Document:

ex10.htm

     

     

    EXHIBIT
10(i)

    
       

      LOAN AND SECURITY
AGREEMENT

      

      This LOAN
AND SECURITY AGREEMENT is entered into as of November ___, 2008 by and between
Power Sports Factory, Inc., a Minnesota Corporation (“Borrower”), and Crossroads
Debt LLC, a Florida limited liability company (“Lender”).

       

      RECITALS

      

      A.
Borrower has requested that Lender provide financial accommodations to Borrower
as more fully set forth herein and in the Loan Documents.

      

      B. The
Obligations will be guaranteed by Guarantors.

      

      NOW,
THEREFORE, in consideration of the premises, and intending to be legally bound
hereby, the Parties hereby agree as follows:

      

      AGREEMENT

      

      1. Certain Definitions and
Index to Definitions.

      

      1.1
Accounting Terms. Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be
prepared in accordance with GAAP consistently applied.

      

      1.2
Definitions. All other terms contained in this Agreement that are not
specifically defined herein shall have the meanings provided in the UCC to the
extent the same are used herein. All references herein to the singular or plural
shall also mean the plural or the singular, respectively. As used herein, the
following terms shall have the following meanings:

      

      1.2.1
“Advances” - see Section 2.1.1 hereof.

      

      1.2.2
“Agreement” - this Loan and Security Agreement, together with all exhibits and
schedules hereto, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated, or replaced.

      

      1.2.3
“Allowable Amount” - the lesser of (i) the Borrowing Base less Availability
Reserves and (ii) the Maximum Amount.

      

      1.2.4
“Availability Reserves” - as of any date of determination, such amounts as
Lender may from time to time establish and revise reducing the amount of
Advances which would otherwise be available to Borrower hereunder:

       

       

      
        
           

        

        
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      (a) To
reflect events, conditions, contingencies or risks which, as determined by
Lender, which may affect either (i) the Collateral or any other property which
is security for the Obligations or its value, (ii) the assets, business or
prospects of Borrower or any Obligor, or (iii) the security interest and other
rights of Lender in the Collateral (including the enforceability, perfection and
priority thereof);

       

      (b) In
the amount of any Third Party Claim, until such time as Lender has determined in
good faith that the Third Party Claim is unlikely to be asserted;

       

      (c) To
reflect Lender's belief that any collateral report or financial information
furnished by or on behalf of Borrower or any Obligor to Lender is or may have
been incomplete, inaccurate or misleading in any material respect;
or

      

      (d) In
respect of any state of facts that Lender determined constitutes an Event of
Default or may, with notice or passage of time or both, constitute an Event of
Default.

       

      1.2.5
“Avoidance Claim” - any claim that any payment received by Lender from or for
the account of Borrower or on account of any Collateral is avoidable under the
United States Bankruptcy Code or any other state or federal debtor relief
statute.

       

      1.2.6
“Borrower” - see Preamble hereof.

      

      1.2.7
“Borrowing Base” – the lower of the following, when applied to Eligible
Inventory:

      

      (a) 50%
of Inventory Cost;

       

      (b) 75%
of Net Liquidation Value.

       

      1.2.8
“Borrowing Base Certificate” - a request for an Advance, in a form acceptable to
Lender.

       

      1.2.9
“Business Day” - any day which is not a Saturday, Sunday, or other day on which
national banks are authorized or required to be closed.

       

      1.2.10
“Chosen State” - Florida.

       

      1.2.11
“Clearance Days” - Five (5) Business Days.

      

      1.2.12
“Clearance Day Payments” - payments received by Lender, in whatever form and
from whatever source, except wire transfers, in reduction of the
Obligations.

       

       

      
        
           

        

        
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      1.2.13
“Collateral” – All Borrower’s present and future Accounts, Chattel Paper, Goods
(including Inventory and Equipment), Instruments, Investment Property,
Documents, and General Intangibles, Letter of Credit Rights, Commercial Tort
Claims, Deposit Accounts, and the proceeds thereof.

      

      1.2.14
“Collateral Management Fee” – [0.5%] per month of
the Loan Account balance.

       

      1.2.15
“Complete Termination” – Complete Termination occurs upon satisfaction of the
following conditions:

      

      (a)
Payment in full of all Obligations;

       

      (b) If
Lender has issued or caused to be issued guarantees, commitments to third
parties or letters of credit on behalf of Borrower, acknowledgement from any
beneficiaries thereof that Lender or any other issuer has no outstanding direct
or contingent liability therein.

       

      (c)
Borrower has executed and delivered to Lender a general release in the form of
Exhibit 1.2.15 (c) attached hereto.

       

      1.2.16
“Contractual Termination Date” – The end of the Initial Term or any Renewal
Term, as the case may be.

       

      1.2.17
“Credit Accommodation” - any advance or other extension of credit by Lender to
or on behalf of Borrower hereunder.

       

      1.2.18
“Default Interest Rate Spread” – 10%. 1.2.19 “Default Waiver Fee” -
$1,000.

       

      1.2.20
“Early Termination Date” – the date on which an Early Termination Event
occurs.

       

      1.2.21
“Early Termination Event” – the occurrence of any of the

      following:

      (a)
Termination of this Agreement by Borrower;

      

      (b)
Borrower becomes a debtor in a case filed under the United States Bankruptcy
Code or any similar state proceeding;

      

      (c)
Borrower repays the Obligations (whether by acceleration or otherwise, except if
such repayment is due to termination of this Agreement by Lender) prior to the
next Contractual Termination Date.

       

       

      
        
           

        

        
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      1.2.22
“Early Termination Fee” - $7,500 per month for each month, or portion thereof,
between the Early Termination Date and the next anniversary date of this
Agreement.

       

      1.2.23
“Eligible Inventory” – Finished goods Inventory of Borrower

      which
is:

      (a)
Subject to Lender’s first priority, perfected security interest; (b) Not owned
by Borrower for more than 120 days, and (c) Otherwise acceptable to Lender in
its sole discretion.

      

      1.2.24
“Event of Default” - see Section 12 hereof.

       

      1.2.25
“Factor” - LSQ Funding Group or any other entity that agrees, pursuant to a
factoring agreement or otherwise, to purchase the Accounts of
Borrower.

       

      1.2.26
“Factoring Documents” – That certain Collection Agreement between Factor and
Borrower dated,
and all documents executed in connection therewith, or any other factoring or
accounts receivable financing agreement or related documents executed by
Borrower and Factor.

       

      1.2.27
“GAAP” - means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and pronouncements of the Financial
Accounting Standards Board (or any successor authority) that are applicable as
of the date of determination.

      

      1.2.28
“Guarantors” - all individuals and entities now or hereafter guaranteeing the
Obligations, including a prepayment penalty of $7,500.

      

      1.2.29
“Initial Term” – 1(12) year [months] from the
date hereof.

       

      1.2.30
“Interest
Rate” – 1.75% per month.

       

      1.2.31
“Inventory Cost” – As determined by Lender, the lesser of (a) cost of Eligible
Inventory, computed on a first-in-first-out basis in accordance with GAAP, or
(b) market value of Eligible Inventory.

       

      1.2.32
“Key Employees” – Stanislav Rubakh (President), Shawn Landgraf (CEO), Tommy
Pannone (VP of Customer Relations and Warehouse).

       

      1.2.33
“Loan Account” – that portion of the Obligations which accrue interest
hereunder, including the sum of the unpaid balances of:

       

      (a)
Advances;

       

       

      
        
           

        

        
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      (b) Other
payments made by Lender arising hereunder for which Borrower is liable to
Lender.

      

      1.2.34
“Loan Documents” - this Agreement, together with any documents, instruments and
agreements, executed and/or delivered in connection herewith, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.

      

      1.2.35
“Loan Fee” – the Loan Fee Percent multiplied by the Maximum Amount at the time
this fee accrues.

      

      1.2.36
“Loan Fee Percent” – 1.5%.

      

      1.2.37
“Maximum Amount” - $1,000,000.

       

      1.2.38
“Minimum Monthly Line Fee” – the greater of interest on $250,000 or the actual
loan balance outstanding, calculated on a monthly basis.

      

      1.2.39
“Net Liquidation Value” – The value of Eligible Inventory, as determined by
Lender in the exercise of its reasonable sole discretion, which could be
obtained upon liquidation under distress conditions.

      

      1.2.40
“Obligor” – the Borrower or any Guarantor.

      

      1.2.41
“Obligations” - all present and future obligations owing by Borrower to Lender
whether arising hereunder or otherwise, and whether arising before, during or
after the commencement of any bankruptcy case in which Borrower is a
Debtor.

      

      1.2.42
“Renewal Term” - one year.

      

      1.2.43
“Subordinating Creditor” – any creditor of the Borrower which has executed a
Subordination Agreement.

      

      1.2.44
“Subordination Agreement” - a subordination agreement in form and substance
acceptable to Lender whereby a Subordinating Creditor subordinates, in favor of
Lender, obligations owed to it by Borrower.

      

      1.2.45
“Termination Date” - the earlier of (i) the Contractual Termination Date or (ii)
the date on which Lender elects to terminate this Agreement pursuant to the
terms herein.

      

      1.2.46
“Third Party Claim” – claims asserted against Lender by any person or entity
relating in any way to the Lender’s relationship with Borrower.

       

       

      
        
           

        

        
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      1.2.47
“UCC” - The Uniform Commercial Code in effect in the Chosen State at the date on
which a determination thereunder is to be made.

      

      2. Credit
Facilities.

      

      2.1
Advances. Subject to the terms and conditions of this Agreement, from the date
on which this Agreement becomes effective until the Termination
Date:

      

      2.1.1
Lender, may, from time to time in its sole discretion, at the request of
Borrower, make advances (“Advances”) to Borrower, so long as, before and after
such Advance, the Obligations do not exceed the Allowable Amount. The fact that
the Borrower is bound to various covenants herein, the breach of which may allow
Lender to accelerate the due date of Borrower's Obligations hereunder, shall not
be construed to constitute a commitment by Lender to make any Advances
hereunder, all of which are in the sole discretion of Lender.

      

      2.1.2
Lender may, in its discretion, from time to time, upon not less then five (5)
days prior notice to Borrower, reduce the amount available under the Borrowing
Base to the extent that Lender determines that the number of days of the
turnover of the Inventory for any period has changed in any material respect, or
(a) the liquidation value of the Eligible Inventory, or any category thereof,
has decreased, or (b) the nature and quality of the Inventory has
deteriorated.

      

      2.2
General Provisions.

      

      2.2.1
Borrowing Base Certificate. Each request from Borrower for a Credit
Accommodation shall be accompanied by a Borrowing Base Certificate, completed
and signed by Borrower.

      

      2.2.2
Crediting Borrower's Account. All Credit Accommodations by Lender may be made by
deposits or transfers to any demand deposit account of Borrower.

      

      2.2.3
Authorization for Credit Accommodations. Subject to the terms and conditions of
this Agreement, Lender is authorized to make Credit Accommodations:

      

      (a) Upon
telephonic, facsimile or other instructions received from anyone purporting to
be an officer, employee or representative of Borrower; or

      

      (b) At
the sole discretion of Lender, and notwithstanding any other provision in this
Agreement, if necessary to meet any Obligations, including but not limited to
any interest not paid when due.

      

      2.3
Limitations on Credit Accommodations. Notwithstanding anything to the contrary
contained herein, Lender shall not be obligated to make a Credit

       

       

      
        
           

        

        
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      Accommodation
if, before or as a result thereof, the Obligations shall exceed the Allowable
Amount.

       

      3. Payments by Borrower.

       

      3.1 In
General.

      

      3.1.1
Place of Payments. All payments hereunder shall be made by Borrower to Lender at
Lender’s address set forth herein or at such other place as Lender may designate
in writing.

      

      3.1.2 ACH
Debits. In order to satisfy any of the Obligations, Lender is hereby authorized
by Borrower to initiate electronic debit entries through the ACH or other
electronic payment system to any account maintained by Borrower. At the Lender's
request, Borrower shall execute and deliver to Lender an authorization agreement
for ACH debits.

      

      3.1.3
Borrower irrevocably waives the right to direct the application of any and all
payments received at any time by Lender from or on behalf of Borrower and
specifically waives any right to designate application of payments. Borrower
irrevocably agrees that Lender shall have the exclusive right to determine the
order and method of the application of payments against the then due and payable
Obligations of Borrower in Lender's sole discretion and to revise such
application prospectively or retroactively in Lender's sole
discretion.

      

      3.2
Notwithstanding anything to the contrary contained in any Loan Document, the
interest paid or agreed to be paid under the Loan Documents shall not exceed the
maximum rate of non-usurious interest permitted by applicable law (the “Maximum
Rate”). If Lender shall receive interest in an amount that exceeds the Maximum
Rate, the excess interest shall be applied to the principal of the loans
hereunder or, if it exceeds such unpaid principal, refunded to Borrower. In
determining whether the interest contracted for, charged, or received by Lender
exceeds the Maximum Rate, Lender may, to the extent permitted by applicable law,
(a) characterize any payment that is not principal as an expense, fee, or
premium rather than interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the
Obligations hereunder.

      

      3.3
Interest and Fees.

      

      3.3.1
Lender is authorized to debit the Loan Account for interest, fees and other
charges due Lender hereunder as and when due.

      

      3.3.2
Interest.

       

       

      
        
           

        

        
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      (a)
Subject to Section 3.3.2 (b) hereof, interest on the Loan Account balance shall
be payable monthly, in arrears, shall be computed at the Interest Rate computed
on the basis of a 360 day year, and shall be due on the first day of each month
following the accrual thereof.

      

      (b)
Default Interest. Immediately upon the occurrence of an Event of Default, the
interest rates otherwise applicable shall be increased by the Default Interest
Rate Spread.

       

      3.3.3
Fees.

       

      (a) Audit
Fee. Borrower shall immediately pay to Lender Lender’s out-of-pocket expenses in
connection with each audit Lender performs or causes to be performed
hereunder.

       

      (b)
Collateral Management Fee. Borrower shall pay the Collateral Management Fee to
Lender monthly, prorated for partial months, in arrears, on the first (1st) day
of each month following the accrual thereof.

       

      (c)
Default Waiver Fee. Borrower shall pay the Default Waiver Fee to Lender,
immediately upon the waiver by Lender of any Event of Default hereunder, so long
as the waiver was done at the Borrower’s request.

       

      (d) Early
Termination Fee. Borrower shall pay to Lender the Early Termination Fee
immediately upon the occurrence of an Early Termination Event.

       

      (e) Loan
Fee. Borrower shall pay the Loan Fee to Lender on the date hereof, and shall pay
an additional Loan Fee on the first day of each Renewal Term.

       

      (f)
Immediately upon any increase in the Maximum Amount, Borrower shall pay to
Lender a fee computed as the product of the Loan Fee Percent and the amount of
the increase in the Maximum Amount.

      

      (g)
Attorney Fees. Borrower shall pay to Lender all attorneys fees and costs
incurred in preparation of this Agreement and related documents.

       

      (h)
Standard Fees. Borrower shall pay to Lender fees for such services as Lender
customarily charges. Lender shall have the right to change all or any of such
fees upon ten days notice to Borrower.

       

      3.3.4
Application of Collections. Lender shall, for the purpose of the computation of
interest and the Collateral Management Fee due hereunder, add the Clearance Days
to any Clearance Day Payments, which is acknowledged by the parties to
constitute an integral aspect of the pricing of Lender's facility to Borrower,
and shall apply irrespective of the characterization of whether receipts are
owned by Borrower or Lender. Should any check or item of payment not be honored
when presented for

       

      
        
           

        

        
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      payment,
then Borrower shall be deemed not to have made such payment, and interest shall
be recalculated accordingly.

      

      4. Indemnification
Protection.

      

      4.1
Notwithstanding payment in full of the Obligations and termination of this
Agreement, in the event that (i) a Third Party Claim has been asserted against
Lender, or (ii) Lender believes in good faith that a Third Party Claim may be
asserted against Lender, Lender may retain its security interest or any funds of
Borrower in the amount of the Third Party Claim together with Lender’s good
faith estimate of its costs to be incurred in the defense thereof, until such
time as the Third Party Claim is withdrawn or satisfied, unless Lender receives
Assurances (as defined below) regarding its exposure to the Third Party
Claim.

      

      4.2 For
the purposes hereof, “Assurances” shall mean collateral, a guaranty or a letter
of credit from an entity so that Lender reasonably believes in good faith that
the likelihood of loss resulting from the Third Party Claim is
remote.

      

      5. Grant of Security
Interest.

      

      5.1 To
secure the performance of the Obligations, Borrower grants to the Lender a
security interest in the Collateral, and all proceeds and products
thereof.

      

      6. Authorization to File
Financing Statements.

      

      6.1 The
Borrower irrevocably authorizes the Lender to file in any Uniform Commercial
Code jurisdiction any initial financing statements and amendments thereto
that:

      

      6.1.1
Indicate the Collateral as all assets of the Borrower or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the UCC, or as being of an equal or
lesser scope or with greater detail;

      

      6.1.2
Contain any other information required by part 5 of Article 9 of the UCC for the
sufficiency or filing office acceptance of any financing statement or amendment,
including (i) whether the Borrower is an organization, the type of organization,
and any organization identification number issued to the Borrower and, (ii) in
the case of a financing statement filed as a fixture filing or indicating
Collateral to be as-extracted collateral or timber to be cut, a sufficient
description of real property to which the Collateral relates;

      

      6.1.3
Contain a notification that the Borrower has granted a negative pledge to the
Lender, and that any subsequent lienor may be tortuously interfering with
Lender’s rights;

       

       

      
        
           

        

        
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      6.2 The
Borrower agrees to furnish any of the foregoing information to the Lender
promptly upon request;

      

      6.3 The
Borrower ratifies its authorization for the Lender to have filed any like
initial financing statements or amendments thereto if filed prior to the date
hereof; and

      

      6.4 The
Lender may add any supplemental language to any such financing statement as
Lender may determine to be necessary or helpful in acquiring or preserving
rights against third parties.

      

      7. Representations and
Warranties by Borrower.

      

      7.1 There
are no actions or proceedings pending by or against Borrower before any court or
administrative agency and Borrower does not have knowledge or belief of any
pending, threatened, or imminent litigation, governmental investigations, or
claims, complaints, actions, or prosecutions involving Borrower or any Guarantor
of the Obligations, except for ongoing collection matters in which Borrower is
the plaintiff.

      

      7.2 All
financial statements relating to Borrower that have been delivered by Borrower
to Lender have been prepared in accordance with GAAP and fairly present
Borrower’s financial condition as of the date thereof and Borrower’s results of
operations for the period then ended. There has not been a material adverse
change in the financial condition of Borrower since the date of the latest
financial statements submitted to Lender on or before the date
hereof.

      

      7.3
Borrower agrees to maintain books and records and its records pertaining to the
Collateral in accordance with GAAP and in such additional detail, form and
scope, as Lender shall reasonably require.

      

      7.4
Borrower certifies that, to the best of Borrower’s knowledge, Borrower has not
been designated, and is not owned or controlled, by a “suspected terrorist” as
defined in Executive Order 13224. Borrower hereby acknowledges that Lender seeks
to comply with all applicable laws concerning money laundering and related
activities. In furtherance of those efforts, Borrower hereby represents,
warrants and agrees that: (i) none of the cash or property that Borrower will
pay or will contribute to Lender has been or shall be derived from, or related
to, any activity that is deemed criminal under United States law; and (ii) no
contribution or payment by Borrower to Lender, to the extent that they are
within Borrower’s control shall cause Lender to be in violation of the United
States Bank Secrecy Act, the United States International Money Laundering
Control Act of 1986 or the United States International Money Laundering
Abatement and Anti­Terrorist Financing Act of 2001. Borrower shall promptly
notify Lender if any of these representations ceases to be true and accurate.
Borrower shall provide Lender any additional information regarding Borrower that
Lender deem necessary or convenient to ensure compliance with all applicable
laws concerning money laundering and similar activities. Borrower understands
and agrees that if at any time it is discovered that any of the foregoing
representations are incorrect, or if otherwise required by applicable law
or

       

       

      
        
           

        

        
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      regulation
related to money laundering similar activities, Lender may undertake appropriate
actions to ensure compliance with applicable law or regulation, including but
not limited to segregation and/or redemption of Lender’ investment in Borrower.
Borrower further understands that Lender may release confidential information
about Borrower and, if applicable, any underlying beneficial owners, to proper
authorities if Lender, in its sole discretion, determines that it is in the best
interests of Lender in light of relevant rules and regulations under the laws
set forth in subsection (ii) above.

      

      8. Authorization to
Lender.

      

      8.1 The
Borrower irrevocably authorizes Lender to take any and all appropriate action
and to execute any and all documents and instruments, in the name of Borrower,
that may be necessary or desirable to accomplish the purposes of this Agreement
including the filing on behalf of Borrower:

      

      8.1.1
With such governmental authorities as are appropriate such documents (including,
without limitation, applications, certificates, and tax returns) as may be
required for purposes of having Borrower qualified to transact business in a
particular state or geographic location.

      

      8.1.2 Any
Correction Statement under Section 9-518 of the Uniform Commercial Code that
Lender reasonably deems necessary to preserve its rights hereunder.

      

      8.2
Borrower authorizes Lender to accept, endorse and deposit on behalf of Borrower
any checks tendered by an account debtor “in full payment” of its obligation to
Borrower. Borrower shall not assert against Lender any claim arising therefrom,
irrespective of whether such action by Lender effects an accord and satisfaction
of Borrower's claims, under §3-311 of the Uniform Commercial Code, or
otherwise.

      

      9. Power of
Attorney.

      

      9.1
Borrower irrevocably appoints Lender, or any person(s) designated by Lender, as
its attorney-in-fact, which appointment is coupled with an interest and shall
remain in full force and effect until all Obligations of Borrower to Lender have
been fully satisfied and discharged, with full power, at Borrower’s sole
expense, to exercise at any time in Lender’s discretion all or any of the
following powers:

      

      9.1.1
receive, take, endorse, assign, deliver, accept and deposit, in the name of
Lender or Borrower, any and all cash, checks, commercial paper, drafts,
remittances and other instruments and documents relating to the Collateral or
the proceeds thereof;

      

      9.1.2
Change Borrower’s address on all invoices and statements of Account mailed or to
be mailed to Borrower’s customers and to substitute thereon the designated
address;

       

       

      
        
           

        

        
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      9.1.3
Receive and open all mail addressed to Borrower, or to Borrower’s trade name at
Lender’s address, or any other designated address;

       

      9.1.4
Take or bring, in the name of Lender or Borrower, all steps, actions, suits or
proceedings deemed by Lender necessary or desirable to effect collection of or
other realization upon any Collateral;

       

      9.1.5
Create a “doing business as” entity (a “d/b/a”) with a name similar to Borrower
and open any deposit accounts under such name;

       

      9.1.6
Execute on behalf of Borrower any UCC-l and/or UCC-3 Financing Statement(s)
and/or any notices or other documents necessary or desirable to carry out the
purpose and intent of this Agreement, and to do any and all things reasonably
necessary and proper to carry out the purpose and intent of this
Agreement;

       

      9.1.7
Change the address for delivery of Borrower’s mail to Lender and to receive and
open mail addressed to Borrower;

       

      9.1.8
Endorse and take any action with respect to bills of lading covering any
inventory;

       

      9.1.9
execute, file and serve, in its own name or in the name of Borrower, mechanics
lien or similar notices, or claims under any payment or performance bond for the
benefit of Borrower; and

      

      9.1.10
Pay any sums necessary to discharge any lien or encumbrance which is senior to
Lender’s security interest in the Collateral, which sums shall be included as
Obligations hereunder, and which sums shall accrue interest at the Default Rate
until paid in full.

      

      9.2
Release. Borrower hereby releases and exculpates Lender, its officers,
employees, agents, designees, attorneys, and accountants from any liability
arising from any acts under this Agreement or in furtherance thereof, whether of
omission or commission, and whether based upon any error of judgment or mistake
of law or fact, except for gross negligence or willful misconduct. In no event
shall Lender have any liability to Borrower for lost profits or other special or
consequential damages.

      

      10. Affirmative
Covenants.

       

      10.1
Until full payment of the Obligations and termination of this Agreement,
Borrower shall:

       

      10.1.1 At
such times as Lender may request and in the manner specified by Lender, Borrower
shall deliver to Lender original invoices, agreements, proof of rendition of
services and delivery of goods and other documents evidencing or relating to the
transactions which gave rise to any of the Collateral, together with
customer

       

       

      
        
           

        

        
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      statements,
schedules describing the Collateral and confirmatory assignments to Lender
thereof, in form and substance satisfactory to Lender, and duly executed by
Borrower.

      

      10.1.2 At
all times, tender the proceeds of all Accounts to Factor in accordance with the
Factoring Documents.

      

      10.1.3
Immediately advise Lender, in writing, of the assertion of any Third Party
Claim.

      

      10.1.4
Furnish to Lender, in form and substance satisfactory to Lender:

      

      (a)
Weekly, delivered each Monday, a report summarizing all inventory, including a
detailed synopsis and description of the inventory warehoused by Borrower at the
time the report is generated.

      

      (b)
Copies of any reports provided by Borrower to Factor under the Factoring
Documents, and such other reporting regarding Accounts and/or credit card
receipts, as Lender may from time to time request.

      

      (c) As
soon as possible after the end of each fiscal year of Borrower, and in any event
within 30 days thereafter:

      

      (i) A
complete copy of Borrower's financial statements, including but not limited to
(a) the management letter, if any, (b) the balance sheet as of the close of the
fiscal year, and (c) the income statement for such year, together with a
statement of cash flows, prepared by a Borrower, and

      

      (ii) A
statement certified by the chief financial officer of Borrower that Borrower is
in compliance with all the terms, conditions, covenants and warranties of this
Agreement.

      

      (iii) No
later than 30 days after the close of each month (an

      “Accounting
Period”):

      

      (iv)
Borrower's balance sheet as of the close of such Accounting Period and its
income statement for that portion of the then current fiscal year through the
end of such Accounting Period certified by Borrower's chief financial officer as
being complete, correct, and fairly representing its financial condition and
results of operations;

      

      (d) Tax
Returns. Copies of each of Borrower's:

      

      (i)
Federal income tax returns, and any amendments thereto, within ten (10) days of
the filing thereof with the Internal Revenue Service; and

       

       

      
        
           

        

        
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      (ii)
Federal payroll tax returns within ten (10) days of filing, together with proof,
satisfactory to Lender, with proof that all taxes have been paid.

      

      (e)
Copies of the following for each Guarantor:

       

      thereof;

       

      end of
each calendar year.

       

      (i)
Federal income tax returns within ten days of the filing (ii) Annual financial
statements within thirty days of the

       

      (f)
Inventory Reports. A listing of all Borrower's Inventory, based upon a physical
count taken by Borrower every three (3) months and whenever requested by
Lender.

      10.1.5
Inspections.

      

      (a)
During usual business hours, permit Lender, without notice to Borrower, to
periodically:

      

      (i) Have
access to all premises where Collateral is located for the purposes of
inspecting (and removing, if after the occurrence of an Event of Default) any of
the Collateral, and

       

      (ii) To
inspect, audit, make copies of, and make extracts from Borrower's records as
Lender may request.

       

      (b)
Without expense to Lender, Lender may use any of Borrower's personnel,
equipment, including computer equipment, programs, printed output and computer
readable media, supplies and premises for the collection of accounts and
realization on other Collateral as Lender, in its sole discretion, deems
appropriate.

       

      10.1.6
Indemnification. Indemnify and save Lender harmless from any and all liability
with respect to any Third Party Claim, including the costs incurred in the
defense thereof.

       

      10.1.7
Enforcement of Judgments. Reimburse Lender for all costs and expenses, including
attorneys' fees, which Lender incurs in enforcing any judgment rendered in
connection with this Agreement. This provision is severable from all other
provisions hereof and shall survive, and not be deemed merged into, such
judgment.

       

       

      10.1.8
Taxes and Expenses Regarding Borrower's Assets.

       

      (a) Make
timely payment when due without extension of all taxes, assessments or
contributions required of Borrower. If Borrower fails to make any
such

       

       

      
        
           

        

        
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      payment
or deposit or furnish proof of such payment immediately upon Lender's request,
Lender may, in its sole discretion and without notice to Borrower:

      

      (i) Make
payment of the same or any part thereof; or

      

      (ii) Set
up such reserves against the Obligations as Lender deems necessary to satisfy
the liability therefore, or both.

      

      (b)
Lender may conclusively rely on statements of the amount owing or other official
statements issued by the appropriate governmental agency. Any payment made by
Lender shall constitute neither:

      

      (i) An
agreement by Lender to make similar payments in

      the
future; nor

      

      (ii) A
waiver by Lender of any default under the Loan Documents. Lender need not
inquire into, nor contest the validity of, any expense, tax, security interest,
encumbrance or lien, and the receipt of the usual official notice requiring the
payment thereof shall be conclusive evidence that the same was validly due and
owing.

      

      10.1.9
Give Lender written notice immediately upon forming an intention to change its
name, state of organization or form of business organization.

      

      10.1.10
Maintenance of Insurance.

      

      (a) The
Borrower will maintain with financially sound and reputable insurers insurance
with respect to its properties and business against such casualties and
contingencies as shall be in accordance with general practices of businesses
engaged in similar activities in similar geographic areas. Such insurance shall
be in such minimum amounts that the Borrower will not be deemed a co-insurer
under applicable insurance laws, regulations, and policies and otherwise shall
be in such amounts, contain such terms, be in such forms and be for such periods
as may be reasonably satisfactory to the Lender. In addition, all such insurance
shall be payable to the Lender under a Lender Loss Payable Endorsement. Without
limiting the foregoing, the Borrower will:

      

      (i) Keep
all of its physical property insured with casualty or physical hazard insurance
on an “all risks” basis, with broad form flood and earthquake coverage and
electronic data processing coverage, with a full replacement cost endorsement
and an “agreed amount” clause in an amount equal to 100% of the full replacement
cost of such property;

      

      (ii)
Maintain all such workers' compensation or similar insurance as may be required
by law; and

       

       

      
        
           

        

        
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      (iii)
Maintain, in amounts and with deductibles equal to those generally maintained by
businesses engaged in similar activities in similar geographic areas, general
public liability insurance against claims of bodily injury, death, or property
damage occurring, on, in or about the properties of the Borrower; business
interruption insurance; and product liability insurance.

       

      (b) In
the event that Borrower fails to maintain such insurance, Lender may obtain such
insurance at Borrower’s expense, and, after an Event of Default, to adjust or
settle any claim or other matter under or arising pursuant to such insurance or
to amend or cancel such insurance.

       

      10.1.11
Borrower hereby permits Lender at any time to access electronically information
concerning any accounts maintained by Borrower with any bank or other financial
institution so long as such access is in furtherance of, or to monitor
compliance with, the terms of this Agreement, and Borrower shall provide Lender
with all necessary access codes, passwords and the like to carry out the
provisions hereof.

       

      10.2
Borrower waives any claim it may now have against Lender arising out of any
unauthorized filing of any Financing Statement by Lender.

       

      11. Negative Covenants.
Borrower will not:

       

      11.1
Negative Pledge. Hereafter grant any lien upon the Collateral except in favor of
Lender.

       

      11.2
Mergers, etc. Enter into any acquisition, merger, consolidation, reorganization,
or recapitalization, or reclassify its capital stock, or liquidate, wind up, or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
assign, lease, transfer, or otherwise dispose of, in one transaction or a series
of transactions, all or any substantial part of its business, property, or
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or substantially all of the properties, assets, stock, or other
evidence of beneficial ownership of any entity.

       

      11.3
Transfer of Assets. Enter into any transaction not in the ordinary and usual
course of Borrower’s business, including the sale, lease, or other disposition
of, moving, relocation, or transfer, whether by sale or otherwise, of any of
Borrower’s properties, assets (other than sales of Inventory to buyers in the
ordinary course of Borrower’s business as currently conducted).

       

      11.4
Suspension of Business. Suspend or go out of a substantial portion of its
business.

       

      11.5 No
Dividends or Distributions. Borrower will not make any distribution or declare
or pay any dividends (in cash or in stock) on, or purchase, acquire, redeem or
retire any of its common stock, membership or partnership interests, of any
class, whether

       

       

      
        
           

        

        
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      now or
hereafter outstanding. Absent an Event of Default, Borrower may, upon prior
written notice to Lender, make distributions to its shareholders or members in
the ordinary and usual course of Borrower’s business to satisfy such
shareholder’s or member’s tax liability on income of Borrower which is allocated
to such shareholder or member.

       

      12. Events of Default.
Each of the following events or conditions shall constitute an “Event of
Default”:

       

      12.1
Borrower defaults in the performance of any payment obligation due
hereunder;

       

      12.2
Borrower defaults under the Factoring Documents or the Factoring Documents are
terminated.

       

      12.3 Any
entity shall have or acquire right in the Collateral which are superior to
Lender’s rights, other than as a result of Lender’s intentional
acts;

       

      12.4
Borrower fails to cure the breach of any Obligation other than a payment
obligation within three days after notice thereof is sent by Lender to
Borrower;

       

      12.5
Borrower is in default with respect to any present or future agreement with
Lender;

       

      12.6 The
Obligations at any time exceed the Allowable Amount;

      

      12.7 An
order for relief is entered against any Obligor by any United States Bankruptcy
Court; or any Obligor does not generally pay its debts as they become due
(within the meaning of 11 U.S.C. 303(h) as at any time amended, or any successor
statute thereto); or any Obligor makes an assignment for the benefit of
creditors; or any Obligor applies for or consents to the appointment of a
custodian, receiver, trustee, or similar officer for it or for all or any
substantial part of its assets, or such custodian, receiver, trustee, or similar
officer is appointed without the application or consent of any Obligor; or any
Obligor institutes (by petition, application, answer, consent, or otherwise) any
bankruptcy, insolvency, reorganization, moratorium, arrangement, readjustment of
debt, dissolution, liquidation or similar proceeding relating to it under the
laws of any jurisdiction; or any such proceeding shall be instituted (by
petition, application, or otherwise) against any Obligor; or any judgment, writ,
warrant of attachment, execution, or similar process shall be issued or levied
against a substantial portion of the property of any Obligor;

      

      12.8 An
adverse change occurs with respect to the financial condition or operations of
Borrower which results in a material impairment of the prospect of repayment of
the Obligations;

       

       

      
        
           

        

        
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      12.9 A
sale, hypothecation or other disposition is made of twenty (20%) percent or more
of the beneficial interest in any class of voting stock of
Borrower;

       

      12.10 Any
Guarantor defaults in the performance of its obligations to Lender or shall
notify Lender of its intention to rescind, modify, terminate or revoke the its
guaranty or it shall cease to be in full force and effect for any reason
whatsoever;

       

      12.11 Any
of the Key Employees fails to devote one hundred (100%) percent of their efforts
in furtherance of the business affairs of Borrower for any one month, or ceases
to be employed by Borrower in the capacity that such employee held as of the
date of this Agreement;

       

      12.12 Any
provision of this Agreement or any of the Loan Documents ceases, for any reason,
to be valid and binding on Borrower.

       

      13. Remedies.

       

      13.1 Upon
the occurrence of any Event of Default all Obligations shall accrue interest at
the Default Rate and Lender may:

       

      13.1.1
Declare this Agreement terminated;

       

      13.1.2
Declare all Obligations to be immediately due and payable, without presentment,
demand, protest, or notice of any kind, all of which are hereby expressly waived
by Borrower;

      

      13.1.3
Take or bring, in the name of Lender or Borrower, all steps, actions, suits or
proceedings deemed by Lender necessary or desirable to effect collection of or
other realization upon any Collateral;

       

      13.1.4
Change the address for delivery of Borrower’s mail to Lender and to receive and
open mail addressed to Borrower;

       

      13.1.5
Execute, file and serve, in its own name or in the name of Borrower, mechanics
lien or similar notices, or claims under any payment or performance bond for the
benefit of Borrower.

      

      13.1.6
Engage a consulting, turnaround or similar firm to (a) conduct an operational
assessment of Borrower, and/or (b) take day-to-day operational and
administrative control of the business of the Borrower. Borrower shall (a) bear
all fees, costs and other expenses associated with such services and (b)
cooperate with such firm in carrying out such services.

       

      13.2
BORROWER WAIVES ANY REQUIREMENT THAT LENDER INFORM BORROWER BY AFFIRMATIVE ACT
OR OTHERWISE OF ANY ACCELERATION OF BORROWER'S OBLIGATIONS HEREUNDER.
FURTHER,

       

       

      
        
           

        

        
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      LENDER'S
FAILURE TO CHARGE OR ACCRUE INTEREST OR FEES AT ANY “DEFAULT” OR “PAST DUE” RATE
SHALL NOT BE DEEMED A WAIVER BY LENDER OF ITS CLAIM THERETO.

       

      14. Standards for Exercising
Remedies. To the extent that applicable law imposes duties on the Lender
to exercise remedies in a commercially reasonable manner, the Borrower
acknowledges and agrees that it is not commercially unreasonable for the
Lender:

       

      14.1 To
not incur expenses to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished
products for disposition;

      

      14.2 To
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental or
third party consents for the collection or disposition of Collateral to be
collected or disposed of;

      

      14.3 To
fail to exercise collection remedies against any persons obligated on Collateral
or to remove liens or encumbrances on or any adverse claims against
Collateral;

       

      14.4 To
exercise collection remedies against any persons obligated on Collateral
directly or through the use of collection agencies and other collection
specialists;

       

      14.5 To
advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized
nature;

       

      14.6 To
hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized
nature;

       

      14.7 To
dispose of Collateral by using Internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets;

      

      14.8 To
dispose of assets in wholesale rather than retail markets;

       

      14.9 To
disclaim all disposition warranties; or

      

      14.10 To
purchase insurance or credit enhancements to insure the Lender against risks of
loss, collection or disposition of Collateral or to provide to the Lender a
guaranteed return from the collection or disposition of Collateral.

       

      14.11
Borrower acknowledges that the purpose of this Section 14 is to provide
non-exhaustive indications of what actions or omissions by the Lender would not
be commercially unreasonable in the Lender’s exercise of remedies against the
Collateral

       

       

      
        
           

        

        
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      and that
other actions or omissions by the Lender shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without
limitation upon the foregoing, nothing contained herein shall be construed to
grant any rights to the Borrower or to impose any duties on the Lender that
would not have been granted or imposed by this Agreement or by applicable law in
the absence of this Section 14.

      

      15. Proceeds and Expenses of
Dispositions.

      

      15.1
Borrower shall pay to the Lender on demand any and all expenses, including
reasonable attorneys' fees and disbursements, incurred or paid by the Lender in
protecting, preserving, defending priority or enforcing the Lender's rights
under or in respect of any of the Obligations or any of the Collateral. After
deducting all of said expenses, the residue of any proceeds of collection or
sale of the Obligations or Collateral shall, to the extent actually received in
cash, be applied to the payment of the Obligations in such order or preference
as the Lender may determine, notwithstanding contrary instructions received by
Lender from the Borrower or any other third party.

      

      16. Liquidation Success
Premium.

      

      16.1 If
Borrower shall substantially cease operating as a going concern, and the
proceeds of Collateral created after the occurrence of an Event of Default (the
“Default”) are in excess of the Obligations at the time of Default, Borrower
shall pay to Lender a liquidation success premium of ten percent of the amount
of such excess.

      

      17. Fees and Expenses.
Borrower agrees to reimburse Lender on demand for:

      

      17.1 The
actual amount of all costs and expenses, including attorneys' fees, which Lender
has incurred or may incur in:

      

      17.1.1
Negotiating, preparing, or administering this Agreement and any documents
prepared in connection herewith;

      

      17.1.2
Any way arising out of or in connection with this Agreement, including based on
tort, and whether or not arising out of a dispute which does not involve
Lender;

      

      17.1.3
Protecting, preserving or enforcing any lien, security interest or other right
granted by Borrower to Lender or arising under applicable law, whether or not
suit is brought, including but not limited to the defense of any Avoidance
Claims;

      

      17.2 The
actual costs, including photocopying (which, if performed by Lender’s employees,
shall be at the rate of $.10/page), travel, and attorneys' fees and expenses
incurred in complying with any subpoena or other legal process attendant to any
litigation in which Borrower is a party; or

       

       

      
        
           

        

        
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      17.3 The
actual amount of all costs and expenses, including attorneys' fees, which Lender
may incur in enforcing this Agreement and any documents prepared in connection
herewith, or in connection with any federal or state insolvency proceeding
commenced by or against Borrower, including those (i) arising out the automatic
stay, (ii) seeking dismissal or conversion of the bankruptcy proceeding or (iii)
opposing confirmation of Borrower's plan thereunder.

      

      18. Termination.

      

      18.1 This
Agreement shall become effective upon the execution and delivery hereof by
Borrower and Lender and shall continue in full force and effect until the end of
the Initial Term.

      

      18.2 This
Agreement shall be automatically extended for successive Renewal Terms unless
(i) Borrower has given Lender at least sixty days’ prior written notice, or (ii)
Lender has given Borrower at least 60 days’ prior written notice, of their
respective intention to have this Agreement terminate at the end of a
Contractual Termination Date.

      

      18.3 Upon
the Termination Date, the unpaid balance of the Obligations shall be due and
payable without demand or notice.

      

      19. Revocation of Borrower's
Right to Sell Inventory Free and Clear of Lender's Security
Interest.

      

      19.1
Lender may, upon the occurrence of an Event of Default, revoke Borrower's right
to sell Inventory free and clear of Lender's security interest
therein.

      

      20. No Lien Termination without
Release In recognition of the Lender's right to have its attorneys' fees
and other expenses incurred in connection with this Agreement secured by the
Collateral, notwithstanding payment in full of all Obligations by Borrower,
Lender shall not be required to record any terminations or satisfactions of any
of Lender's liens on the Collateral unless and until Complete Termination has
occurred. Borrower understands that this provision constitutes a waiver of its
rights under §9-513 of the UCC.

      

      21. Account
Stated.

      

      21.1
Lender shall render to Borrower a statement setting forth the transactions
arising hereunder. Each statement shall be considered correct and binding upon
Borrower, absent manifest error, as an account stated, except to the extent that
Lender receives, within thirty (30) days after the mailing of such statement,
written notice from Borrower of any specific exceptions by Borrower to that
statement.

      

      22. Retention of
Records.

      

      22.1
Lender shall retain any documents, schedules, invoices or other papers delivered
by Borrower only for such period as Lender, at its sole discretion,
may

       

       

      
        
           

        

        
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      determine
necessary, after which time Lender may destroy such records without notice to or
consent from Borrower.

      

      23. Notices to Third
Parties.

      

      23.1
Lender shall have the right at any time to give any Guarantor or Subordinating
Creditor notice of any fact or event relating to this Agreement, as Lender may
deem necessary or desirable in Lender's sole discretion, including, without
limitation, Borrower's financial condition. Borrower shall provide to each
Guarantor and Subordinating Creditor a copy of each notice, statement or report
required to be given to Lender hereunder.

       

      24. Information to
Participants.

      

      24.1
Lender may furnish any financial or other information concerning Borrower, or
any of its subsidiaries, heretofore or hereafter provided by Borrower to Lender,
pursuant to this Agreement or otherwise, to any prospective or actual purchaser
of any participation or other interest in any loans made by Lender to Borrower
(whether under this Agreement or otherwise), or to any prospective purchaser of
any securities issued or to be issued by Lender.

      

      25. Entire
Agreement.

      

      25.1 No
promises of any kind have been made by Lender or any third party to induce
Borrower to execute this Agreement. No course of dealing, course of performance
or trade usage, and no parole evidence of any nature, shall be used to
supplement or modify any terms of this Agreement.

      

      26. Notice.

      

      26.1 All
notices required to be given to any party other than Lender shall be deemed
given upon the first to occur of (i) deposit thereof in a receptacle under the
control of the United States Postal Service, (ii) transmittal by electronic
means to a receiver under the control of such party, or (iii) actual receipt by
such party or an employee or agent of such party. All notices to Lender shall be
deemed given upon actual receipt by a responsible officer of
Lender.

      

      26.2 The
addresses of the parties are as set forth below or as may otherwise be specified
from time to time in a writing sent by one party to the other in accordance with
the provisions hereof:

       

       

      
        
           

        

        
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      BORROWER

       

      
        	
                Address:

              	
                6950
      Central Highway Pennsauken, NJ 08109

              
	 	 
	Attention:	Shawn
      Landgraf Fax Number: 856-488-8077

      

       

      LENDER

       

      
        
          
            	
                    Address:

                  	      
                    250
      Royal Palm Way, Suite 201

                  
	 	Palm
      Beach, Florida 33480
	Officer:	Paul Cattogio Fax Number:
  561-805-5630

          

           

          27. Counterparts.

        

      

       

      27.1 This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if all signatures were upon the same
instrument. Delivery of an executed counterpart of the signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement, and any party delivering such an executed
counterpart of the signature page to this Agreement by facsimile to any other
party shall thereafter also promptly deliver a manually executed counterpart of
this Agreement to such other party, provided that the failure to deliver such
manually executed counterpart shall not affect the validity, enforceability, or
binding effect of this Agreement.

      28. Amendment and
Waiver.

      

      28.1 Only
a writing signed by all parties hereto may amend this Agreement. No failure or
delay in exercising any right hereunder shall impair any such right that Lender
may have, nor shall any waiver by Lender hereunder be deemed a waiver of any
default or breach subsequently occurring. Lender’s rights and remedies herein
are cumulative and not exclusive of each other or of any rights or remedies that
Lender would otherwise have.

       

      29. Governing
Law.

       

      29.1 This
Agreement and all transactions contemplated hereunder and/or evidenced hereby
shall be governed by, construed under, and enforced in accordance with the
internal laws of the Chosen State.

      

      30. Venue.

       

      30.1 Any
suit, action or proceeding arising hereunder, or the interpretation, performance
or breach hereof, shall, if Lender so elects, be instituted in any court
sitting

       

       

      
        
           

        

        
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      in the
Chosen State, in the city in which Lender’s chief executive office is located,
or if none, any court sitting in the Chosen State (the “Acceptable Forums”).
Borrower agrees that the Acceptable Forums are convenient to it, and submits to
the jurisdiction of the Acceptable Forums and waives any and all objections to
jurisdiction or venue. Should such proceeding be initiated in any other forum,
Borrower waives any right to oppose any motion or application made by Lender to
transfer such proceeding to an Acceptable Forum.

      

      31. Jury Trial
Waiver.

      

      31.1 IN
RECOGNITION OF THE HIGHER COSTS AND DELAY WHICH MAY RESULT FROM A JURY TRIAL,
THE PARTIES HERETO WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (A) ARISING HEREUNDER, OR (B) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY FURTHER WAIVES
ANY RIGHT TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED;
AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.

      

      32. Service Of
Process.

      

      32.1
Borrower agrees that Lender may effect service of process upon Borrower by
regular mail at the address set forth herein or at such other address as may be
reflected in the records of Lender, or at the option of Lender by service upon
Borrower’s agent for the service of process.

      

      33. Assignment.

      

      33.1
Lender may assign its rights and delegate its duties hereunder. Upon such
assignment, Borrower shall be deemed to have attorned to such assignee and shall
owe the same obligations to such assignee and shall accept performance hereunder
by such assignee as if such assignee were Lender.

      

      34. Time of the
Essence

       

      34.1 It
is agreed that time is of the essence in all matters herein.

       

       

      
        
           

        

        
          Page 24
of 26

          
            

          

        

        
           

        

      

       

       

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

       

      BORROWER:

      POWER
SPORTS FACTORY, INC,

      a
Minnesota corporation

       

       

      By:   /s/
Steve Rubakh

        
          

        

      

      Name:
Stanislav Rubakh

      Title:
President

       

      LENDER:

      CROSSROADS
DEBT LLC,

      a Florida
limited liability company

       

      By: 
Umbach Financial Group, LLC,

       

       

      By: 
/s/ Paul Catoggio

        
          

        

      

      Name:
Paul Catoggio

      Its:
Director

       

       

      
        
           

        

        
          Page 25
of 26

          
            

          

        

        
           

        

      

       

      EXHIBIT
1.2.15 (c)

      
        GENERAL
RELEASE

         

        FOR GOOD
AND VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby
acknowledged, the undersigned and each of them (collectively “Releasor”) hereby
forever releases, discharges and acquits Crossroads Debt LLC (“Releasee”), its
parent, directors, shareholders, agents and employees, of and from any and all
claims of every type, kind, nature, description or character, and irrespective
of how, why, or by reason of what facts, whether heretofore existing, now
existing or hereafter arising, or which could, might, or may be claimed to
exist, of whatever kind or name, whether known or unknown, suspected or
unsuspected, liquidated or unliquidated, each as though fully set forth herein
at length, to the extent that they arise out of or are in any way connected to
or are related to that certain Loan and Security Agreement dated November ___,
2008.

         

        Releasor
agrees that the matters released herein are not limited to matters that are
known or disclosed.

         

        Releasor
acknowledges that factual matters now unknown to it may have given or may
hereafter give rise to Claims which are presently unknown, unanticipated and
unsuspected, and it acknowledges that this Release has been negotiated and
agreed upon in light of that realization and that it nevertheless hereby intends
to release, discharge and acquit the Releasee from any such unknown
Claims.

        

        Acceptance
of this Release shall not be deemed or construed as an admission of liability by
any party released.

        

        Releasor
acknowledges that either (a) it has had advice of counsel of its own choosing in
negotiations for and the preparation of this release, or (b) it has knowingly
determined that such advice is not needed.

         

        DATED: 
November ___, 2008

        
           

          POWER
SPORTS FACTORY, INC.,

           

           

          By: 
            
            
              

            

          

          Name:
Stanislav Rubakh

          Title:
President

           

           

          Page 26 of 26Unassociated Document

    
      
        
          CONTACTS

           

        

        
          	
                  Chief
      Financial Officer 

                  Radware
      Ltd.

                  Meir
      Moshe

                  +972-3766-8610

                   

                  Media
      Relations

                  Radware
      Inc.

                  Joyce
      Anne Shulman

                  Tel:
      +1 201 785 3209

                  ir@radware.com

                	 	
                   

                

        

      

       

    

    For
Immediate Release

    

    Radware
Announces Q4 Earnings Conference Call

    Tuesday,
February 10, 2009 08:45 AM (ET)

    

    TEL AVIV, ISRAEL; January 22, 2008.
Radware (NASDAQ: RDWR),
the leading provider of integrated application delivery solutions for
business-smart networking, will present its fourth quarter financial
results in a conference call on Tuesday, February 10, at 08:45 AM
(ET).

    

    Radware
management will host a teleconference at 8:45 ET, to discuss fourth quarter
results and the company's outlook. Please call the following dial-in numbers to
participate in the fourth quarter 2008 call:

    

    PARTICIPANTS IN THE US CALL:
Toll Free 1 800 230 1096

    

    PARTICIPANTS INTERNATIONALLY
CALL: +1 612 288 0329

    

    Please
find a link to the upcoming webcast presentation on the following web page:
http://www.radware.com/Company/InvestorRelations/default.aspx

    

    About
Radware

    Radware
(NASDAQ:RDWR), the global leader in integrated application delivery solutions,
assures the full availability, maximum performance, and complete security of
business-critical applications for more than 6,000 enterprises and carriers
worldwide. With APSoluteTM, Radware's comprehensive and award-winning suite of
intelligent front-end, access, and security products, companies in every
industry can drive business productivity, improve profitability, and reduce IT
operating and infrastructure costs by making their networks "business smart."
For more information, please visit www.radware.com.

     

    ###

     

    This
press release may contain forward-looking statements that are subject to risks
and uncertainties. Factors that could cause actual results to differ materially
from these forward-looking statements include, but are not limited to, general
business conditions in the Application Switching or Network Security industry,
changes in demand for Application Switching or Network Security products, the
timing and amount or cancellation of orders and other risks detailed from time
to time in Radware's filings with the Securities and Exchange Commission,
including Radware's Form 20-F.

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