of any award
      or
      compensation for condemnation or taking by eminent domain, shall be paid over
      to
      the Lender to be applied, at the option of the Lender, either to the prepayment
      of the Obligations or shall be disbursed to the Borrower under staged payment
      terms reasonably satisfactory to the Lender for application to the cost of
      repairs, replacements, or restorations. Any such repairs, replacements, or
      restorations shall be effected with reasonable promptness and shall be of a
      value at least equal to the value of the items or property destroyed prior
      to
      such damage or destruction.

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

     

    Section
      3.4 Occupancy.

    (a) The
      Borrower hereby irrevocably grants to the Lender the right to take exclusive
      possession of the Premises at any time during a Default Period without notice
      or
      consent.

     

    (b) The
      Lender may use the Premises only to hold, process, manufacture, sell, use,
      store, liquidate, realize upon or otherwise dispose of goods that are Collateral
      and for other purposes that the Lender may in good faith deem to be related
      or
      incidental purposes.

     

    (c) The
      Lender’s right to hold the Premises shall cease and terminate upon the earlier
      of (i) payment in full and discharge of all Obligations and termination of
      the Credit Facility, and (ii) final sale or disposition of all goods
      constituting Collateral and delivery of all such goods to
      purchasers.

     

    (d) The
      Lender shall not be obligated to pay or account for any rent or other
      compensation for the possession, occupancy or use of any of the Premises;
provided,
      however,
      that if
      the Lender does pay or account for any rent or other compensation for the
      possession, occupancy or use of any of the Premises, the Borrower shall
      reimburse the Lender promptly for the full amount thereof. In addition, the
      Borrower will pay, or reimburse the Lender for, all taxes, fees, duties,
      imposts, charges and expenses at any time incurred by or imposed upon the Lender
      by reason of the execution, delivery, existence, recordation, performance or
      enforcement of this Agreement or the provisions of this Section
      3.4.

     

    Section
      3.5 License.
      Without limiting the generality of any other Security Document, the Borrower
      hereby grants to the Lender a non-exclusive, worldwide and royalty-free license
      to use or otherwise exploit all Intellectual Property Rights of the Borrower
      for
      the purpose of: (a) completing the manufacture of any in-process materials
      during any Default Period so that such materials become saleable Inventory,
      all
      in accordance with the same quality standards previously adopted by the Borrower
      for its own manufacturing and subject to the Borrower’s reasonable exercise of
      quality control; and (b) selling, leasing or otherwise disposing of any or
      all Collateral during any Default Period.

     

    Section
      3.6 Financing
      Statement.
      The Borrower authorizes the Lender to file from time to time, such financing
      statements against collateral described as “all personal property” or “all
      assets” or describing specific items of collateral including commercial tort
      claims as the Lender deems necessary or useful to perfect the Security Interest.
      All financing statements filed before the date hereof to perfect the Security
      Interest were authorized by the Borrower and are hereby re-authorized. A carbon,
      photographic or other reproduction of this Agreement or of any financing
      statements signed by the Borrower is sufficient as a financing statement and
      may
      be filed as a financing statement in any state to perfect the security interests
      granted hereby. For this purpose, the Borrower represents and warrants that
      the
      following information is true and correct:

     

    
      
         

      

      
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    Name
      and
      address of Debtor:

     

    uBid.com
      Holdings, Inc. 

    8550
      West
      Bryn Mawr Avenue, Suite 200

    Chicago,
      Illinois 60631

    Federal
      Employer Identification No. 522372260

    Organizational
      Identification No. DE 4057093

     

    UBid,
      Inc. 

    8550
      West
      Bryn Mawr Avenue, Suite 200

    Chicago,
      Illinois 60631 

    Federal
      Employer Identification No. 412084832 

    Organizational
      Identification No. DE 3633799

     

    Name
      and
      address of Secured Party:

     

    Wells
      Fargo Business Credit, Inc.

    100
      East
      Wisconsin Avenue, Suite 1400

    Milwaukee,
      Wisconsin 53202

    

    Section
      3.7 Setoff.
      The
      Lender may at any time or from time to time, at its sole discretion and without
      demand and without notice to anyone, setoff any liability owed to the Borrower
      by the Lender, whether or not due, against any Obligation, whether or not due.
      In addition, each other Person holding a participating interest in any
      Obligations shall have the right to appropriate or setoff any deposit or other
      liability then owed by such Person to the Borrower, whether or not due, and
      apply the same to the payment of said participating interest, as fully as if
      such Person had lent directly to the Borrower the amount of such participating
      interest.

     

    Section
      3.8 Collateral.
      This Agreement does not contemplate a sale of accounts, contract rights or
      chattel paper, and, as provided by law, the Borrower is entitled to any surplus
      and shall remain liable for any deficiency. The Lender’s duty of care with
      respect to Collateral in its possession (as imposed by law) shall be deemed
      fulfilled if it exercises reasonable care in physically keeping such Collateral,
      or in the case of Collateral in the custody or possession of a bailee or other
      third Person, exercises reasonable care in the selection of the bailee or other
      third Person, and the Lender need not otherwise preserve, protect, insure or
      care for any Collateral. The Lender shall not be obligated to preserve any
      rights the Borrower may have against prior parties, to realize on the Collateral
      at all or in any particular manner or order or to apply any cash proceeds of
      the
      Collateral in any particular order of application. The Lender has no obligation
      to clean-up or otherwise prepare the Collateral for sale. The Borrower waives
      any right it may have to require the Lender to pursue any third Person for
      any
      of the Obligations.

     

    ARTICLE
      IV

     

    CONDITIONS
      OF LENDING

     

    Section
      4.1 Conditions
      Precedent to the Initial Advances and Letter of Credit.
      The
      Lender’s obligation to make the initial Advances or to cause any Letters of
      Credit to be issued shall be subject to the condition precedent that the Lender
      shall have received all of the following, each properly executed by the
      appropriate party and in form and substance satisfactory to the
      Lender:

     

    (a) This
      Agreement.

     

    
      
         

      

      
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    (b) The
      Revolving Note.

     

    (c) A
      Commercial Letter of Credit Agreement and L/C Application for each Letter of
      Credit that the Borrower wishes to have issued thereunder. 

     

    (d) A
      true
      and correct copy of any and all leases pursuant to which the Borrower is leasing
      the Premises where Inventory is located, together with a landlord’s disclaimer
      and consent with respect to each such lease.

     

    (e) A
      true
      and correct copy of any and all mortgages pursuant to which the Borrower has
      mortgaged the Premises, together with a mortgagee’s disclaimer and consent with
      respect to each such mortgage.

     

    (f) A
      true
      and correct copy of any and all agreements pursuant to which the Borrower’s
      property is in the possession of any Person other than the Borrower, together
      with, in the case of any goods held by such Person for resale, (i) a
      consignee’s acknowledgment and waiver of Liens, (ii) UCC financing
      statements sufficient to protect the Borrower’s and the Lender’s interests in
      such goods, and (iii) UCC searches showing that no other secured party has
      filed a financing statement against such Person and covering property similar
      to
      the Borrower’s other than the Borrower, or if there exists any such secured
      party, evidence that each such secured party has received notice from the
      Borrower and the Lender sufficient to protect the Borrower’s and the Lender’s
      interests in the Borrower’s goods from any claim by such secured
      party.

     

    (g) An
      acknowledgment and waiver of Liens from each warehouse in which the Borrower
      is
      storing Inventory.

     

    (h) A
      true
      and correct copy of any and all agreements pursuant to which the Borrower’s
      property is in the possession of any Person other than the Borrower, together
      with, (i) an acknowledgment and waiver of Liens from each subcontractor who
      has possession of the Borrower’s goods from time to time, (ii) UCC
      financing statements sufficient to protect the Borrower’s and the Lender’s
      interests in such goods, and (iii) UCC searches showing that no other
      secured party has filed a financing statement covering such Person’s property
      other than the Borrower, or if there exists any such secured party, evidence
      that each such secured party has received notice from the Borrower and the
      Lender sufficient to protect the Borrower’s and the Lender’s interests in the
      Borrower’s goods from any claim by such secured party.

     

    (i) The
      Collection Account Agreement. 

     

    (j) Control
      agreements with each bank at which the Borrower maintains deposit
      accounts.

     

    (k) [Intentionally
      Omitted]

     

    (l) [Intentionally
      Omitted]

     

    (m) Current
      searches of appropriate filing offices showing that (i) no Liens have been
      filed and remain in effect against the Borrower except Permitted Liens or Liens
      held by Persons who have agreed in writing that upon receipt of proceeds of
      the
      initial Advances, they will satisfy, release or terminate such Liens in a manner
      satisfactory to the Lender, and (ii) the Lender has duly filed all
      financing statements necessary to perfect the Security Interest, to the extent
      the Security Interest is capable of being perfected by filing.

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

     

    (n) A
      certificate of the Borrower’s Secretary or Assistant Secretary certifying that
      attached to such certificate are (i) the resolutions of the Borrower’s
      Directors and, if required, Owners, authorizing the execution, delivery and
      performance of the Loan Documents, (ii) true, correct and complete copies
      of the Borrower’s Constituent Documents, and (iii) examples of the
      signatures of the Borrower’s Officers or agents authorized to execute and
      deliver the Loan Documents and other instruments, agreements and certificates,
      including Advance requests, on the Borrower’s behalf.

     

    (o) A
      current
      certificate issued by the Delaware Department of State, certifying that the
      Borrower is in compliance with all applicable organizational requirements of
      the
      State of Delaware.
      

     

    (p) Evidence
      that the Borrower is duly licensed or qualified to transact business in all
      jurisdictions where the character of the property owned or leased or the nature
      of the business transacted by it makes such licensing or qualification
      necessary.

     

    (q) A
      certificate of an Officer of the Borrower confirming, in his official capacity,
      the representations and warranties set forth in Article V.

     

    (r) Certificates
      of the insurance required hereunder, with all hazard insurance containing a
      lender’s loss payable endorsement in the Lender’s favor and with all liability
      insurance naming the Lender as an additional insured.

     

    (s) Payment
      of the fees and commissions due under Section 2.7 through the date of the
      initial Advance or Letter of Credit and expenses incurred by the Lender through
      such date and required to be paid by the Borrower under Section 8.5, including
      all legal expenses incurred through the date of this Agreement.

     

    (t)
       Evidence
      that after making the initial Revolving Advance, satisfying all obligations
      owed
      to the Borrower’s prior lender, satisfying all trade payables older than
      60 days from invoice date, book overdrafts and closing costs, Availability
      shall be not less than $2,000,000.00. 

     

    (u) A
      Customer Identification Information form and such other forms and verification
      as the Lender may need to comply with the U.S.A. Patriot Act. 

    

    (v) Such
      other documents as the Lender in its sole discretion may require.

     

    
      
         

      

      
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    Section
      4.2 Conditions
      Precedent to All Advances and Letters of Credit. The Lender’s obligation to
      make each Advance or to cause the issuance of a Letter of Credit shall be
      subject to the further conditions precedent that:

     

    (a) the
      representations and warranties contained in Article V are correct on and as
      of the date of such Advance or issuance of a Letter of Credit as though made
      on
      and as of such date, except to the extent that such representations and
      warranties relate solely to an earlier date; and

     

    (b) no
      event
      has occurred and is continuing, or would result from such Advance or issuance
      of
      a Letter of Credit which constitutes a Default or an Event of
      Default.

     

    ARTICLE
      V

     

    REPRESENTATIONS
      AND WARRANTIES

     

    The
      Borrower represents and warrants to the Lender as follows:

     

    Section
      5.1 Existence
      and Power; Name; Chief Executive Office; Inventory and Equipment Locations;
      Federal Employer Identification Number and Organizational Identification
      Number.
      The Borrower is a corporation, duly organized, validly existing and in good
      standing under the laws of the State of Delaware and is duly licensed or
      qualified to transact business in all jurisdictions where the character of
      the
      property owned or leased or the nature of the business transacted by it makes
      such licensing or qualification necessary. The Borrower has all requisite power
      and authority to conduct its business, to own its properties and to execute
      and
      deliver, and to perform all of its obligations under, the Loan Documents. During
      its existence, the Borrower has done business solely under the names set forth
      in Schedule 5.1. The Borrower’s chief executive office and principal place of
      business is located at the address set forth in Schedule 5.1, and all of the
      Borrower’s records relating to its business or the Collateral are kept at that
      location. All Inventory and Equipment is located at that location or at one
      of
      the other locations listed in Schedule 5.1. The Borrower’s federal employer
      identification number and organization identification number are correctly
      set
      forth in Section 3.6.

     

    Section
      5.2 Capitalization.
      Schedule 5.2 constitutes a correct and complete list of all ownership interests
      of the Borrower and rights to acquire ownership interests including the record
      holder, number of interests and percentage interests on a fully diluted basis,
      and an organizational chart showing the ownership structure of all Subsidiaries
      of the Borrower.

     

    Section
      5.3 Authorization
      of Borrowing; No Conflict as to Law or Agreements.
      The execution, delivery and performance by the Borrower of the Loan Documents
      and the borrowings from time to time hereunder have been duly authorized by
      all
      necessary corporate action and do not and will not (i) require any consent
      or approval of the Borrower’s Owners; (ii) require any authorization,
      consent or approval by, or registration, declaration or filing with, or notice
      to, any governmental department, commission, board, bureau, agency or
      instrumentality, domestic or foreign, or any third party, except such
      authorization, consent, approval, registration, declaration, filing or notice
      as
      has been obtained, accomplished or given prior to the date hereof;
      (iii) violate any provision of any law, rule or regulation (including
      Regulation X of the Board of Governors of the Federal Reserve System) or of
      any order, writ, injunction or decree presently in effect having applicability
      to the Borrower or of the Borrower’s Constituent Documents; (iv) result in
      a breach of or constitute a default under any indenture or loan or credit
      agreement or any other material agreement, lease or instrument to which the
      Borrower is a party or by which it or its properties may be bound or affected;
      or (v) result in, or require, the creation or imposition of any Lien (other
      than the Security Interest) upon or with respect to any of the properties now
      owned or hereafter acquired by the Borrower.

     

    
      
         

      

      
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    Section
      5.4 Legal
      Agreements.
      This Agreement constitutes and, upon due execution by the Borrower, the other
      Loan Documents will constitute the legal, valid and binding obligations of
      the
      Borrower, enforceable against the Borrower in accordance with their respective
      terms.

     

    Section
      5.5 Subsidiaries.
      Except as set forth in Schedule 5.5 hereto, the Borrower has no
      Subsidiaries.

     

    Section
      5.6 Financial
      Condition; No Adverse Change.
      The Borrower has furnished to the Lender its audited consolidated and
      consolidating financial statements for its fiscal year ended December 31, 2005
      and internally prepared financial statements for the fiscal-year-to-date period
      ended January 31, 2006, and those statements fairly present the Borrower’s
      financial condition on the dates thereof and the results of its operations
      and
      cash flows for the periods then ended and were prepared in accordance with
      GAAP.
      Since the date of the most recent financial statements, there has been no change
      in the Borrower’s business, properties or condition (financial or otherwise)
      which has had a Material Adverse Effect. 

     

    Section
      5.7 Litigation.
      There are no actions, suits or proceedings pending or, to the Borrower’s
      knowledge, threatened against or affecting the Borrower or any of its Affiliates
      or the properties of the Borrower or any of its Affiliates before any court
      or
      governmental department, commission, board, bureau, agency or instrumentality,
      domestic or foreign, which, if determined adversely to the Borrower or any
      of
      its Affiliates, would result in a final judgment or judgments against the
      Borrower or any of its Affiliates in an amount in excess of $50,000.00, apart
      from those matters specifically listed in Schedule 5.7. 

     

    Section
      5.8 Regulation U.
      The Borrower is not engaged in the business of extending credit for the purpose
      of purchasing or carrying margin stock (within the meaning of Regulation U
      of
      the Board of Governors of the Federal Reserve System), and no part of the
      proceeds of any Advance will be used to purchase or carry any margin stock
      or to
      extend credit to others for the purpose of purchasing or carrying any margin
      stock.

     

    Section
      5.9 Taxes.
      The Borrower and its Affiliates have paid or caused to be paid to the proper
      authorities when due all federal, state and local taxes required to be withheld
      by each of them. The Borrower and its Affiliates have filed all federal, state
      and local tax returns which to the knowledge of the Officers of the Borrower
      or
      any Affiliate, as the case may be, are required to be filed, and the Borrower
      and its Affiliates have paid or caused to be paid to the respective taxing
      authorities all taxes as shown on said returns or on any assessment received
      by
      any of them to the extent such taxes have become due.

     

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

     

    Section
      5.10 Titles
      and Liens.
      The Borrower has good and absolute title to all Collateral free and clear of
      all
      Liens other than Permitted Liens. No financing statement naming the Borrower
      as
      debtor is on file in any office except to perfect only Permitted
      Liens.

     

    Section
      5.11 Intellectual
      Property Rights.

     

    (a) Owned
      Intellectual Property.
      Schedule 5.11 is a complete list of all patents, applications for patents,
      trademarks, applications to register trademarks, service marks, applications
      to
      register service marks, mask works, trade dress and copyrights for which the
      Borrower is the owner of record (the “Owned Intellectual Property”). Except as
      disclosed on Schedule 5.11, (i) the Borrower owns the Owned Intellectual
      Property free and clear of all restrictions (including covenants not to sue
      a
      third party), court orders, injunctions, decrees, writs or Liens, whether by
      written agreement or otherwise, (ii) no Person other than the Borrower owns
      or has been granted any right in the Owned Intellectual Property, (iii) all
      Owned Intellectual Property is valid, subsisting and enforceable and
      (iv) the Borrower has taken all commercially reasonable action necessary to
      maintain and protect the Owned Intellectual Property.

     

    (b) Agreements
      with Employees and Contractors.
      The
      Borrower has entered into a legally enforceable agreement with each of its
      employees and subcontractors obligating each such Person to assign to the
      Borrower, without any additional compensation, any Intellectual Property Rights
      created, discovered or invented by such Person in the course of such Person’s
      employment or engagement with the Borrower (except to the extent prohibited
      by
      law), and further requiring such Person to cooperate with the Borrower, without
      any additional compensation, in connection with securing and enforcing any
      Intellectual Property Rights therein; provided,
      however,
      that
      the foregoing shall not apply with respect to employees and subcontractors
      whose
      job descriptions are of the type such that no such assignments are reasonably
      foreseeable.

     

    (c) Intellectual
      Property Rights Licensed from Others.
      Schedule 5.11 is a complete list of all agreements under which the Borrower
      has
      licensed Intellectual Property Rights from another Person (“Licensed
      Intellectual Property”) other than readily available, non-negotiated licenses of
      computer software and other intellectual property used solely for performing
      accounting, word processing and similar administrative tasks (“Off-the-shelf
      Software”) and a summary of any ongoing payments the Borrower is obligated to
      make with respect thereto. Except as disclosed on Schedule 5.11 and in written
      agreements, copies of which have been given to the Lender, the Borrower’s
      licenses to use the Licensed Intellectual Property are free and clear of all
      restrictions, Liens, court orders, injunctions, decrees, or writs, whether
      by
      written agreement or otherwise. Except as disclosed on Schedule 5.11, the
      Borrower is not obligated or under any liability whatsoever to make any
      payments of a material nature by way of royalties, fees or otherwise to any
      owner of, licensor of, or other claimant to, any Intellectual Property
      Rights.

     

    (d) Other
      Intellectual Property Needed for Business.
      Except
      for Off-the-shelf Software and as disclosed on Schedule 5.11, the Owned
      Intellectual Property and the Licensed Intellectual Property constitute all
      Intellectual Property Rights used or necessary to conduct the Borrower’s
      business as it is presently conducted or as the Borrower reasonably foresees
      conducting it.

     

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

     

    (e) Infringement.
      Except
      as disclosed on Schedule 5.11, the Borrower has no knowledge of, and has not
      received any written claim or notice alleging, any Infringement of another
      Person’s Intellectual Property Rights (including any written claim that the
      Borrower must license or refrain from using the Intellectual Property Rights
      of
      any third party) nor, to the Borrower’s knowledge, is there any threatened claim
      or any reasonable basis for any such claim.

     

    Section
      5.12 Plans.
      Except as disclosed to the Lender in writing prior to the date hereof, neither
      the Borrower nor any ERISA Affiliate (i) maintains or has maintained any Pension
      Plan, (ii) contributes or has contributed to any Multiemployer Plan or
      (iii) provides or has provided post-retirement medical or insurance benefits
      with respect to employees or former employees (other than benefits required
      under Section 601 of ERISA, Section 4980B of the IRC or applicable state law).
      Neither the Borrower nor any ERISA Affiliate has received any notice or has
      any
      knowledge to the effect that it is not in full compliance with any of the
      requirements of ERISA, the IRC or applicable state law with respect to any
      Plan.
      No Reportable Event exists in connection with any Pension Plan. Each Plan which
      is intended to qualify under the IRC is so qualified, and no fact or
      circumstance exists which may have an adverse effect on the Plan’s tax-qualified
      status. Neither the Borrower nor any ERISA Affiliate has (i) any
      accumulated funding deficiency (as defined in Section 302 of ERISA and Section
      412 of the IRC) under any Plan, whether or not waived, (ii) any liability
      under Section 4201 or 4243 of ERISA for any withdrawal, partial withdrawal,
      reorganization or other event under any Multiemployer Plan or (iii) any
      liability or knowledge of any facts or circumstances which could result in
      any
      liability to the Pension Benefit Guaranty Corporation, the Internal Revenue
      Service, the Department of Labor or any participant in connection with any
      Plan
      (other than routine claims for benefits under the Plan).

     

    Section
      5.13 Default.
      The Borrower is in compliance with all provisions of all agreements,
      instruments, decrees and orders to which it is a party or by which it or its
      property is bound or affected, the breach or default of which could have a
      Material Adverse Effect. 

     

    Section
      5.14 Environmental
      Matters.
      To Borrower’s knowledge as to the subsections herein:

     

    (a) Except
      as
      disclosed on Schedule 5.14, there are not present in, on or under the Premises
      any Hazardous Substances in such form or quantity as to create any material
      liability or obligation for either the Borrower or the Lender under the common
      law of any jurisdiction or under any Environmental Law, and no Hazardous
      Substances have ever been stored, buried, spilled, leaked, discharged, emitted
      or released in, on or under the Premises in such a way as to create any such
      material liability. 

    

    (b) Except
      as
      disclosed on Schedule 5.14, the Borrower has not disposed of Hazardous
      Substances in such a manner as to create any material liability under any
      Environmental Law.

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

     

    (c) Except
      as
      disclosed on Schedule 5.14, there have not existed in the past, nor are there
      any threatened or impending requests, claims, notices, investigations, demands,
      administrative proceedings, hearings or litigation relating in any way to the
      Premises or the Borrower, alleging material liability under, violation of,
      or
      noncompliance with any Environmental Law or any license, permit or other
      authorization issued pursuant thereto. 

     

    (d) Except
      as
      disclosed on Schedule 5.14, the Borrower’s businesses are and have in the past
      always been conducted in accordance with all Environmental Laws and all
      licenses, permits and other authorizations required pursuant to any
      Environmental Law and necessary for the lawful and efficient operation of such
      businesses are in the Borrower’s possession and are in full force and effect,
      nor has the Borrower been denied insurance on grounds related to potential
      environmental liability. No permit required under any Environmental Law is
      scheduled to expire within 12 months and there is no threat that any such permit
      will be withdrawn, terminated, limited or materially changed.

     

    (e) Except
      as
      disclosed on Schedule 5.14, the Premises are not and never have been listed
      on
      the National Priorities List, the Comprehensive Environmental Response,
      Compensation and Liability Information System or any similar federal, state
      or
      local list, schedule, log, inventory or database.

     

    (f) The
      Borrower has delivered to the Lender all environmental assessments, audits,
      reports, permits, licenses and other documents which are in the Borrower’s
      possession and control describing or relating in any way to the Premises or
      the
      Borrower’s businesses.

     

    Section
      5.15 Submissions
      to Lender.
      All financial and other information provided to the Lender by or on behalf
      of
      the Borrower in connection with the Borrower’s request for the credit facilities
      contemplated hereby (i) is true and correct in all material respects,
      (ii) does not omit any material fact necessary to make such information not
      misleading and, (iii) as to projections, valuations or proforma financial
      statements, presents a good faith opinion as to such projections, valuations
      and
      proforma condition and results.

     

    Section
      5.16 Financing
      Statements.
      The
      Borrower has authorized the filing of financing statements sufficient when
      filed
      to perfect the Security Interest and the other security interests created by
      the
      Security Documents. When such financing statements are filed in the offices
      noted therein, the Lender will have a valid and perfected security interest
      in
      all Collateral which is capable of being perfected by filing financing
      statements. None of the Collateral is or will become a fixture on real estate,
      unless a sufficient fixture filing is in effect with respect
      thereto. 

     

    Section
      5.17 Rights
      to Payment.
      Each right to payment and each instrument, document, chattel paper and other
      agreement constituting or evidencing Collateral is (or, in the case of all
      future Collateral, will be when arising or issued) the valid, genuine and
      legally enforceable obligation, subject to no defense, setoff or counterclaim,
      of the account debtor or other obligor named therein or in the Borrower’s
      records pertaining thereto as being obligated to pay such
      obligation.

     

    
      
         

      

      
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    Section
      5.18 Financial
      Solvency.
      Both before and after giving effect to the refinancing and all of the
      transactions contemplated in the Loan Documents, none of the Borrower or its
      Affiliates:

     

    (a) Was
      or
      will be insolvent, as that term is used and defined in Section 101(32) of the
      United States Bankruptcy Code and Section 2 of the Uniform Fraudulent Transfer
      Act;

     

    (b) Has
      unreasonably small capital or is engaged or about to engage in a business or
      a
      transaction for which any remaining assets of the Borrower or such Affiliate
      are
      unreasonably small;

     

    (c) By
      executing, delivering or performing its obligations under the Loan Documents
      or
      other documents to which it is a party or by taking any action with respect
      thereto, intends to, nor believes that it will, incur debts beyond its ability
      to pay them as they mature;

     

    (d) By
      executing, delivering or performing its obligations under the Loan Documents
      or
      other documents to which it is a party or by taking any action with respect
      thereto, intends to hinder, delay or defraud either its present or future
      creditors; and

     

    (e) At
      this
      time contemplates filing a petition in bankruptcy or for an arrangement or
      reorganization or similar proceeding under any law of any jurisdiction, nor,
      to
      the best knowledge of the Borrower, is the subject of any actual, pending or
      threatened bankruptcy, insolvency or similar proceedings under any law of any
      jurisdiction.

     

    ARTICLE
      VI

     

    COVENANTS

     

    So
      long
      as the Obligations shall remain unpaid, or the Credit Facility shall remain
      outstanding, the Borrower will comply with the following requirements, unless
      the Lender shall otherwise consent in writing:

     

    Section
      6.1 Reporting
      Requirements.
      The Borrower will deliver, or cause to be delivered, to the Lender each of
      the
      following, which shall be in form and detail acceptable to the
      Lender:

     

    (a) Annual
      Financial Statements.
      As soon
      as available, and in any event within 90 days after the end of each fiscal
      year
      of the Borrower, the Borrower’s audited financial statements on a consolidated
      and consolidating basis with the unqualified opinion of independent certified
      public accountants selected by the Borrower and acceptable to the Lender, which
      annual financial statements shall include the Borrower’s balance sheet as at the
      end of such fiscal year and the related statements of the Borrower’s income,
      retained earnings and cash flows for the fiscal year then ended, prepared,
      if
      the Lender so requests, on a consolidating and consolidated basis to include
      any
      Affiliates, all in reasonable detail and prepared in accordance with GAAP,
      together with (i) copies of all management letters prepared by such
      accountants; (ii) an acknowledgment as part of the audited financial
      statements and/or documents filed with the Securities and Exchange Commission
      (“SEC”) signed by such accountants stating whether any Default or Event of
      Default then exists (and, if any Default or Event of Default then exists, a
      description of such Default or Event of Default); and (iii) a certificate
      of the Borrower’s chief financial officer stating that such financial statements
      have been prepared in accordance with GAAP, fairly represent the Borrower’s
      financial position and the results of its operations, and whether or not such
      Officer has knowledge of the occurrence of any Default or Event of Default
      and,
      if so, stating in reasonable detail the facts with respect thereto.

     

    
      
         

      

      
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    (b) Monthly
      Financial Statements.
      As soon
      as available and in any event within 20 days after the end of each month,
      the internally prepared unaudited/internal balance sheet and statements of
      income and retained earnings of the Borrower as at the end of and for such
      month
      and for the year to date period then ended, prepared, if the Lender so requests,
      on a consolidating and consolidated basis to include any Affiliates, in
      reasonable detail and stating in comparative form the figures for the
      corresponding date and periods in the previous year, all prepared in accordance
      with GAAP, subject to year-end audit adjustments and which fairly represent
      the
      Borrower’s financial position and the results of its operations; and accompanied
      by a certificate of the Borrower’s chief financial officer, substantially in the
      form of Exhibit B hereto stating (i) that such financial statements have
      been prepared in accordance with GAAP, subject to year-end audit adjustments,
      and fairly represent the Borrower’s financial position and the results of its
      operations, (ii) whether or not such Officer has knowledge of the
      occurrence of any Default or Event of Default not theretofore reported and
      remedied and, if so, stating in reasonable detail the facts with respect
      thereto, and (iii) all relevant facts in reasonable detail to evidence, and
      the computations as to, whether or not the Borrower is in compliance with the
      Financial Covenants.

     

    (c) Collateral
      Reports.
      Within
      15 days after the end of each month or more frequently if the Lender so
      requires, the Borrower’s accounts receivable and its accounts payable, a
      detailed inventory report, an inventory certification report, and a calculation
      of the Borrower’s Accounts, Eligible Accounts, Inventory and Eligible Inventory
      as at the end of such month or shorter time period (the “Collateral
      Reports”).
      Borrower
      agrees to submit the Collateral Reports to Lender via Collateral Services,
      Inc.
      (“CSI”) and further agrees to pay Lender as specified in Section 2.7(i) herein.
 

     

    (d) Projections.
      As soon
      as available, and in any event within 30 days prior to the beginning of each
      fiscal year, the Borrower will deliver to the Lender the Borrower’s projected
      balance sheets, income statements, statements of cash flow and projected
      Availability for each month of the succeeding fiscal year, each in reasonable
      detail. Such items will be certified by the Officer who is the Borrower’s chief
      financial officer as being the most accurate projections available and identical
      to the projections used by the Borrower for internal planning purposes and
      be
      delivered with a statement of underlying assumptions and such supporting
      schedules and information as the Lender may in its discretion
      require.

     

    (e) Supplemental
      Reports.
      Weekly,
      or more frequently if the Lender so requires, the Borrower’s “daily collateral
      reports”, receivables schedules, collection reports, copies of invoices to
      account debtors, signed and dated shipment documents and delivery receipts
      for
      goods sold to said account debtors, as requested by Lender in its sole
      discretion. 

    

    (f) Litigation.
      Immediately after the commencement thereof, notice in writing of all litigation
      and of all proceedings before any governmental or regulatory agency affecting
      the Borrower (i) of the type described in Section 5.14(c) or
      (ii) which seek a monetary recovery against the Borrower in excess of
      $50,000.

     

    
      
         

      

      
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    (g) Defaults.
      When
      any Officer of the Borrower becomes aware of the probable occurrence of any
      Default or Event of Default, and no later than 3 days after such Officer becomes
      aware of such Default or Event of Default, notice of such occurrence, together
      with a detailed statement by a responsible Officer of the Borrower of the steps
      being taken by the Borrower to cure the effect thereof.

     

    (h) Plans.
      As soon
      as possible, and in any event within 30 days after the Borrower knows or
      has reason to know that any Reportable Event with respect to any Pension Plan
      has occurred, a statement signed by the Officer who is the Borrower’s chief
      financial officer setting forth details as to such Reportable Event and the
      action which the Borrower proposes to take with respect thereto, together with
      a
      copy of the notice of such Reportable Event to the Pension Benefit Guaranty
      Corporation. As soon as possible, and in any event within 10 days after the
      Borrower fails to make any quarterly contribution required with respect to
      any
      Pension Plan under Section 412(m) of the IRC, the Borrower will deliver to
      the
      Lender a statement signed by the Officer who is the Borrower’s chief financial
      officer setting forth details as to such failure and the action which the
      Borrower proposes to take with respect thereto, together with a copy of any
      notice of such failure required to be provided to the Pension Benefit Guaranty
      Corporation. As soon as possible, and in any event within ten days after the
      Borrower knows or has reason to know that it has or is reasonably expected
      to
      have any liability under Sections 4201 or 4243 of ERISA for any withdrawal,
      partial withdrawal, reorganization or other event under any Multiemployer Plan,
      the Borrower will deliver to the Lender a statement of the Borrower’s chief
      financial officer setting forth details as to such liability and the action
      which the Borrower proposes to take with respect thereto.

     

    (i) Disputes.
      Promptly upon knowledge thereof, notice of (i) any disputes or claims by
      the Borrower’s customers exceeding $100,000 in the aggregate at any one time
      during any fiscal year; (ii) credit memos; and (iii) any goods
      returned to or recovered by the Borrower.

     

    (j) Officers
      and Directors.
      Promptly upon knowledge thereof, notice of any change in the persons
      constituting the Borrower’s Officers and Directors.

     

    (k) Collateral.
      Promptly upon knowledge thereof, notice of any material loss of or material
      damage to any Collateral or of any substantial adverse change in any Collateral
      or the prospect of payment thereof.

     

    (l) Commercial
      Tort Claims.
      Promptly upon knowledge thereof, notice of any commercial tort claims it may
      bring against any Person, including the name and address of each defendant,
      a
      summary of the facts, an estimate of the Borrower’s damages, copies of any
      complaint or demand letter submitted by the Borrower, and such other information
      as the Lender may request.

     

    
      
         

      

      
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    (m) Intellectual
      Property.

     

    (i) 30
      days
      prior written notice of Borrower’s intent to acquire material Intellectual
      Property Rights; except for transfers permitted under Section 6.18, the Borrower
      will give the Lender 30 days prior written notice of its intent to dispose
      of
      material Intellectual Property Rights and upon request shall provide the Lender
      with copies of all proposed documents and agreements concerning such
      rights.

     

    (ii) Promptly
      upon knowledge thereof, notice of (A) any Infringement of its Intellectual
      Property Rights by others, (B) claims that the Borrower is Infringing
      another Person’s Intellectual Property Rights and (C) any threatened
      cancellation, termination or material limitation of its Intellectual Property
      Rights.

     

    (iii) Promptly
      upon receipt, copies of all registrations and filings with respect to its
      Intellectual Property Rights.

     

    (n) Reports
      to Owners.
      Promptly upon their distribution, copies of all financial statements, reports
      and proxy statements which the Borrower shall have sent to its
      Owners.

     

    (o) SEC
      Filings.
      Promptly after the sending or filing thereof, copies of all regular and periodic
      reports which the Borrower shall file with the Securities and Exchange
      Commission or any national securities exchange.

     

    (p) Tax
      Returns of Borrower. As
      soon
      as possible, and in any event no later than five days after they are due to
      be filed, copies of the state and federal income tax returns and all schedules
      thereto of the Borrower.

    

    (q) Tax
      Returns and Personal Financial Statements of Owners.
      [Intentionally deleted]

    

    (r) Violations
      of Law.
      Promptly upon knowledge thereof, notice of the Borrower’s violation of any law,
      rule or regulation, the non-compliance with which could have a Material Adverse
      Effect on the Borrower. 

     

    (s)
       Other
      Reports.
      From
      time to time, with reasonable promptness, any and all receivables schedules,
      inventory reports, collection reports, deposit
      records, equipment schedules, copies of invoices to account debtors, shipment
      documents and delivery receipts for goods sole, and such other material,
      reports, records or information as the Lender may request. 

     

    Section
      6.2 Financial
      Covenants.

     

    (a) Net
      Earnings.
      While
      any part of the Obligations remains unpaid, the Borrower will not be required
      to
      demonstrate a required amount of Net Earnings if
      and
      only if
      Borrower’s average monthly excess Availability on the Revolving Facility is not
      less than Three Million Five Hundred Thousand Dollars ($3,500,000.00) (the
      “Minimum Excess Availability”); provided,
      however,
      that in
      the event that Borrower does not meet the Minimum Excess Availability while
      any
      part of the Obligations remains unpaid, then the Borrower shall, unless waived
      in writing by the Lender, demonstrate Net Earnings, as measured on a quarterly
      basis and calculated based upon Borrower’s trailing twelve (12) month, of: (i)
      not more than a negative Three Million Dollars (<$3,000,000.00>) during
      the fiscal year ending December 31, 2006; (ii) not more than a negative Two
      Million Dollars (<$2,000,000.00>) during the fiscal year ending December
      31, 2007; and (iii) not more than a negative One Million Dollars
      (<$1,000,000.00>) during the fiscal year ending December 31,
      2008.

     

    
      
         

      

      
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    (b) Capital
      Expenditures.
      The
      Borrower will not to subject to a Capital Expenditures limit so
      long as
      Borrower’s average monthly excess Availability on the Revolving Facility is not
      less than Three Million Five Hundred Thousand Dollars ($3,500,000.00) (the
      “Minimum Excess Availability”); provided,
      however,
      that in
      the event that Borrower does not meet the Minimum Excess Availability at any
      time during this Agreement, then the Borrower agrees that it will not incur
      or
      contract to incur Capital Expenditures of more than $1,700,000.00 in the
      aggregate for the fiscal year ending December 31, 2006; provided,
      further,
      however,
      that in
      the event that Borrower does not meet the Minimum Excess Availability at any
      time during this Agreement, then the Borrower agrees that it will not incur
      or
      contract to incur Capital Expenditures of more than $1,200,000.00 in the
      aggregate for the fiscal year ending December 31, 2007 and for each fiscal
      year
      end thereafter.

     

    Section
      6.3 Permitted
      Liens; Financing Statements.

     

    (a) The
      Borrower will not create, incur or suffer to exist any Lien upon or of any
      of
      its assets, now owned or hereafter acquired, to secure any indebtedness;
excluding,
      however,
      from
      the operation of the foregoing, the following (each a “Permitted Lien”;
      collectively, “Permitted Liens”):

     

    (i) In
      the
      case of any of the Borrower’s property which is not Collateral, covenants,
      restrictions, rights, easements and minor irregularities in title which do
      not
      materially interfere with the Borrower’s business or operations as presently
      conducted;

     

    (ii) Liens
      in
      existence on the date hereof and listed in Schedule 6.3 hereto, securing
      indebtedness for borrowed money permitted under Section 6.4; and 

     

    (iii) The
      Security Interest and Liens created by the Security Documents. 

     

    (b) The
      Borrower will not amend any financing statements in favor of the Lender except
      as permitted by law.
      Any
      authorization by the Lender to any Person to amend financing statements in
      favor
      of the Lender shall be in writing.

     

    Section
      6.4 Indebtedness.
      The Borrower will not incur, create, assume or permit to exist any indebtedness
      or liability on account of deposits or advances or any indebtedness for borrowed
      money or letters of credit issued on the Borrower’s behalf, or any other
      indebtedness or liability evidenced by notes, bonds, debentures or similar
      obligations, except:

     

    (a) Indebtedness
      arising hereunder;

     

    (b) Indebtedness
      of the Borrower in existence on the date hereof and listed in Schedule 6.4
      hereto; and

     

    
      
         

      

      
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    (c) Indebtedness
      relating to Permitted Liens.

     

    Section
      6.5 Guaranties.
      The Borrower will not assume, guarantee, endorse or otherwise become directly
      or
      contingently liable in connection with any obligations of any other Person,
      except:

     

    (a) The
      endorsement of negotiable instruments by the Borrower for deposit or collection
      or similar transactions in the ordinary course of business; and

     

    (b) Guaranties,
      endorsements and other direct or contingent liabilities in connection with
      the
      obligations of other Persons, in existence on the date hereof and listed in
      Schedule 6.4 hereto.

     

    Section
      6.6 Investments
      and Subsidiaries.
      The Borrower will not make or permit to exist any loans or advances to, or
      make
      any investment or acquire any interest whatsoever in, any other Person or
      Affiliate, including any partnership or joint venture, nor purchase or hold
      beneficially any stock or other securities or evidence of indebtedness of any
      other Person or Affiliate, except:

     

    (a) Investments
      in direct obligations of the United States of America or any agency or
      instrumentality thereof whose obligations constitute full faith and credit
      obligations of the United States of America having a maturity of one year or
      less, commercial paper issued by U.S. corporations rated “A-1” or “A-2” by
      Standard & Poor’s Ratings Services or “P-1” or “P-2” by Moody’s
      Investors Service or certificates of deposit or bankers’ acceptances having a
      maturity of one year or less issued by members of the Federal Reserve System
      having deposits in excess of $100,000,000 (which certificates of deposit or
      bankers’ acceptances are fully insured by the Federal Deposit Insurance
      Corporation);

     

    (b) Travel
      advances or loans to the Borrower’s Officers and employees not exceeding at any
      one time an aggregate of $10,000.00;
      

     

    (c) Prepaid
      rent not exceeding one month or security deposits; and

     

    (d) Current
      investments in the Subsidiaries in existence on the date hereof and listed
      in
      Schedule 5.5 hereto.

     

    Section
      6.7 Dividends
      and Distributions.
      The Borrower will not declare or pay any dividends (other than dividends payable
      solely in stock of the Borrower) on any class of its stock, or make any payment
      on account of the purchase, redemption or other retirement of any shares of
      such
      stock, or other securities or evidence of its indebtedness or make any
      distribution in respect thereof, either directly or indirectly. 

     

    Section
      6.8 Salaries.
      The Borrower will not pay excessive or unreasonable salaries, bonuses,
      commissions, consultant fees or other compensation.

     

    Section
      6.9 Intentionally
      Deleted.

     

    
      
         

      

      
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    Section
      6.10 Books
      and Records; Collateral
      Examination, Inspection and Appraisals. 

     

    (a) The
      Borrower will keep accurate books of record and account for itself pertaining
      to
      the Collateral and pertaining to the Borrower’s business and financial condition
      and such other matters as the Lender may from time to time request in which
      true
      and complete entries will be made in accordance with GAAP and, upon the Lender’s
      request, will permit any officer, employee, attorney, accountant or other agent
      of the Lender to audit, review, make extracts from or copy any and all company
      and financial books and records of the Borrower at all times during ordinary
      business hours, to send and discuss with account debtors and other obligors
      requests for verification of amounts owed to the Borrower, and to discuss the
      Borrower’s affairs with any of its Directors, Officers, employees or agents.

     

    (b) The
      Borrower hereby irrevocably authorizes all accountants and third parties to
      disclose and deliver to the Lender or its designated agent, at the Borrower’s
      expense, all financial information, books and records, work papers, management
      reports and other information in their possession regarding the Borrower.

     

    (c) The
      Borrower will permit the Lender or its employees, accountants, attorneys or
      agents, to examine and inspect any Collateral or any other property of the
      Borrower at any time during ordinary business hours. 

     

    (d) The
      Lender may also, in the event of an Event of Default by Borrower, obtain at
      the
      Borrower’s expense an appraisal of Inventory and Equipment by an appraiser
      acceptable to the Lender
      in
      its sole discretion. 

     

    Section
      6.11 Account
      Verification.
      

     

    (a) The
      Lender or its agent may at any time and from time to time send or require the
      Borrower to send requests for verification of accounts or notices of assignment
      to account debtors and other obligors. The Lender or its agent may also at
      any
      time and from time to time telephone account debtors and other obligors to
      verify accounts.

     

    (b) The
      Borrower shall pay when due unless being contested in good faith each account
      payable due to a Person holding a Permitted Lien (as a result of such payable)
      on any Collateral. 

    

    Section
      6.12 Compliance
      with Laws.

     

    (a) The
      Borrower shall (i) comply with the requirements of applicable laws and
      regulations, the non-compliance with which would materially and adversely affect
      its business or its financial condition and (ii) use and keep the
      Collateral, and require that others use and keep the Collateral, only for lawful
      purposes, without violation of any federal, state or local law, statute or
      ordinance.

     

    (b) Without
      limiting the foregoing undertakings, the Borrower specifically agrees that
      it
      will comply with all applicable Environmental Laws and obtain and comply with
      all permits, licenses and similar approvals required by any Environmental Laws,
      and will not generate, use, transport, treat, store or dispose of any Hazardous
      Substances in such a manner as to create any material liability or obligation
      under the common law of any jurisdiction or any Environmental Law.

     

    
      
         

      

      
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    (c) The
      Borrower
      shall (i) ensure that no Owner shall be listed on the Specially Designated
      Nationals and Blocked Person List or other similar lists maintained by the
      Office of Foreign Assets Control ("OFAC"), the Department of the Treasury or
      included in any Executive Orders, (ii) not use or permit the use of the proceeds
      of the Credit Facility or any other financial accommodation from the Lender
      to
      violate any of the foreign asset control regulations of OFAC or other applicable
      law, (iii) comply with all applicable Bank Secrecy Act laws and regulations,
      as
      amended from time to time, and (iv) otherwise comply with the USA Patriot Act
      as
      required by federal law and the Lender's policies and practices.

     

    Section
      6.13 Payment
      of Taxes and Other Claims.
      The Borrower will pay or discharge, when due, (a) all taxes, assessments
      and governmental charges levied or imposed upon it or upon its income or
      profits, upon any properties belonging to it (including the Collateral) or
      upon
      or against the creation, perfection or continuance of the Security Interest,
      prior to the date on which penalties attach thereto, (b) all federal, state
      and local taxes required to be withheld by it, and (c) all lawful claims
      for labor, materials and supplies which, if unpaid, might by law become a Lien
      upon any properties of the Borrower; provided, that the Borrower shall not
      be
      required to pay any such tax, assessment, charge or claim whose amount,
      applicability or validity is being contested in good faith by appropriate
      proceedings and for which proper reserves have been made.

     

    Section
      6.14 Maintenance
      of Properties.

     

    (a) The
      Borrower will keep and maintain the Collateral and all of its other properties
      necessary or useful in its business in good condition, repair and working order
      (normal wear and tear excepted) and will from time to time replace or repair
      any
      worn, defective or broken parts; provided,
      however,
      that
      nothing in this covenant shall prevent the Borrower from discontinuing the
      operation and maintenance of any of its properties if such discontinuance is,
      in
      the Borrower’s judgment, desirable in the conduct of the Borrower’s business and
      not disadvantageous in any material respect to the Lender. The Borrower will
      take all commercially reasonable steps necessary to protect and maintain its
      Intellectual Property Rights.

     

    (b) The
      Borrower will defend the Collateral against all Liens, claims or demands of
      all
      Persons (other than the Lender) claiming the Collateral or any interest therein.
      The Borrower will keep all Collateral free and clear of all Liens except
      Permitted Liens. The Borrower will take all commercially reasonable steps
      necessary to prosecute any Person Infringing its Intellectual Property Rights
      and to defend itself against any Person accusing it of Infringing any Person’s
      Intellectual Property Rights.

     

    Section
      6.15 Insurance.
      The Borrower will obtain and at all times maintain insurance with insurers
      acceptable to the Lender, in such amounts, on such terms (including any
      deductibles) and against such risks as may from time to time be required by
      the
      Lender, but in all events in such amounts and against such risks as is usually
      carried by companies engaged in similar business and owning similar properties
      in the same general areas in which the Borrower operates. Without limiting
      the
      generality of the foregoing, the Borrower will at all times maintain business
      interruption insurance including coverage for force majeure and keep all
      tangible Collateral insured against risks of fire (including so-called extended
      coverage), theft, collision (for Collateral consisting of motor vehicles) and
      such other risks and in such amounts as the Lender may reasonably request,
      with
      any loss payable to the Lender to the extent of its interest, and all policies
      of such insurance shall contain a lender’s loss payable endorsement for the
      Lender’s benefit. All policies of liability insurance required hereunder shall
      name the Lender as an additional insured.

     

    
      
         

      

      
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    Section
      6.16 Preservation
      of Existence.
      The Borrower will preserve and maintain its existence and all of its rights,
      privileges and franchises necessary or desirable in the normal conduct of its
      business and shall conduct its business in an orderly, efficient and regular
      manner.

     

    Section
      6.17 Delivery
      of Instruments, etc.
      Upon
      request by the Lender, the Borrower will promptly deliver to the Lender in
      pledge all instruments, documents and chattel paper constituting Collateral,
      duly endorsed or assigned by the Borrower.

     

    Section
      6.18 Sale
      or Transfer of Assets; Suspension of Business Operations.
      The Borrower will not sell, lease, assign, transfer or otherwise dispose of
      (i) the stock of any Subsidiary, (ii) all or a substantial part of its
      assets, or (iii) any Collateral or any interest therein (whether in one
      transaction or in a series of transactions) to any other Person other than
      the
      sale of Inventory in the ordinary course of business and will not liquidate,
      dissolve or suspend business operations. The Borrower will not transfer any
      part
      of its ownership interest in any Intellectual Property Rights and will not
      permit any agreement under which it has licensed Licensed Intellectual Property
      to lapse, except that the Borrower may transfer such rights or permit such
      agreements to lapse if it shall have reasonably determined that the applicable
      Intellectual Property Rights are no longer useful in its business. If the
      Borrower transfers any Intellectual Property Rights for value, the Borrower
      will
      pay over the proceeds to the Lender for application to the Obligations. The
      Borrower will not license any other Person to use any of the Borrower’s
      Intellectual Property Rights, except that the Borrower may grant licenses in
      the
      ordinary course of its business in connection with sales of Inventory or
      provision of services to its customers.

     

    Section
      6.19 Consolidation
      and Merger; Asset Acquisitions.
      The Borrower will not consolidate with or merge into any Person, or permit
      any
      other Person to merge into it, or acquire (in a transaction analogous in purpose
      or effect to a consolidation or merger) all or substantially all the assets
      of
      any other Person without the written consent of the Lender, which consent shall
      not be unreasonably withheld.

     

    Section
      6.20 Sale
      and Leaseback.
      The Borrower will not enter into any arrangement, directly or indirectly, with
      any other Person whereby the Borrower shall sell or transfer any real or
      personal property, whether now owned or hereafter acquired, and then or
      thereafter rent or lease as lessee such property or any part thereof or any
      other property which the Borrower intends to use for substantially the same
      purpose or purposes as the property being sold or transferred.

     

    
      
         

      

      
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    Section
      6.21 Restrictions
      on Nature of Business.
      The Borrower will not engage in any line of business materially different from
      that presently engaged in by the Borrower and will not purchase, lease or
      otherwise acquire assets not related to its business.

     

    Section
      6.22 Accounting.
      The Borrower will not adopt any material change in accounting principles other
      than as required by GAAP. The Borrower will not adopt, permit or consent to
      any
      change in its fiscal year.

     

    Section
      6.23 Discounts,
      etc.
      After
      notice from the Lender, the Borrower will not grant any discount, credit or
      allowance to any customer of the Borrower or accept any return of goods sold.
      The Borrower will not at any time modify, amend, subordinate, cancel or
      terminate the obligation of any account debtor or other obligor of the
      Borrower.

     

    Section
      6.24 Plans.
      Unless disclosed to the Lender pursuant to Section 5.12, neither the Borrower
      nor any ERISA Affiliate will (i) adopt, create, assume or become a party to
      any
      Pension Plan, (ii) incur any obligation to contribute to any Multiemployer
      Plan,
      (iii) incur any obligation to provide post-retirement medical or insurance
      benefits with respect to employees or former employees (other than benefits
      required by law) or (iv) amend any Plan in a manner that would materially
      increase its funding obligations.

     

    Section
      6.25 Place
      of Business; Name.
      The Borrower will not transfer its chief executive office or principal place
      of
      business, or move, relocate, close or sell any business location except as
      disclosed on Schedule 5.1. The Borrower will not permit any tangible Collateral
      or any records pertaining to the Collateral to be located in any state or area
      in which, in the event of such location, a financing statement covering such
      Collateral would be required to be, but has not in fact been, filed in order
      to
      perfect the Security Interest. The Borrower will not change its name or
      jurisdiction of organization.

     

    Section
      6.26 Constituent
      Documents; S Corporation Status.
      The Borrower will not amend its Constituent Documents. The Borrower will not
      become an S Corporation. 

     

    Section
      6.27 Performance
      by the Lender.
      If the Borrower at any time fails to perform or observe any of the foregoing
      covenants contained in this Article VI or elsewhere herein, and if such
      failure shall continue for a period of ten calendar days after the Lender gives
      the Borrower written notice thereof (or in the case of the agreements contained
      in Section 6.13 and Section 6.15, immediately upon the occurrence of such
      failure, without notice or lapse of time), the Lender may, but need not, perform
      or observe such covenant on behalf and in the name, place and stead of the
      Borrower (or, at the Lender’s option, in the Lender’s name) and may, but need
      not, take any and all other actions which the Lender may reasonably deem
      necessary to cure or correct such failure (including the payment of taxes,
      the
      satisfaction of Liens, the performance of obligations owed to account debtors
      or
      other obligors, the procurement and maintenance of insurance, the execution
      of
      assignments, security agreements and financing statements, and the endorsement
      of instruments); and the Borrower shall thereupon pay to the Lender on demand
      the amount of all monies expended and all costs and expenses (including
      reasonable attorneys’ fees and legal expenses) incurred by the Lender in
      connection with or as a result of the performance or observance of such
      agreements or the taking of such action by the Lender, together with interest
      thereon from the date expended or incurred at the Default Rate. To facilitate
      the Lender’s performance or observance of such covenants of the Borrower, the
      Borrower hereby irrevocably appoints the Lender, or the Lender’s delegate,
      acting alone, as the Borrower’s attorney in fact (which appointment is coupled
      with an interest) with the right (but not the duty) from time to time to create,
      prepare, complete, execute, deliver, endorse or file in the name and on behalf
      of the Borrower any and all instruments, documents, assignments, security
      agreements, financing statements, applications for insurance and other
      agreements and writings required to be obtained, executed, delivered or endorsed
      by the Borrower hereunder.

     

    
      
         

      

      
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    ARTICLE
      VII

     

    EVENTS
      OF DEFAULT, RIGHTS AND REMEDIES

     

    Section
      7.1 Events
      of Default.
      “Event of Default”, wherever used herein, means any one of the following
      events:

     

    (a) Default
      in the payment of any Obligations when they become due and payable;

     

    (b) Default
      in the performance, or breach, of any covenant or agreement of the Borrower
      contained in this Agreement;

     

    (c) An
      Overadvance arises as the result of any reduction in the Borrowing Base, or
      arises in any manner on terms not otherwise approved of in advance by the Lender
      in writing; 

     

    (d) A
      Change
      of Control shall occur; 

     

    (e) Any
      Financial Covenant shall become inapplicable due to the lapse of time and the
      failure to amend any such covenant to cover future periods;

     

    (f) The
      Borrower or any Guarantor shall be or become insolvent, or admit in writing
      its
      or his inability to pay its or his debts as they mature, or make an assignment
      for the benefit of creditors; or the Borrower or any Guarantor shall apply
      for
      or consent to the appointment of any receiver, trustee, or similar officer
      for
      it or him or for all or any substantial part of its or his property; or such
      receiver, trustee or similar officer shall be appointed without the application
      or consent of the Borrower or such Guarantor, as the case may be; or the
      Borrower or any Guarantor shall institute (by petition, application, answer,
      consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement,
      readjustment of debt, dissolution, liquidation or similar proceeding relating
      to
      it or him under the laws of any jurisdiction; or any such proceeding shall
      be
      instituted (by petition, application or otherwise) against the Borrower or
      any
      such Guarantor; or any judgment, writ, warrant of attachment or execution or
      similar process shall be issued or levied against a substantial part of the
      property of the Borrower or any Guarantor;

     

    (g) A
      petition shall be filed by or against the Borrower or any Guarantor under the
      United States Bankruptcy Code or the laws of any other jurisdiction naming
      the
      Borrower or such Guarantor as debtor and such petition is not dismissed within
      60 days of the filing of such petition, provided,
      further,
      however,
      that an
      Order relating to financing acceptable to Lender in its sole discretion is
      entered by a court of competent jurisdiction;

     

    
      
         

      

      
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    (h) Any
      representation or warranty made by the Borrower in this Agreement, by any
      Guarantor in any Guaranty delivered to the Lender, or by the Borrower (or any
      of
      its Officers) or any Guarantor in any agreement, certificate, instrument or
      financial statement or other statement contemplated by or made or delivered
      pursuant to or in connection with this Agreement or any such Guaranty shall
      prove to have been incorrect in any material respect when deemed to be
      effective;

     

    (i) The
      rendering against the Borrower of an arbitration award, final judgment, decree
      or order for the payment of money in excess of $100,000 and the continuance
      of
      such arbitration award, judgment, decree or order unsatisfied and in effect
      for
      any period of 30 consecutive days without a stay of execution;

     

    (j) A
      default
      under any bond, debenture, note or other evidence of material indebtedness
      of
      the Borrower owed to any Person other than the Lender, or under any indenture
      or
      other instrument under which any such evidence of indebtedness has been issued
      or by which it is governed, or under any material lease or other contract,
      and
      the expiration of the applicable period of grace, if any, specified in such
      evidence of indebtedness, indenture, other instrument, lease or
      contract;

     

    (k) Any
      Reportable Event, which the Lender determines in good faith might constitute
      grounds for the termination of any Pension Plan or for the appointment by the
      appropriate United States District Court of a trustee to administer any Pension
      Plan, shall have occurred and be continuing 30 days after written notice to
      such effect shall have been given to the Borrower by the Lender; or a trustee
      shall have been appointed by an appropriate United States District Court to
      administer any Pension Plan; or the Pension Benefit Guaranty Corporation shall
      have instituted proceedings to terminate any Pension Plan or to appoint a
      trustee to administer any Pension Plan; or the Borrower or any ERISA Affiliate
      shall have filed for a distress termination of any Pension Plan under Title
      IV
      of ERISA; or the Borrower or any ERISA Affiliate shall have failed to make
      any
      quarterly contribution required with respect to any Pension Plan under Section
      412(m) of the IRC, which the Lender determines in good faith may by itself,
      or
      in combination with any such failures that the Lender may determine are likely
      to occur in the future, result in the imposition of a Lien on the Borrower’s
      assets in favor of the Pension Plan; or any withdrawal, partial withdrawal,
      reorganization or other event occurs with respect to a Multiemployer Plan which
      results or could reasonably be expected to result in a material liability of
      the
      Borrower to the Multiemployer Plan under Title IV of ERISA;

     

    (l) An
      event
      of default shall occur under any Security Document;

     

    (m) The
      Borrower shall liquidate, dissolve, terminate or suspend its business operations
      or otherwise fail to operate its business in the ordinary course, merge with
      another Person unless the Borrower is the surviving entity; or sell or attempt
      to sell all or substantially all of its assets, without the Lender’s prior
      written consent;

     

    (n) Default
      in the payment of any amount owed by the Borrower to the Lender other than
      any
      indebtedness arising hereunder;

     

    
      
         

      

      
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    (p) Any
      event
      or circumstance with respect to the Borrower shall occur such that the Lender
      shall believe in good faith that the prospect of payment of all or any part
      of
      the Obligations or the performance by the Borrower under the Loan Documents
      is
      impaired or any material adverse change in the business or financial condition
      of the Borrower shall occur; 

     

    (q) Any
      breach, default or event of default by or attributable to any Affiliate under
      any agreement between such Affiliate and the Lender shall occur;
      or

     

    (r) The
      indictment of any Director, Officer, Guarantor, or any Owner of the Borrower
      for
      a felony offence under state or federal law. 

     

    Section
      7.2 Rights
      and Remedies.
      During any Default Period, the Lender may exercise any or all of the following
      rights and remedies:

     

    (a) The
      Lender may, by notice to the Borrower, declare the Commitment to be terminated,
      whereupon the same shall forthwith terminate;

     

    (b) The
      Lender may, by notice to the Borrower, declare the Obligations to be forthwith
      due and payable, whereupon all Obligations shall become and be forthwith due
      and
      payable, without presentment, notice of dishonor, protest or further notice
      of
      any kind, all of which the Borrower hereby expressly waives;

     

    (c) The
      Lender may, without notice to the Borrower and without further action, apply
      any
      and all money owing by the Lender to the Borrower to the payment of the
      Obligations;

     

    (d) The
      Lender may exercise and enforce any and all rights and remedies available upon
      default to a secured party under the UCC, including the right to take possession
      of Collateral, or any evidence thereof, proceeding without judicial process
      or
      by judicial process (without a prior hearing or notice thereof, which the
      Borrower hereby expressly waives) and the right to sell, lease or otherwise
      dispose of any or all of the Collateral (with or without giving any warranties
      as to the Collateral, title to the Collateral or similar warranties), and,
      in
      connection therewith, the Borrower will on demand assemble the Collateral and
      make it available to the Lender at a place to be designated by the Lender which
      is reasonably convenient to both parties;

     

    (e) The
      Lender may make demand upon the Borrower and, forthwith upon such demand, the
      Borrower will pay to the Lender in immediately available funds for deposit
      in
      the Special Account pursuant to Section 2.5 an amount equal to the aggregate
      maximum amount available to be drawn under all Letters of Credit then
      outstanding, assuming compliance with all conditions for drawing
      thereunder;

     

    (f) The
      Lender may exercise and enforce its rights and remedies under the Loan
      Documents; 

     

    (g) The
      Lender may without regard to any waste, adequacy of the security or solvency
      of
      the Borrower, apply for the appointment of a receiver of the Collateral, to
      which appointment the Borrower hereby consents, whether or not foreclosure
      proceedings have been commenced under the Security Documents and whether or
      not
      a foreclosure sale has occurred; and 

     

    
      
         

      

      
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    (h) The
      Lender may exercise any other rights and remedies available to it by law or
      agreement.

     

    Notwithstanding
      the foregoing, upon the occurrence of an Event of Default described in Section
      7.1(f) or (g), the Obligations shall be immediately due and payable
      automatically without presentment, demand, protest or notice of any kind. If
      the
      Lender sells any of the Collateral on credit, the Obligations will be reduced
      only to the extent of payments actually received. If the purchaser fails to
      pay
      for the Collateral, the Lender may resell the Collateral and shall apply any
      proceeds actually received to the Obligations.

     

    Section
      7.3 Certain
      Notices.
      If notice to the Borrower of any intended disposition of Collateral or any
      other
      intended action is required by law in a particular instance, such notice shall
      be deemed commercially reasonable if given (in the manner specified in Section
      8.3) at least ten calendar days before the date of intended disposition or
      other
      action.

     

    ARTICLE
      VIII

     

    MISCELLANEOUS

     

    Section
      8.1 No
      Waiver; Cumulative Remedies; Compliance with Laws.
      No failure or delay by the Lender in exercising any right, power or remedy
      under
      the Loan Documents shall operate as a waiver thereof; nor shall any single
      or
      partial exercise of any such right, power or remedy preclude any other or
      further exercise thereof or the exercise of any other right, power or remedy
      under the Loan Documents. The remedies provided in the Loan Documents are
      cumulative and not exclusive of any remedies provided by law. The Lender may
      comply with any applicable state or federal law requirements in connection
      with
      a disposition of the Collateral and such compliance will not be considered
      adversely to affect the commercial reasonableness of any sale of the
      Collateral.

     

    Section
      8.2 Amendments,
      Etc.
      No
      amendment, modification, termination or waiver of any provision of any Loan
      Document or consent to any departure by the Borrower therefrom or any release
      of
      a Security Interest shall be effective unless the same shall be in writing
      and
      signed by the Lender, and then such waiver or consent shall be effective only
      in
      the specific instance and for the specific purpose for which given. No notice
      to
      or demand on the Borrower in any case shall entitle the Borrower to any other
      or
      further notice or demand in similar or other circumstances.

     

    Section
      8.3 Notices;
      Communication of Confidential Information; Requests for
      Accounting.
      Except
      as otherwise expressly provided herein, all notices, requests, demands and
      other
      communications provided for under the Loan Documents shall be in writing and
      shall be (a) personally delivered, (b) sent by first class United
      States mail, (c) sent by overnight courier of national reputation,
      (d) transmitted by telecopy, or (e) sent as electronic mail, in each case
      delivered or sent to the party to whom notice is being given to the business
      address, telecopier number, or e mail address set forth below next to its
      signature or, as to each party, at such other business address, telecopier
      number, or e mail address as it may hereafter designate in writing to the other
      party pursuant to the terms of this Section. All such notices, requests, demands
      and other communications shall be deemed to be an authenticated record
      communicated or given on (a) the date received if personally delivered,
      (b) when deposited in the mail if delivered by mail, (c) the date
      delivered to the courier if delivered by overnight courier, or (d) the date
      of transmission if sent by telecopy or by e mail, except that notices or
      requests delivered to the Lender pursuant to any of the provisions of
      Article II shall not be effective until received by the Lender. All
      notices, financial information, or other business records sent by either party
      to this Agreement may be transmitted, sent, or otherwise communicated via such
      medium as the sending party may deem appropriate and commercially reasonable;
      provided,
      however,
      that
      the risk that the confidentiality or privacy of such notices, financial
      information, or other business records sent by either party may be compromised
      shall be borne exclusively by the Borrower. All requests for an accounting
      under
      Section 9-210 of the UCC (i) shall be made in a writing signed by a Person
      authorized under Section 2.2(b), (ii) shall be personally delivered, sent
      by registered or certified mail, return receipt requested, or by overnight
      courier of national reputation, (iii) shall be deemed to be sent when
      received by the Lender and (iv) shall otherwise comply with the requirements
      of
      Section 9-210. The Borrower requests that the Lender respond to all such
      requests which on their face appear to come from an authorized individual and
      releases the Lender from any liability for so responding. The Borrower shall
      pay
      the Lender the maximum amount allowed by law for responding to such
      requests. 

     

    
      
         

      

      
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    Section
      8.4 Further
      Documents.
      The Borrower will from time to time execute, deliver, endorse and authorize
      the
      filing of any and all instruments, documents, conveyances, assignments, security
      agreements, financing statements, control agreements and other agreements and
      writings that the Lender may reasonably request in order to secure, protect,
      perfect or enforce the Security Interest or the Lender’s rights under the Loan
      Documents (but any failure to request or assure that the Borrower executes,
      delivers, endorses or authorizes the filing of any such item shall not affect
      or
      impair the validity, sufficiency or enforceability of the Loan Documents and
      the
      Security Interest, regardless of whether any such item was or was not executed,
      delivered or endorsed in a similar context or on a prior occasion).

     

    Section
      8.5 Costs
      and Expenses.
      The Borrower shall pay on demand all costs and expenses, including reasonable
      attorneys’ fees, incurred by the Lender in connection with the Obligations, this
      Agreement, the Loan Documents, any Letter of Credit and any other document
      or
      agreement related hereto or thereto, and the transactions contemplated hereby,
      including all such costs, expenses and fees incurred in connection with the
      negotiation, preparation, execution, amendment, administration, performance,
      collection and enforcement of the Obligations and all such documents and
      agreements and the creation, perfection, protection, satisfaction, foreclosure
      or enforcement of the Security Interest.

     

    Section
      8.6 Indemnity.
      In addition to the payment of expenses pursuant to Section 8.5, the Borrower
      shall indemnify, defend and hold harmless the Lender, and any of its
      participants, parent corporations, subsidiary corporations, affiliated
      corporations, successor corporations, and all present and future officers,
      directors, employees, attorneys and agents of the foregoing (the “Indemnitees”)
      from and against any of the following (collectively, “Indemnified
      Liabilities”):

     

    (i) Any
      and
      all transfer taxes, documentary taxes, assessments or charges made by any
      governmental authority by reason of the execution and delivery of the Loan
      Documents or the making of the Advances;

     

    
      
         

      

      
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    (ii) Any
      claims, loss or damage to which any Indemnitee may be subjected if any
      representation or warranty contained in Section 5.14 proves to be incorrect
      in
      any respect or as a result of any violation of the covenant contained in Section
      6.12(b) ; and

     

    (iii) Any
      and
      all other liabilities, losses, damages, penalties, judgments, suits, claims,
      costs and expenses of any kind or nature whatsoever (including the reasonable
      fees and disbursements of counsel) in connection with the foregoing and any
      other investigative, administrative or judicial proceedings, whether or not
      such
      Indemnitee shall be designated a party thereto, which may be imposed on,
      incurred by or asserted against any such Indemnitee, in any manner related
      to or
      arising out of or in connection with the making of the Advances and the Loan
      Documents or the use or intended use of the proceeds of the Advances.

     

    If
      any
      investigative, judicial or administrative proceeding arising from any of the
      foregoing is brought against any Indemnitee, upon such Indemnitee’s request, the
      Borrower, or counsel designated by the Borrower and satisfactory to the
      Indemnitee, will resist and defend such action, suit or proceeding to the extent
      and in the manner directed by the Indemnitee, at the Borrower’s sole costs and
      expense. Each Indemnitee will use its best efforts to cooperate in the defense
      of any such action, suit or proceeding. If the foregoing undertaking to
      indemnify, defend and hold harmless may be held to be unenforceable because
      it
      violates any law or public policy, the Borrower shall nevertheless make the
      maximum contribution to the payment and satisfaction of each of the Indemnified
      Liabilities which is permissible under applicable law. The Borrower’s obligation
      under this Section 8.6 shall survive the termination of this Agreement and
      the
      discharge of the Borrower’s other obligations hereunder. Notwithstanding any of
      the foregoing, Borrower shall not have any obligation for Indemnified
      Liabilities arising from the gross negligence or willful misconduct of any
      Indemnitees determined by a final order of a court of competent jurisdiction.
      

     

    Section
      8.7 Participants.
      The Lender and its participants, if any, are not partners or joint venturers,
      and the Lender shall not have any liability or responsibility for any
      obligation, act or omission of any of its participants. All rights and powers
      specifically conferred upon the Lender may be transferred or delegated to any
      of
      the Lender’s participants, successors or assigns.

     

    Section
      8.8 Execution
      in Counterparts; Telefacsimile Execution.
      This Agreement and other Loan Documents may be executed in any number of
      counterparts, each of which when so executed and delivered shall be deemed
      to be
      an original and all of which counterparts, taken together, shall constitute
      but
      one and the same instrument. Delivery of an executed counterpart of this
      Agreement by telefacsimile shall be equally as effective as delivery of an
      original executed counterpart of this Agreement. Any party delivering an
      executed counterpart of this Agreement by telefacsimile also shall deliver
      an
      original executed counterpart of this Agreement but the failure to deliver
      an
      original executed counterpart shall not affect the validity, enforceability,
      and
      binding effect of this Agreement.

     

    Section
      8.9 Retention
      of Borrower’s Records.
      The Lender shall have no obligation to maintain any electronic records or any
      documents, schedules, invoices, agings, or other papers delivered to the Lender
      by the Borrower or in connection with the Loan Documents for more than 30 days
      after receipt by the Lender.
      If there
      is a special need to retain specific records, the Borrower must inform the
      Lender of its need to retain those records with particularity, which must be
      delivered in accordance with the notice provisions of Section 8.3 within 30
      days
      of the Lender taking control of same. 

     

    
      
         

      

      
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    Section
      8.10 Binding
      Effect; Assignment; Complete Agreement; Sharing Information.
      The Loan Documents shall be binding upon and inure to the benefit of the
      Borrower and the Lender and their respective successors and assigns, except
      that
      the Borrower shall not have the right to assign its rights thereunder or any
      interest therein without the Lender’s prior written consent. To the extent
      permitted by law, the Borrower waives and will not assert against any assignee
      any claims, defenses or set-offs which the Borrower could assert against the
      Lender. This Agreement shall also bind all Persons who become a party to this
      Agreement as a borrower. This Agreement, together with the Loan Documents,
      comprises the complete and integrated agreement of the parties on the subject
      matter hereof and supersedes all prior agreements, written or oral, on the
      subject matter hereof. To the extent that any provision of this Agreement
      contradicts other provisions of the Loan Documents, this Agreement shall
      control. Without limiting the Lender’s right to share information regarding the
      Borrower and its Affiliates with the Lender’s participants, accountants, lawyers
      and other advisors, the Lender and Wells Fargo Bank may share with each other
      any and all information they may have in their possession regarding the Borrower
      and its Affiliates, and the Borrower waives any right of confidentiality it
      may
      have with respect to such sharing of information.

     

    Section
      8.11 Severability
      of Provisions.
      Any provision of this Agreement which is prohibited or unenforceable shall
      be
      ineffective to the extent of such prohibition or unenforceability without
      invalidating the remaining provisions hereof.

     

    Section
      8.12 Headings.
      Article, Section and subsection headings in this Agreement are included herein
      for convenience of reference only and shall not constitute a part of this
      Agreement for any other purpose.

     

    Section
      8.13 Governing
      Law; Jurisdiction, Venue; Waiver of Jury Trial.
      The Loan Documents shall be governed by and construed in accordance with the
      substantive laws (other than conflict laws) of the State of Wisconsin. The
      parties hereto hereby (i) consent to the personal jurisdiction of the state
      and federal courts located in the State of Wisconsin in connection with any
      controversy related to this Agreement; (ii) waive any argument that venue
      in any such forum is not convenient; (iii) agree that any litigation
      initiated by the Lender or the Borrower in connection with this Agreement or
      the
      other Loan Documents may be venued in either the state or federal courts located
      in the County of Milwaukee, Wisconsin; and (iv) agree that a final judgment
      in any such suit, action or proceeding shall be conclusive and may be enforced
      in other jurisdictions by suit on the judgment or in any other manner provided
      by law. 

     

    Section
      8.14 
      Intentionally Deleted. 

     

    
      
         

      

      
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    THE
      BORROWER AND THE LENDER WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION AT LAW
      OR
      IN EQUITY OR IN ANY OTHER PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT
      OR
      ANY OTHER LOAN DOCUMENT. Borrower’s Initials /s/
 MAM  ; Lender’s
      Initials
      /s/ MLD  ;

    
      
        

      

    

     

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

     

    
      	
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                West Bryn Mawr Avenue, Suite 200

              Chicago,
                Illinois 60631

              Telecopier:
                773-272-4028

              Attention:
                M. Martinez

              e-mail:
                mikem@ubid.com

            	
              uBID.COM
                HOLDINGS, INC.

               

              By:
                /s/
                Miguel A. Martinez, Jr.

               

              Miguel
                Martinez, Jr.

              Its
                Vice President Finance

            
	 	 
	
              UBid,
                Inc.

              8550
                West Bryn Mawr Avenue, Suite 200 

              Chicago,
                Illinois 60631 

              Telecopier:
                773-272-0428 

              Attention:
                M. Martinez

              e-mail:
                mikem@ubid.com

            	
              UBID,
                INC.

By:
                /s/
                Miguel A. Martinez, Jr.

              
Miguel
                Martinez, Jr.

              Its
                Vice President Finance

            
	 	 
	
              Wells
                Fargo Bank, National Association, 

              acting
                through its Wells Fargo Business Credit 

              operating
                division

              100
                East Wisconsin Avenue, Suite 1400

              Milwaukee,
                Wisconsin 53202 

              Telecopier:
                

              Attention:
                Melissa Dreifuerst

              e-mail:
                Melissa.Dreifuerst@wellsfargo.com

            	
              WELLS
                FARGO BANK, NATIONAL ASSOCIATION, 

              acting
                through its Wells Fargo Business Credit 

              operating
                division

               

              By:
                /s/
                Melissa L. Dreifuerst

               

              Melissa
                Dreifuerst

              Its
                Vice President

            

    

    

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

     

    
      REVOLVING
        NOTE

       

      
        	
                $25,000,000.00

              	
                May
                  9, 2006

              

      

       

      For
        value
        received, the undersigned, uBID.COM HOLDINGS, INC., a Delaware corporation
        (“uBid.Com) and UBID, INC., a Delaware corporation (“UBid”), each a Borrower are
        hereinafter collectively referred to as (the “Borrower”), jointly and severally
        hereby promises to pay on the Termination Date under the Credit Agreement
        (defined below), to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (the
        “Lender”), acting through its Wells Fargo Business Credit operating division, at
        its office in Milwaukee, Wisconsin, or at any other place designated at any
        time
        by the holder hereof, in lawful money of the United States of America and
        in
        immediately available funds, the principal sum of Twenty-Five Million Dollars
        ($25,000,000.00) or the aggregate unpaid principal amount of all Revolving
        Advances made by the Lender to the Borrower under the Credit Agreement (defined
        below) together with interest on the principal amount hereunder remaining
        unpaid
        from time to time, computed on the basis of the actual number of days elapsed
        and a 360-day year, from the date hereof until this Note is fully paid at
        the
        rate from time to time in effect under the Credit and Security Agreement
        dated
        the same date as this Note (the “Credit Agreement”) by and between the Lender
        and the Borrower. The principal hereof and interest accruing thereon shall
        be
        due and payable as provided in the Credit Agreement. This Note may be prepaid
        only in accordance with the Credit Agreement.

       

      This
        Note
        is issued pursuant, and is subject, to the Credit Agreement, which provides,
        among other things, for acceleration hereof. This Note is the Revolving Note
        referred to in the Credit Agreement. This Note is secured, among other things,
        pursuant to the Credit Agreement and the Security Documents as therein defined,
        and may now or hereafter be secured by one or more other security agreements,
        mortgages, deeds of trust, assignments or other instruments or
        agreements.

       

      The
        Borrower shall pay all costs of collection, including reasonable attorneys’ fees
        and legal expenses if this Note is not paid when due, whether or not legal
        proceedings are commenced.

       

      Presentment
        or other demand for payment, notice of dishonor and protest are expressly
        waived.

       

       

      
        	
                UBID.COM
                  HOLDINGS, INC.

                

                By:
                  /s/
                  Robert H. Tomlinson, Jr.

                Name:
                  Robert H. Tomlinson, Jr.

                Its:
                  President and Chief Executive Officer

                

                UBID,
                  INC.

                

                By:
                  /s/ Timothy E. Takesue

                Name:
                  Timothy E. Takesue

                Its:
                  Executive Vice President --
                  MerchandiseExhibit
      10.126: Certain confidential information in this Exhibit 10.126 was omitted
      and
      filed separately with the Securities and Exchange Commission (“SEC”) with a
      request for confidential treatment by Inter Parfums,
      Inc.

    CONTRAT
      DE LICENCE DE MARQUES

    

     

    ENTRE
      LES SOUSSIGNES :

    

    

    	-  	
             QS
              HOLDINGS, SARL
              de
              droit luxembourgeois ayant son siège social situé 1, rue de Glacis, Duché
              de Luxembourg et ayant un établissement Rue Centrale 115, CH-2503 Biel,
              Bienne, Suisse, représentée par son Senior Vice-Président Monsieur Peter
              Bloxham et ci-après dénommée le « Concédant »,

          

    

    D’une
      part,

    

    ET

    

    	-  	
            INTER-PARFUMS,
              société anonyme ayant son siège social situé 4, rond-point des Champs
              Elysées, 75008 Paris, immatriculée au RCS de Paris sous le numéro 350 219
              382, représentée par son Président-Directeur Général, Monsieur Philippe
              Benacin, et ci-après dénommée le « Licencié »,

          

    

    

    D’autre
      part,

    

    

    IL
      EST D’ABORD EXPOSE QUE:

    

    Le
      Concédant, avec ses sociétés parentes et affiliées, est propriétaire des marques
« QUIKSILVER », « ROXY » et des logos qui leurs sont
      associés, incluant mais non limités au logo « Mountain & Wave » et
      au logo « Heart » qu’il a déposés à titre de marques dans divers pays
      dans le monde entier et sous lesquels il conçoit, développe, fabrique, distribue
      et promeut depuis de nombreuses années une vaste ligne de vêtements,
      accessoires, équipement sportif et produits associés conçus pour une clientèle
      dynamique adoptant un style de vie décontracté, issu de l’héritage des sports de
      glisse, avec un style exclusif et haut de gamme .

    

    Les
      marques « QUIKSILVER » et « ROXY » et leurs logos associés
      ont acquis dans le secteur d’activité du Concédant une notoriété mondiale et le
      Concédant souhaite se développer davantage dans le domaine des cosmétiques, des
      soins de la peau et de la parfumerie.

    

    De
      son
      côté, le Licencié tient une place de premier plan sur le marché mondial des
      produits de parfumerie et des cosmétiques, grâce aux moyens et à la longue
      expérience dont il dispose tant en matière de conception et de développement
      qu’en matière de communication et de distribution.

    

    Dans
      le
      cadre du rapprochement entre le Licencié et le Concédant, et en considération de
      l’effet bénéfique que la conjonction de leurs forces respectives ne manquerait
      pas d’avoir sur leurs affaires, les parties ont examiné les conditions dans
      lesquelles l’attribution d’une licence pour les parfums au Licencié pourrait
être effectuée à leurs avantages communs.

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
 

    IL
      EST ALORS CONVENU CE QUI SUIT :

    

    

    ARTICLE
      1 - DEFINITIONS

    

    

    	1.1  	
            L’expression
              « Marques
              Concédées »
              utilisée dans le présent contrat désigne outre les noms
              « QUIKSILVER » et « ROXY », les marques listées en
              Annexe
              1
              aux présentes appliquées aux « Produits » tels que définis comme
              ci-après et dans la Classe internationale 3 de dépôt des marques, ainsi
              que les noms, abréviations, symboles et autres signes distinctifs
              quelconques, qui lui sont actuellement ou lui seront dans le futur
              associés sur l’initiative du Concédant ou sur proposition du Licencié
              expressément acceptée par écrit par le
              Concédant.

          

    

    

    	1.2  	
            Le
              terme « Produits »
              désigne les produits de parfumerie, cosmétiques, de toilette, et les
              produits de soins visage et corporels incluant les soins solaires vendus
              sous l’une ou plusieurs des « Marques Concédées » telles que
              décrites en Annexe
              2
              aux présentes, étant convenu expressément que pour les parfums et
              déodorants actuels et futurs pour homme le Concédant exercera ses droits
              conformément aux dispositions de l’article 2-3 ci-après.
              

          

    

    

    	1.3  	
            Le
              terme « Territoire »
              désigne tous les pays du monde où les Marques Concédées sont ou seront
              déposées dans la Classe internationale 3 ou tels qu’approuvés par écrit
              par le Concédant en vertu de l’article 7.7 des présentes, incluant les
              zones de vente en Duty-Free. Est jointe à l’Annexe 1 des présentes une
              liste des demandes de marques et enregistrements de marques actuels
              du
              Concédant en classe 3, par pays et listant les produits
              désignés.

          

    

    

    	1.4  	
            L’expression
              « Chiffre
              d’Affaires Net Mondial »
              désigne, pour les besoins de calcul des redevances, le chiffre d’affaires
              mondial de la vente des Produits incluant la facturation de la PLV,
étant
              précisé qu’il s’agit du montant hors taxes des ventes facturées par
              :

          

    

    	·  	
            le
              Licencié à tous ses « détaillants » (tout point de vente ou
              espace de vente au consommateur final habilité à vendre les Produits),
              étant précisé que si la vente est effectuée à un détaillant possédé ou
              contrôlé par le Licencié, le montant est réputé être le montant dont le
              Licencié aurait facturé le détaillant si celui-ci n’était pas possédé ou
              contrôlé par le Licencié ;

          

    	·  	
            le
              Licencié aux « distributeurs indépendants » (toute société
              indépendante habilitée à revendre les Produits en vertu d’un contrat écrit
              ou d’accords avec le Licencié à des détaillants dans un ou plusieurs
              pays). Par distributeur indépendant, il convient d’entendre toute entité
              qui ne soit pas contrôlée par le Licencié au sens des dispositions de
              l’article 233-3 du Code du
              Commerce ;

          

    	·  	
            par
              les distributeurs locaux ou filiales, contrôlés par le Licencié au sens
              des dispositions de l’article 233-3 du Code du Commerce, aux détaillants
              (tout point de vente ou espace de vente au consommateur final habilité à
              vendre les Produits).

          

    

    

    	1.5  	
            L’expression
              « Lancement
              de Nouveaux Produits »
              désigne les opérations décrites en Annexe
              3.

          

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    	1.6  	
            L’expression
              « Activités
              de Publicité et de Promotion »
              désigne : uniquement les achats d’espaces publicitaires de toute
              nature et dans tous médias, la diffusion de produits gratuits
              (échantillons, collatéraux) et la publicité sur les lieux de vente, y
              compris les objets promotionnels. Elle inclut également les dépenses
              suivantes : les frais de personnel engagé au titre de la vente ou de
              la présentation des Produits en magasins, les ouvertures de stand, les
              participations à des salons professionnels et expositions et les espaces
              de présentation des Produits.

          

    

    	1.7  	
            L’expression
              de la « P.L.V » désigne : testeurs, miniatures (5ml),
              échantillons (2ml), comptoirs/présentoirs, pancartes, sacs shopping et
              « blotters ».

          

    

    

    

    ARTICLE
      2 - LICENCE 

    

    2.1 Le
      Concédant concède au Licencié qui accepte, à compter de la date d’effet des
      présentes en vertu de l’article 11 ci-après, une licence exclusive d’utilisation
      des Marques Concédées, pour la conception, le développement, la fabrication, la
      vente, la distribution et la commercialisation des Produits dans le Territoire,
      conformément aux dispositions et conditions des présentes. Dans le présent
      contexte, l’utilisation du terme « exclusif » signifie que, pour toute
      la durée du présent contrat, le Concédant s’interdit d’accorder d’autres
      licences relatives à la création, développement, fabrication et/ou vente des
      Produits porteurs des Marques Concédées, conformément à l’article
      10.1

    

    2.2
       Le
      Licencié s’engage expressément par les présentes à développer ses meilleurs
      efforts pour promouvoir, développer et étendre les ventes des Produits dans le
      Territoire, afin d’assurer une connaissance et une demande continues et
      croissantes des Produits dans et à travers chacun des pays du
      Territoire.

    

    Le
      Licencié s’engage également expressément par les présentes à fabriquer ou faire
      fabriquer des quantités suffisantes de Produits jusqu’au terme du présent
      contrat afin de satisfaire la demande des Produits et à promouvoir les Produits
      par tous moyens publicitaires adaptés, modernes, importants et
      effectifs.

    

    2.3 Les
      parties conviennent qu’en ce qui concerne le cas particulier des parfums et
      déodorants (eau de toilette et eaux de parfums, lotions, baumes après rasage et
      déodorants) pour homme sous la marque « QUIKSILVER », l’exercice des
      droits concédés ci-dessus à l’article 2.1 est soumis à l’obtention de l’accord
      préalable écrit du Concédant, étant précisé que ce dernier décidera librement de
      la suite à donner à la demande du Licencié de créer un tel produit.

    

    2.4 Le
      présent contrat étant strictement personnel entre le Concédant et le Licencié,
      aucune des deux parties n’est en conséquence autorisée à céder ni à transférer à
un quelconque tiers tout ou partie de ses droits ou obligations découlant du
      présent contrat, à l’exception du Concédant qui peut librement transférer ou
      céder les droits découlant du présent contrat à toute entité appartenant au
      Groupe Quiksilver au sens de l’article L 233-3 du Code de commerce, à condition
      que ce transfert ou cette cession maintienne au Licencié les mêmes droits sur
      les Marques Concédées au titre du présent contrat . En outre, les droits
      conférés au Licencié par le présent contrat lui étant strictement personnels et
      intransférables ou incessibles, le Licencié s’engage à ne pas concéder de
      sous-licences totales ou partielles de ses droits concédés au titre du présent
      contrat et s’engage à ne donner en garantie, gager ou concéder aucun droit tiré
du présent contrat à quelque tiers que ce soit.

    

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    ARTICLE
      3 - PRINCIPES DE BASE

    

    3.1 Le
      Licencié aura, en coordination avec le Concédant et sous réserve de l’accord de
      ce dernier, le choix du sous-traitant, l’initiative et la direction de la
      fabrication des Produits du présent contrat dont il assumera seul la
      responsabilité dans les conditions exprimées ci-après.

    

    3.2 Le
      Licencié aura également, en concertation avec le Concédant, le choix du
      prestataire (créateurs de parfums, désigner de flacons, d’étuis, etc.),
      l’initiative et la responsabilité de la création, après qu’aura été définie avec
      le Concédant l’orientation de ladite création, cela dans le cadre général décrit
      au présent article et dans celui de l’univers exclusif aux marques QUIKSILVER et
      ROXY.

    

    3.3 Le
      Licencié est autorisé, sous son entière responsabilité, à confier la
      distribution des Produits à toutes sociétés indépendantes et/ou filiales
      contrôlées par le Licencié et s’engage à faire respecter par ces dernières les
      termes du présent contrat.

    

    3.4 En
      conséquence de ce qui précède, le Licencié s’engage à respecter et à faire
      respecter en permanence, dans toutes ses actions et initiatives, l’image de
      qualité, de haut de gamme et d’originalité attachée aux Marques Concédées,
      notamment en ce qui concerne la qualité des Produits du présent contrat, leur
      aspect créatif, leur publicité, leur promotion et leur distribution. Le Licencié
se conformera sans délai à toute instruction raisonnable du Concédant concernant
      la manière et la forme de l’usage des Marques Concédées.

    

    3.5 Le
      Licencié s’engage à respecter et à faire respecter par ses salariés,
      représentants, agents, mandataires et/ou ayants droits, ainsi que par ses
      sociétés affiliées et sous-traitants, pendant la durée des présentes, toutes les
      lois et règlements en vigueur sur le Territoire ayant trait à l’objet des
      présentes. 

    

    3.6 A
      ce
      titre, le Licencié déclare, en son nom et pour le compte de toutes ses sociétés
      affiliées, que toutes les polices d’assurances nécessaires à la réalisation de
      l’objet des présentes ont été et seront régulièrement souscrites et payées et
      seront maintenues en vigueur et effectives pendant toute la durée des présentes.
      En ce qui concerne les polices de responsabilité civile, le Licencié s’engage à
souscrire une telle police couvrant ses activités relatives au présent contrat
      pour un montant suffisant et conforme aux usages de la profession.

    

    Le
      Licencié s’engage également à inclure le Concédant et ses affiliés, ainsi que
      leurs directeurs, présidents, employés, agents et contractants en tant que
      bénéficiaires additionnels désignés assurés.

    

    Le
      Licencié s’engage également à fournir au Concédant une attestation d’assurance
      en cours dès la signature des présentes et sur toute demande raisonnable
      formulée par le Concédant.

    

    3.7 Le
      Licencié s’interdit pendant la durée des présentes, d’utiliser à titre de raison
      sociale ou de dénomination sociale, directement ou par l’une des entités dans
      lesquelles elle aurait une participation ou un contrôle direct ou indirect,
      l’une quelconque des Marques Concédées, ainsi que plus généralement les noms
«QUIKSILVER » et/ou « ROXY » et leurs logos
      associés.

    

    3.8 Les
      parties conviennent que la notoriété et la renommée de « QUIKSILVER »
et « ROXY » et des autres Marques Concédées dans le secteur d’activité
du Concédant est un élément important de ces marques. Dans cette optique, le
      Concédant et le Licencié attachent tout deux une importance primordiale à ce que
      dans tous les domaines l’image haut de gamme, de qualité et de style exclusif
      attachée aux marques « QUIKSILVER » et « ROXY » et aux
      autres Marques Concédées se retrouve et soit respectée en permanence.  Dans
      cette optique, le Concédant s’engage à maintenir la renommée et la notoriété des
      noms « QUIKSILVER » et « ROXY » dans son domaine exclusif,
      afin de soutenir régulièrement le Licencié dans ses efforts de positionnement
      des marques « QUIKSILVER » et « ROXY » sur les marchés des
      produits de beauté et de la parfumerie.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
 

    ARTICLE
      4 - CREATION, FABRICATION, DISTRIBUTION

    

    

    4.1 Le
      Licencié aura la charge et la responsabilité d’assurer à ses frais la création,
      la conception, la mise au point et la fabrication des Produits, dans le respect
      des principes énoncés à l’article 3 ci-dessus et sous réserve de l’acceptation
écrite préalable du Concédant.

     

    4.2 Le
      Licencié assume au plan mondial et à titre exclusif la charge entière de la
      conception, du développement de l’élaboration et de la fabrication des Produits.
      Le Licencié s’engage à créer et à commercialiser des produits de grande qualité
de conception, d’exécution, d’esthétique sur le marché international de produits
      de beauté et de parfumerie qui répondent à des standards de style et qualité
comparables aux marques citées en Annexe
      6.
      Le
      Licencié sera seul responsable de la conformité avec toutes lois et
      réglementations dans chaque pays du Territoire et devra obtenir toute
      approbation réglementaire, dédouanement et autorisation nécessaires à la
      création, la fabrication, la promotion, la distribution et la vente des Produits
      (incluant, sans y être limité, l’emballage des Produits).

    

    4.3 
      Création des Produits et du visuel publicitaire :

    La
      création des Produits et des visuels publicitaires relatifs à ces Produits devra
      s'inscrire dans la cohérence d'un style exclusif à l’univers de
« QUIKSILVER » et « ROXY », et afin de garantir cette
      cohérence, le Licencié associera le Concédant, dont l’accord sera nécessaire, à
toutes les étapes de la création et du développement étant précisé que dans tous
      les cas les parties feront leurs meilleurs efforts pour coopérer en vue
      d’aboutir ensemble à un projet commun et étant entendu que le Concédant se
      réserve le droit d’approbation finale de tout Produit et toute publicité pour
      les Produits.

    Pour
      toute création de Produit, le Licencié recherchera l’accord préalable écrit du
      Concédant sur le projet aux principales étapes suivantes :

    

    	·  	
            Mise
              au point du concept Produit 

          

    	·  	
            Rédaction
              des briefs destinés aux créateurs (design et parfum) leur donnant une
              directive de travail 

          

    	·  	
            Mise
              au point du design du flacon

          

    	·  	
            Développement
              et choix du jus

          

    	·  	
            Développement
              et choix du packaging

          

    	·  	
            Choix
              du nom du Produit

          

    	·  	
            Le
              concept du visuel publicitaire et projets de mise en page relatifs
              au
              nouveau Produit envisagé et destinés à la
              publicité

          

    

    

    4.4. Développement
      industriel ou mise au point technique des Produits :

    Le
      Licencié s’engage à ce que les Produits soient fabriqués selon les standards de
      qualité de l’industrie afin qu’ils soient conformes au style haut de gamme de
      l’environnement de «QUIKSILVER » et de « ROXY » et des autres
      Marques Concédées.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    En
      particulier, la fabrication des Produits et la destruction de tout surplus,
      matière première , ingrédient ou Produits non utilisés doivent être en
      conformité avec toutes les lois et règlements, standards de santé et de
      sécurité, dans l’ensemble des pays constituant le Territoire, et doit notamment
      respecter l’environnement, et le Licencié ne doit tester ou faire tester aucun
      Produit, ingrédient ou matériau sur aucun animal..

    

    La
      fabrication de tout Produit doit également être en conformité, et le licencié
fera ses meilleures efforts pour s’assurer que l’ensemble des usines et
      sous-traitants qu’il utilisera soit également en conformité, avec les
      dispositions du « Quiksilver Ethical Standard of Trade » (Quest Code),
      qui figure en Annexe 7 des présentes. Si le Licencié est informé qu’un
      sous-traitant manque à son obligation de se conformer au Quest Code du
      Concédant, le Licencié doit immédiatement le notifier au Concédant et cesser
      utiliser ce sous-traitant.

    

    Les
      parties conviennent que le Licencié conservera la maîtrise de toutes les étapes
      techniques du développement industriel. Elle sélectionnera librement les
      fournisseurs des articles de conditionnement (moules, capots, pompes, étuis,
      cales, étiquettes etc.), étant entendu qu’avant toute mise en fabrication, le
      Licencié recherchera l’accord préalable écrit du Concédant qui sera donné aussi
      rapidement que possible.

    

    Le
      Concédant pourra, sous réserve d’un préavis raisonnable adressé au Licencié et
      aux frais raisonnables du Licencié, pendant les heures régulières d’ouverture,
      inspecter toute unité de production, incluant les unités de production de
      sous-traitants, fournisseurs, etc., du Licencié où tout Produit est fabriqué,
      pour permettre au Concédant de vérifier que le Licencié respecte les
      dispositions du présent contrat concernant la nature et la qualité des Produits
      et l’usage de l’une quelconque des Marques Concédées en relation avec les
      Produits.

    

    Le
      Licencié adressera au Concédant pour information, dans un délai raisonnable
      avant le lancement de chaque Produit ou nouvelle ligne de Produits du présent
      contrat, les échantillons ou maquettes des Produits en question, avec leur
      conditionnement, pour accord préalable écrit du Concédant.

    

    Si
      le
      Concédant n’a pas présenté des réserves écrites au Licencié dans [__________]1 suivant
      la réception des échantillons ou maquettes, il sera réputé satisfait du
      projet.

    

    Dans
      le
      cas contraire, si le Concédant fait part de toute réserve par écrit ou informe
      par écrit qu’il n’approuve pas l’un quelconque des Produits ou nouvelle ligne de
      Produits dans un délai de [__________]2 à
compter
      de la réception d’échantillons ou de modèles tests les parties se concerteront
      sur les mesures à prendre pour tenir compte des souhaits du Concédant. Dans tous
      les cas les parties s’engagent à faire leurs meilleurs efforts pour coopérer en
      vue d’aboutir ensemble à un projet satisfaisant pour les deux parties. Dans tous
      les cas également, le Licencié ne fabriquera, distribuera, commercialisera ni ne
      vendra aucun Produit ou ligne de Produits à moins que le Concédant les ait
      approuvés à l’avance ou soit considéré les avoir approuvés en accord avec
      l’article 4.4 des présentes.

    

    De
      manière générale, il est expressément convenu que c’est au Concédant que revient
      l’approbation finale et nécessaire de tout projet et tout Produit ou ligne de
      Produits et que le Licencié ne pourra entamer aucune démarche suite à un projet
      soumis au Concédant sans que les objections éventuellement soulevées par le
      Concédant ne soient préalablement prises en compte par le Licencié à la
      satisfaction du Concédant.

     

     

      
        

      

    

    1 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:1.

    2 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:2.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    4.5  Contrôle
      de qualité :

    Le
      Licencié devra effectuer les contrôles de qualité et inspections requis avant la
      livraison des Produits aux clients.

    

    Le
      Concédant se réserve le droit d’approuver et/ou rejeter tout Produit pour des
      raisons tenant à leur qualité, ainsi qu’à leur style et leur
      apparence.

    

    Le
      Licencié assumera seul la responsabilité de la conformité des Produits aux
      législations et aux réglementations relatives à la santé et
      sécurité.

    

    Le
      Licencié indemnisera et tiendra hors de cause le Concédant et ses affiliés,
      ainsi que leurs directeurs, dirigeants, employés, agents et contractants de et
      contre tous réclamation, frais, dépenses, pertes et responsabilité (incluant les
      frais raisonnables d’avocats) subis ou engagés par quiconque d’entre eux et
      résultant directement ou indirectement de toute plainte ou mise en cause de sa
      responsabilité formée par tout consommateur ou consommateur des Produits, de
      tout manquement du Licencié à se conformer à toute loi ou exigence
      réglementaire, de toute autre attaque résultant du fait des ou liée aux
      Produits, de tout autre manquement du Licencié à se conformer au présent contrat
      et/ou de toute condamnation judiciaire qui pourrait résulter de l’un quelconques
      des faits qui précèdent.

    

    Sans
      limiter l’un quelconque de ses autres droits, le Concédant peut, par
      notification écrite, exiger du Licencié, aux seuls frais du Licencié,
      d’effectuer immédiatement un rappel de tous Produits si, selon l’opinion
      raisonnable du Concédant, ces Produits créent un risque sanitaire ou de sécurité
pour toute personne ou sont susceptibles d’être à l’origine de tout événement
      qui pourrait matériellement détériorer ou dévaluer le goodwill attaché aux ou la
      réputation des Marques Concédées. Le Licencié se conformera immédiatement à une
      telle notification et coopérera pleinement avec l’équipe RP et/ou la cellule de
      communication de crise et les plans de réponse du Concédant.

    

    4.6 Réseau
      de distribution

    Le
      Licencié organisera la distribution des Produits du contrat dans le Territoire
      sur une base sélective, en limitant la vente aux seuls (a) parfumeries et rayons
      de parfumerie des grands magasins en adéquation avec l’image de marque de
      QUIKSILVER et ROXY, en prenant comme référence les points de vente des produits
      concurrents des Produits sur le Territoire (dont la liste figure en Annexe
      6
      aux
      présentes) et (b) points de ventes franchisés ou licenciés portant l’enseigne
« QUIKSILVER » ou « ROXY » ou autres types de points de
      vente appartenant au Concédant ou à toutes entités contrôlées par le Concédant
      tels que communiqués par écrit au Licencié par le Concédant ((a) et (b) étant
      collectivement désignés en tant que « Circuits Approuvés de
      Distribution »).

    

    Nonosbtant
      les dispositions qui précèdent, le Concédant peut à tout moment et
      ponctuellement notifier par écrit au Licencié que le Concédant ne considère pas
      tel ou tel point de vente faisant partie des Circuits Approuvés de Distribution
      comme à même de distribuer les Produits et conduisant le Licencié à ne livrer
      aucun des Produits à ce(s) point(s) de vente si, de l’avis raisonnable du
      Concédant, ces point(s) de vente ne maintiennent pas ou ne reflètent pas
      l’intégrité, le positionnement ou l’image des Marques Concédées. Le Licencié se
      conformera à une telle notification dès qu’il le pourra.

    

    Les
      Produits ne pourront être distribués, vendus ou commercialisés par le Licencié
dans tout réseau de distribution ou point de vente autre que les Circuits
      Approuvés de Distribution sans l’accord préalable écrit du
      Concédant.

    

    S’agissant
      des ventes de Produits à tout point de vente appartenant en nom propre au
      Concédant ou appartenant à toute entité contrôlant ou contrôlée ou appartenant
      au groupe du Concédant, le Licencié appliquera le prix de gros le plus favorable
      offert à tout autre client des Produits dans ce pays moins une réduction de
[_____
      ]3 .

    
      
 3 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:3..

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

      S’agissant
        des ventes de Produits à tout point de vente sous franchise ou sous licence du
        Concédant ou de toute entité contrôlant ou contrôlée par le Concédant ou
        appartenant au groupe du Concédant et opérant sous l’enseigne
« QUIKSILVER » ou « ROXY » ou tout autre type de point de
        vente opérant à ce titre dans le réseau de distribution du Concédant, le
        Licencié appliquera à ces points de vente le prix de gros le plus favorable
        offert à tout autre client des Produits dans ce pays et paiera au Concédant une
        redevance égale à [_____
        ]4du
        prix
        de gros de tous les produits vendus à ces points de vente

      

      S’agissant
        des ventes de Produits à tout point de vente faisant partie des propres réseaux
        de distribution du Concédant ou de toute entité contrôlant ou contrôlée par le
        Concédant ou appartenant au groupe du Concédant pour des produits autres que les
        Produits (incluant sans y être limités les magasins spécialisés de surf et
        sports de glisse, magasins de sport et rayons spécialisés de grands magasins),
        le Licencié paiera au Concédant une redevance égale à [_____
        ]5
        du prix
        de gros de tous les produits vendus à ces points de vente.

      
        
           

        

      

    

    Les
      redevances payables au titre du présent Article sont à ajouter aux et payables
      en même temps que la redevance payable au titre de l’article 9.1.

     

    4.7 Vente
      agréée par Internet

    

    Le
      Licencié ne pourra autoriser ses distributeurs et détaillants agréés à vendre et
à promouvoir les Produits et les Marques Concédées sur l’Internet, et ne pourra
      lui-même vendre ou promouvoir les Produits et les Marques Concédées qu’à la
      condition d’obtenir préalablement l’accord écrit du Concédant, qui est libre de
      le refuser, sur tout projet. A cet égard, le Licencié s’engage notamment à
respecter l’environnement sélectif des Produits, préserver ou faire préserver le
      positionnement haut de gamme des Marques Concédées et à faire respecter
      l’ensemble des règles stipulées dans le présent contrat et que cette
      présentation puisse être considérée comme « la vitrine électronique »
du distributeur ou des détaillants agréés.

    

    Le
      Licencié, en cas d’accord préalable écrit du Concédant sur un projet de vente
      par Internet, et en particulier après que le Concédant ait été pleinement
      informé du projet par le Licencié, s’engage à développer ses meilleurs efforts
      pour contrôler les ventes sur le net en exigeant de ses détaillants et/ou de ses
      distributeurs un contrat écrit, soumis à acceptation préalable du Concédant,
      fixant les règles de vente par Internet afin de prévenir, dans les limites du
      droit applicable, les risques inhérents aux ventes par Internet.

    

    4.8 Le
      Licencié décidera par ailleurs des lancements, des conditions et des prix de
      vente des promotions commerciales, après en avoir avisé le Concédant au
      préalable dans le cadre des réunions de travail mentionnées ci-après et après
      avoir obtenu l’accord préalable écrit du Concédant. 

    

    Le
      Licencié communiquera annuellement au Concédant sa politique tarifaire
      applicable aux Produits. 

    

    Conformément
      aux usages de la profession, le Licencié pourra appliquer une politique
      tarifaire discountée à la vente des Produits discontinués, en concertation avec
      le Concédant.

    

    4.9 Le
      Licencié et le Concédant se réuniront régulièrement à leur convenance commune
      afin de faire un point sur toutes les actions entreprises dans le cadre de
      l’exécution du contrat et le respect de ses dispositions. Le Licencié s’engage à
communiquer au Concédant, à première demande de celui-ci, toute information que
      celui-ci pourrait souhaiter dans le cadre de la préparation et de la tenue de
      ces réunions. Lors de ces réunions, les représentants des parties aux présentes
      traiteront notamment :

     

     

      
        

      

    

    4
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:4.
5 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:3.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    	-  	
            de
              l’analyse en commun du déroulement et des résultats de l’exploitation des
              Produits du contrat et le cas échéant des produits
              promotionnels,

          

    

    	-  	
            de
              la qualité de la fabrication des
              Produits,

          

    

    	-  	
            de
              la distribution et de la commercialisation des
              Produits,

          

    

    	-  	
            de
              l’utilisation du budget promotionnel et publicitaire tel que prévu à
              l’article 7 des présentes, et notamment du ratio entre le budget de
              publicité média et le budget PLV, 

          

    

    	-  	
            de
              la définition, le cas échéant, des orientations
              nouvelles,

          

    

    	-  	
            de
              toutes autres questions ayant trait l’exécution du présent
              contrat.

          

    

    

    

    ARTICLE
      5 - MARQUES, PROPRIETE INDUSTRIELLE

    

    5.1 Le
      Concédant s’engage à garantir, pendant la durée des présentes, au Licencié, qui
      reconnaît la validité des Marques Concédées et leur titularité par le Concédant
      ou sociétés affiliées, l’existence matérielle des dépôts des Marques Concédées
      figurant dans l’Annexe
      1
      aux
      présentes, dans la limite des lois et règlements en vigueur.

    

    Les
      Marques Concédées, signes de toute nature et logos doivent apparaître de façon
évidente, visible à l’œil nu dans un graphisme déterminé sur les flacons,
      boîtes, emballages et présentoirs aussi bien que dans toutes les publicités. Ce
      graphisme pour les produits portant la marque ROXY devra inclure l’apposition de
      manière claire et lisible sur tous les Produits, d’une part de l’appellation
« ROXY », avec ou sans son logo, et d ‘autre part, de façon nettement
      séparée c’est-à-dire ne suivant en aucun cas l’appellation ROXY, mais à d’autres
      endroits des produits et/ou de leurs emballages, et en caractères de taille
      moins importante, l’appellation « (BY) QUIKSILVER », (BY) QUIKSILVER
      PARFUMS » ou « ROXY (BY) QUIKSILVER PERFUMES ».

    

    Sans
      préjudice des dispositions qui précèdent, tous les Produits et tous les
      emballages et instructions concernant les Produits doivent comporter une mention
      à l’effet de « fabriqué sous licence par Inter-Parfums
      SA ».

    

    Le
      Licencié aura l’exclusivité, pendant la durée des présentes, de l’utilisation de
      l’appellation « ROXY » ainsi que de l’utilisation des Marques
      Concédées de produits alcool (parfums) et lignes de bain dérivées, exploitées
      dans le cadre du présent contrat, pour la commercialisation et la distribution
      des Produits.

    

    Le
      Licencié pourra mentionner dans les documents commerciaux et boursiers usuels
      ayant trait à son activité l’une ou plusieurs des Marques Concédées, avec le
      même traitement que les autres marques dont il assure la distribution.

    

    Toutefois,
      toute annonce publique ou référence publique à l’une des Marques Concédées, dans
      le cadre de l’alinéa ci-dessus, sera soumise à l’accord préalable écrit du
      Concédant.

    

    Les
      Marques Concédées doivent servir à la commercialisation des Produits à
l’exclusion de tout autre usage. Il est entendu que les Marques Concédées,
      telles qu’utilisées pour commercialiser les Produits, le sont de telle sorte que
      ces derniers ne puissent être discrédités aux yeux du public

    

    Il
      ne
      devra être apposé aucune mention ou inscription préjudiciable à la visibilité
des Marques Concédées, ni aucune mention ou inscription qui pourrait en diminuer
      l'importance et le style aux yeux du public.

    

    Tout
      usage par le Licencié des Marques Concédées devra développer le goodwill et la
      réputation des Marques Concédées, au bénéfice du Concédant. Il est expressément
      convenu que le Licencié n’acquerra par l’effet du présent contrat aucun droit
      sur les Marques Concédées, de quelque nature que ce soit. Le Licencié devra se
      conformer à toutes directives écrites du Concédant concernant la manière ou la
      forme de l’usage des Marques Concédées.

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    5.2 Les
      frais
      du maintien en vigueur de ces Marques Concédées seront à la charge du Concédant.
      Le Licencié s’engage à collaborer avec le Concédant afin de lui fournir toute
      pièce ou document nécessaire au dépôt des Marques Concédées, à leur
      renouvellement ou au dépôt de nouvelles Marques Concédées.

    

    5.3 Le
      Licencié pourra demander, si nécessaire, au Concédant de déposer les Marques
      Concédées dans d’autres pays dans la Classe internationale 3. Les dépôts seront
      effectués exclusivement au nom du Concédant et/ou de toute société affiliée s’il
      l’estime justifié au regard du projet et des plans commerciaux. La requête du
      Licencié en vue de tels dépôts complémentaires sera examinée de bonne foi par le
      Concédant, qui demeure maître de la décision de dépôt et supportera les frais
      d’éventuels dépôts complémentaires. Le Licencié s’engage, en tant que de besoin,
à fournir toute signature, document et/ou assistance pour l’obtention des
      enregistrement de Marques Concédées en vertu du présent article.

    

    	5.4      
              	
            Les
              Marques Concédées ainsi que les formules ou toutes autres données
              techniques quelconques se rapportant à la composition et/ou à la
              fabrication des Produits du contrat (y compris d’éventuels brevets), de
              même que tous les dessins et modèles (flaconnage, conditionnements,
              étiquettes, etc....) et toutes instructions, tous matériels de marketing, de
              PLV et publicitaires développés par le Licencié ou pour son compte et
              déposés ou non par lui seront et resteront la propriété du Concédant, et
              le Licencié cède, vend et transfère irrévocablement par les présentes au
              Concédant tous droits qu’il pourrait ainsi
              détenir.

          

    .

    Le
      Licencié s’engage à rétrocéder gratuitement au profit du Concédant, à sa
      première demande, tout dépôt des Marques Concédées qui aurait pu être effectué
au nom du Licencié, ce qui ne peut viser que la seule hypothèse où dans un pays
      donné, l’enregistrement ne pouvait être sollicité qu’au nom du Licencié, ne
      pouvait pas être effectué au nom du Concédant, et n’a pu être effectué. Et où le
      Concédant a fait part de son accord préalable écrit. Le Licencié s’engage alors
à signer sans délai à la demande du Concédant tout document aux fins d’une telle
      rétrocession.

    

    D’une
      manière générale, le Licencié s’engage par les présentes à donner au Concédant,
      sur simple demande et sans délai, toute signature et tout document permettant la
      plein applicabilité du présent article et en particulier la pleine et entière
      propriété par le Concédant des Marques Concédées.

    

    

    

    ARTICLE
      6 - CONTREFACONS

    

    6.1
      En
      cas de
      constatation d’actes de la part de tiers pouvant constituer des actes de
      contrefaçon ou d’atteintes aux Marques Concédées mais également de tous dessins,
      modèles, droits d’auteur et plus généralement de tous droits de propriété
intellectuelle du Concédant, mais également des actes de concurrence déloyale
      et/ou parasitaire ou tout acte équivalent en vertu de la loi de tout pays du
      Territoire, liés aux Produits et au présent contrat, le Concédant aura la
      priorité pour toute réclamation et/ou action qu’il déciderait d’initier, s’il
      décide de le faire, étant précisé qu’il n’est nullement tenu de le
      faire.

    

    Si
      le
      Concédant décide d’agir, à sa seule discrétion, le Licencié s’engage à coopérer
      pleinement et sans réserve avec lui ; les frais exposés pour les actions
      seront supportés par le Concédant, et les dommages et intérêts et condamnations
      financières qui pourraient être alloués ou prononcés à son profit lui seront
      entièrement et exclusivement attribués, sauf si le Licencié choisit de se
      joindre à l’action et d’y participer, auquel cas les deux parties supporteront
      leurs propres frais et les dommages et intérêts et condamnations financières à
leur profit seront répartis entre les parties à proportion de leurs
      participation aux frais d’actions.

    

    Si
      le
      Concédant décide de ne pas agir, le Licencié peut décider de le faire seul, en
      son propre nom et en réparation de son préjudice propre ; dans cette
      hypothèse, le Concédant s’engage à coopérer pleinement et sans réserve avec lui.
      Les frais exposés pour ces actions seront supportés par le Licencié, et les
      dommages et intérêts et condamnations financières qui pourraient être alloués ou
      prononcés à son profit lui seront entièrement et exclusivement
      attribués.

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    6.2 
      Il est
      convenu entre les parties que le Licencié s'engage à indemniser le Concédant de
      tout préjudice résultant d'une action de tiers fondée sur le caractère
      contrefaisant des Marques Concédées, telle qu'exploitées par le Licencié en
      manquement à ses obligations aux termes du présent Contrat. 

    

    

    

    ARTICLE
      7 - PUBLICITE, LANCEMENT DE NOUVEAUX PRODUITS , « PLAN DE
      ROUTE »

    

    

    7.1 Le
      Licencié aura, dans le cadre défini à l’article 3 des présentes, l’initiative et
      la responsabilité de la publicité et de la promotion des Produits du contrat
      ainsi que le choix des prestataires (agence de publicité, centrale d’achat,
      photographes, etc.), après qu’en auront été définis, en concertation avec le
      Concédant, les orientations générales, en cohérence avec l’univers de QUIKSILVER
      et ROXY, et après acceptation préalable écrite du Concédant.

    

    7.2 Le
      Licencié consacrera les frais relatifs aux Activités de Publicité et de
      Promotion et à cet effet, il s’engage à y consacrer avec ses distributeurs pour
      les Activités de Publicité et de Promotion un budget commun suffisant pour
      assurer un bon développement des ventes et qui ne saura être
      inférieur :

    

    	-  	
            du
              1er
              janvier 2007 au 31 décembre 2009 : à [_____
              ]6du
              montant du Chiffre d’Affaires Net Mondial (hors
              P.L.V)
              réalisé par le Licencié sur l’année civile
              précédente

          

    	-  	
            du
              1er
              janvier 2010 au 31 décembre 2017 : à [_____
              ]7 du
              montant du Chiffre d’Affaires Net Mondial (hors
              P.L.V)
              réalisé par le Licencié sur l’année civile
              précédente

          

    

    étant
      entendu que [_____
      ]8
      du
      budget
      ci-dessus fixé seront consacrés aux médias constitués par les supports TV,
      presse et magazines incluant ceux édités par les grands points de vente comme
      notamment DOUGLAS, MARIONNAUD et SAKS.

    

    Pendant
      la période du 1er
      janvier
      2010 au 31 décembre 2017, tout lancement de tout nouveau Produit devra être
      accompagné de la part du Licencié de dépenses publicitaires plus importantes,
      dont le montant ne saurait être inférieur au montant consacré au lancement
équivalent d’un nouveau Produit comparable pendant la période du 1er
      janvier
      2007 au 31 décembre 2009. Sans préjudice des dispositions qui précèdent , le
      montant dépensé en Activités de Publicité et Promotion relatives au lancement de
      tout nouveau Produit pendant la période de douze (12) mois à compter d’un tel
      lancement doit être suffisant et adéquat pour un produit haut de gamme de sa
      nature et en phase avec les pratiques de l’industrie pour le lancement de
      produits équivalents de marques comparables, incluant par exemple les marques
      listées à l’Annexe 6,

     

    

      
        

      

    

    6
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:6.

    7
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:7.
8 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:8.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    7.3 Les
      parties conviennent qu’en période de lancements, la répartition géographique des
      dépenses ci-dessus à l’article 7.2 sera déterminée en concertation avec le
      Concédant en fonction de la stratégie de positionnement des Marques Concédées
      sur les marchés considérés et qu’elles en fixeront le montant par référence aux
      pratiques normales du marché de la parfumerie sélective.

    

    7.4
      Le
      Licencié consultera le Concédant sur toute approche créative concernant tout
      matériel publicitaire pour les Produits, incluant les publicités par voie de
      posters, brochures, PLV, journaux, magazines, radio et télévision. Le Licencié
s’engage à ce que le marketing et la publicité pour les Produits ne soient en
      aucune manière en conflit avec la qualité, les standards et le style des
      publicités et du marketing du Concédant et des entités contrôlant ou contrôlée
      par le Concédant ou appartenant au groupe du Concédant et s’engage à ne porter
      en aucune manière atteinte ou diminuer en aucune manière la réputation du nom et
      de l’image des marques dans le monde. 

    

    En
      particulier, le Licencié et le Concédant se concerteront sur :

    

    	-  	
            le
              contenu créatif de la publicité ;

          

    	-  	
            le
              choix et la définition des grands axes (objectifs à assigner à la
              communication, message à transmettre,
              etc.) ;

          

    	-  	
            les
              modalités d’application envisagées (média, thèmes,
              etc.),

          

    

    étant
      précisé que c’est au Concédant qu’appartient le choix et la décision finale, et
      qu’aucun projet ne peut être réalisé sans l’acceptation préalable écrite du
      Concédant.

    

    Si
      le
      Concédant ne l’a pas désapprouvé par écrit dans les [_____
      ]9  à
compter
      de la réception par un dirigeant autorisé du Concédant des projets, le Concédant
      sera réputé les avoir approuvés, si le Licencié obtient confirmation du
      Concédant que la proposition du Concédant a été dûment reçue par un dirigeant
      autorisé du Concédant.

    

    En
      cas de
      désaccord, le Concédant notifiera au Licencié son refus accompagné de
      l’explication des motifs du refus au plus tard dans un délai de [_____
      ]10 à
      compter de la réunion entre le Licencié et le Concédant au cours laquelle seront
      présentés par le Licencié les éléments cités ci-dessus. En cas de désaccord, les
      parties feront leurs meilleurs efforts pour arriver à un consensus dans un délai
      de [ ____
      ] 11 à
compter
      de la notification par le Concédant de son refus. 

    

    7.5 Plan
      de lancement :

    Le
      Licencié s’engage à procéder au lancement au moins de [_____
      ]12 nouvelles
      lignes de parfums et/ou lignes de soins visage et corporels, pendant toute
      la
      durée du présent contrat selon le déroulement des opérations décrites à
l’Annexe
      3
      aux
      présentes. A cet effet, le Licencié s’engage à développer ses meilleurs efforts
      pour se conformer au calendrier de lancement des Produits ainsi indiqué à
l’Annexe
      3.

     

    7.6 « Plan
      de route (chiffre d’affaires prévisionnel) » :

    Sans
      préjudice de ses droits découlant du présent contrat, le Licencié a établi en
Annexe
      4
      aux
      présentes, à titre indicatif, une estimation du chiffre d’affaires des ventes
      des Produits vers les distributeurs et une estimation du chiffre d’affaires gros
      local des ventes des Produits par le distributeurs vers les points de vente
      afin
      de permettre au Concédant d’apprécier au regard des objectifs que se fixe le
      Licencié, le positionnement envisagé des marques QUIKSILVER et ROXY dans le
      domaine des produits de soins et de parfums. Il est toutefois entendu
      expressément que ce plan prévisionnel de chiffre d’affaires ne saurait
      constituer à quelque titre que ce soit une obligation de moyen et/ou de résultat
à la charge du Licencié et que l’absence de réalisation de ces objectifs ne
      saurait être qualifié de manquement contractuel par le Licencié.

     

     

      
        

      

    

    9 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:9.

    10
      Confidential Information omitted and filed
      separately with the SEC with a request for confidential treatment by Inter
      Parfums, Inc. No. 10.126:10.

    
11
      Confidential Information omitted and filed separately with
      the SEC with a request for confidential treatment by Inter Parfums, Inc. No.
      10.126:11.

    
12
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:12. 

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    7.7 Plan
      de développement du réseau de distribution

    Le
      Licencié fera ses meilleurs efforts pour étendre progressivement le réseau de
      distribution des Produits dans le Territoire, par zones géographiques et selon
      l’ordre prioritaire tel que proposé à l’Annexe
      5
      aux
      présentes

    

    La
      mise
      en place du plan de développement suivant l’Annexe 5 requiert préalablement,
      pour chaque pays concerné, l’enregistrement par le Concédant et en son nom de la
      ou des Marque(s) Concédée(s), ou au minimum l’accord préalable écrit du
      Concédant par exemple si l’enregistrement de la ou des Marque(s) Concédées)
      n’est pas encore prononcé mais qu’il n’existe pas de risque sérieux identifié
par le Concédant pour l’exploitation de la ou des Marque(s) Concédée(s) dans le
      pays.

    

    S’agissant
      de la République Populaire de Chine, le lancement de tout Produit dans ce pays
      sera en toute hypothèse conditionné à l’acceptation préalable écrite du
      Président de Quiksilver Inc.

    

    

    

    ARTICLE
      8 - OBJETS PROMOTIONNELS

    

    

    Le
      Licencié ne pourra exploiter (par vente ou remise gratuite), sous les Marques
      Concédées, des objets ou produits promotionnels de toute nature (en dehors du
      domaine des Produits) qu’à condition que :

    

    	a)  	
            le
              Concédant, qui est libre de refuser, ait préalablement autorisé par écrit
              la fabrication et diffusion des objets en question, dont le Licencié lui
              aura remis un échantillon ou une
              maquette,

          

    

    	b)  	
            l’exploitation
              de ces objets demeure l’accessoire de celle des Produits du contrat,
              et

          

    

    	c)  	
            Les
              objets et produits promotionnels dans la mesure où ils promeuvent les
              Produits marqués ROXY soient siglés « ROXY (BY) QUIKSILVER
              PARFUMS » ou « ROXY (BY) QUIKSILVER PERFUMES » et qu’aucune
              confusion ne puisse être faite avec les produits commercialisés par le
              Concédant ou ses autres licenciés.

          

    

    	d)  	
            Par
              Produits Promotionnels les parties désignent des articles autres que les
              Produits, servant à promouvoir la vente des Produits, comme notamment des
              trousses, sacs de voyages, draps de bains, parapluies etc..., qui en toute
              hypothèse devront systématiquement être soumis au Concédant pour
              approbation préalable écrite.

          

    

    

    

    ARTICLE
      9 - REDEVANCE - MINIMUM GARANTI - 

    CHIFFRE
      D’AFFAIRES PREVISIONNELS

    

    	9.1  	
            Redevance

          

    Le
      Licencié s’engage à verser une redevance annuelle, nette de toute retenue à la
      source ou autre prélèvement fiscal de quelque nature que ce soit, égale à
[_____
      ]13 du
      Chiffre d’Affaires Net Mondial, et qui ne saura être inférieure au minimum
      garanti fixé à l’article 9.6 ci-après. Cette redevance sera payée en quatre
échéances égales par le Licencié au Concédant dans les [_____
      ]14 respectivement
      suivant la fin de chaque trimestre civil, sur la base d’un état détaillé des
      ventes réalisées accompagné du calcul de la redevance. Le Licencié fournira au
      Concédant dans [_____
      ]15 à
compter
      de la fin de chaque mois un rapport écrit sur les ventes réalisées, réparties
      par pays, marque et catégorie de produit, et faisant apparaître la redevance
      payable

     

     

      
        

      

    

    13 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:13.
14 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:14.

    15 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:15.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    9.2 Le
      Licencié communiquera au Concédant annuellement au plus tard avant le
[_____
      ]16 un
état
      détaillé des ventes annuelles de l’année écoulée, certifié par son commissaire
      aux comptes. Cet état servira de base au calcul de la redevance annuelle pour
      l’année écoulée. En cas d’ajustement éventuel entre la somme des redevances
      trimestrielles versées lors d’une année écoulée et le montant de la redevance
      annuelle ainsi calculée pour cette même année, ledit ajustement viendra
      s’imputer à la hausse ou à la baisse sur le montant de l’échéance du premier
      trimestre de l’année suivante.

    

    9.3 Le
      Concédant disposera à tout moment d’un droit d’audit par un tiers expert de son
      choix des déclarations du Licencié et notamment de l’état détaillé des ventes
      annuelles de Produits et en respectant un préavis raisonnable. Cet audit pourra
      porter sur les [_____
      ]17 années
      calendaires écoulées. Le Licencié s’engage à conserver les archives nécessaires
      le temps voulu à cette fin, ainsi qu’à collaborer pleinement à l’audit. En cas
      d’ajustement des redevances dues sur une année calendaire d’un montant supérieur
à [_____
      ]18 en
      faveur
      du Concédant, le Licencié supportera, en sus de la régularisation des
      redevances, le coût total de l’audit. Le paiement de la redevance complémentaire
      et du coût de l’audit interviendra, le cas échéant, dans les [_____
      ]19 suivant
      la présentation du résultat de l’audit par le Concédant au
      Licencié.

    

    9.4 Pour
      le
      calcul de la redevance trimestrielle, les montants de Chiffre d’Affaires Net
      Mondial établis en monnaie autre que l’Euro seront convertis en cette monnaie
      sur la base des cours moyens des devises à la date de ce trimestre.

    

    9.5 Le
      Licencié tiendra des états et comptes précis des dépenses relatives aux
      Activités de Publicité et de Promotion des Produits et aux objets promotionnels
      distribués sous les Marques Concédées et en permettra une fois par an, avec un
      préavis raisonnable, aux frais du Concédant, la vérification par un
      expert-comptable mandaté par le Concédant et tenu au secret
      professionnel.

    

    9.6 Minimum
      Garanti

    Le
      Licencié s’engage à verser au Concédant, pendant la durée du présent contrat,
      les redevances minima annuelles (« Minima Garanti ») déterminées
      conformément au tableau ci-dessous, étant précisé que le premier Minima Garanti
      annuel ne sera pas du au titre de la période contractuelle du 1er avril 2006 au
      31 décembre 2007, cette période étant consacrée à la conception et au
      développement de la première ligne de Produits.

    

    
      	
              PERIODE
                

            	
              MINIMA
                GARANTIS ( H.T ) en euros

            
	
              Du
                1er
                Avril 2006 au 31 Décembre 2006

            	
              [

            
	
              Du
                1er
                Janvier 2007 au 31 Décembre 2007

            	 
	
              Du
                1er
                Janvier 2008 au 31 Décembre 2008

            	 
	
              Du
                1er
                Janvier 2009 au 31 Décembre 2009

            	 
	
              Du
                1er
                Janvier 2010 au 31 Décembre 2010

            	 
	
              Du
                1er
                Janvier 2011 au 31 Décembre 2011

            	 
	
              Du
                1er
                Janvier 2012 au 31 Décembre 2012

            	 
	
              Du
                1er
                Janvier 2013 au 31 Décembre 2013

            	 
	
              Du
                1er
                Janvier 2014 au 31 Décembre 2014

            	 
	
              Du
                1er
                Janvier 2015 au 31 Décembre 2015

            	 
	
              Du
                1er
                Janvier 2016 au 31 Décembre 2016

            	 
	
              Du
                1er
                Janvier 2017 au 31 Décembre 2017

            	
              ]20 

            

    

     

    
      

    

    16 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:16.

    17 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:17.

    18 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:18.
19 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:19.

    20 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:20.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    ARTICLE
      10 - NON-CONCURRENCE ET LOYAUTE

    

    

    10.1  Le
      Concédant s’interdit d’exploiter ou faire exploiter dans le Territoire, pendant
      toute la durée de ce contrat, les Marques Concédées dans le domaine des
      Produits, ou d’entreprendre des actions quelconques de nature à porter préjudice
à l’exploitation des Produits du contrat par le Licencié, étant précisé que le
      Concédant demeure libre de créer, fabriquer, vendre, distribuer et
      commercialiser tout autre produit et fournir tout autre service sous les Marques
      Concédées ou tout produit ou service, qu’ils soient de nature identique ou
      similaire aux Produits, sous toute autre marque, nom ou logo, directement ou
      en
      concédant toute licence à tout tiers, dans le monde entier.

    

    10.2  Les
      parties s'engagent à exécuter de manière loyale le présent contrat et à ne pas
      prendre des mesures, directement et/ou indirectement, qui porteraient préjudice
      au Concédant ou au Licencié et/ou à la vente, la distribution ou l'image des
      Produits.

    

    Le
      Concédant a été informé par le Licencié des marques autres que les Marques
      Concédées dont il est actuellement le titulaire ou le licencié.

    

    Les
      marques du Licencié autres que les Marques Concédées, visées à l’alinéa
      ci-dessus, sont mentionnées à l’Annexe 8 ci-après. Il est expressément convenu
      que le Licencié n’est autorisé à exploiter de telles marques qu’à condition
      qu’elles ne concernent aucun sport « outdoor » et qu’après
      l’acceptation préalable écrite du Concédant, lequel ne peut pas le refuser de
      façon déraisonnable, dès lors que ces marques ne sont pas commercialisées en
      relation avec un quelconque sport « outdoor ».

    

    Le
      Licencié s’engage également par les présentes à ne pas fabriquer,
      commercialiser, distribuer ou vendre de produits destinés ou associés à un
      quelconque sport « outdoor » ou une quelconque marque de sport
« outdoor », l’expression « sport outdoor » incluant tout
      sport individuel et/ou non pratiqué dans une enceinte tel que tous sports de
      surf, neige, rue, mer, montagne, hiver et campagne, sports de planche, cyclisme,
      mountain bike, moto cross, sports extrêmes, plongée, sports de plage (incluant,
      sans y être limités, la natation de mer, le « surf life saving », le
      beach volley), triathlon, vol à voile, sports de campagne et d’aventures
      (incluant, sans y être limités, le trecking, la randonnée, le camping et
      l’escalade) pêche, voile, bateau, kayak, canoë, rafting, outrigger et
      golf.

    

    

    

    ARTICLE
      11 - DUREE DU CONTRAT

    

    

    11.1 Le
      présent Contrat prend effet à compter du 1er
      Avril
      2006 et se poursuivra jusqu’au 31 décembre 2017, soit pendant une durée de 11
      ans et 9 mois.

    

    11.2 [_____
      ]21 avant
      l’expiration du présent contrat à son terme initial, les parties discuteront de
      bonne foi pour savoir si elles sont intéressées par le renouvellement du présent
      contrat, étant précisé qu’un tel renouvellement est soumis à la signature d’un
      nouvel accord écrit entre les parties. Si les deux parties sont intéressées à
discuter d’un renouvellement, elles s’engagent à coopérer pour établir les
      termes et conditions d’un renouvellement, étant accepté que les éléments qui
      pourront servir de base à la discussion incluront, sans limitation, les
      résultats effectivement obtenus par le Licencié dans le cadre de l’exécution du
      présent contrat .

     

     

    
      

    

    21 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:21.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    11.3 Il
      est
      expressément prévu que dans tous les cas y compris pour le cas où le présent
      accord ne serait pas renouvelé pour quelque raison que ce soit, le Licencié
s’engage à respecter jusqu’au terme du présent contrat toutes les dispositions
      des présentes, en particulier à continuer selon les pratiques usuelles la
      promotion des Produits et en versant la redevance prévue aux présentes pour la
      dernière année restant à courir. 

    

    	11.4       	
            Le
              Concédant pourra mettre fin à tout moment au présent contrat
              unilatéralement sans préavis et sur simple notification adressée au
              Licencié par lettre recommandée AR, dans le cas
              où :

          

    

    	-  	
            Le
              Licencié ne réaliserait aucun lancement de Nouveaux Produits en conformité
              avec le plan de développement mentionné à l’Annexe
              5
              des présentes dans les pays dans lesquels les Marques Concédées ont été
              enregistrées ou dans lesquels le consentement écrit a été donné par le
              Concédant conformément à l’article 7.7, à moins que l’absence de lancement
              de Nouveau Produit soit uniquement due à la force majeure, à savoir si
              cette absence est due à tout événement extérieur tel que guerre, émeute,
              insurrection, guerre civile, sabotage, grève ou autre interruption du
              travail, accident, incendie, inondation, tremblement de terre, explosion
              détruisant les locaux, mesure gouvernementale ou toute autre circonstance
              imprévisible et extérieure à la volonté du Licencié, à condition qu’une
              fois la cause de force majeure disparue, le Licencié ait rapidement
              exécuté ses obligations contractuelles, et ne soit pas due à une faute ou
              négligence quelconque du Licencié.

          

    	-  	
            Le
              Licencié aurait manqué à son obligation de développer ses meilleurs
              efforts pour promouvoir, développer et étendre les ventes des Produits
              pour permettre d’assurer une connaissance et une demande continues et
              croissantes des Produits dans et à travers chaque pays du Territoire
              

          

    	-  	
            Le
              Licencié, quelle qu’en soit la raison, aurait vendu tout Produit n’ayant
              pas reçu l’acceptation préalable écrite du Concédant ou serait d’un
              standard ou qualité inférieur au standard et à la qualité approuvés par le
              Concédant

          

    	-  	
            Le
              Licencié négligerait son obligation découlant du présent contrat de
              fabriquer, commercialiser et vendre les Produits en sorte que le nom
              et la
              réputation des Marques Concédées seraient ou pourrait être
              endommagés

          

    	-  	
            Le
              Licencié cesserait de fabriquer, distribuer ou vendre les
              Produits

          

    	-  	
            Le
              Licencié commettrait tout acte ou action calculé pour ou susceptible de
              causer préjudice à la validité des Marques Concédées ou à leur titularité,
              ou remettrait en cause leur validité ou
              titularité

          

    	-  	
            De
              l’avis raisonnable du Concédant, le Licencié commet tout acte dont
              résulterait, ou ne prend pas une mesure en son pouvoir pour prévenir, un
              préjudice ou une atteinte grave au goodwill ou à la réputation des Marques
              Concédées

          

    	-  	
            Le
              Licencié lui-même manque à son obligation de se conformer au Quest Code et
              toutes règles explicatives y relatives, ou continue d’utiliser un
              sous-traitant alors qu’il serait informé que ce sous-traitant ne se
              conforme pas au Quest Code

          

    	-  	
            Le
              Licencié serait placé sous le « contrôle » de toute personne,
              société ou business intervenant dans le domaine de la fabrication, la
              fourniture ou la distribution de vêtements, accessoires ou équipements
              sportifs destinés à, en relation avec ou commercialisé en référence à tout
              sport « outdoor » (tel que précédemment défini).
              « Contrôle » signifie contrôle direct ou indirect de la
              direction ou de la politique, incluant le contrôle exercé comme résultat
              de ou au moyen d’arrangements ou pratiques, basées ou non sur des droits
              légaux ou équitables. ou

          

    	-  	
            Le
              Licencié deviendrait insolvable,, serait déclaré en faillite, placé sous
              régime de sauvegarde, en liquidation judiciaire ou amiable, devrait céder
              ses actifs à ses créanciers ou devrait requérir la nomination d’un
              administrateur.

          

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

    11.5 En
      sus
      des cas visés au paragraphe 11.4, chacune des parties pourra résilier le présent
      contrat en cas de non-respect par l’autre partie de l’une des dispositions des
      présentes à laquelle il ne pourrait être remédié ou, s’il peut y être remédié,
      si la partie défaillante n’y a pas remédié dans les [_____
      ]22 suivant
      la mise en demeure qui lui aura été adressée à cet effet par lettre recommandée
      avec demande d’avis de réception. La résiliation sera notifiée par les mêmes
      moyens au plus tard dans les [_____
      ]23 suivant
      l’envoi de la mise en demeure restée sans effet.

    

    11.6 En
      tout
état de cause, le Licencié ne pourra prendre d’engagements contractuels d’une
      durée supérieure au présent contrat dans ses relations avec des tiers qui
      découlent de ses droits et obligations telles qu’ils figurent aux
      présentes.

    

    

    ARTICLE
      12 - DECLARATIONS DES PARTIES

    

    12.1 Le
      Licencié déclare et garantit qu’à ce jour, ainsi que toutes les sociétés qu’il
      contrôle, qui viendraient à être impliqués dans la réalisation de l’objet du
      présent Contrat, ont été dûment et régulièrement constituées selon les
      dispositions légales qui leur sont applicables. Le Licencié et ses sociétés sont
      depuis leur constitution en conformité avec la loi sur les sociétés commerciales
      et leurs décrets d'application telles qu’applicables. 

    

    12.2 Le
      Concédant garantit n’avoir à ce jour connaissance d’aucune circonstance de
      nature à empêcher la commercialisation des Produits dans les pays qu’elle a
      listés à l’Annexe
      1
      dans
      lesquels les Marques Concédées ont été déposées et/ou enregistrées, en ce qui
      concerne exclusivement les produits concernés pour lesquels chaque Marque
      Concédée a été enregistrée dans les pays concernés.

    

    

    

    ARTICLE
      13 - DROITS ET OBLIGATIONS A L’EXPIRATION DU CONTRAT 

    

    

    13.1 A
      l’expiration ou terminaison du présent contrat pour quelque raison que ce
      soit :

    

    -
à
moins
      qu’il en soit disposé autrement dans le présent article, le Licencié n’aura
      aucun droit d’utiliser les Marques Concédées et le Licencié ne fabriquera ni ne
      fera plus fabriquer aucun Produit

    

    	-  	
            Le
              Licencié aura le droit pendant les [_____
              ]24qui
              suivront l’expiration du contrat de vendre ses stocks existants de
              Produits et de PLV aux prix commerciaux normaux, sous réserve de
              l’application de l’article 4.8 al. 2 des présentes. Toutes ces ventes
              seront soumises à redevance suivant les dispositions de l’article 9
              ci-dessus. Au-delà de ce délai de [_____
              ]25 
              le
              Licencié devra cesser complètement l’exploitation des Marques Concédées et
              des Produits. Au-delà du délai de [_____
              ]26 précité,
              le Licencié renonce à se prévaloir d’un droit quelconque découlant du
              présent contrat et visant les droits de propriété intellectuelle attachés
              aux Produits, créés ou non à l’initiative du Licencié et Marques
              Concédées ;

          

    

    	-
             	
            le
              Licencié devra informer le Concédant de tous les contrats en cours,
              conclus avec des tiers, le Concédant se réservant la faculté de reprendre
              ces contrats ou d’exiger du Licencié qu’il y mette fin aux frais de ce
              dernier.

          

     

     

      
        

      

    

    22 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:22.
23 
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:23.

    24
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:24.

    25
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:25.

    26
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:26.

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

    13.2  Le
      Concédant pourra à sa seule discrétion s’opposer à l’exercice par le Licencié du
      droit mentionné au paragraphe ci-dessus, à condition de (a) racheter au Licencié
ses stocks de Produits et de
      PLV,
      ainsi que les matières premières entrant dans la composition de ceux-ci ainsi
      que ceux des supports de vente, qu’il en sa possession ou commandés à la date de
      cessation du présent Contrat, à leur prix d’achat ou de revient, déprécié le cas
échéant selon les pratiques commerciales usuelles selon la nature du stock
      concerné et de (b) faire son affaire de la livraison des commandes en cours à
l’expiration du contrat.

    

    13.3  A
      l’expiration du délai de [_____
      ]27prévus
à
      l’article 13.1 ci-dessus, le Licencié s’engage, au choix du Concédant qui devra
      en être préalablement informé et décidera de l’option, et en tout état de cause
      aux frais du Licencié, soit à détruire l’intégralité des stocks de Produits et
      de PLV qui resteraient en sa possession, soit à les réacheminer au Concédant ou
à toute société affiliée qui lui serait désignée à cet effet, incluant tous
      emballages, matériels publicitaires, PLV et matériels et articles
      promotionnels.. Le Licencié devra également restituer au Concédant ou à toute
      société affiliée, ou bien détruire, au choix du Concédant, tous objets,
      illustrations, moules, reproductions et autres objets ou articles utilisés par
      le Licencié ou tout fabricant ou sous-traitant en rapport avec la fabrication
      des Produits pendant la durée du contrat. 

    

    A
      la
      requête du Concédant, le Licencié devra fournir au Concédant, aux frais du
      Licencié, toutes attestations en bonne et due forme, exécutées par un Directeur
      ou Représentant légal du Licencié ou de tout fabricant du Licencié, concernant
      la destruction des stocks en vertu du présent article.

    

    

    

    ARTICLE
      14 - MODIFICATIONS DU CONTRAT

    

    

    14.1 Toute
      convention dérogatoire ou complémentaire ou tout avenant au présent contrat
      seront nécessairement établis par un écrit signé par les parties et annexé au
      contrat. Toute modification à ce titre sera limitée au point particulier pour
      lequel elle aura été convenue.

    

    14.2 Si,
      en
      cas de force majeure, l'une des parties se trouve dans l'impossibilité d'honorer
      ses engagements au titre du présent contrat, elle devra en informer son
      cocontractant, afin que les parties puissent convenir ensemble d’ajustements
équitables à ce contrat dans leur intérêt commun.

    

    14.3 Si
      l'une
      ou plusieurs clauses du présent contrat s'avèrent être privées d'effet, cette
      circonstance n'affectera en rien la validité des autres dispositions du contrat
      ni celle du contrat dans son ensemble. Il en irait de même dans l'hypothèse où
le présent contrat comporterait des lacunes. La clause devant être supprimée, ou
      qui est manquante, sera remplacée par une disposition juridiquement valable et
      conforme à l'objet du présent contrat.

    

    

    

    ARTICLE
      15- CONFIDENTIALITE

    

    

    15.1 Les
      parties s’engagent à considérer comme strictement confidentielles et à traiter
      comme telles toutes les informations, quelque soient leur nature et leur
      support, recueillies auprès de l’autre partie pendant l’exécution du présent
      Contrat, y compris les dispositions du présent Contrat (ci-après les
« Informations Confidentielles »).

     

    
      

    

    27
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:27.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

    15.2 Le
      Concédant et le Licencié seront autorisés, en raison de leur statut sociétés
      cotées, à divulguer ces Informations Confidentielles uniquement suite à une
      exigence d’une réglementation en vigueur, notamment de nature boursière ou sur
      injonction d’une autorité judiciaire ou administrative et ce, sous la réserve
      expresse d’en informer l’autre partie au préalable, de se concerter avec cette
      dernière sur les modalités de divulgation des Informations à ce titre, en
      particulier de se mettre d’accord préalablement et par écrit sur les modalités
      de rédaction des annonces et communiqués de presse, et d’avoir obtenu l’accord
      préalable écrit et complet de l’autre partie.

    

    15.3 Toutes
      les informations connues du public sont réputées non confidentielles sauf si
      elles sont compilées sous une forme non connue du public. 

    

    15.4 Les
      parties s'engagent à ne pas divulguer ou laisser divulguer, directement ou par
      personne interposée, en totalité ou en partie, les Informations Confidentielles
      dont elles auraient eu ainsi connaissance, à quelque tiers que ce soit, à
l’exception des employés et/ou sous-traitants ayant besoin des informations pour
      l’exécution de leurs obligations.

    

    15.5 Les
      parties s’engagent, à cet égard, à prendre toutes les mesures nécessaires auprès
      de leurs salariés et/ou prestataires afin que ceux ci soient soumis à cette même
      obligation de confidentialité.

    

    15.6 Les
      parties s'engagent à ne pas utiliser les Informations Confidentielles dans un
      cadre autre que celui du présent Contrat.

    

    15.7 Chaque
      partie s'engage à restituer à première demande de l’autre partie tous documents,
      ou autres supports contenant des Informations Confidentielles que celle-ci
      aurait été amenée à lui remettre dans le cadre de l'exécution du présent Contrat
      ainsi que toutes leurs reproductions. 

    

    

    

    ARTICLE
      16- NOTIFICATIONS

    

    

    Toute
      notification effectuée par l’une des parties dans le cadre de l’exécution des
      dispositions des présentes devra être adressée, par lettre recommandée avec
      accusé de réception ou par télécopie, à l’adresse de son siège social, à
l’attention de son représentant légal, ou de toute autre personne dûment
      désignée par ladite partie à la partie ayant fait la notification. 

    

    Toute
      notification sera réputée effectuée à compter, soit de la signature de l’accusé
de réception en ce qui concerne la transmission par lettre recommandée avec
      accusé de réception, soit de la confirmation de la bonne transmission de la
      télécopie au destinataire générée par la machine à fac-simile de l’expéditeur.
      Si la notification a lieu un samedi ou un dimanche, ou un jour férié observé par
      le destinataire, la notification sera réputée avoir été faite je jour qui suit
      et qui n’est ni un samedi, ni un dimanche ni un jour férié observé par le
      destinataire.

    

    

    

    ARTICLE
      17- CONCILIATION / LITIGES

    

    

    En
      cas de
      désaccord entre les Parties sur la validité, l’interprétation, l’exécution et/ou
      la résolution d’une des dispositions des présentes, les parties s’engagent avant
      d’initier toute procédure contentieuse à suivre la procédure de conciliation
      suivante :

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    	-  	
            dans
              un premier temps, le désaccord fera l’objet d’une réunion entre les
              responsables opérationnels compétents de chacune des parties, à
              l’initiative de la partie la plus diligente, et dans les plus brefs délais
              dès la survenance du désaccord. Cette réunion aura pour but de trouver une
              solution amiable au désaccord en question. Un procès-verbal de cette
              réunion contradictoire sera dressé par les
              parties.

          

    

    	-  	
            Dans
              un second temps, si la réunion entre les responsables opérationnels
              n’aboutit pas à une solution amiable, les dirigeants mandataires sociaux
              de chacune des parties se rencontreront et feront leurs meilleurs efforts
              afin de solutionner ce désaccord de manière amiable. Cette réunion devra
              intervenir dans les plus brefs délais et pas plus tard que [_____
              ]28à
              compter de la réunion entre les responsables
              opérationnels.

          

    

    Si,
      en
      dépit de la procédure de conciliation un litige subsiste sur la validité,
      l’interprétation, l’exécution et/ou la résolution des présentes, ou bien si
      l’une des parties refusent d’exécuter avec diligence et bonne foi la procédure
      susvisée, ce litige sera soumis à la compétence exclusive des tribunaux du
      ressort de la Cour d’Appel de Paris.

    

    

    

    ARTICLE
      18 - DROIT APPLICABLE

    

    

    Le
      présent contrat est soumis au Droit français.

    

    

    ARTICLE
      19 - DISPOSITIONS GENERALES

    

    	19.1        	
            Contractant
              indépendant

          

    

    Pendant
      toute la durée du présent contrat le Licencié s’engage à demeurer un contractant
      indépendant et à ne jamais, sauf accord préalable exprès du Concédant, en vertu
      du présent contrat, en rapport avec ou au nom du Concédant ou de ses produits ou
      services :

    

    	(a)  	
            être
              ou se comporter comme un agent, employé, associé ou lié en aucune manière
              que ce soit du ou avec le
              Concédant ;

          

    	(b)  	
            avoir
              ou s’attribuer la capacité d’engager le crédit du Concédant ;
              ou

          

    	(c)  	
            accepter
              d’ordres, se lier de toute autre manière ou contracter de quelque manière
              que ce soit au nom du Concédant.

          

    

    	19.2        	
            Non
              renonciation

          

    

    Le
      retard
      ou le manquement de l’une des parties à requérir de l’autre partie une stricte
      exécution des dispositions du présent contrat ne sera pas considéré comme une
      renonciation à se prévaloir de l’atteinte ou du manquement au contrat.
      L’acceptation par le Concédant d’une quelconque somme d’argent au titre du
      présent contrat après tout retard ou manquement par le Licencié dans l’exécution
      de tout ou partie de ses obligations contractuelles, avant ou après notification
      ou mise en connaissance de cause par le Concédant, ne sera pas non plus
      considérée comme une renonciation par le Concédant à se prévaloir de l’atteinte
      ou du manquement au contrat.

    

    	19.3       	
            Exemplaires
              du contrat

          

    

    Le
      présent contrat peut être établi en trois exemplaires, chacun d’entre eux étant
      considéré comme un original, mais tous les exemplaires, considérés ensemble,
      constituent un seul et même instrument.

    

    
      
        

      

    

    28
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:28.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    Signé
le
      23 mars 2006

    A
      PARIS

    En
      trois
      (3) exemplaires originaux

    

    

    

    

    

    
      	QS
              HOLDINGS     
              /s/
                Peter Bloxham     

              Le
                Concédant

            	
              INTER PARFUMS

              /s/ Philippe Benacin

              Le Licencié

            

    

          

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    

    Annexe
      1 : liste des Marques Concédées

    

    

    

    

    	§  	
            QUIKSILVER

          

    

    	§  	 

    

    

    

    	§  	
            ROXY

          

    

    

    	§  	 

    

    

    

    

    

    

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    Annexe
      2 : liste des Produits

    

    

    

    Produits
      ligne féminine sous le nom « ROXY »

    

    	1.  	
            Parfum
              extrait

          

    	2.  	
            Eau
              de Parfum

          

    	3.  	
            Eau
              de Toilette

          

    	4.  	
            Eau
              de Cologne

          

    	5.  	
            Vaporisateur
              de sac

          

    	6.  	
            Stylo
              de sac roll-on

          

    	7.  	
            Crème
              pour le corps

          

    	8.  	
            Lait
              pour le corps

          

    	9.  	
            Lait
              pour le corps pailleté

          

    	10.  	
            Huile
              pour le corps

          

    	11.  	
            Poudre
              parfumée pour le corps

          

    	12.  	
            Gel
              pour le bain et la douche

          

    	13.  	
            Mousse
              douche

          

    	14.  	
            Gommage
              pour le corps

          

    	15.  	
            Eau
              déodorante spray

          

    	16.  	
            Produits
              de soins pour le visage et le corps

          

    	17.  	
            Produits
              de soins solaires

          

    	18.  	
            Déodorant
              roll-on 

          

    	19.  	
            Brume
              pour les cheveux

          

    	20.  	
            Brume
              pailletée pour les cheveux

          

    	21.  	
            Shampoing
              parfumé

          

    	22.  	
            Savon

          

    	23.  	
            Bougie
              parfumée pour la maison

          

    

    

    

    Produits
      ligne masculine sous le nom « QUIKSILVER »

    

    	24.  	
            Eau
              de Toilette (*)

          

    	25.  	
            Eau
              de Parfum (*)

          

    	26.  	
            Lotion
              après rasage flacon
              (*)

          

    	27.  	
            Baume
              après rasage flacon
              (*)

          

    	28.  	
            Gel
              de rasage

          

    	29.  	
            Gel
              douche intégral

          

    	30.  	
            Shampoing
              intégral

          

    	31.  	
            Déodorant
              spray (*)

          

    	32.  	
            Déodorant
              stick (*)

          

    	33.  	
            Savon

          

    	34.  	
            Produits
              de soins corporels et visage

          

    	35.  	
            Produits
              de soins solaires

          

    

    

    (*)
      Les produits marqués d’un astérisque ne sont consentis que sous réserve de
      l’accord préalable écrit du Concédant conformément aux dispositions de l’article
      2.3.

    .
      

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    Annexe
      3 : Lancement de Nouveaux Produits

    

    Le
      lancement de nouveaux Produits se caractérise par la réalisation des opérations
      suivantes :

    	1.  	
            définition
              et mise en place de la cible consommateurs (tranches
              d’âge) ;

          

    	2.  	
            définition
              et mise en place du concept des produits (définition de la nouvelle
              flagrance, du nouveau flacon, du nouveau packaging, des codes couleurs,
              du
              nouveau nom...) ;

          

    	3.  	
            définition
              et mise en place de la politique de communication (choix des canaux
              de
              communication, choix des médias...) ;

          

    	4.  	
            définition
              et mise en place de la politique de distribution (choix des canaux
              de
              distribution : parfumeries sélective, stratégie de positionnement
              prix par rapport à la concurrence..)

          

    	5.  	
            fabrication,
              distribution et commercialisation des nouveaux Produits ;
              

          

    	6.  	
            déclinaison
              du nouveau Produit dans un ou plusieurs produits suivants :

          

    

    Produits
      ligne féminine

    	-  	
            Parfum
              extrait 

          

    	-  	
            Eau
              de Parfum

          

    	-  	
            Eau
              de Toilette

          

    	-  	
            Eau
              de Cologne

          

    	-  	
            Stylo
              de sac roll-on 

          

    	-  	
            Crème
              pour le corps

          

    	-  	
            Lait
              pour le corps 

          

    	-  	
            Lait
              pour le corps pailleté 

          

    	-  	
            Huile
              pour le corps 

          

    	-  	
            Poudre
              parfumée pour le corps 

          

    	-  	
            Gel
              pour le bain et la douche 

          

    	-  	
            Mousse
              douche 

          

    	-  	
            Gommage
              pour le corps 

          

    	-  	
            Eau
              déodorante spray 

          

    	-  	
            Déodorant
              roll-on 

          

    	-  	
            Brume
              pour les cheveux 

          

    	-  	
            Shampooing
              parfumé 

          

    	-  	
            Savon
              

          

    	-  	
            Produits
              de soins pour le corps et/ou le visage

          

    	-  	
            Produits
              de soins solaires

          

    

    Produits
      ligne masculine

    	-  	
            Eau
              de Toilette (*)

          

    	-  	
            Eau
              de Parfum (*)

          

    	-  	
            Lotion
              après rasage flacon (*)

          

    	-  	
            Baume
              après rasage flacon (*)

          

    	-  	
            Gel
              de rasage 

          

    	-  	
            Gel
              douche intégral 

          

    	-  	
            Shampoing
              intégral 

          

    	-  	
            Déodorant
              spray (*)

          

    	-  	
            Déodorant
              stick (*)

          

    	-  	
            Savon

          

    	-  	
            Produits
              de soin corporel et visage

          

    	-  	
            Produits
              de Soins solaires

          

    

    

    (*)
      Les
      produits marqués d’un astérisque ne sont consentis que sous réserve de l’accord
      préalable du Concédant conformément aux dispositions de l’article
      2.3.

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    (Suite
      ) Annexe 3 : Lancement de Nouveaux Produits

    

    

    

    Plan
      de lancement

    

    

    	·  	
            Septembre
              2007 :Lancement
              d’une première ligne de parfum femme de « ROXY » (Women
              I)

          

    

    

    	·  	
            [_____
              ]29Déclinaison
              du Parfum « ROXY » (Women I) en lignes de bain et ligne
              corporelle à définir d’un commun accord

          

    

    

    	·  	
            [_____
              ]30Lancement
              de la ligne « QUIKSILVER SUN CARE » (Sun Care
              1)

          

    

    

    	·  	
            [_____
              ]31Lancement
              d’une deuxième ligne de parfum féminin de « ROXY » (Women
              II)

          

    

    

    	·  	
            [_____
              ]32Lancement
              d’une première ligne de parfum pour homme de QUIKSILVER (Men I), après
              validation par le Concédant

          

     

    

      
        

      

    

    29
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:29. 

    30
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:30. 

    31
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:31. 

    32
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:32. 

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    Annexe
      4 : PLAN DE ROUTE (Chiffre d’affaires prévisionnels)
      Art.7-6

    

    

    

    

    

    
      	
              ANNEE
                

            	
              CHIFFRE
                D’AFFAIRES NET MONDIAL (ventes du Licencié)

            	
              CHIFFRE
                D’AFFAIRES GROS LOCAL

              (ventes
                des distributeurs)

            
	
              2007

            	
              [

            	 
	
              2008

            	 	 
	
              2009

            	 	 
	
              2010

            	 	 
	
              2011

            	 	 
	
              2012

            	 	 
	
              2013

            	 	 
	
              2014

            	 	 
	
              2015

            	 	 
	
              2016

            	 	 
	
              2017

            	 	
              ]33  
                

            

    

    

      
        

      

    
33
    Confidential information omitted and filed separately with the SEC with a
    request for confidential treatment by Inter Parfums, Inc. No.
    10.126:33. 

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    Annexe
      5 : Plan de développement du réseau de distribution (art.
      7-7)

    

    

    

    

    	-  	
            [_____
              ]34

          

    

    Les
      pays
      prioritaires seront les suivants :

    

    	§  	
            Europe
              de l’Ouest : France, Espagne, Italie, Royaume Uni, Allemagne,
              Autriche, Portugal, Belgique, Hollande, Scandinavie (Suède, Danemark,
              Norvège, Finlande)

          

    	§  	
            Moyen
              Orient : Arabie Saoudite, Koweit,
              Qatar

          

    	§  	
            Amérique
              Nord : Etats-Unis et Canada

          

    

    

    

    	-  	
            [_____
              ]35

          

    

    Les
      pays
      prioritaires seront les suivants :

    

    	§  	
            Amériques
              Sud : Brésil, Argentine, Uruguay,
              Mexique

          

    	§  	
            Europe
              de l’Est : Russie, Pologne, Hongrie, République Tchèque, Pays Baltes
              (Lituanie, Lettonie, Estonie), Slovénie

          

    	§  	
            Asie :
              Australie, Japon, Singapour, Corée

          

     

    

      
        

      

    

    34
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:34. 

    35
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:35. 

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    

    Annexe
      6 : liste des marques concurrentes servant de référence au positionnement
      des Marques dans les canaux de distribution (article
      4.6)

    

    

    

    

    

    Parfums

    

    	§  	
            [_____
              ]36

          

    

    

    

    Produits
      de soin

    

    	§  	
            [_____
              ]37

          

    

    

    

    

    

    36
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:36. 

    37
      Confidential information omitted and filed separately with the SEC with a
      request for confidential treatment by Inter Parfums, Inc. No.
      10.126:37. 

    

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    Annexe
      7 : Quiksilver Ethical Standard of Trade (Quest
      Code)

     

    

    [

     

    SUPPLIER
      WORKPLACE CODE OF CONDUCT

     

    Quiksilver
      aims to do business with others around the world who respects the law, the
      culture in which they operate, and the workers who manufacture Quiksilver
      products and garments.

     

    Quiksilver
      has developed this Supplier Workplace Code of Conduct ("Code"), set on the
      basic
      international standards with which Quiksilver requires its Suppliers to
      comply.

     

    In
      addition to the specific provisions in this Code, Quiksilver expects its
      Suppliers to act reasonably in all respects and to do their best to ensure
      that
      no abusive, exploitative or illegal conditions exist at their
      workplaces.

     

    I. Supplier’s
      Agreement

     

    A
      Supplier to Quiksilver agrees to:

     

    	·  	
            Comply
              with this Code.

          

     

    	·  	
            Disclose
              to Quiksilver the name and address of every Supplier of materials,
              components, or parts either marked with the Quiksilver names or logos
              or
              made exclusively for incorporation in Quiksilver products and the name
              and
              address of any sub-contractor used by it in the production of Quiksilver
              garments and products.

          

     

    	·  	
            Allow
              Quiksilver and its representatives to inspect its facilities to ensure
              compliance with this Code.

          

     

    	·  	
            Only
              deal with such Supplier(s) and sub-contractors who comply with this
              Code
              and who have signed a copy of this Code and who have agreed to permit
              Quiksilver and its representatives to inspect their facilities and
              documents to ensure compliance with this
              Code.

          

     

    Quiksilver
      intends this Code to apply to each purchase order submitted to Quiksilver
      Suppliers. 

     

    II. Compliance
      With the Law

     

    Quiksilver’s
      Suppliers must in all material respects comply with the applicable legal
      requirements of the country in which they operate. This includes all employment
      and environmental laws.

     

    III. Employment
      Standards

     

    
      	 	
              A.

            	
              Wages
                and Benefits: Suppliers must pay all employees who manufacture Quiksilver
                garments, products or components the minimum wages and benefits mandated
                by local law.

            

    

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    
      	 	
              B.

            	
              Overtime:
                Suppliers shall not require their employees to work in excess of
                the
                number of hours per day or per week allowed by the law of the country
                of
                manufacture. Where overtime is permitted by local law, it must be
                compensated at such premium rates, if any, required by applicable
                law.

            

    

     

    
      	 	
              C.

            	
              Child
                Labor: No Supplier may employ any person younger than 14 years of
                age or
                the age limit provided by the law of the country of manufacture,
                whichever
                is greater.

            

    

     

    
      	 	
              D.

            	
              Forced
                Labor: No forced labor may be used by any Supplier in any form, whether
                prison labor, indentured labor, bonded labor or
                otherwise.

            

    

     

    
      	 	
              E.

            	
              Discrimination
                and Harassment: No employee shall be subjected to unlawful workplace
                discrimination, harassment or
                abuse.

            

    

     

    
      	
            	F.	
              Health
                and Safety: The workplace must be safe and healthy, and Suppliers
                must
                comply in all material respects with all applicable laws regarding
                the
                provision of a safe, hygienic and healthy working environment. Suppliers
                must take steps to prevent workplace injuries and illnesses, and
                must
                train employees to use safe workplace
                practices.

            

    

     

    
      	
            	G.	
              Supply
                Chain Security: We require reasonable security practices to eliminate
                vulnerabilities of our global supply chain against terrorism,
                transshipments, smuggling, and other illegal activities associated
                with
                importation.

            

    

     

    IV. Compliance.

     

    Quiksilver
      expects its Suppliers to support and cooperate in the distribution of this
      Code.

     

    Quiksilver,
      by its representatives, may inspect the facilities of any Supplier, and the
      facilities of any sub-contractor who shall fully cooperate and provide access
      to
      all facilities and documents to ensure compliance with this Code.

     

    Quiksilver
      may give advice to its Suppliers and their Suppliers and sub-contractors to
      assist them to comply with this Code but Quiksilver always reserves the right
      to
      refuse to deal further with a Supplier who does not comply with this Code,
      and
      to require its Suppliers not deal with Suppliers or sub-contractors who do
      not
      comply with this Code.

     

    V. “Quiksilver”

     

    In
      this
      document, “Quiksilver” means Quiksilver, Inc., any subsidiary and any person
      licensed by it to use its trade marks, and any person licensed by Quiksilver
      International Pty Ltd to use its trade marks.

    

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

    Annexe
      8 : marques du Licencié

    

    

    

    

    

    	·  	
            BURBERRY

          

    

    	·  	
            LANVIN

          

    

    	·  	
            PAUL
              SMITH

          

    

    	·  	
            ST
              DUPONT

          

    

    	·  	
            CHRISTIAN
              LACROIX

          

    

    	·  	
            CELINE

          

    

    	·  	
            NICKEL

          

    
       

    

    
      
         

        
          
             

          

          
            31

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