Document:

Unassociated Document

    
      AGREEMENT

       

      DATED
        AS
        OF: June 1, 2006

       

      The
        PARTIES to this Agreement are as follows:

       

      
        	1.	
                D.T.
                  Drinks, LLC., a New York Limited Liability Company, (“Client”) 372 Danbury
                  Rd., Suite 163, Wilton CT 06897

              

      

       

      
        	2.	
                PRODUCTION
                  FINANCE INTERNATIONAL, LLC. a Washington Limited Liability Company
                  (“PFI”)
                  801 West Riverside, Suite 444 Spokane, Washington
                  99201

              

      

       

      The
        TERMS
        of this Agreement are as follows:

       

      RECITALS

       

      I.
        CLIENT
        has entered into or anticipates entering into contracts (hereinafter
“Contracts”) with various suppliers (hereinafter “Suppliers”) and customers
        (hereinafter “Customers”) under which CLIENT has agreed, among other things, to
        purchase from Suppliers and furnish to Customers certain products.

       

      II.
        CLIENT is in the business of importing and / or exporting, and distributing
        Beverages and has requested PFI, and PFI has agreed, subject to the terms
        and
        conditions of this Agreement, to provide certain purchasing arrangements
        with
        respect to Beverages specifically identified per Addenda to this Agreement
        (hereinafter “Products”) to be provided under the Contracts.

       

      NOW
        THEREFORE, the parties agree as follows:

       

      1.
        No
        commitment: Notwithstanding any other provisions of this Agreement, this
        Agreement does not commit CLIENT or PFI to participate in any transactions
        other
        than those specifically agreed upon from time to time as evidenced by signed
        Addenda to this Agreement.

       

      2.
        Amount: PFI’s aggregate participation with CLIENT in transactions shall not
        exceed $1,500,000 at any one time.

       

      3.
        Affirmations: As a pre-condition to PFI assisting with transactions under
        this
        Agreement, CLIENT shall have credit facilities available, acceptable to PFI,
        to
        support CLIENT’s working capital requirements. CLIENT hereby represents and
        affirms that CLIENT is financially solvent, and in good standing with all
        creditors and is in compliance with all covenants of lending agreements.
        CLIENT
        shall immediately inform PFI of any financial insolvency or out-of-compliance
        situation with creditors. CLIENT grants to PFI the right to confirm all CLIENT
        financing arrangements directly with the financing entities
        involved.

       

      4.
        Presale of Products: CLIENT shall have pre-sold the Products to Customers
        in
        amounts, and on credit and delivery terms, acceptable to PFI. CLIENT shall
        provide to PFI for review and approval, as applicable, copies of letters
        of
        credit, purchase orders, and sales contracts from Customers, as well as
        outstanding order reports summarizing such orders and contracts with respect
        to
        Products for which PFI anticipates providing purchase order assistance
        (hereinafter “Customer Purchase Orders”). PFI shall have the right to confirm
        all sales arrangements directly with Customers. Although it is not expected
        that
        such shall be necessary, CLIENT shall furnish to PFI, upon PFI’s request, credit
        information sufficient in PFI’s opinion, for PFI to credit approve CLIENT’s
        Customers. Should such not be available to PFI’s satisfaction, CLIENT authorizes
        PFI to select and use a credit research and consulting company (“Credit
        Consultant”) to pre-qualify CLIENT’s Customers. All expenses associated with
        such Credit Consultant shall become a part of PFI’s Costs as defined herein.
        CLIENT hereby agrees to hold harmless and releases PFI from any and all
        liability for Customer credit losses regardless of any use or non-use of
        such
        Credit Consultant.

       

      
        
          
          

        

        
          64

          
            

          

        

        
          
          

        

      

       

      5.
        Products: CLIENT shall provide to PFI copies of purchase orders to, and order
        confirmations from, Suppliers of Products associated with this Agreement.
        CLIENT
        warrants and represents to PFI that Products delivered from Suppliers shall
        conform in every respect, including but not limited to quantity, quality,
        style,
        and packaging, with existing Customer Purchase Orders, and additionally,
        any
        further specifications as have been or may be required by CLIENT or CLIENT’s
        Customers. CLIENT grants to PFI the right to confirm all purchase arrangements
        directly with Suppliers.

       

      6.
        Bill
        of Sale: Upon review and acceptance of the above, and other requirements
        per
        Addendum by PFI, CLIENT shall present to PFI a bill of sale (hereinafter
“Bill
        of Sale”) which sells, assigns, and transfers to PFI the Products and all of
        CLIENT’s purchase and sales documentation related thereto, together with a
        non-exclusive right to, license for, and right to sublicense, any trademarks,
        tradenames, and service marks used or useful, directly or indirectly, with
        respect to, or inherent in, such Products covered by Addenda to this Agreement
        (collectively “PFI Assets”). PFI Assets shall thereafter be exclusively owned by
        PFI, and CLIENT hereby acknowledges PFI’s exclusive ownership regardless of
        whose name appears on documents. Only upon PFI’s acceptance of the Bill of Sale,
        shall PFI agree to proceed with a PFI transaction; For an import transaction,
        PFI shall arrange to have import letters of credit issued (or other payment
        arrangements) in favor of Suppliers showing PFI as Applicant; For an export
        transaction, PFI shall arrange to make payment to the supplier of Products.
        CLIENT hereby grants to PFI the full right and authority to take any action,
        which in PFI’s sole discretion, PFI believes to be reasonably necessary to
        protect PFI’s interests. This shall include full right and authority to resolve
        any questions of non-compliance of documents and to give any instructions
        as to
        acceptance or rejection of any documents or Products, all without any notice
        to,
        or any consent from CLIENT.

       

      7.
        Currency: In the event the payment to Suppliers and /or letters of credit
        issued
        to Suppliers are in currencies other than United States dollars CLIENT shall
        arrange forward foreign exchange currency contracts, acceptable to PFI, to
        hedge
        against foreign currency fluctuations.

       

      8.
        Security Interest: CLIENT hereby grants to PFI a security interest in all
        of the
        following CLIENT assets (hereinafter “Collateral”):

       

      All
        assets, including all inventory, accounts, accounts receivable, chattel paper,
        documents, instruments, contract rights, insurance proceeds, trademarks,
        tradenames and other general intangibles, furniture, fixtures, equipment,
        and
        all proceeds thereof, now owned and hereafter acquired.

       

      CLIENT
        shall execute a formal Security Agreement and New York Uniform Commercial
        Code
        Financing Statement for the benefit of PFI. In addition, CLIENT shall arrange
        for the benefit of PFI for the corporate guaranties of Drinks Americas, Inc.
        and
        the personal guaranties of J. Patrick Kenny, Fabio Berkowicz, Jason Lazo.
        Except
        for the security interest granted to PFI herein, CLIENT shall not, without
        PFI’s
        prior written consent, grant any other security interest in any of the
        Collateral to any other party. Prior to PFI assisting CLIENT with any
        transactions under this Agreement, CLIENT shall arrange for the benefit of
        PFI
        general subordination agreements and transaction-specific subordinations
        with
        Business Alliance Capital Company, all in a form acceptable to PFI.

       

      9.
        Importer / Exporter of Record: For import transactions (where Products are
        imported into the US), CLIENT shall be the importer of record and Products
        shall
        be cleared through CLIENT’s U.S. Customs bond. CLIENT shall arrange with all
        customs house brokers to have the Products cleared through U.S. Customs,
        and
        thereafter held in trust for, and under the exclusive control of PFI. All
        customs house brokers must be approved in advance by PFI. For export
        transactions (where Products sourced in the US or other countries are sold
        to
        foreign buyers), CLIENT shall be the exporter of record and shall arrange
        for
        the supply of Products, their inland shipment and their export shipment through
        CLIENT’s freight forwarder, subject to PFI’s prior approval of such forwarder.
        PFI shall have the right to negotiate revisions to any payment arrangements
        directly with any supplier of Products and to control any shipment of the
        Products should PFI elect to exercise such rights. CLIENT and PFI shall jointly
        execute a letter to PFI’s freight forwarder advising such forwarder of PFI’s
        interest in the Products and instructing the forwarder to follow any
        instructions PFI might give concerning Products or related shipping documents;
        PFI shall have the right to give any such instructions directly to any
        forwarders or carriers and to confirm any related matters directly with any
        forwarders or carriers. For each letter of credit in CLIENT’S favor concerning
        Products, CLIENT shall execute an “authorization to pay proceeds of letter of
        credit” (also commonly referred to as “assignment of proceeds”) to the bank
        where such letter of credit is payable, in a manner acceptable to such bank
        and
        in the full amount of the letter of credit. If requested by PFI, CLIENT shall
        execute a letter to any bank where a letter of credit covering any Products
        is
        payable, advising such bank that PFI is CLIENT’s agent for matters concerning
        the letter of credit and requesting such bank to act according to PFI’s
        instructions concerning such letter of credit or any documents presented
        under
        it.

       

      
        
          
          

        

        
          65

          
            

          

        

        
          
          

        

      

       

      10.
        Third
        Party Warehousing: If third-party warehousing of the Products is necessary,
        CLIENT shall arrange to have the Products received and held in trust for
        PFI in
        warehouse facilities which have been approved in advance by PFI. Such Products
        shall be stored there in PFI’s name and under PFI’s exclusive control. CLIENT
        shall arrange for PFI personnel to have unlimited access to the warehouse
        facilities and to the Products at all times during regular warehouse working
        hours. CLIENT hereby recognizes and agrees that PFI shall have sole authority
        to
        release the Products from such warehouse facilities, however, PFI shall not
        unreasonably withhold such release.

       

      11.
        Client Warehousing: Should Products be delivered to CLIENT’s facility for
        redistribution or storage, CLIENT shall, as applicable, receive, organize
        for
        redistribution, and hold the Products under trust receipts and in trust for
        PFI
        in: 

       

      
        	
              	x	
                A
                  field warehouse established by an independent warehouse company
                  acceptable
                  to PFI. 

              

      

       

      
        
          	
                	o	
                  Secured
                    sections of CLIENT’s facility, leased to and/or under the exclusive
                    control of PFI, where Products shall be separate from and not
                    co-mingled
                    with the property of others, including the property of CLIENT.
                    

                

        

      

       

      Such
        Products shall be stored there in PFI’s name and under PFI’s exclusive control.
        CLIENT shall arrange for PFI personnel to have unlimited access to such
        facilities and to the Products at all times during regular CLIENT working
        hours.
        CLIENT hereby recognizes and agrees that PFI shall have sole authority to
        release the Products from such warehouse facilities, however, PFI shall not
        unreasonably withhold such release.

       

      12.
        Freight, Duty, Other: Upon CLIENT’s request per Addendum, or Default, and then
        only at the sole discretion of PFI, PFI may from time to time agree to arrange
        for payments to be made for freight, duty, customs clearance, handling, and
        other charges necessary to have the Products delivered to the warehouses
        or
        Customers, and such payments shall become a component of PFI’s Costs as defined
        herein.

       

      13.
        Insurance: Ocean/air cargo, storage, and inland transit insurance for the
        Products shall be arranged as needed by CLIENT, and such coverage shall have
        been pre-approved by PFI and shall name PFI as an Additional Assured. CLIENT
        shall provide to PFI copies of such insurance policies evidencing PFI’s
        Additional Assured status. CLIENT guaranties to make declarations as required
        in
        their insurance policies and shall notify PFI immediately of any loss or
        damage
        which might occur. CLIENT agrees to reimburse PFI for any Products lost,
        damaged, or spoiled within 90 days from the occurrence and shall pay PFI
        immediately upon presentation to CLIENT of a PFI invoice. The payment amount
        shall be calculated in accordance with Sections 15(A), 15(B), 15(C), 15(D),
        and
        15(E) below.

       

      14.
        Product Liability Insurance: At PFI’s discretion, PFI may require Product
        liability insurance coverage in the minimum amount of US $1,000,000 be arranged
        by CLIENT and such policy shall name PFI as Additional Assured. CLIENT shall
        provide to PFI copies of such insurance policy evidencing PFI’s Additional
        Assured status.

       

      15.
        Client’s Repurchase of Products: Regardless of the status or location of the
        Products, CLIENT hereby agrees to re-purchase and take delivery of the Products
        from PFI, without recourse to PFI for defects, mispackaging, mislabeling,
        damage
        caused in transit or storage, Customer returns, Customer claims, product
        liability, or for any other reason, and shall pay for such Products in
        accordance with the terms stipulated per Addendum to this Agreement. Unless
        otherwise instructed per Addendum to this Agreement, CLIENT shall arrange
        for
        payments to be wire transferred to PFI’s account as follows:

       

      U.S.
        BANK, NATIONAL ASSOCIATION Spokane Main Branch, Spokane, Washington

      ABA:
        125-000-105 

      To
        Benefit: Production Finance International, LLC. 

      Account
        Number: 153 5916 87816

       

      The
        payment amount shall be the sum total of the following: 

       

      
        	
              	A)	
                PFI’s
                  costs (hereinafter “PFI’s Costs”) which shall include, but not be limited
                  to, the amounts paid, or to be paid, to Suppliers and agents for
                  Products,
                  freight, warehousing, insurance, handling and bank charges (including
                  all
                  banking fees relating to the issuance, amendment, collection, and
                  negotiation of import letters of credit), if any, paid or incurred
                  by PFI.
                  

              

      

      
        	 	 	 

        	
              	B)	
                Interest
                  (hereinafter “Interest”) on the amount of PFI’s Costs from the dates paid
                  by PFI to the dates payments are received by PFI at a per annum
                  rate equal
                  to the Prime Rate plus 5%. For the purpose of this Agreement, “Prime Rate”
                  means the prime rate that the Wall Street Journal from time to
                  times
                  identifies as the “Prime Rate” in its “Money Rates” section, and is not
                  necessarily the lowest rate a bank may offer to any borrower or
                  group of
                  borrowers. 

              

        	 	 	 

      

      
        	
              	C)	
                Other
                  costs (hereinafter “Other Costs”) which shall include, but not be limited
                  to UCC investigation and filing fees, credit agency fees, reasonable
                  attorney fees related to this Agreement and Addenda thereto, if
                  any, paid
                  or incurred by PFI. D) Commission (hereinafter “Commission”) to PFI on
                  PFI’s Costs in an amount to be agreed by the parties per Addendum.
                  E) PFI
                  Service Fees (hereinafter “Fees”) for special services performed by PFI,
                  which may include but not be limited to, amendments to PFI letters
                  of
                  credit to Suppliers, amendments to PFI Addenda, drawings under
                  Supplier
                  letters of credit, letter of credit drawings on settled Addenda,
                  etc. This
                  list of examples is not meant to be exclusive. A PFI Service Fee
                  Schedule
                  shall be sent out and adjusted from time to time at the discretion
                  of
                  PFI.

              

        	 	 	 

        	
              	D)	
                Commission
                  (hereinafter “Commission”) to PFI on PFI’s Costs in an amount to be agreed
                  by the parties per Addendum. 

              

        	 	 	 

        	
              	E)	
                PFI
                  Service Fees (hereinafter “Fees”) for special services performed by PFI,
                  which may include but not be limited to, amendments to PFI letters
                  of
                  credit to Suppliers, amendments to PFI Addenda, drawings under
                  Supplier
                  letters of credit, letter of credit drawings on settled Addenda,
                  etc. This
                  list of examples is not meant to be exclusive. A PFI Service Fee
                  Schedule
                  shall be sent out and adjusted from time to time at the discretion
                  of
                  PFI.

              

      

       

      
        
          
          

        

        
          66

          
            

          

        

        
          
          

        

      

       

      Should
        for any reason whatsoever CLIENT not take delivery of the Products from PFI,
        and/or payments not be received by PFI from CLIENT within the time and/or
        according to the terms stated per Addendum, CLIENT agrees the Commission
        due to
        PFI shall be increased by 3%.

       

      16.
        Payments to PFI: In consideration of PFI agreeing to assist with a particular
        transaction as evidenced by a signed Addendum hereto, CLIENT agrees that,
        should
        for any reason whatsoever a transaction not be completed, CLIENT shall pay
        PFI
        amounts due calculated in accordance with Sections 15(A), 15(B), 15(C), 15(D),
        and 15(E) above. CLIENT recognizes and agrees that the minimum Commission
        due
        PFI on each Addendum shall be determined per Addendum.

       

      17.
        Authorization: CLIENT hereby authorizes PFI to prepare and execute on behalf
        of
        CLIENT any missing or incorrect documents which may be required to complete
        transactions covered by Addenda hereto, and to make any presentation of such
        documents to any party which PFI, in its sole discretion, deems reasonable
        and
        necessary. CLIENT shall execute a formal Power of Attorney for the benefit
        of
        PFI.

       

      18.
        Information: CLIENT shall provide, or arrange to provide, to PFI the following
        financial information which shall be prepared in accordance with generally
        accepted accounting principles consistently applied:

      
        

          
            	x	
                    Interim
                      financial statements for Client (including an income statement
                      and balance
                      sheet) as soon as possible, but no later than 30 calendar days
                      after each
                      o
                      month-end;
                      x
                      quarter-end; o
                      fiscal
                      semi-annual period-end.

                  

          

        

      

       

      
        
          	x	
                  Accounts
                    Receivable Agings, and o
                    Accounts Payable
                    agings as soon as possible, but no later than 30 calendar days
                    after each
                    o month-end; x
                    quarter-end; o fiscal semi-annual
                    period-end.

                

        

      

       

      
        	x	
                Fiscal
                  year-end financial statements for CLIENT (including an income statement,
                  balance sheet, statement of change of financial condition, and
                  retained
                  earnings statement, all with footnotes) as soon as possible, but
                  no later
                  than 90 days after CLIENT’s fiscal year-end. Such financial statements
                  shall be: o audited, o
                  reviewed, x compiled, by CLIENT’s Certified
                  Public Accountant (“CPA”); o
                  internally prepared by CLIENT’s accounting staff. All CPA charges and fees
                  shall be for the account of CLIENT. PFI shall have the right to
                  discuss
                  CLIENT’s financial condition and financial statements, directly with
                  CLIENT’s CPA.

              

      

       

      
        	x 	
                Current
                  financial statements on all guarantors to be provided
                  annually.

              

      

       

      
        	x	
                 
                  Any other reasonable financial information requested by PFI, including
                  information relating to CLIENT’S financing arrangements and availability
                  with lenders and factors.

              

      

       

      19.
        No
        payments or transfers: As a pre-condition to PFI assisting with transactions
        under this Agreement CLIENT agrees there shall be no payment or transfer
        of
        funds, out of the ordinary course of business, from CLIENT to any CLIENT
        parent
        company, subsidiary, affiliate, officer, investor, employee, or any other
        party
        without the prior written consent of PFI, however, PFI shall not unreasonably
        withhold such consent.

       

      20.
        Time
        is of the essence of this Agreement and each of its provisions. Default shall
        occur under this Agreement if the CLIENT fails to perform in accordance with
        any
        Section or sub-section of this Agreement or Addenda thereto, or if there
        is a
        Default under any other agreement between CLIENT and PFI, or if there is
        a
        Default under any security documents securing this Agreement. Should any
        one or
        combination of these events occur, and CLIENT fails to cure such event(s)
        of
        Default within 5 business days following PFI providing written notice, the
        entire amount of PFI’s Costs, Interest, Other Costs, Commission and Fees shall
        without notice become immediately due and payable at the option of PFI, and
        furthermore, all amounts due PFI from CLIENT, shall immediately and without
        notice, bear Interest at a per annum rate equal to the Prime Rate plus 8%.
        PFI,
        as owner of the Products and PFI Assets, shall have the right to sell the
        Products and to retain for its own account any and all proceeds of sale until
        all amounts due PFI from CLIENT pursuant to this Agreement are paid in full.
        CLIENT agrees that if PFI sells the Products upon CLIENT’s Default, PFI shall be
        doing so as the sole owner of the Products. In Default, CLIENT agrees to
        assist
        PFI in good faith in the sale of Products, and shall not obstruct in any
        way
        PFI’s sales efforts. CLIENT shall make available CLIENT’s sales force to assist
        in fulfilling orders, taking new orders, or otherwise liquidating Products
        on
        any terms which PFI, in its sole discretion, may deem
        reasonable.

      
        
          
          

        

        
          67

          
            

          

        

        
          
          

        

      

       

      21.
        Hold
        Harmless: CLIENT hereby recognizes, agrees, and acknowledges that PFI is
        not a
        party to, and shall not be or become responsible to Customers, Suppliers,
        or any
        other party for performance under the Contracts. Except for acts of gross
        negligence committed by PFI, CLIENT hereby agrees to indemnify PFI, its
        officers, employees, and agents for, and agrees to hold them harmless from,
        any
        liabilities, claims, demands, costs, damages, or other expenses, including,
        but
        not limited to reasonable attorney fees at trial and on appeal arising out
        of or
        relating to the Contracts. This shall include an indemnification to PFI,
        its
        officers, employees, and agents by CLIENT to hold them harmless from any
        claim
        against PFI’s use of another person’s or entity’s trademark(s), trade name(s),
        or service mark(s) under this Agreement. The provisions of this Section 21
        shall
        survive the termination of this Agreement.

       

      22.
        Hold
        Harmless: Except for acts of gross negligence committed by PFI, CLIENT hereby
        agrees to indemnify PFI, its officers, employees, and agents for, and agrees
        to
        hold them harmless from, any liabilities, claims, demands, costs, damages,
        fines, taxes, duties, or other expenses sought by any party, including but
        not
        limited to attorney fees at trial and on appeal arising out of or relating
        to
        this Agreement. The provisions of this Section 22 shall survive the termination
        of this Agreement.

       

      23.
        Disputes. Any controversy or claim arising out of or relating to this Agreement,
        or breach thereof, shall be settled in accordance with the laws of the State
        of
        Washington and shall be commenced in the city and county of Spokane, Washington.
        Attorney’s fees of the prevailing party shall be born by the non-prevailing
        party.

       

      24.
        Representations. CLIENT represents that it is the business entity type and
        is
        duly organized under the laws of the state which are indicated in the first
        paragraph of this Agreement, and has full power and authority to enter into
        this
        Agreement and perform the client obligations hereunder. CLIENT further
        represents that it: (1) has received and is in compliance with all federal,
        state and local permits, licenses, and approvals necessary to perform its
        business and the transactions contemplated by this Agreement, (2) execution
        of
        this Agreement and the transactions contemplated herein will not violate
        any
        provision of CLIENT’s Articles of Organization or Bylaws, or any law,
        regulation, ordinance, order, award, judgment or decree to which CLIENT is
        a
        party or bound, and (3) no consent of any governmental or regulatory authority
        is or will be required in connection with the execution, delivery, performance
        and the consummation of the transactions contemplated by this
        Agreement.

       

      25.
        Compliance with Laws. CLIENT shall strictly observe and comply with all federal,
        state and local laws and regulations which govern the manufacture, sale,
        handling and disposal of any Products referred to herein. If CLIENT violates
        or
        is officially charged with violation of any such laws or regulations, then
        PFI
        in its sole discretion may treat such conduct as a breach of this entire
        Agreement, and in addition to any other remedies may immediately terminate
        this
        Agreement.

       

      26.
        Benefit. This Agreement shall be binding upon and shall inure to the benefit
        of
        the parties and their successors and assigns, provided that CLIENT shall
        not
        assign its rights or delegate the performance of its duties under this Agreement
        without the prior written consent of PFI.

       

      27.
        Collection Costs. Should litigation be commenced, CLIENT hereby promises
        to pay
        all costs of collecting past due amounts. Without limiting the foregoing,
        in the
        event that PFI consults an attorney regarding the enforcement of any of its
        rights under this Agreement or any document securing the same, or if this
        Agreement is placed in the hands of an attorney for collection, or if litigation
        is brought to enforce this Agreement or any documents securing same, CLIENT
        promises to pay all costs thereof including such additional sums as the court
        or
        may adjudge reasonable as attorney fees, including without limitation, costs
        and
        attorney fees incurred in any appellate court, in any proceeding under the
        bankruptcy code, or in any receivership.

       

      28.
        Notice. Any notice or other communications transmitted by either party to
        the
        other may be hand delivered, sent by facsimile transmission, or sent by courier,
        regular mail, or certified mail, return receipt requested, to the address
        shown
        in this Agreement, or such other place as each party may hereafter designate
        to
        the other party in writing. All such notices and communications so provided
        shall be deemed sufficiently given and served.

       

      29.
        Remedies. All remedies provided for in this Agreement are distinct and
        cumulative to any other right or remedy afforded by law or equity and, to
        the
        extent permitted by law, may be exercised concurrently, independently, or
        successively.

       

      30.
        No
        Verbal Agreements. There shall be no verbal agreements which qualify, modify,
        or
        supplement this Agreement.

       

      31.
        No
        waivers. No waiver of any right on one occasion shall be a waiver of the
        same or
        any other right on a subsequent occasion. Any invalidity, in whole or in
        part,
        or any provision herein shall not affect the validity of any other provision.
        No
        delay or omission on the part of PFI in exercising any right under this
        Agreement shall operate as a waiver of such right or any other
        right.

      
        
          
          

        

        
          68

          
            

          

        

        
          
          

        

      

       

      32.
        Facsimiles. CLIENT acknowledges and agrees that each Addenda and supporting
        transactional documentation signed by CLIENT and received by PFI in the form
        of
        a document reproduced by facsimile transmission (a “FAX reproduction”) is
        intended to be and shall be deemed to be an original signature and document,
        and
        such FAX reproduction (and any duplicate made thereof) shall be effective
        for
        all purposes to the same extent as if it were the original.

       

      33.
        Jurisdiction. This Agreement shall be governed by and construed and enforced
        in
        accordance with the laws of the State of Washington. Any legal action related
        thereto and/or related to this Agreement shall be commenced in Spokane,
        Washington, and the parties agree that they will be subject to the jurisdiction
        of the Courts of Spokane County, Washington.

       

      
        	D.T. DRINKS, LLC PRODUCTION FINANCE
                INTERNATIONAL, LLC	 	 	 
	 	 	 	 
	 	 	 	 
	 By:
                	 	 	By:
	
                
                  

                

              	 	 	
                
                  

                

              
	
                Title:
                  

                
                  

                

              	 	 	
                Title:

                
                  

                

                 

              

      

       

       

      
        
          
          

        

        
          69Unassociated Document

    
      LOAN
        AND
        SECURITY AGREEMENT

       

      This
        LOAN
        AND SECURITY AGREEMENT is entered into as of June ___, 2006 between BUSINESS
        ALLIANCE CAPITAL COMPANY, a division of Sovereign Bank, a federal savings
        bank
        (BACC), with its chief executive office located at 214 Carnegie Center, Suite
        302, Princeton, New Jersey 08540 and DRINKS AMERICAS INC., a Delaware
        corporation (“DAI”), DRINKS GLOBAL IMPORTS, LLC, a New York limited liability
        company (DGI”), and D.T. DRINKS, LLC, a New York limited liability company
        (“DTD”, and together with DAI and DGI individually and collectively Borrower),
        each with its chief executive office located at 372 Danbury Road, Wilton,
        CT
        06897.

       

      The
        parties agree as follows

       

      1.
        DEFINITIONS AND CONSTRUCTION

       

      1.1
        Terms. As used in this Agreement, the following terms shall have the following
        meanings:

       

      Accounts
        means, in addition to the definition of accounts in the Code, all presently
        existing and hereafter arising accounts receivable, contract rights,
        health-care-insurance receivables, and all other forms of obligations owing
        to
        Borrower arising out of the sale, lease, license or assignment of goods or
        other
        property, or the rendition of services by Borrower, whether or not earned
        by
        performance, all credit insurance, guaranties, and other security therefor,
        as
        well as all merchandise returned to or reclaimed by Borrower and Borrower’s
        Books relating to any of the foregoing.

       

      Advances
        means all loans, advances and other financial accommodations by BACC to or
        on
        account of the Borrower, including those under this Agreement.

       

      Agreement
        means collectively this Loan and Security Agreement, any concurrent or
        subsequent rider to this Loan and Security Agreement, and any extensions,
        supplements, amendments, addenda or modifications to or in connection with
        this
        Loan and Security Agreement or any such rider.

       

      Authorized
        Officer means any officer or other representative of Borrower authorized
        in a
        writing delivered to BACC to transact business with BACC.

       

      BACC
        means Business Alliance Capital Company, a division of Sovereign Bank, its
        successors and assigns.

       

      BACC
        Expenses means all of the following: costs and expenses (whether taxes,
        assessments, insurance premiums or otherwise) required to be paid by Borrower
        under any of the Loan Documents which are paid or advanced by BACC; filing,
        recording, publication, appraisal and search fees paid or incurred by BACC
        in
        connection with BACC’s transactions with Borrower; costs and expenses incurred
        by BACC in the disbursement or collection of funds to or from Borrower or
        its
        account debtors; charges resulting from the dishonor of checks; costs and
        expenses incurred by BACC to correct any default or enforce any provision
        of the
        Loan Documents, or in gaining possession of, maintaining, handling, preserving,
        storing, shipping, selling, preparing for sale, or advertising to sell the
        Collateral, or any portion thereof, irrespective of whether a sale is
        consummated; and costs and expenses incurred by BACC in enforcing or defending
        the Loan Documents or otherwise exercising its rights and remedies upon the
        existence of an Event of Default, including, but not limited to, costs and
        expenses incurred in connection with any proceeding, suit, enforcement of
        judgment, or appeal; and BACC’s reasonable attorneys’ fees and expenses,
        including allocated fees of in-house counsel, incurred in advising, structuring,
        drafting, reviewing, administering, amending, modifying, terminating, enforcing,
        defending, or otherwise representing BACC concerning the Loan Documents or
        the
        Obligations.

      
        
          
          

        

        
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      Borrower’s
        Books means all of Borrower’s books and records including all of the following:
        ledgers; records indicating, summarizing, or evidencing Borrower’s assets or
        liabilities, or the Collateral; all information relating to Borrower’s business
        operations or financial condition; and all computer programs, disk or tape
        files, printouts, runs, or other computer prepared information, and the
        facilities containing such information.

       

      Business
        Day means any day which is not a Saturday, Sunday, or other day on which
        banks
        in the State of New Jersey are authorized or required to close.

       

      Chattel
        Paper shall have the same meaning ascribed to such term in the
        Code.

       

      Code
        means the New Jersey Uniform Commercial Code, as amended or revised from
        time to
        time.

       

      Collateral
        means all assets of the Borrower, whether now owned or existing, or hereafter
        acquired or arising, and wherever located, including, without limitation,
        all of
        the following assets, properties and interests in property of Borrower,:
        all
        Accounts; all Equipment; all Commercial Tort Claims, all General Intangibles;
        all Chattel Paper; all Inventory; all Negotiable Collateral; all Investment
        Property, all Financial Assets, all Letter of Credit Rights, all Supporting
        Obligations, all Deposit Accounts, all money or any assets of Borrower which
        hereafter come into the possession, custody, or control of BACC; all proceeds
        and products, whether tangible or intangible, of any of the foregoing, including
        proceeds of insurance covering any or all of the foregoing, and any and all
        tangible or intangible property resulting from the sale, lease, license or
        other
        disposition of the foregoing, or any portion thereof or interest therein,
        and
        all proceeds thereof, and any other assets of Borrower or any Guarantor which
        may be subject to a lien in favor of BACC as security for the
        Obligations.

       

      Commercial
        Tort Claims shall have the meaning ascribed to such term in the
        Code.

       

      Daily
        Balance means the amount of the Obligations owed at the end of a given
        day.

       

      Deposit
        Account shall have the meaning ascribed to such term in the Code.

       

      Documents
        shall have the meaning ascribed to such term in the Code.

       

      Eligible
        Accounts means those Accounts created by Borrower in the ordinary course
        of
        business, which are and at all times shall continue to be acceptable to BACC
        in
        all respects; provided, however, that standards of eligibility may be fixed
        and
        revised from time to time by BACC in BACC’s good faith judgment. In determining
        such acceptability and standards of eligibility, BACC may, but need not,
        rely on
        agings, reports and schedules of Accounts furnished by Borrower, but reliance
        by
        BACC thereon from time to time shall not be deemed to limit BACC’s right to
        revise standards of eligibility at any time as to both Borrower’s present and
        future Accounts. In general, an Account shall not be deemed eligible unless:
        (1)
        the Account debtor on such Account is and at all times continues to be
        acceptable to BACC in its sole discretion, and up to credit limits acceptable
        to
        BACC in its sole discretion, and (2) such Account complies in all respects
        with
        the representations, covenants and warranties hereinafter set forth. Except
        in
        BACC’s sole discretion, Eligible Accounts shall not include any of the following
        (a) Accounts which the Account debtor has failed to pay within sixty (60)
        days
        of invoice date, and all Accounts owed by any Account debtor that has failed
        to
        pay twenty-five percent (25%) or more of its Accounts owed to Borrower within
        sixty (60) days of invoice date; (b) Accounts with respect to which goods
        are
        sold on a bill and hold basis or placed on consignment or for a guaranteed
        sale,
        or which contain other terms by reason of which payment by the Account debtor
        may be conditional; (c) Accounts with respect to which the Account debtor
        is not
        a resident of the United States unless the Account is supported by foreign
        credit insurance or a letter of credit, in both instances satisfactory to
        and
        assigned to BACC; (d) Accounts with respect to which the Account debtor is
        the
        United States or any department, agency or instrumentality of the United
        States,
        any State of the United States or any city, town, municipality or division
        thereof unless all filings have been made under the Federal Assignment of
        Claims
        Act or comparable state or other statute; (e) Accounts with respect to which
        the
        Account debtor is an officer, employee or agent of, or subsidiary of, related
        to, affiliated with or has common shareholders, officers or directors with
        Borrower; (f) Accounts with respect to which Borrower is or may become liable
        to
        the Account debtor for goods sold or services rendered by the Account debtor
        to
        Borrower or otherwise; (g) Accounts with respect to an Account debtor (or
        affiliated group of Account debtors) whose total obligations to Borrower
        exceed
        twenty five percent (25%) of all Eligible Accounts or such other percentage
        as
        BACC may agree to in writing as to a particular Account debtor (the applicable
        percentage the “Concentration Percentage”), to the extent such obligations
        exceed the applicable Concentration Percentage; (h) Accounts with respect
        to
        which the Account debtor disputes liability or makes any claim with respect
        thereto, or is subject to any insolvency proceeding, or becomes insolvent,
        fails
        or goes out of business; (i) the Account arises out of a contract or purchase
        order for which a surety bond was issued on behalf of Borrower; (j) Accounts
        in
        which BACC does not have first priority and exclusive perfected security
        interest; (k) Accounts where the Account Debtor is in a jurisdiction for
        which
        Borrower is required to file a notice of business activities or similar report
        and Borrower has not filed such report within the time period required by
        applicable law; (l) any Account as to which an invoice has not been issued
        to
        the Account debtor; (m) any Account which represents a progress billing on
        a
        contract which has not been fully completed by Borrower, or (n) any Purchase
        Order Financed Account.

       

      
        
          
          

        

        
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      Equipment
        means in addition to the definition of equipment in the Code, all of Borrower’s
        present and hereafter acquired equipment, machinery, machine tools, motors,
        furniture, furnishings, fixtures, motor vehicles, rolling stock, processors,
        tools, pans, dies, jigs, goods (other than consumer goods or farm products)
        and
        any interest in any of the foregoing, and all attachments, accessories,
        accessions, replacements, substitutions, additions, and improvements to any
        of
        the foregoing, wherever located.

       

      ERISA
        means the Employee Retirement Income Security Act of 1974, as amended, and
        the
        regulations thereunder.

       

      ERISA
        Affiliate means each trade or business (whether or not incorporated and whether
        or not foreign) which is or may hereafter become a member of a group of which
        Borrower is a member and which is treated as a single employer under ERISA
        Section 4001(b)( 1), or IRC Section 414.

       

      Event
        of
        Default means the events specified in Section 8, below.

       

      Financial
        Assets shall have the meaning ascribed to such term in the Code.

       

      General
        Intangibles means in addition to the definition of general intangibles in
        the
        Code, all of Borrower’s present and future general intangibles and other
        personal property (including choses or things in action, goodwill, patents,
        trade names; trademarks, service marks, copyrights, blueprints, drawings,
        purchase orders, customer lists, monies due or recoverable from pension funds,
        route lists, infringement claims, computer programs, computer discs, computer
        tapes, Borrower’s Books, literature, reports, catalogs, deposit accounts,
        insurance premium rebates, tax refunds, and tax refund claims) other than
        goods
        and Accounts.

       

      Guarantor
        means each person or entity which guarantees the Obligations, or issues a
        validity guaranty relating to the Collateral, or pledges any assets to BACC
        as
        additional security for the Obligations.

       

      Insolvency
        Proceeding means any proceeding commenced by or against any person or entity
        under any provision of the federal Bankruptcy Code, as amended, or under
        any
        other state or federal insolvency law, including assignments for the benefit
        of
        creditors, formal or informal moratoria, compositions, or extensions generally
        with its creditors.

       

      Instruments
        shall have the meaning ascribed to such term in the Code.

       

      Inventory
        means, in addition to the definition of inventory in the Code, all present
        and
        future inventory in which Borrower has any interest, including goods held
        for
        sale or lease or to be furnished under a contract of service, Borrower’s present
        and future raw materials, work in process, finished goods, tangible property,
        stock in trade, wares, and materials used in or consumed in Borrower’s business,
        goods which have been returned to, repossessed by, or stopped in transit
        by
        Borrower, packing and shipping materials, wherever located, any documents
        of
        title representing any of the above, and Borrower’s Books relating to any of the
        foregoing.

       

      Investment
        Property shall have the meaning ascribed to such term in the Code.

       

      IRC
        means
        the Internal Revenue Code of 1986, as amended, and the regulations
        thereunder.

       

      Letter
        of
        Credit Rights shall have the meaning ascribed to such term in the
        Code.

       

      
        
          
          

        

        
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      Loan
        Documents means, collectively, this Agreement, any Note or Notes, any security
        agreements, pledge agreements, mortgages, deeds of trust or other encumbrances
        or agreements which secure the Obligations, and any other agreement entered
        into
        between Borrower and BACC or by Borrower or a Guarantor in favor of BACC
        relating to or in connection with this Agreement or the Obligations, as each
        of
        same may be amended, modified, renewed, extended or substituted from time
        to
        time.

       

      Multiemployer
        Plan means a multiemployer plan as defined in ERISA Sections 3(37) or 4001(a)(3)
        or IRC Section 414(f).

       

      Negotiable
        Collateral means all of Borrower’s present and future letters of credit, notes,
        drafts, Instruments, Documents, leases, and Chattel Paper.

       

      Note
        means any promissory note made by Borrower to the order of BACC concurrently
        herewith or at any time hereafter.

       

      Obligations
        means all loans, Advances, debts, liabilities (including all interest and
        amounts charged to the Obligations pursuant to any agreement authorizing
        BACC to
        charge the Obligations), obligations, lease payments, guaranties, covenants,
        and
        duties owing by Borrower to BACC of any kind and description (whether pursuant
        to or evidenced by the Loan Documents or by any other agreement between BACC
        and
        Borrower, and irrespective of whether for the payment of money), whether
        made or
        incurred prior to, on, or after the Termination Date, direct or indirect,
        absolute or contingent, due or to become due, now existing or hereafter arising,
        including any debt, liability or obligation owing from Borrower to others
        which
        BACC may obtain by assignment or otherwise, and all interest thereon and
        all
        BACC Expenses.

       

      Permitted
        Indebtedness means the following: (a) indebtedness to BACC arising under
        any of
        the Loan Documents or otherwise, (b) current liabilities of Borrower incurred
        in
        the ordinary course of business not incurred through (i) the borrowing of
        money,
        or (ii) the obtaining of credit except for credit on an open account basis
        customarily extended and in fact extended in connection with normal purchases
        of
        goods and services; (c) unsecured indebtedness in respect of taxes, assessments,
        governmental charges, insurance, materials or supplies in the ordinary course
        of
        Borrowers business; (d) amounts payable for expense reimbursements to or
        indemnification of employees, officers, or directors; (f) indebtedness arising
        in connection with capital leases, provided that the aggregate principal
        amount
        of all such indebtedness permitted under this clause shall not exceed amounts
        provided in the Agreement; (g) indebtedness in respect of judgments or awards
        that are fully covered by insurance (with the insurer having acknowledged
        coverage) or that have been in force for less than the applicable period
        for
        initiating an appeal of such judgment or award so long as execution is not
        levied thereunder or in respect of which the Borrower shall at the time in
        good
        faith be prosecuting an appeal or proceedings for review and in respect of
        which
        a stay of execution shall have been obtained pending such appeal or review;
        (h)
        endorsements for collection, deposit or negotiation and warranties of products
        or services, in each case incurred in the ordinary course of business; (i)
        indebtedness under a Permitted Purchase Order Assistance Facility (j) purchase
        money indebtedness in Equipment incurred in the ordinary course of business
        (k)
        indebtedness of Borrower existing on the date hereof and listed and described
        on
        Schedule 7.1 hereto; (l) unsecured indebtedness for borrowed money (which
        may be
        under convertible debentures or similar debt instruments) provided that such
        indebtedness is subordinate to the Obligations of Borrower to BACC, pursuant
        to
        subordination terms and provisions satisfactory to BACC, and prior written
        notice of the incurrence of said indebtedness have been furnished to BACC,
        and
        (m) indebtedness of Borrower incurred to refinance or replace indebtedness
        permitted hereunder, provided that the principal amount (or committed principal
        amount) of such refinancing indebtedness shall not exceed the outstanding
        principal amount (or committed principal amount) of the indebtedness being
        refinanced.

       

      Permitted
        Purchase Order Assistance Facility means a Purchase Order Assistance Facility
        acceptable to BACC in its sole discretion, provided the subject Purchase
        Order
        Assistance Provider has entered into an intercreditor agreement with BACC
        satisfactory in form and substance to BACC.

       

      PFI
        means
        Production Finance International, LLC

       

      
        
          
          

        

        
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      Plan
        means any plan described in ERISA Section 3(2) maintained for employees of
        Borrower or any ERISA Affiliate, other than a Multiemployer Plan.

       

      PO
        Financed Borrower means D.T. Drinks, LLC or such other Borrower as BACC may
        agree to and approve to, in writing, from time to time, which may have a
        Permitted Purchase Order Assistance Facility.

       

      Prime
        Rate means that rate designated by Sovereign Bank, or any successor thereof,
        from time to time as its prime rate, which shall not necessarily constitute
        its
        lowest available rate.

       

      Purchase
        Order Assistance Facility means a facility to be provided to a PO Financed
        Borrower by a Purchase Order Assistance Provider under which, inter alia,
        such
        Purchase Order Assistance Provider shall provide assistance to the PO Financed
        Borrower to acquire specific Inventory approved by BACC, by such Purchase
        Order
        Assistance Provider against specific purchase orders to Borrower, and will
        acquire title to the goods to be acquired to fulfill said purchase
        order.

       

      Purchase
        Order Assistance Provider means a third party which provides a Purchase Order
        Assistance Facility to a PO Financed Borrower.

       

      Purchase
        Order Financed Account means any Account arising from the sale of Purchase
        Order
        Financed Inventory or other Account of a PO Financed Borrower subject to
        a lien
        in favor of a Purchase Order Assistance Provider, provided such Account shall
        cease to be a Purchase Order Financed Account if (a) BACC and the Purchase
        Order
        Assistance Provider providing the subject Purchase Order Assistance Facility
        to
        a PO Financed Borrower have entered into an Intercreditor Agreement satisfactory
        in form and substance to BACC, and (b) upon BACC’s forwarding to said Purchase
        Order Assistance Provider the amount requested by said Purchase Order Assistance
        Provider (which may be set forth in the intercreditor agreement between BACC
        and
        such Purchase Order Assistance Provider), all right, title and interest in
        said
        Account shall be owned by the subject PO Financed Borrower and the security
        interest or other lien or interest of said Purchase Order Assistance Provider
        in
        said Account shall be subordinate to the security interest in favor of BACC
        in
        accordance with the terms of the subject Intercreditor Agreement.

       

      Purchase
        Order Financed Inventory means all goods to be sold under a purchase order
        issued to a PO Financed Borrower from one of its customers, which goods are
        acquired or to be acquired through a Purchase Order Assistance Facility between
        a PO Financed Borrower and a Purchase Order Assistance Provider, including,
        without limitation, the existing Purchase Order Assistance Facility between
        D.T.
        Drinks, LLC and PFI.

       

      Revolving
        Credit Facility means the revolving credit facility provided for in Section
        2.1
        hereof.

       

      Supporting
        Obligation shall have the same meaning ascribed to such term in the
        Code.

       

      Term
        means the period from the date of the execution and delivery by BACC of this
        Agreement through and including the later of (a) the Termination Date and
        (b)
        the payment and performance in full of the Obligations.

       

      Termination
        Date means (a) June ____, 2009 (the period through such date the “Initial
        Term”), unless such date is extended pursuant to Section 3.1 hereof, and if so
        extended on one or more occasions the last date of the last such extension,
        or
        (b) if earlier terminated by BACC pursuant to section 9.1 hereof, the date
        of
        such termination.

       

      1.2
        Construction. Unless the context of this Agreement clearly requires otherwise,
        references to the plural include the singular and to the singular include
        the
        plural. The words hereof, herein, hereby, hereunder, and similar terms in
        this
        Agreement refer to this Agreement as a whole and not to any particular provision
        of this Agreement. Section, subsection, clause and exhibit references are
        to
        this Agreement unless otherwise specified. Words importing a particular gender
        mean and include every other gender.

      
        
          
          

        

        
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      1.3
        Accounting Terms. All accounting terms not specifically defined herein shall
        be
        construed in accordance with generally accepted accounting principles (GAAP)
        as
        in effect from time to time. When used herein, the term financial statements
        shall include the notes and schedules thereto.

       

      1.4
        Exhibits. All of the exhibits, addenda or riders attached to this Agreement
        shall be deemed incorporated herein by reference.

       

      1.5
        Code.
        Any terms used in this Agreement which are defined in the Code shall be
        construed and defined as set forth in the Code, unless otherwise defined
        herein.

       

      2.
        ADVANCES AND TERMS OF PAYMENT

       

      2.1
        Revolving Advances; Advance Limit.

       

      (A)
        Upon
        the request of Borrower, made at any time from and after the date hereof
        until
        the Termination Date, and so long as no Event of Default has occurred, BACC
        may,
        in its good faith discretion, make Advances in an amount up to eighty five
        percent (85%) of the aggregate outstanding amount of Eligible Accounts,
        provided, however, that in no event shall the aggregate amount of the
        outstanding Advances under the Revolving Credit Facility be greater than,
        at any
        time, the amount of Ten Million Dollars ($10,000,000.00) (said dollar limit
        the
        Advance Limit). BACC may create reserves against, or reduce its advance
        percentages based on Eligible Accounts without declaring an Event of Default
        if
        it determines, in its good faith discretion, that such reserves or reduction
        is
        necessary, including, without limitation, to protect its interest in the
        Collateral and/or against diminution in the value of any Collateral, and/or
        to
        insure the prospect of payment or performance by Borrower of its Obligations
        to
        BACC are not impaired.

       

      (B)
        Borrower has advised BACC that D.T. Drinks, LLC has obtained, or intends
        to
        obtain, a Purchase Order Assistance Facility from PFI. Borrower represents
        it
        has furnished to BACC a true, accurate and complete copy of the Agreement
        to be
        entered into by Borrower and PFI pursuant to which a Purchase Order Assistance
        Facility will be established, and all other documents and agreements related
        thereto. Borrower confirms it requested that BACC enter into an Intercreditor
        Agreement with PFI in the form annexed hereto as Exhibit A, and to which
        Borrower shall be a party to. Borrower hereby reaffirms said Intercreditor
        Agreement and the authorization set forth in said Intercreditor Agreement
        that,
        inter alia, BACC forward directly to PFI the proceeds of all Advance against
        an
        Account that is a Purchased Order Financed Account arising from the Purchase
        Order Assistance Facility between the PO Financed Borrower and PFI. Borrower
        will act in accordance with the procedures set forth in said Intercreditor
        Agreement relative to seeking Advances from BACC. Borrower hereby authorizes
        BACC to, from time to time, communicate directly with PFI and any other future
        Purchase Order Assistance Provider, so as to exchange any and all information
        relative to the Revolving Credit Facility between BACC and Borrower provided
        for
        herein and the Purchase Order Assistance Facility provided by said Purchase
        Order Assistance Provider. If hereafter Borrower obtains a Purchase Order
        Assistance Facility from a Purchase Order Assistance Provider which replaces
        the
        subject facility from PFI, all references in this Section 2.1(B) to PFI shall
        be
        deemed to be the replacement Purchase Order Assistance Provider.

       

      2.2
        Overadvances. All Advances shall be added to and be deemed part of the
        Obligations when made. If, at any time and for any reason, the aggregate
        amount
        of the outstanding Advances under the Revolving Credit Facility exceeds the
        dollar or percentage limitations contained in Section 2.1 (an Overadvance)
        then
        Borrower shall, upon demand by BACC, immediately pay to BACC, in cash, the
        amount of such Overadvance. Without affecting Borrower’s obligation to
        immediately repay to BACC the amount of each Overadvance, Borrower shall
        pay
        BACC a fee (the Overadvance Fee) in an amount to be agreed upon between BACC
        and
        Borrower, but not less than $500.00 per occurrence of an Overadvance, plus
        interest on the Overadvance amount at the Default Rate set forth
        below.

       

      
        
          
          

        

        
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      2.3
        Authorization to Make Advances. BACC is hereby authorized to make the Advances
        based upon telephonic or other instructions received from anyone purporting
        to
        be an Authorized Officer, or, at the discretion of BACC, if such Advances
        are
        necessary to satisfy any Obligations. All requests for Advances shall specify
        the date on which such Advance is to be made (which day shall be a Business
        Day)
        and the amount of such Advance. Requests received after 12:00 p.m. Eastern
        time
        on any day shall be deemed to have been made as of the opening of business
        on
        the immediately following Business Day. All Advances made under this Agreement
        shall be conclusively presumed to have been made to, at the request of, and
        for
        the benefit of Borrower when deposited to the credit of Borrower or otherwise
        disbursed in accordance with the instructions of Borrower or in accordance
        with
        the terms and conditions of this Agreement, or the intercreditor agreement
        between BACC and the Purchase Order Assistance Provider. Unless otherwise
        requested by Borrower, all Advances shall be made by a wire transfer to the
        deposit account of Borrower designated on schedule 2.3 annexed hereto, or
        such
        other account as Borrower shall notify BACC in writing. Borrower shall pay
        to
        BACC a funds transfer fee of $25.00 for each Advance. Said fees shall be
        payable
        on the first day of each month of the Term for all Advances made during the
        preceding month.

       

      2.4
        Interest.

       

      A.
        Except
        where specified to the contrary in the Loan Documents interest shall accrue
        on
        the Daily Balance of the Obligations at the per annum rate of one and one
        half
        percentage points (1.5%) above the Prime Rate, in effect from time to time.
        The
        Obligations shall, at the option of BACC, from and after the occurrence of
        an
        Event of Default, and without constituting a waiver of any such Event of
        Default, and if the Obligations are not paid in full by the Termination Date,
        and without waiving the maturity of the Obligations on the Termination Date,
        bear interest at the per annum rate of six and one half percentage points
        (6.5%)
        above the Prime Rate (the “Default Rate”). All interest payable under the Loan
        Documents shall be computed on the basis of a three hundred sixty (360) day
        year
        for the actual number of days elapsed on the Daily Balance. Interest as provided
        for herein shall continue to accrue until the Obligations are paid in
        full.

       

      B.
        The
        interest rate payable by Borrower under the terms of this Agreement shall
        be
        adjusted in accordance with any change in the Prime Rate from time to time
        on
        the date of any such change. All interest payable by Borrower shall be due
        and
        payable on the first day of each calendar month during the Term. BACC may,
        at
        its option, add such interest and all BACC Expenses to the Obligations, and
        such
        amount shall thereafter accrue interest at the rate then applicable under
        this
        Agreement. Notwithstanding anything to the contrary contained in the Loan
        Documents, the minimum monthly interest payable by Borrower on the Advances
        shall be calculated on a minimum Daily Balance of One Million Dollars
        ($1,000,000.00).

       

      C.
        In no
        event shall interest on the Obligations exceed the highest lawful rate in
        effect
        from time to time. It is not the intention of the parties hereto to make
        an
        agreement which violates any applicable state or federal usury laws. In no
        event
        shall Borrower pay or BACC accept or charge any interest which, together
        with
        any other charges upon the principal or any portion thereof, exceeds the
        maximum
        lawful rate of interest allowable under any applicable state or federal usury
        laws. Should any provision of this Agreement or any existing or future Notes
        or
        Loan Documents between the parties be construed to require the payment of
        interest or any other fees or charges which could be construed as interest
        which, together with any other charges upon the principal or any portion
        thereof
        and any other fees or charges which could be construed as interest, exceeds
        the
        maximum lawful rate of interest, then any such excess shall be applied to
        the
        remaining principal balance of the Obligations, if any, and the remainder
        refunded to Borrower.

       

      D.
        Notwithstanding the foregoing, for purposes of this Agreement, it is the
        intention of Borrower and BACC that “interest” shall mean, and be limited to,
        any payment to BACC which compensates it for extending credit to Borrower,
        for
        making available to Borrower a revolving credit facility during the term
        of this
        Agreement and for any default or breach by Borrower of a condition upon which
        credit was extended. Borrower and BACC agree that, for the sole purpose of
        calculating the “interest” paid by Borrower to BACC, it is the intention of
        Borrower and BACC that interest shall mean and include, and be expressly
        limited
        to, any interest accrued on the aggregate outstanding balance of the Obligations
        during the term hereof pursuant to Sections 2.4(A) and 2.4(B); and any
        Overadvance Fee, Facility Fee, and late fees charged to Borrower during the
        term
        hereof. Borrower and BACC further agree that it is their intention that the
        following fees shall not constitute “interest”: any Servicing Fees, any
        Examination Fees, any attorney fees incurred by BACC, any premiums or
        commissions attributable to insurance guaranteeing repayment, finders’ fees,
        credit report fees, appraisal fees or fees for document preparation or
        notarization. To the extent, however, that New Jersey law excludes from the
        calculation of “interest” any fees defined herein as interest, or includes as
        interest any fees or other sums which are intended not to constitute interest
        New Jersey law shall supersede and prevail and all such interest shall be
        subject to paragraph 2.4(C) above.

       

      
        
          
          

        

        
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      2.5
        Collection of Accounts. BACC or a BACC designee may, at any time, with or
        without notice to Borrower, notify customers or Account debtors or other
        obligors that the Accounts or other Collateral have been assigned to BACC,
        and
        that BACC has a security interest in them and collect the Accounts and other
        Collateral directly, and add the collection costs and expenses to the
        Obligations, but, unless and until BACC does so or gives Borrower other written
        instructions, Borrower shall notify all Account debtors and other obligors
        to
        remit payments on Accounts and other Collateral to a lockbox to be designated
        by
        BACC, and with payments to be made by wire transfer, ACH or other electronic
        means, to an account designated by BACC. All such payments remitted to the
        lockbox or made by wire transfer, ACH or other electronic means, shall be
        credited to a deposit account of BACC and into which account remittances
        from
        account debtors or obligors of other clients of BACC may be credited. If
        notwithstanding said notice Borrower obtains payment on any Account or other
        Collateral, including, without limitation, collections under credit card
        sales,
        Borrower shall receive all such payments on Accounts and other Collateral
        and
        other proceeds, including cash, in trust for BACC and immediately deliver
        said
        payments to BACC in their original form as received from the Account debtor
        or
        other obligor, together with any necessary endorsements.

       

      2.6
        Crediting Payments. The receipt of any item of payment by BACC shall, for
        the
        sole purpose of determining availability under the revolving credit facility
        provided for herein, subject to final payment of such item, be provisionally
        applied to reduce the Obligations on the date of receipt of such item by
        BACC,
        but the receipt of such an item of payment shall for all other purposes in
        determining the Daily Balance, including without limitation for the purpose
        of
        calculation of interest on the Obligations and the calculation of the Servicing
        Fee, not be deemed to have been paid to BACC until three (3) Business Days
        after
        the date of BACC’s actual receipt of such item of payment. Notwithstanding
        anything to the contrary contained herein, payments received by BACC after
        11:00
        a.m. Eastern time shall be deemed to have been received by BACC as of the
        opening of business on the immediately following Business Day.

       

      2.7
        Closing and Facility Fee. In consideration of BACC’s entering into this
        Agreement, Borrower shall pay BACC a closing fee (the Closing Fee) of one
        half
        percent (.5%) of the Advance Limit (said closing fee being Fifty Thousand
        Dollars ($50,000.00), one half of which (Twenty Five Thousand Dollars
        ($25,000.-00) shall be paid simultaneous with the execution hereof, and the
        balance on June 1, 2007. Notwithstanding the foregoing the unpaid balance
        of
        said closing fee shall be payable in full on the earlier of (a) termination
        of
        this Agreement or (b) at BACC’s option upon BACC’s declaration of an Event of
        Default. On each annual anniversary of the date hereof Borrower shall pay
        to
        BACC an annual facility fee (the Facility Fee) of one quarter percent (.25%)
        of
        the Advance Limit plus the then outstanding principal balance of any term
        loans
        and Advances other than under the Revolving Credit Facility. The Closing
        Fee and
        Facility Fee shall be deemed to have been fully earned upon the execution
        hereof
        for the entire Initial Term.

       

      2.8
        Servicing Fee. Borrower shall pay BACC a monthly fee (the Servicing Fee)
        in an
        amount equal to two tenths percent (.2%) of the average Daily Balance of
        the
        Advances during each month on or before the first (1st) day of each calendar
        month in respect of BACC’s services for the preceding calendar month, during the
        Term, including each Renewal Term, or so long as the Obligations are
        outstanding, provided, however, that if Borrower breaches its obligations
        under
        Section 2.5 of this Agreement, and without constituting a waiver of an Event
        of
        Default as a consequence of such breach, at the election of BACC the Servicing
        Fee shall be doubled. Notwithstanding anything to the contrary contained
        in the
        Loan Documents, the Servicing Fee shall be based on a minimum Daily Balance
        of
        Advances of One Million Dollars ($1,000,000.00).

       

      2.9
        Field
        Examination Fee. Borrower shall pay BACC a fee (the Field Examination Fee)
        in an
        amount equal to Seven Hundred Fifty Dollars ($750.00) per day per examiner,
        plus
        out-of-pocket expenses for each examination of Borrower’s Books or the other
        Collateral performed by BACC or its designee.

       

      2.10
        Late
        Reporting Fee. Borrower shall pay to BACC a fee in an amount equal to Fifty
        Dollars ($50.00) per document per day for each Business Day any report,
        financial statement or schedule required by this Agreement to be delivered
        to
        BACC, is past due.

       

      2.11
        Monthly Statements. BACC may render monthly statements to Borrower of all
        Obligations, including statements of all principal, interest and BACC Expenses,
        and Borrower shall have fully and irrevocably waived all objections to such
        statements and the contents thereof unless, within thirty (30) days after
        receipt, Borrower shall deliver to BACC, by registered, certified or overnight
        mail as set forth in Section 12 hereof, written objection to such statement
        specifying the error or errors, if any, contained therein.

      
        
          
          

        

        
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      3.
        TERM

       

      3.1
        Term
        and Renewal Date. This Agreement shall become effective upon execution by
        BACC
        and continue in full force through the Initial Term and from year to year
        thereafter (a “Renewal Term”) if BACC, at its option, in writing agrees to
        extend the Term for one (1) year from the then Termination Date, provided
        that
        Borrower has not exercised its termination right in accordance with this
        Section
        3.1. Borrower may terminate the Term on the then Termination Date by giving
        BACC
        at least sixty (60) days prior written notice by registered or certified
        mail,
        return receipt requested. In addition, BACC shall have the right to terminate
        this Agreement immediately at any time upon the occurrence of an Event of
        Default. No such termination shall relieve or discharge Borrower of its duties,
        Obligations and covenants hereunder until all Obligations have been paid
        and
        performed in full, and BACC’s continuing security interest in the Collateral
        shall remain in effect until the Obligations have been fully and irrevocably
        paid and satisfied in cash or cash equivalent. On the Termination Date of
        this
        Agreement, the Obligations shall be immediately due and payable in full.
        Expressly in addition to all rights and remedies available to BACC, if the
        term
        of this Agreement is not renewed and the Obligations are not paid in full
        by the
        Termination Date, then Borrower shall also pay to BACC, as part of the
        Obligations, a fee of two percent (2%) of the then outstanding principal
        balance
        of the Obligations.

       

      3.2
        Termination Fee. If the Term is terminated by BACC upon the occurrence of
        an
        Event of Default, or is terminated by Borrower except as provided in Section
        3.1, in view of the impracticability and extreme difficulty of ascertaining
        actual damages and by mutual agreement of the parties as to a reasonable
        calculation of BACC’s lost profits as a result thereof, in addition to payment
        of all principal, interest, fees, expenses and other Obligations, Borrower
        shall
        pay BACC upon the effective date of such termination a fee in an amount equal
        to: (a) three percent (3%) of the Advance Limit plus the then outstanding
        principal balance of any term loans or Advances other than under the Revolving
        Credit Facility, if such termination occurs on or prior to the first (1st)
        anniversary of the commencement date of the Initial Term; or (b) two percent
        (2%) of the Advance Limit plus the then outstanding principal balance of
        any
        term loans or Advances other than under the Revolving Credit Facility if
        such
        termination occurs after the first (1st) anniversary of the commencement
        date of
        the Initial Term and prior to the second (2nd) anniversary of the commencement
        date of the Initial Term. Such fee shall be presumed to be the amount of
        damages
        sustained by BACC as the result of termination and Borrower acknowledges
        that it
        is reasonable under the circumstances currently existing. The fee provided
        for
        in this Section 3.2 shall be deemed included in the Obligations.

       

      4.
        CREATION OF CONTINUING SECURITY INTEREST

       

      4.1
        Grant
        of Continuing Security Interest. Borrower hereby grants to BACC a continuing
        security interest in all presently existing and hereafter acquired or arising
        Collateral in order to secure prompt repayment of the Obligations and in
        order
        to secure prompt performance by Borrower of each and all of its covenants
        and
        Obligations under the Loan Documents and otherwise. BACC’s continuing security
        interest in the Collateral shall attach to all Collateral without further
        act on
        the part of BACC or Borrower.

       

      4.2
        Negotiable Collateral. In the event that any Collateral, including proceeds,
        is
        evidenced by or consists of Negotiable Collateral, Borrower shall notify
        BACC
        and upon the request of BACC, immediately endorse and assign such Negotiable
        Collateral to BACC and deliver physical possession of such Negotiable Collateral
        to BACC.

       

      
        
          
          

        

        
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      4.3
        Delivery of Additional Documentation Required. Borrower shall execute and
        deliver to BACC concurrently with Borrower’s execution and delivery of this
        Agreement and at any time thereafter at the request of BACC, all security
        agreements, chattel mortgages, pledges, assignments, endorsements of
        certificates of title, applications for title, affidavits, reports, notices,
        schedules of accounts, letters of authority, and all other documents that
        BACC
        may request, in form satisfactory to BACC, to perfect and maintain perfected
        BACC’s continuing security interests in the Collateral and in order to fully
        consummate all of the transactions contemplated under the Loan Documents,
        and
        Borrower hereby authorizes BACC to file and/or record such financing statements
        and other documents as BACC deems necessary to perfect and maintain BACC’s
        continuing security interest in the Collateral, and agrees any such financing
        statement may contain an “all asset” or “all property” description of the
        Collateral, and Borrower hereby ratifies any such financing statement or
        other
        document heretofore filed by BACC.

       

      4.4
        Power
        of Attorney. Borrower hereby irrevocably makes, constitutes and appoints
        BACC
        (and any person designated by BACC) as Borrower’s true and lawful
        attorney-in-fact with power to sign the name of Borrower on any of the above
        described documents or on any other similar documents to be executed, recorded
        or filed in order to perfect or continue perfected BACC’s continuing security
        interest in the Collateral. In addition, Borrower hereby appoints BACC (and
        any
        person designated by BACC) as Borrower’s attorney-in-fact with power to: (a)
        sign Borrower’s name on verifications of Accounts and other Collateral, and on
        notices to Account debtors; (b) send requests for verification of Accounts
        and
        other Collateral; (c) endorse Borrower’s name on any checks, notes, acceptances,
        money orders, drafts or other forms of payment or security that may come
        into
        BACC’s possession; (d) notify the post office authorities to change the address
        for delivery of Borrower’s mail to an address designated by BACC, to receive and
        open all mail addressed to Borrower, and to retain all mail relating to the
        Collateral and forward all other mail to Borrower; (e) make, settle and adjust
        all claims under Borrower’s policies of insurance, endorse the name of Borrower
        on any check, draft, instrument or other item of payment for the proceeds
        of
        such policies of insurance and make all determinations and decisions with
        respect to such policies of insurance. The appointment of BACC as Borrower’s
        attorney-in-fact and each and every one of BACC’s rights and powers, being
        coupled with an interest, is irrevocable so long as any Accounts in which
        BACC
        has a continuing security interest remain unpaid and until all of the
        Obligations have been fully repaid and performed.

       

      4.5
        Right
        To Inspect. BACC shall have the right at any time or times hereafter during
        Borrower’s usual business hours, or during the usual business hours of any third
        party having control over Borrower’s Books, to inspect Borrower’s Books in order
        to verify the amount or condition of, or any other matter relating to, the
        Collateral or Borrower’s financial condition. BACC also shall have the right at
        any time or times hereafter during Borrower’s usual business hours to inspect,
        examine and appraise the Inventory, the Equipment and other Collateral and
        to
        check and test the same as to quality, quantity, value and
        condition.

       

      5.
        REPRESENTATIONS AND WARRANTIES AND COVENANTS

       

      Borrower
        represents and warrants to BACC, and covenants, the following and
        acknowledges:

       

      5.1
        No
        Prior Encumbrances; Security Interests. Borrower has good and marketable
        title
        to the Collateral, free and clear of liens, claims, security interests or
        encumbrances, except for the security interests to be satisfied from the
        proceeds of the first Advances hereunder, the continuing security interests
        granted to BACC by Borrower, and those disclosed on Schedule 5.1 annexed
        hereto.
        Other than those expressly permitted by this Agreement, Borrower will not
        create
        or permit to be created any security interest, lien, pledge, mortgage or
        encumbrance on any Collateral or any of its other assets.

       

      5.2
        Bona
        Fide Accounts. All Accounts reported to BACC as Eligible Accounts represent
        bona
        fide sales or leases of goods and/or services for which Borrower has an
        unconditional right to payment and as to which the goods have been delivered
        to
        the customer and/or the services rendered, as applicable. None of the Accounts
        reported to BACC as Eligible Accounts are subject to any rights of offset,
        counterclaim, cancellation or contractual rights of return.

       

      5.3
        Merchantable Inventory. All Inventory is now and at all times hereafter shall
        be
        of good and merchantable quality, free from defects.

       

      5.4
        Location of Inventory and Equipment. The Inventory and Equipment (except
        for
        specific items of Inventory while they remain subject to a Permitted Purchase
        Order Assistance Facility) is not now and shall not at any time or times
        hereafter be stored with a bailee, warehouseman, processor, or similar party
        other than those which are identified on the perfection certificate annexed
        hereto or as to which Borrower may from time to time have provided BACC with
        prior written notice. Borrower shall keep the Inventory and Equipment only
        at
        its address set forth on the first page hereof and at the locations set forth
        in
        the perfection certificate annexed hereto and other locations as to which
        Borrower has provided BACC with prior written notice of. If any of the Inventory
        and Equipment is located at a premises not owned by Borrower, Borrower shall
        cause the landlord of such premises, warehouseman, or other party having
        an
        interest in said premises, to execute and deliver to BACC a landlord waiver
        and
        subordination, warehouseman’s acknowledgment, or similar agreement, satisfactory
        in form and substance to BACC.

       

      
        
          
          

        

        
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      5.5
        Inventory Records. Borrower now keeps and hereafter at all times shall keep
        correct and accurate records itemizing and describing the kind, type, quality
        and quantity of the Inventory and Borrower’s cost of said items and none of
        Borrower’s Inventory contains any labels, trademarks, trade-names or other
        identifying characteristics which are the properties of third
        parties.

       

      5.6
        Retail Accounts. No Accounts arise from the sale of goods or rendition of
        services for personal, family or household purposes.

       

      5.7
        Relocation of Chief Executive Office. The chief executive office of Borrower
        and
        the location of all books and records of Borrower relating to the Collateral
        is
        at the address indicated on the first page of this Agreement and Borrower
        will
        not, without thirty (30) days’ prior written notice to BACC and compliance with
        Section 4.3 hereof, relocate such office.

       

      5.8
        Due
        Organization and Qualification. Borrower is, and shall at all times hereafter,
        be a corporation or limited liability company, as applicable, duly organized
        and
        existing under the laws of the state of its incorporation or formation as
        applicable, as set forth on the first page hereof, and Borrower is, and shall
        at
        all times hereafter be, qualified and licensed to do business and is in good
        standing in any state in which the conduct of its business or its ownership
        of
        assets requires that it be so qualified. Borrower’s organizational
        identification number as issued by the state in which it is incorporated
        or
        formed as applicable, is set forth in the perfection certificate annexed
        hereto.

       

      5.9
        Actual and Fictitious Name. Borrower’s exact name is set forth on the first page
        hereof and except as set forth in the perfection certificate annexed hereto
        Borrower has not changed its name within the last five (5) years. Borrower
        is
        conducting its business under the trade or fictitious name(s) set forth in
        the
        perfection certificate annexed hereto, and no others. Borrower has complied
        with
        the fictitious name laws of all jurisdictions in which compliance is required
        in
        connection with its use of such name(s).

       

      5.10
        Permits and Licenses. Borrower holds all licenses, permits, franchises,
        approvals and consents required for the conduct of its business and the
        ownership and operation of its assets, and schedule 5.10 annexed hereto
        identifies all such license, approvals and the like held by
        Borrower.

       

      5.11
        Due
        Authorization. Borrower has the right and power and is duly authorized to
        enter
        into the Loan Documents to which it is a party.

       

      5.12
        Compliance with Organizational Documents. The execution by Borrower of the
        Loan
        Documents to which it is a party does not constitute a breach of any provision
        contained in Borrower’s organizational documents, by-laws or operating agreement
        as applicable, nor does it constitute an event of default under any material
        agreement to which Borrower is now or may hereafter become a party.

       

      5.13
        Litigation. Except as disclosed on Schedule 5.13 annexed hereto there are
        no
        actions, proceedings or claims pending by or against Borrower, whether or
        not
        before any court or administrative agency and Borrower has no knowledge or
        notice of any pending, threatened or imminent litigation, governmental
        investigations, or claims, complaints, actions, or prosecutions involving
        Borrower, except for ongoing collection matters in which Borrower is the
        plaintiff. If any such actions, proceedings or claims presently exist or
        arise
        during the Term, Borrower shall promptly notify BACC in writing and shall,
        from
        time to time, notify BACC of all material events relating thereto.

       

      
        
          
          

        

        
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    5.14
      Accuracy of Information and No Material Adverse Change in Financial Statements.
      All information furnished by Borrower to BACC, and all statements made by
      Borrower to BACC, including, without limitation, information set forth in any
      loan application, client profile, and in the annexed perfection certificate,
      are
      true, accurate and complete in all respects and do not contain any misstatement
      of fact or omit to state any facts necessary to make the statements or
      information contained therein not misleading. All financial statements relating
      to Borrower which have been or may hereafter be delivered to BACC (i) have
      been
      prepared in accordance with GAAP; (ii) fairly present Borrower's financial
      condition as of the date thereof and Borrower's results of operations for the
      period then ended; and (iii) disclose all contingent obligations of Borrower.
      In
      addition no material adverse change in the financial condition of Borrower
      has
      occurred since the date of the most recent of such financial
      statements.

     

    5.15
      [this section intentionally left blank].

     

    5.16
      ERISA. Neither Borrower or any ERISA Affiliate, nor any Plan is or has been
      in
      violation of any of the provisions of ERISA, any of the qualification
      requirements of IRC Section 401(a), or any of the published interpretations
      thereof. No lien upon the assets of Borrower has arisen with respect to any
      Plan. No prohibited transaction within the meaning of ERISA Section 406 or
      IRC
      Section 4975(c) has occurred with respect to any Plan. Neither Borrower nor
      any
      ERISA Affiliate has incurred any withdrawal liability with respect to any
      Multiemployer Plan. Borrower and each ERISA Affiliate have made all
      contributions required to be made by them to any Plan or Multiemployer Plan
      when
      due. There is no accumulated funding deficiency in any Plan, whether or not
      waived.

     

    5.17
      Environmental Laws and Hazardous Materials. Borrower has complied, and at all
      times through the Term will comply, with all Environmental Laws. Borrower has
      not and will not cause or permit any Hazardous Materials to be located,
      incorporated, generated, stored, manufactured, transported to or from, released,
      disposed of, or used at, upon, under, or within any premises at which Borrower
      conducts its business, or in connection with Borrower's business. To the best
      of
      Borrower's knowledge, no prior owner or operator of any premises at which
      Borrower conducts its business has caused or permitted any of the above to
      occur
      at, upon, under, or within any of the premises. Borrower will not permit any
      lien to be filed against the Collateral or any part thereof under any
      Environmental Law, and will promptly notify BACC of any proceeding, inquiry
      or
      claim relating to any alleged violation of any Environmental Law, or any alleged
      loss, damage or injury resulting from any Hazardous Material. BACC shall have
      the right to join and participate in, as a party if it so elects, any legal
      or
      administrative proceeding initiated with respect to any Hazardous Material
      or in
      connection with any Environmental Law. "Hazardous Material" includes without
      limitation any substance, material, emission, or waste which is or hereafter
      becomes regulated or classified as a hazardous substance, hazardous material,
      toxic substance or solid waste under any Environmental Law, asbestos, petroleum
      products, urea formaldehyde, polychlorinated biphenyls (PCBs), radon, and any
      other hazardous or toxic substance, material, emission or waste. Environmental
      Law means the Comprehensive Environmental Response, Compensation, and Liability
      Act of 1980, as amended, the Resource Conservation and Recovery Act of 1976,
      the
      Hazardous Materials Transportation Act, the Toxic Substances Control Act, the
      regulations pertaining to such statutes, and any other safety, health or
      environmental statutes, laws, regulations or ordinances of the United States
      or
      of any state, county or municipality in which Borrower conducts its business
      or
      the Collateral is located.

     

    5.18
      Tax
      Compliance. Borrower has filed all tax returns required to be filed by it and
      has paid all taxes due and payable on said returns and on any assessment made
      against it or its assets.

     

    5.19
      Reliance by BACC; Cumulative. Each warranty, representation and agreement
      contained in this Agreement shall be automatically deemed repeated by Borrower
      with each request for an Advance and shall be conclusively presumed to have
      been
      relied on by BACC regardless of any investigation made or information possessed
      by BACC. The warranties, representations and agreements set forth herein shall
      be cumulative and in addition to any and all other warranties, representations
      and agreements which Borrower shall now or hereafter give, or cause to be given,
      to BACC.

     

    5.20
      Use
      of Proceeds. The proceeds of the initial Advance will be used by Borrower for
      the purposes set forth on Schedule 5.20 annexed hereto. Absent BACC's written
      consent to the contrary the proceeds of Advances after the initial Advance
      will
      be used by Borrower solely for working capital purposes.

     

    
      
        
          
          

        

        
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    5.21
      Motor Vehicles and Intellectual Property. The perfection certificate annexed
      hereto identifies all motor vehicles, patents, patent applications, copyrights,
      trademarks, trade-names and other intellectual property, registered or
      unregistered, owned by Borrower. Borrower will promptly notify BACC of all
      motor
      vehicles or intellectual property hereafter owned by Borrower, and the status
      of
      all patent applications and the issuance of patents, and all copyrights
      registrations, and in accordance with Section 4.3 hereof, will cooperate with
      BACC in taking all actions required by BACC to have a perfected security
      interest or lien on such motor vehicles and intellectual property.

     

    5.22
      Commercial Tort Claims. Borrower does not, as of the date hereof, have any
      Commercial Tort Claims against any third parties. If Borrower does hereafter
      have any such Commercial Tort Claims Borrower shall furnish BACC with prompt
      written notice thereof, and in accordance with Article 4 hereof, execute and
      deliver such supplemental documents and cooperate with BACC in taking all action
      required by BACC to have a perfected security interest or lien on such
      Commercial Tort Claims.

     

    5.23
      Affiliation. DGI and DTD are each wholly owned by DAI. DAI is wholly owned
      by
      Drinks Americas Holding, Ltd., a Delaware corporation ("Holdings"). There are
      no
      other entities wholly or partially owned by any Borrower or Holdings other
      than
      the entities identified on Schedule 5.23 annexed hereto (the "Affiliated
      Entities"). Each of the Affiliated Entities is an inactive entity in the sense
      it does not have any material assets and does not actively conduct business.
      If
      any time any of the Affiliated Entities, or any other present or future entity
      wholly or partially owned by Borrower or Holdings is to become an active entity,
      Borrower will furnish BACC with at least ten (10) Business Days prior written
      notice thereof and, at the request of BACC cause such entities to execute and
      deliver to BACC a guaranty of all Obligations of Borrower to BACC, and to secure
      said guaranty, a first priority perfected security interest in all of said
      entities assets, pursuant to a guaranty and security interest, and supporting
      documents, each in form satisfactory to BACC, or at the option of BACC, cause
      said entities to enter into a joinder agreement, satisfactory in form to BACC,
      so as to become a borrower under this Agreement and the other Loan
      Documents.

     

    5.24
      License Agreements. Schedule 3.9 to the annexed perfection certificate
      identifies all license agreements, distribution agreements, and the like, to
      which Borrower is a party, and true, accurate and complete copies of same have
      been delivered by Borrower to BACC. If Borrower hereafter enters into a license
      agreement, distribution agreement, or the like, with any third party, Borrower
      will promptly give BACC written notice thereof, and furnish to BACC a true,
      accurate, and complete copy of same.

     

     6.
      AFFIRMATIVE COVENANTS

     

    Borrower
      covenants and acknowledges that during the Term Borrower shall comply with
      all
      of the following:

     

    6.1
      Collateral and Other Reports. Borrower shall at least once a week and each
      time
      it requests an Advance under the Revolving Credit Facility, furnish to BACC
      a
      borrowing base report satisfactory in form and substance to BACC, and report
      to
      BACC all sales and Accounts arising since its most recent report to BACC and
      shall execute and deliver to BACC, no later than the fifteenth (15th) day of
      each month during the Term, a detailed aging of the Accounts, a reconciliation
      statement and a summary aging, by vendor, of all accounts payable of Borrower
      and any book overdraft. Borrower shall deliver to BACC, as BACC may from time
      to
      time require, collection reports, sales journals, invoices, original delivery
      receipts, customers' purchase orders, shipping instructions, bills of lading
      and
      other documentation respecting shipment arrangements, and other matters
      requested by BACC. Absent such a request by BACC, copies of all such
      documentation shall be held by Borrower as custodian for BACC. Borrower shall
      at
      all times provide BACC with all current "passwords" or similar access
      requirements relative to all computer systems available to Borrower with its
      Account debtors so as to enable BACC to have access to said computer systems
      so
      as to verify the status of Accounts owing to Borrower from said Account debtors.
      Any and all borrowing base reports, agings, etc. shall specify if any Inventory
      reported therein is Purchase Order Financed Inventory, or any Account report
      therein is a Purchaser Order Financed Account. Borrower will immediately report,
      in writing, all allowances programs or terms, discounts, and the like, provided
      to any customers of Borrower.

     

    
      
        
          
          

        

        
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    6.2
      Returns. Returns and allowances, if any, as between Borrower and any Account
      debtors, shall be permitted on the same basis and in accordance with the usual
      customary practices of Borrower as they exist at the date of the execution
      and
      delivery of this Agreement. If at any time prior to the occurrence of an Event
      of Default any Account debtor returns any Inventory to Borrower, Borrower shall
      promptly determine the reason for such return and, if Borrower accepts such
      return, issue a credit memorandum (with a copy to be sent to BACC) in the
      appropriate amount to such Account debtor. Borrower shall promptly notify BACC
      of all returns and recoveries and of all disputes and claims.

     

    6.3
      Designation of Inventory. Borrower shall contemporaneous with the execution
      hereof and from time to time hereafter, but not less frequently than once every
      week, execute and deliver to BACC a designation of Inventory specifying the
      cost
      and the wholesale market value of Borrower's raw materials, work in process
      and
      finished goods, and further specifying such other information as BACC may
      reasonably request. Borrower shall promptly, in writing, notify BACC if any
      of
      Borrower's Inventory contains any labels, trademarks, trade-names or other
      identifying characteristics which are the properties of third
      parties.

     

    6.4
      Financial Statements, Reports, Certificates. Borrower shall deliver to BACC:
      (a)
      as soon as available, but in any event within thirty (30) days after the end
      of
      each month during the Term, a balance sheet and profit and loss statement
      prepared by Borrower covering Borrower's operations during such period; and
      (b)
      as soon as available, but in any event within ninety (90) days after the end
      of
      each of Borrower's fiscal years, financial statements of Borrower for each
      such
      fiscal period, audited on an unqualified basis (other than a "going concern
      qualification"), by independent certified public accountants acceptable to
      BACC.
      Such financial statements shall include a balance sheet and profit and loss
      statement, and the accountants' management letter, if any, and shall be prepared
      in accordance with GAAP, and shall include consolidating schedules. Together
      with the above, Borrower shall also deliver Borrower's Form 10-Qs, 10-Ks or
      8-Ks, if any, as soon as the same become available, and any other report
      reasonably requested by BACC relating to the Collateral and the financial
      condition of Borrower and a certificate signed by its chief financial officer
      to
      the effect that all reports, statements or computer prepared information of
      any
      kind or nature delivered or caused to be delivered to BACC under this Section
      6.4 fairly present its financial condition and that there exists on the date
      of
      delivery of such certificate to BACC no condition or event which constitutes
      an
      Event of Default.

     

    6.5
      Tax
      Returns, Receipts. Borrower shall deliver to BACC copies of each of its future
      federal income tax returns, and any amendments thereto, within thirty (30)
      days
      of the filing thereof. Borrower further shall promptly deliver to BACC, upon
      request, satisfactory evidence of Borrower's payment of all withholding and
      other taxes required to be paid by it.

     

    6.6
      Guarantor Reports. Borrower agrees to cause each Guarantor to deliver to BACC
      (a) its annual financial statements as soon as available and in any event within
      ninety (90) days of each fiscal year end, and (b) copies of all federal and
      state income tax returns as soon as the same are available and in any event
      no
      later than thirty (30) days after the same are required to be filed by
      law.

     

    6.7
      Title
      to Equipment. Upon BACC's request, Borrower shall immediately deliver to BACC,
      properly endorsed, any and all evidences of ownership of, certificates of title,
      or applications for title to any items of Equipment.

     

    6.8
      Maintenance of Equipment. Borrower shall keep and maintain the Equipment in
      good
      operating condition and repair, and shall make all necessary replacements
      thereto so that its value and operating efficiency shall at all times be
      maintained and preserved. Borrower shall not permit any item of Equipment to
      become a fixture to real estate or an accession to other property, and the
      Equipment is now and shall at all times remain Borrower's personal
      property.

     

    6.9
      Taxes. All Federal, state and local assessments and taxes, whether real,
      personal or otherwise, including, without limitation, excise taxes, due or
      payable by, or imposed, levied or assessed against Borrower or any of its assets
      or in connection with Borrower's business shall hereafter be paid in full,
      before they become delinquent or before the expiration of any extension period.
      Borrower shall make due and timely payment or deposit of all federal, state
      and
      local taxes, assessments or contributions required of it by law, and will
      execute and deliver to BACC, on demand, appropriate certificates attesting
      to
      the payment or deposit thereof.

    

      
        
          
          

        

        
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    6.10
      Insurance. Borrower, at its expense, shall keep and maintain insurance to
      protect the Collateral against all risk of loss covered under a Special property
      form (If any of the tangible Collateral is located in a flood zone, Borrower
      must also have flood insurance. Borrowers with Collateral in California must
      also insure against the peril of earthquakes.) The coverage shall be written
      on
      a replacement cost basis. The property limit(s) shall be no less than those
      necessary to satisfy the coinsurance requirement contained in the insurance
      policy. All policies of insurance covering business personal property and
      business income shall contain a Lender's Loss Payable endorsement in a form
      satisfactory to BACC. All policies insuring real property on which BACC has
      a
      mortgage or other lien shall contain a Mortgagee endorsement in form
      satisfactory to BACC. Either, or both, form(s) shall contain a waiver of
      warranties. All proceeds payable under such policies shall be payable to BACC
      and applied to the Obligations. Borrower shall cause to be delivered to BACC
      a
      properly executed Evidence of Property Insurance form along with a copy of
      the
      Lender's Loss Payable and/or Mortgagee endorsement(s) as applicable, in advance
      of the loan closing date and thereafter at least thirty (30) days prior to
      the
      expiration date(s) of the policy(ies). All Mortgagee and Lender's Loss Payable
      endorsements shall contain the following address for notification purposes,
      or
      such other address as BACC may, from time to time, notify Borrower:

     

    Business
      Alliance Capital Company 

    214
      Carnegie Center, Suite 302 

    Princeton,
      New Jersey 08540 

    Attn:
      Operations Department

     

    Borrower,
      at its expense, shall keep and maintain Commercial General Liability Coverage
      insuring against all risks relating to or arising from Borrower's ownership
      and
      use of the Collateral and its other assets, its products, and its operations.
      BACC, its directors, officers and employees shall be named as additional
      insureds for Commercial General Liability on Borrower's policy. Borrower shall
      cause to be delivered to BACC a properly executed Certificate of Insurance,
      containing the required additional insured wording, before the loan closing
      and
      thereafter at least thirty (30) days prior the expiration date of the policy.
      Along with the Certificate of Insurance, Borrower shall also deliver a copy
      of
      the General Liability endorsement whereby BACC, et. al., are added to the policy
      as additional insureds.

     

    All
      required policies shall be in such form, with such companies and in such amounts
      as may be satisfactory to BACC. All policies shall contain a 30 day notice
      for
      cancellation or non-renewal. BACC reserves the right to change insurance
      specifications at any time.

     

    6.11
      BACC
      Expenses. Borrower shall immediately and without demand reimburse BACC for
      all
      BACC Expenses and Borrower hereby authorizes the payment of such BACC
      Expenses.

     

    6.12
      Compliance With Law. Borrower shall comply, in all material respects, with
      the
      requirements of all applicable laws, rules, regulations and orders of
      governmental authorities relating to Borrower and the conduct of its
      business.

     

    6.13
      Accounting System. Borrower at all times hereafter shall maintain a standard
      and
      modern system of accounting in accordance with GAAP with ledger and account
      cards or computer tapes, disks, printouts and records pertaining to the
      Collateral containing such information as may from time to time be requested
      by
      BACC.

     

    7.
      NEGATIVE COVENANTS

     

    Borrower
      covenants and acknowledges that during the Term Borrower shall not undertake
      any
      of the following:

     

    
      
        
          
          

        

        
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    7.1
      Extraordinary Transactions and Disposal of Assets. (A) Enter into any
      transaction not in the ordinary and usual course of its business as conducted
      on
      the date hereof, including but not limited to the sale, lease, disposal,
      movement, relocation or transfer, whether by sale or otherwise, of any its
      assets other than sales of Inventory in the ordinary and usual course of its
      business as presently conducted; (B) incur (i) any indebtedness for borrowed
      money or purchase money indebtedness except for (a) the existing indebtedness
      identified on Schedule 7.1 annexed hereto and (b) Permitted Indebtedness, or
      (ii) any other indebtedness outside the ordinary and usual course of its
      business as conducted on the date hereof, except for renewals or extensions
      of
      existing debts identified of schedule 7.1 annexed hereto;(C) make any advance
      or
      loan to any third party; or (D) grant a lien on any of its assets except (i)
      in
      favor of BACC, or (ii) the continuing security interests, if any, set forth
      on
      Schedule 5.1, or (iii) the liens in favor of a Purchase Order Assistance
      Provider under a Permitted Purchase Order Assistance Facility.

     

    7.2
      Change Name, etc. Change its name, business structure, jurisdiction of
      incorporation or formation as applicable, or identity, or add any new fictitious
      name.

     

    7.3
      Merge, Acquire. Merge, acquire, or consolidate with or into any other business
      organization.

     

    7.4
      Guaranty. Guaranty or otherwise become in any way liable with respect to the
      obligations of any third party, except by endorsement of instruments or items
      of
      payment for deposit to the account of Borrower for negotiation and delivery
      to
      BACC.

     

    7.5
      Restructure. Make any change in its financial structure or business
      operations.

     

    7.6
      Prepayments. Prepay any existing indebtedness owing to any third party other
      than trade payables.

     

    7.7
      Change of Ownership. (A) Cause, permit or suffer any change, direct or indirect,
      in the ownership of the capital stock or other equity interests of any Borrower
      or (B) cause, permit or suffer any change, direct or indirect, in the ownership
      of the capital stock or other equity interest of any entity that directly or
      indirectly owns the capital stock or equity interests in Borrower or its parent
      entities, including, without limitation, Holdings, such that there is a change
      of ownership of a controlling interest of such parent entities or Joseph Patrick
      Kenny ceases to be the chief executive officer of Borrower, or (B) enter into
      any agreement with any person or entity that provides for a payment to such
      person or entity based upon the income of Borrower.

     

    7.8
      Compensation. Pay total compensation, including salaries, withdrawals, fees,
      bonuses, commissions, drawing accounts, management fees, consulting fees, or
      other payments, whether direct or indirect, in money or otherwise, during any
      fiscal year to its executives, officers, shareholders, affiliates, and directors
      (or any relatives of the foregoing) in an aggregate amount in excess of One
      Million Three Hundred Fifty Thousand Dollars ($1,350,000.00), except for the
      payment, when due, (without acceleration) of the consulting fees owing under
      the
      consulting agreement identified on Schedule 7.8 annexed hereto.

     

    7.9
      Loans
      and Advances. Make any loans, advances or extensions of credit to any officer,
      director, executive employee or shareholder of Borrower (or any relative of
      any
      of the foregoing), or to any entity which is a subsidiary of, related to,
      affiliated with or has common shareholders, officers or directors with
      Borrower.

     

    7.10
      Capital Expenditures. Make any plant or fixed capital expenditure, or any
      commitment therefor, or purchase or lease any real or personal assets or
      replacement Equipment in excess of One Hundred Thousand Dollars ($100,000.00)
      for any individual transaction or where the aggregate amount of such
      transactions in any fiscal year exceeds Three Hundred Thousand Dollars
      ($300,000.00).

     

    7.11
      Consignments of Inventory. Consign any Inventory to any third party or obtain
      any Inventory on a consignment basis from any third party.

     

    7.12
      Distributions. Make any distribution or declare or pay any dividends (in cash
      or
      in stock) on, or purchase, acquire, redeem or retire any of its capital stock
      or
      member interest, of any class, whether now or hereafter
      outstanding.

    

    
      
        
          
          

        

        
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     7.13
      Accounting Methods. Modify or change its method of accounting or enter into,
      modify or terminate any agreement presently existing or at any time hereafter
      entered into with any third party for the preparation or storage of Borrower's
      records of Accounts and financial condition without said party agreeing to
      provide BACC with information regarding the Collateral or Borrower's financial
      condition. Borrower waives the right to assert a confidential relationship,
      if
      any, it may have with any such third party in connection with any information
      requested by BACC hereunder, and agrees that BACC may contact any such party
      directly in order to obtain such information.

     

    7.14
      Business Suspension. Suspend or go out of business.

     

    7.15
      Transactions with Affiliates. Borrower will not become a party to any
      transaction with any affiliates of Borrower unless the terms and conditions
      relating to such transaction are as favorable to Borrower as would be obtainable
      at the time in a comparable arms-length transaction with a person other than
      an
      affiliate.

     

    7.16
      Purchase Order Assistance Facility. Obtain a Purchase Order Assistance Facility
      other than a Permitted Purchase Order Assistance Facility.

     

    8.
      EVENTS
      OF DEFAULT

     

    The
      occurrence of any one or more of the following events shall constitute an Event
      of Default by Borrower hereunder:

     

    8.1
      Failure to Pay. Borrower's failure to pay when due and payable, or when declared
      due and payable, any portion of the Obligations (whether principal, interest,
      taxes, BACC Expenses, or otherwise);

     

    8.2
      Failure to Perform. Borrower's or a Guarantor's failure to perform, keep or
      observe any term, provision, condition, representation, warranty, covenant
      or
      agreement contained in this Agreement, in any of the Loan Documents or in any
      other present or future agreement between Borrower, and/or a Guarantor and
      BACC;

     

    8.3
      Misrepresentation. Any misstatement or misrepresentation now or hereafter exists
      in any warranty, representation, statement, aging or report made to BACC by,
      Borrower and/or a Guarantor or any officer, employee, agent or director thereof,
      or if any such warranty, representation, statement, aging or report is withdrawn
      by such person;

     

    8.4
      Material Adverse Change. There is a material adverse change in Borrower's,
      or a
      Guarantor's, business or financial condition;

     

    8.5
      Material Impairment. There is a material impairment of the prospect of repayment
      of the Obligations or a material impairment of BACC's continuing security
      interests in the Collateral;

     

    8.6
      Levy
      or Attachment. Any material portion of Borrower's assets is attached, seized,
      subjected to a writ or distress warrant or is levied upon, or comes into the
      possession of any judicial officer or assignee;

     

    8.7
      Insolvency by Borrower or Guarantor. An Insolvency Proceeding is commenced
      by
      Borrower or by a Guarantor;

     

    8.8
      Insolvency Against Borrower or Guarantor. An Insolvency Proceeding is commenced
      against Borrower or a Guarantor;

     

    8.9
      Injunction Against Borrower. Borrower is enjoined, restrained or in any way
      prevented by court order from continuing to conduct all or any material part
      of
      its business;

    

    
      
        
          
          

        

        
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    8.10
      Government Lien. A notice of lien, levy or assessment is filed of record with
      respect to any of Borrower's or a Guarantor's assets by the United States
      Government, or any department, agency or instrumentality thereof, or by any
      state, county, municipal or other governmental agency, or any taxes or debts
      owing at any time hereafter to any one or more of such entities becomes a lien,
      whether choate or otherwise, upon any of Borrower's or a Guarantor's assets
      and
      the same is not paid on the payment date thereof;

     

    8.11
      Judgment. A judgment is entered against Borrower or a Guarantor;

     

    8.12
      Default to Third Party. There is a default in any material agreement to which
      Borrower or a Guarantor is a party or by which binds Borrower or a Guarantor
      or
      any of their assets, including, without limitation, a default by a PO Financed
      Borrower under a Purchase Order Assistance Facility;

     

    8.13
      Subordinated Debt Payments. Borrower makes any payment on account of
      indebtedness which has now or hereafter been subordinated to the Obligations,
      except to the extent such payment is allowed under any subordination agreement
      entered into with BACC;

     

    8.14
      Termination of Guarantor. A Guarantor dies or terminates its
      guaranty;

     

    8.15
      Change in Management. If Joseph Patrick Kenny ceases to be actively engaged
      as
      the chief executive officer of Borrower;

     

    8.16
      ERISA Violation. A prohibited transaction within the meaning of ERISA Section
      406 or IRC Section 1975(c) shall occur with respect to a Plan which could have
      a
      material adverse effect on the financial condition of Borrower; any lien upon
      the assets of Borrower in connection with any Plan shall arise; Borrower or
      any
      ERISA Affiliate shall completely or partially withdraw from a Multiemployer
      Plan
      and such withdrawal could, in the opinion of BACC, have a material adverse
      effect on the financial condition of Borrower. Borrower or any of its ERISA
      Affiliates shall fail to make full payment when due of all amounts which
      Borrower or any of its ERISA Affiliates may be required to pay to any Plan
      or
      any Multiemployer Plan as one or more contributions thereto; Borrower or any
      of
      its ERISA Affiliates creates or permits the creation of any accumulated funding
      deficiency, whether or not waived; the voluntary or involuntary termination
      of
      any Plan which termination could, in the opinion of BACC, have a material
      adverse effect on the financial condition of Borrower or Borrower shall fail
      to
      notify BACC promptly and in any event within ten (l0) days of the occurrence
      of
      an event which constitutes an Event of Default under this clause or would
      constitute an Event of Default upon the exercise of BACC's judgment;
      or

     

    8.17
      Loss
      of License, etc. If any license, permit, distributor, franchise, license
      agreement, or similar agreement, necessary for the continued operation of
      Borrower's ordinary course of business is revoked, suspended or
      terminated.

     

    Notwithstanding
      anything contained in this Agreement to the contrary, BACC shall refrain from
      exercising its rights and remedies and an Event of Default shall not be deemed
      to have occurred by reason of the occurrence of any of the events set forth
      in
      Sections 8.6, 8.8, 8.10 or 8.11 hereof if, within ten (10) days from the date
      thereof, the same is released, discharged, dismissed, bonded against or
      satisfied; provided, however, BACC shall not be obligated to make Advances
      to
      Borrower during such periods.

     

    9.
      BACC'S
      RIGHTS AND REMEDIES

     

    9.1
      Rights and Remedies. Upon the occurrence of an Event of Default, BACC may,
      at
      its election, without notice of such election and without demand, do any one
      or
      more of the following:

     

    (a)
      Declare all Obligations, whether evidenced by the Loan Documents or otherwise,
      immediately due and payable in full:

     

    
      
        
          
          

        

        
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    (b)
      Cease
      advancing money or extending credit to or for the benefit of Borrower under
      the
      Loan Documents or under any other agreement between Borrower and
      BACC;

     

    (c)
      Terminate this Agreement as to any future liability or obligation of BACC,
      but
      without affecting BACC's rights and security interest in the Collateral and
      without affecting the Obligations;

     

    (d)
      Settle or adjust disputes and claims directly with Account debtors for amounts
      and upon terms which BACC considers advisable and, in such cases, BACC will
      credit the Obligations with the net amounts received by BACC in payment of
      such
      disputed Accounts, after deducting all BACC Expenses;

     

    (e)
      Cause
      Borrower to hold all returned Inventory in trust for BACC, segregate all
      returned Inventory from all other property of Borrower or in Borrower's
      possession and conspicuously label said returned Inventory as the property
      of
      BACC;

     

    (f)
      Without notice to or demand upon Borrower or a Guarantor, make such payments
      and
      do such acts as BACC considers necessary or reasonable to protect its security
      interest in the Collateral. Borrower shall assemble the Collateral if BACC
      so
      requires and deliver or make the Collateral available to BACC at a place
      designated by BACC. Borrower authorizes BACC to enter any premises where the
      Collateral is located, to take and maintain possession of the Collateral, or
      any
      part of it, and to pay, purchase, contest or compromise any encumbrance, charge
      or lien on the Collateral which in BACC's determination appears to be prior
      or
      superior to its security interest or lien, and to pay all expenses incurred
      in
      connection therewith;

     

    (g)
      Ship,
      reclaim, recover, store, finish, maintain, repair, prepare for sale, lease,
      license or other disposition, advertise for sale, lease, license or other
      disposition, and sell, lease, license or otherwise dispose (in the manner
      provided for herein or in the Code) the Collateral. BACC is hereby granted
      a
      license or other right to use, without charge, Borrower's labels, patents,
      copyrights, rights of use of any name, trade secrets, trade names, trademarks,
      service marks, and advertising matter, or any asset of a similar nature,
      pertaining to the Collateral, in completing the production of, advertising
      for
      sale, lease, license or other disposition, and sale, lease, license or other
      disposition of the Collateral. Borrower's rights under all licenses and all
      franchise agreements shall inure to BACC's benefit;

     

    (h)
      Sell,
      lease, license or otherwise dispose of the Collateral at either a public or
      private proceeding, or both, by way of one or more contracts or transactions,
      for cash or on terms, in such manner and at such places (including Borrower's
      premises) as BACC determines is commercially reasonable. It is not necessary
      that the Collateral be present at any such sale;

     

    (i)
      BACC
      shall give notice of the disposition of the Collateral as follows:

     

    (1)
      To
      Borrower and each holder of a security interest in the Collateral who has filed
      with BACC a written request for notice, a notice in writing of the time and
      place of public sale or other disposition or, if the sale or other disposition
      is a private sale or some other disposition other than a public sale is to
      be
      made, then the time on or after which the private sale or other disposition
      is
      to be made;

     

    (2)
      The
      notice hereunder shall be personally delivered or mailed, postage prepaid,
      to
      Borrower as provided in Section 12 hereof, at least ten (10) calendar days
      before the date fixed for the sale or other disposition, or at least ten (10)
      calendar days before the date on or after which the private sale or other
      disposition is to be made, unless the Collateral is perishable or threatens
      to
      decline speedily in value. Notice to persons other than Borrower claiming an
      interest in the Collateral shall be sent to such addresses as they have
      furnished to BACC;

     

    (j)
      BACC
      may credit bid and purchase at any public sale:

     

    (k)
      Any
      deficiency that exists after disposition of the Collateral, as provided herein,
      shall be immediately paid by Borrower. Any excess will be remitted without
      interest by BACC to the party or parties legally entitled to such excess;
      and

     

    
      
        
          
          

        

        
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    (l)
      In
      addition to the foregoing, BACC shall have all rights and remedies provided
      by
      law (including those set forth in the Code) and any rights and remedies
      contained in any Loan Documents and all such rights and remedies shall be
      cumulative.

     

    9.2
      No
      Waiver. No delay on the part of BACC in exercising any right, power or privilege
      under any Loan Document shall operate as a waiver, nor shall any single or
      partial exercise of any right, power or privilege under such Loan Documents
      or
      otherwise, preclude other or further exercise of any such right, power or
      privilege.

     

    10.
      TAXES
      AND EXPENSES REGARDING THE COLLATERAL.

     

    If
      Borrower fails to pay any monies (whether taxes, assessments, insurance premiums
      or otherwise) due to third persons or entities, or fails to make any deposits
      or
      furnish any required proof of payment or deposit, or fails to perform any of
      Borrower's other covenants under any of the Loan Documents, then in its
      discretion and without prior notice to Borrower, BACC may do any or all of
      the
      following: (a) make any payment which Borrower has failed to pay or any part
      thereof; (b) set up such reserves in Borrower's loan account as BACC deems
      necessary to protect BACC from the exposure created by such failure; (c) obtain
      and maintain insurance policies of the type described in Section 6.10 hereof
      and
      take any action with respect to such policies as BACC deems prudent; or (d)
      take
      any other action deemed necessary to preserve and protect its interests and
      rights under the Loan Documents. Any payments made by BACC shall not constitute:
      (a) an agreement by BACC to make similar payments in the future or (b) a waiver
      by BACC of any Event of Default. BACC need not inquire as to, or contest the
      validity of, any such expense, tax, security interest, encumbrance or lien
      and
      the receipt of notice for the payment thereof shall be conclusive evidence
      that
      the same was validly due and owing.

     

    11.
      WAIVERS

     

    11.1
      Demand, Protest. Borrower waives demand, protest, notice of protest, notice
      of
      default or dishonor, notice of payment and nonpayment, notice of any default,
      notice of intention to accelerate, notice of acceleration, and notice of
      nonpayment at maturity and acknowledges that BACC may compromise, settle or
      release, without notice to Borrower, any Collateral and/or guaranties at any
      time held by BACC. Borrower hereby consents to any extensions of time of payment
      or partial payment at, before or after the Termination Date.

     

    11.2
      No
      Marshaling. Borrower, on its own behalf and on behalf of its successors and
      assigns hereby expressly waives all rights, if any, to require a marshaling
      of
      assets by BACC or to require that BACC first resort to some portion(s) of the
      Collateral before foreclosing upon, selling or otherwise realizing on any other
      portion thereof.

     

    11.3
      BACC's Non-Liability for Inventory or Equipment or for Protection of Rights.
      So
      long as BACC complies with its obligations, if any, under Section 9-207 of
      the
      Code, BACC shall not in any way or manner be liable or responsible for: (a)
      the
      safekeeping of the Inventory or Equipment; (b) any loss or damage thereto
      occurring or arising in any manner or fashion from any cause; (c) any diminution
      in the value thereof; or (d) any act or default of any carrier, warehouseman,
      bailee, forwarding agency or other person whomsoever. All risk of loss, damage
      or destruction of the Inventory or Equipment shall be borne by Borrower. BACC
      shall have no obligation to protect any rights of Borrower against any person
      obligated on any Collateral

     

    11.4
      Limitation of Damages. In any action or other proceeding against BACC under
      this
      Agreement or relating to the transactions between BACC and Borrower, Borrower
      waives the right to seek any consequential or punitive damages.

     

    
      
        
          
          

        

        
          89

          
            

          

        

         

      

    

     

    12.
      NOTICES

     

    Unless
      otherwise provided herein, all consents, waivers, notices or demands by any
      party relating to the Loan Documents shall be in writing and (except for
      financial statements and other informational documents which may be sent by
      first-class mail, postage prepaid) shall be telecopied (followed up by a
      mailing), personally delivered or sent by registered or certified mail, postage
      prepaid, return receipt requested, or by receipted overnight delivery service
      to
      Borrower or to BACC, as the case may be, at their addresses set forth
      below

     

    If
      to
      Borrower:  Drinks Americas Inc. 

    372
      Danbury Road, Suite 163 

    Wilton,
      CT 06897 

    Attn:
      Joseph Patrick Kenny, CEO 

    Fax
      #:
      (203) 762-8992

     

    If
      to
      BACC:        Business Alliance Capital
      Company 

    214
      Carnegie Center, Suite 302 

    Princeton,
      New Jersey 08540 

    Attn:
      General Counsel 

    Fax
      #:
      (609) 514-1137

     

    Any
      party
      may change the address at which it is to receive notices hereunder by notice
      in
      writing in the foregoing manner given to the other. All notices or demands
      sent
      in accordance with this Section 12 shall be deemed received on the earlier
      of
      the date of actual receipt or five (5) calendar days after the deposit thereof
      in the mail or on the date telecommunicated if telecopied.

     

    13.
      DESTRUCTION OF BORROWER'S DOCUMENTS

     

    All
      documents, schedules, invoices, agings or other papers delivered to BACC may
      be
      destroyed or otherwise disposed of by BACC four (4) months after they are
      delivered to or received by BACC, unless Borrower requests, in writing, the
      return of the said documents, schedules. invoices or other papers and makes
      arrangements, at Borrower's expense, for their return.

     

    14.
      GENERAL PROVISIONS

     

    14.1
      Effectiveness. This Agreement shall be binding and deemed effective when
      executed by Borrower and executed and delivered by BACC.

     

    14.2
      Successors and Assigns. This Agreement shall bind and inure to the benefit
      of
      the respective successors and assigns of each of the parties; provided, however,
      that Borrower may not assign this Agreement or any rights hereunder and any
      prohibited assignment shall be absolutely void. No consent to an assignment
      by
      BACC shall release Borrower from its Obligations. Without notice to or the
      consent of Borrower, BACC may assign this Agreement and its rights and duties
      hereunder and BACC reserves the right to sell, assign, transfer, negotiate
      or
      grant participations in all or any part of, or any interest in BACC's rights
      and
      benefits hereunder. In connection therewith, BACC may disclose all documents
      and
      information which BACC now or hereafter may have relating to Borrower or
      Borrower's business. Borrower hereby consents to, and authorizes BACC to,
      prepare and distribute a "tombstone", to issue a press release, or otherwise
      disseminate information to newspapers, trade journals, and other sources,
      describing the nature of, and closing of the credit facilities provided for
      herein, which may include Borrower's name as well as other general information
      about Borrower and the credit facilities. Borrower and BACC do not intend any
      of
      the benefits of the Loan Documents to inure to any third party, and no third
      party shall be a third party beneficiary hereof or thereof.

     

    14.3
      Section Headings. Headings and numbers have been set forth herein for
      convenience only.

     

    14.4
      Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein
      shall be construed or resolved against BACC or Borrower, whether under any
      rule
      of construction or otherwise. On the contrary, this Agreement has been reviewed
      by each party and shall be construed and interpreted according to the ordinary
      meaning of the words used so as to fairly accomplish the purposes and intentions
      of the parties hereto.

    

    
      
        
          
          

        

        
          90

          
            

          

        

         

      

    

     

    14.5
      Severability of Provisions. Each provision of this Agreement shall be severable
      from every other provision of this Agreement for the purpose of determining
      the
      legal enforceability of such provision.

     

    14.6
      Amendments in Writing. This Agreement cannot be changed or terminated orally.
      This Agreement supersedes all prior agreements, understandings and negotiations,
      if any, all of which are merged into this Agreement. THIS AGREEMENT, TOGETHER
      WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
      PARTIES REGARDING THE SUBJECT MATTER HEREIN AND THEREIN, AND MAY NOT BE
      CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
      AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
      THE PARTIES.

     

    14.7
      Counterparts and Facsimile Signatures. This Agreement may be executed in any
      number of counterparts each of which, when executed and delivered, shall be
      deemed to be an original and all of which, when taken together, shall constitute
      but one and the same Agreement. Any signature to a Loan Document delivered
      by a
      party via telecopy transmission or other electronic means shall be deemed to
      be
      an original signature.

     

    14.8
      Indemnification. Borrower hereby indemnifies, protects, defends and saves
      harmless BACC and any member, officer, director, official, agent, employee
      and
      attorney of BACC, and their respective heirs, successors and assigns
      (collectively, the "Indemnified Parties"), from and against any and all losses,
      damages, expenses or liabilities of any kind or nature and from any suits,
      claims or demands, including reasonable counsel fees incurred in investigating
      or defending such claim, suffered by any of them and caused by, relating to,
      arising out of, resulting from, or in any way connected with the Loan Documents
      and the transactions contemplated therein or the Collateral (unless caused
      by
      the gross negligence or willful misconduct of the Indemnified Parties)
      including, without limitation: (a) losses, damages, expenses or liabilities
      sustained by BACC in connection with any environmental cleanup or other remedy
      required or mandated by any Environmental Law; (b) any untrue statement of
      a
      material fact contained in information submitted to BACC by Borrower or a
      Guarantor or the omission of any material fact necessary to be stated therein
      in
      order to make such statement not misleading or incomplete; (c) the failure
      of
      Borrower or a Guarantor to perform any obligations required to be performed
      by
      Borrower or a Guarantor under the Loan Documents; and (d) the ownership,
      construction, occupancy, operations, use and maintenance of any of Borrower's
      or
      a Guarantor's assets. The provisions of this paragraph 14.8 shall survive
      termination of this Agreement and the other Loan Documents.

     

    14.9.
      Joint and Several Obligations; Dealings with Multiple Borrowers. If more than
      one person or entity is named as Borrower hereunder, all Obligations,
      representations, warranties, covenants and indemnities set forth in the Loan
      Documents to which such person or entity is a party shall be joint and several.
      BACC shall have the right to deal with any individual of any Borrower with
      regard to all matters concerning the rights and obligations of BACC and Borrower
      hereunder and pursuant to applicable law with regard to the transactions
      contemplated under the Loan Documents. All actions or inactions of the officers,
      managers, members and/or agents of any Borrower with regard to the transactions
      contemplated under the Loan Documents shall be deemed with full authority and
      binding upon all Borrowers hereunder. Each Borrower hereby appoints each other
      Borrower as its true and lawful attorney-in-fact, with full right and power,
      for
      purposes of exercising all rights of such person hereunder and under applicable
      law with regard to the transactions contemplated under the Loan Documents.
      The
      foregoing is a material inducement to the agreement of BACC to enter into this
      Agreement and to consummate the transactions contemplated hereby. The Borrowers
      represents they are operated as part of one consolidated business entity and
      are
      directly dependent upon each other for and in connection with their respective
      business activities and financial resources. Each Borrower will receive a direct
      economic and financial benefit from the Obligations incurred under this
      Agreement and the incurrence of such Obligations is in the best interests of
      each Borrower.

     

    
    

    
      
        
          
          

        

        
          91

          
            

          

        

         

      

    

     

    15.
      CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

     

    THE
      VALIDITY OF THE LOAN DOCUMENTS, THEIR CONSTRUCTION, INTERPRETATION, AND
      ENFORCEMENT AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER,
      GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
      OF
      NEW JERSEY, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE PARTIES AGREE
      THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THE LOAN DOCUMENTS
      SHALL BE TRIED AND LITIGATED ONLY IN THE STATE COURTS LOCATED IN THE COUNTY
      OF
      MERCER, STATE OF NEW JERSEY, THE FEDERAL COURTS WHOSE VENUE INCLUDES THE STATE
      OF NEW JERSEY, OR AT THE SOLE OPTION OF BACC, IN ANY OTHER COURT IN WHICH BACC
      SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
      JURISDICTION OVER THE MATTER IN CONTROVERSY. BORROWER AND BACC EACH WAIVES,
      TO
      THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE RIGHT TO A TRIAL BY JURY IN
      ANY
      PROCEEDING UNDER THE LOAN DOCUMENTS OR RELATING TO THE DEALINGS OF BORROWER
      AND
      BACC AND ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF "FORUM NON
      CONVENIENS" OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
      ACCORDANCE WITH THIS SECTION 15.

     

    
      
        
          
          

        

        
          92

          
            

          

        

         

      

    

     

    Borrower
      and BACC have executed and delivered this Agreement at BACC's place of business
      in Princeton, New Jersey as of the date first above written.

     

    
      
        	 	 
	 	
                DRINKS
                  AMERICAS INC.

                a
                  Delaware corporation

              
	 	
                 

                 

              
	 	Signed by: 
	 	
                
                  

                

                Print
                  Name: J. Patrick Kenny

                Title/Capacity:
                  President and CEO

              
	 	
              
	 	 
	 	
                DRINKS
                  GLOBAL IMPORTS, LLC

                a
                  New York limited liability company

              
	 	
                 

                 

              
	 	
                Signed
                  by: 

              
	 	
                
                  

                

                Print
                  Name: J. Patrick Kenny

                Title/Capacity:
                  President and CEO

              
	 	 
	 	 
	 	
                D.T.
                  DRINKS, LLC a New York limited

                liability
                  company

              
	 	
                 

                 

              
	 	
                Signed
                  by: 

              
	 	
                
                  

                

                Print
                  Name: J. Patrick Kenny

                Title/Capacity:
                  President and CEO

              
	 	 
	 	 
	 	
                BUSINESS
                  ALLIANCE CAPITAL COMPANY

                Division
                  of Sovereign Bank, a federal 

                savings
                  bank

              
	 	
                 

                 

              
	 	
                Signed
                  by: 

              
	 	
                
                  

                

                Print
                  Name: 

              
	 	
                
                  

                

                Title/Capacity:
                  

                
                  
 

              

      

    

     

    
      
        
          
          

        

        
          93

          
            

          

        

         

      

    

     

    Schedule
      2.3

     

    Deposit
      Account of Borrower for Advances

     

    Account
      #
      ______________________

     

    Bank
      Name, address, and Wire Transfer Instructions:

     

    _________________________________

     

    _________________________________

     

    _________________________________

     

    ABA
      #
      ________________________________

     

    
      
        
          
          

        

        
          94

          
            

          

        

         

      

    

     

    Schedule
      5.1

     

    EXISTING
      LIENS WHICH ARE TO CONTINUE

     

    Liens
      on
      substantially all assets of Borrower in favor of Nexcomm International Beverage,
      LLC, and Kenneth H. Close, which liens are to be subordinate to the liens in
      favor of BACC pursuant to an intercreditor agreement, satisfactory in form
      and
      substance, to BACC.

     

    Liens
      on
      assets of DAI and DTD in favor of Production Finance International, LLC provided
      the liens on the assets of DAI are subordinate to the liens in favor of BACC,
      and on the assets of DTD will be released on conditions satisfactory to BACC,
      all pursuant to an intercreditor agreement satisfactory in form and substance
      to
      BACC.

     

    
      
        
          
          

        

        
          95

          
            

          

        

         

      

    

     

    Schedule
      5.10

     

    Licenses
      and permits

     

    See
      schedule annexed

     

    Schedule
      5.20

     

    USE
      OF
      PROCEEDS OF INITIAL ADVANCE

     

    Satisfaction
      in full of all obligations of Borrower to Platinum Funding Corp. Payment
      of the Closing Fee due to BACC and other closing costs.

     

    
      
        
          
          

        

        
          96

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