Document:

REVOLVING
      CREDIT NOTE

     

    
      
        	
                Up
                  to $5,000,000

              	
                Ridgefield,
                  CT

              
	 	
                As
                  of July 15, 2006

              

      

    

    

    FOR
      VALUE
      RECEIVED, the undersigned, PETALS DECORATIVE ACCENTS, INC., a Delaware
      corporation with its principal offices and place of business at 90 Grove Street,
      Ridgefield CT, 06877
      (the
      "Borrower"),
      promises to pay, upon demand, to the order of Southshore
      Capital Fund Ltd.,
      a
      Cayman Island Corporation (the "Lender"), or at such other place as may be
      designated from time to time by the Lender, the unpaid amount of all sums that
      have been advanced to or for the benefit of the Borrower in accordance with
      the
      terms hereof, as evidenced on the attached Grid Schedule, not to exceed the
      aggregate principal sum of five million dollars ($5,000,000), lawful money
      of
      the United States of America, plus interest on the unpaid principal balance
      computed as set forth below. Unless otherwise stated herein, capitalized terms
      shall have the meanings as set forth in that certain Loan and Security Agreement
      dated as of the date hereof, by and between Lender and Borrower (the
      "Agreement").

    

    This
      Note
      and the Loans evidenced by it shall bear interest at the rate equal to five
      (5%)
      percent per year, on the basis of a 360-day year and actual number of days
      elapsed. Accrued interest shall be payable quarterly in arrears by the Borrower
      within ten calendar (10) days from the end of each calendar quarter.

    

    There
      shall be no prepayment premium in the event the Borrower prepays any principal
      or accrued interest thereon.

    

    Mandatory
      Repayment. Unless waived by the Lender, if at any time the Company closes on
      a
      Qualified Financing (as described below), the Company shall be required at
      the
      time of such closing to redeem in cash the then outstanding principal balance
      plus accrued and unpaid interest on this Revolving Credit Note. A “Qualified
      Financing” shall mean (1) the issuance of any debt or equity securities (in any
      combination) by the Company in one or more related transactions in exchange
      for
      cash consideration of at least $15,000,000 dollars, (2) a sale or transfer
      of
      all or substantially all of the assets of the Company to another person, or
      (3)
      a transaction that results in a change in control of the Company. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The
      Borrower hereby requests, authorizes and empowers any officer or employee or
      agent of the Lender who may be directed by the Lender from time to time to
      make
      notations of Advances, payments and resulting outstanding balances on the Grid
      Schedule attached to this Revolving Credit Note and on additional Grid Schedule
      sheets as may be used by the Lender from time to time, and agrees to be bound
      by
      and to be liable to the Lender for repayment of the outstanding principal
      balances as shown in good faith to be due and owing on such Grid Schedule sheets
      from time to time, plus accrued interest thereon. Said Grid Schedule is
      incorporated herein and made a part of this Revolving Credit Note.
      Notwithstanding the foregoing, the Lender or the Borrower may establish, by
      extrinsic evidence, that the outstanding balance of the Note is greater or
      less
      than the amount shown on the Grid.

    

    This
      Revolving Credit Note evidences the Loans, as each are described in and referred
      to in the Agreement, and is governed by and entitled to the benefits contained
      in the Agreement and is secured by the security interests granted therein,
      which, among other things, contain provisions for acceleration of the maturity
      hereof upon the occurrence of certain events.

    

    Upon
      the
      occurrence of one or more Events of Default as provided in the Agreement, the
      entire disbursed and unpaid principal, and the interest thereon shall, subject
      to any applicable cure periods, become immediately due and payable without
      presentment or protest or other notice or demand, all of which are expressly
      waived by the Borrower.

    

    The
      powers and remedies given hereby shall not be exclusive of any other powers
      and
      remedies available to the Lender. No course of dealings between the Borrower
      and
      the Lender and no delay on the part of the Lender in exercising any rights
      with
      respect to any default shall operate as a waiver of any rights of the Lender.
      Failure on the part of the Lender of exercise any rights with respect to any
      default shall not operate as a waiver of any rights with respect to any other
      default.

    

    The
      Borrower agrees to pay all costs and expenses incurred by the Lender in
      enforcing this Revolving Credit Note, including, without limitation, reasonable
      attorneys' fees and legal expenses.

    

    Notwithstanding
      any provision to the contrary contained herein, it is expressly understood
      and
      agreed between the Lender and the Borrower that the Lender shall not collect
      a
      rate of interest on any obligation or liability due and owing by the Borrower
      to
      the Lender in excess of the maximum contract rate of interest permitted by
      law.
      It is the intent of the Lender and the Borrower that the interest laws adopted
      by the State of Connecticut shall govern the relationship between the parties
      hereto, but in the event of a final adjudication to the contrary, the Borrower,
      nunc
      pro tunc,
      shall
      be obligated to pay to the Lender only such interest as then shall be permitted
      by the law of the jurisdiction found to govern the contract relationship between
      the Borrower and the Lender. All interest found in excess of that rate of
      interest allowed and collected by the Lender shall be applied to the balance
      of
      the principal due hereunder in such manner as to prevent the payment and
      collection of interest in excess of the rate permitted under applicable
      law.

    

    This
      Revolving Credit Note may not be waived, changed, modified or discharged orally,
      but only by agreement in writing signed by the party against whom any
      enforcement of any waiver, change modification or discharge is
      sought.

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    THIS
      REVOLVING CREDIT NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
      THE
      LAWS OF THE STATE OF CONNECTICUT APPLICABLE TO CONTRACTS MADE AND TO BE
      PERFORMED WHOLLY WITHIN THE STATE OF CONNECTICUT. BORROWER HEREBY WAIVES THE
      RIGHT TO A JURY TRIAL AND CONSENTS TO THE EXCLUSIVE JURISDICTION IN THE FEDERAL
      OR STATE COURTS OF THE STATE OF CONNECTICUT WITH RESPECT TO THE ENFORCEMENT
      OF
      THE TERMS HEREOF AND THE COLLECTION OF THE OBLIGATIONS
      HEREUNDER.

    

    

    IN
      WITNESS WHEREOF, the Borrower has duly executed this Revolving Credit Note
      the
      day and year first above written.

    

    
      	 	 	 
	 	
              PETALS
                DECORATIVE ACCENTS, INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:

            
	 	
              Title:

            

    

    
 

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

       

    

    
      	
              GRID
                SCHEDULE

            
	
              Date
                of Transaction

            	
              Amount
                of Loan

            	
              Principal
                Payments

            	
              Interest
                Payments

            	
              Unpaid
                Principal Balance

            	
              Person
                Making Notation

            
	
              8/01/06

            	
              $500,000

            	 	 	
              $500,000

            	 
	
              8/11/06

            	
              $315,000

            	 	 	
              $315,000

            	 
	
              8/28/06

            	
              $360,000

            	 	 	
              $360,000

            	 
	
              9/08/06

            	
              $50,000

            	 	 	
              $50,000

            	 
	
              9/14/06

            	
              $500,000

            	 	 	
              $500,000

            	 
	
              9/28/06

            	
              $200,000

            	 	 	
              $200,000

            	 
	
              10/12/06

            	
              $223,908

            	 	 	
              $223,908

            	 
	
              10/24/06

            	
              $400,000

            	 	 	
              $400,000

            	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 

    

    

    

    
      
         

      

      
        -4-REVOLVING
      CREDIT NOTE

    

    
      	
              Up
                to $5,000,000

            	
              Ridgefield,
                CT

            
	 	
              As
                of July 15, 2006

            

    

    

    FOR
      VALUE
      RECEIVED, the undersigned, PETALS DECORATIVE ACCENTS, INC., a Delaware
      corporation with its principal offices and place of business at 90 Grove Street,
      Ridgefield CT, 06877
      (the
      "Borrower"),
      promises to pay, upon demand, to the order of Southridge
      Partners LP,
      a
      Delaware limited partnership (the "Lender"), or at such other place as may
      be
      designated from time to time by the Lender, the unpaid amount of all sums that
      have been advanced to or for the benefit of the Borrower in accordance with
      the
      terms hereof, as evidenced on the attached Grid Schedule, not to exceed the
      aggregate principal sum of five million dollars ($5,000,000), lawful money
      of
      the United States of America, plus interest on the unpaid principal balance
      computed as set forth below. Unless otherwise stated herein, capitalized terms
      shall have the meanings as set forth in that certain Loan and Security Agreement
      dated as of the date hereof, by and between Lender and Borrower (the
      "Agreement").

    

    This
      Note
      and the Loans evidenced by it shall bear interest at the rate equal to five
      (5%)
      percent per year, on the basis of a 360-day year and actual number of days
      elapsed. Accrued interest shall be payable quarterly in arrears by the Borrower
      within ten calendar (10) days from the end of each calendar quarter.

    

    There
      shall be no prepayment premium in the event the Borrower prepays any principal
      or accrued interest thereon.

    

    Mandatory
      Repayment. Unless waived by the Lender, if at any time the Company closes on
      a
      Qualified Financing (as described below), the Company shall be required at
      the
      time of such closing to redeem in cash the then outstanding principal balance
      plus accrued and unpaid interest on this Revolving Credit Note. A “Qualified
      Financing” shall mean (1) the issuance of any debt or equity securities (in any
      combination) by the Company in one or more related transactions in exchange
      for
      cash consideration of at least $15,000,000 dollars, (2) a sale or transfer
      of
      all or substantially all of the assets of the Company to another person, or
      (3)
      a transaction that results in a change in control of the Company. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    The
      Borrower hereby requests, authorizes and empowers any officer or employee or
      agent of the Lender who may be directed by the Lender from time to time to
      make
      notations of Advances, payments and resulting outstanding balances on the Grid
      Schedule attached to this Revolving Credit Note and on additional Grid Schedule
      sheets as may be used by the Lender from time to time, and agrees to be bound
      by
      and to be liable to the Lender for repayment of the outstanding principal
      balances as shown in good faith to be due and owing on such Grid Schedule sheets
      from time to time, plus accrued interest thereon. Said Grid Schedule is
      incorporated herein and made a part of this Revolving Credit Note.
      Notwithstanding the foregoing, the Lender or the Borrower may establish, by
      extrinsic evidence, that the outstanding balance of the Note is greater or
      less
      than the amount shown on the Grid.

    

    This
      Revolving Credit Note evidences the Loans, as each are described in and referred
      to in the Agreement, and is governed by and entitled to the benefits contained
      in the Agreement and is secured by the security interests granted therein,
      which, among other things, contain provisions for acceleration of the maturity
      hereof upon the occurrence of certain events.

    

    Upon
      the
      occurrence of one or more Events of Default as provided in the Agreement, the
      entire disbursed and unpaid principal, and the interest thereon shall, subject
      to any applicable cure periods, become immediately due and payable without
      presentment or protest or other notice or demand, all of which are expressly
      waived by the Borrower.

    

    The
      powers and remedies given hereby shall not be exclusive of any other powers
      and
      remedies available to the Lender. No course of dealings between the Borrower
      and
      the Lender and no delay on the part of the Lender in exercising any rights
      with
      respect to any default shall operate as a waiver of any rights of the Lender.
      Failure on the part of the Lender of exercise any rights with respect to any
      default shall not operate as a waiver of any rights with respect to any other
      default.

    

    The
      Borrower agrees to pay all costs and expenses incurred by the Lender in
      enforcing this Revolving Credit Note, including, without limitation, reasonable
      attorneys' fees and legal expenses.

    

    Notwithstanding
      any provision to the contrary contained herein, it is expressly understood
      and
      agreed between the Lender and the Borrower that the Lender shall not collect
      a
      rate of interest on any obligation or liability due and owing by the Borrower
      to
      the Lender in excess of the maximum contract rate of interest permitted by
      law.
      It is the intent of the Lender and the Borrower that the interest laws adopted
      by the State of Connecticut shall govern the relationship between the parties
      hereto, but in the event of a final adjudication to the contrary, the Borrower,
      nunc
      pro tunc,
      shall
      be obligated to pay to the Lender only such interest as then shall be permitted
      by the law of the jurisdiction found to govern the contract relationship between
      the Borrower and the Lender. All interest found in excess of that rate of
      interest allowed and collected by the Lender shall be applied to the balance
      of
      the principal due hereunder in such manner as to prevent the payment and
      collection of interest in excess of the rate permitted under applicable
      law.

    

    This
      Revolving Credit Note may not be waived, changed, modified or discharged orally,
      but only by agreement in writing signed by the party against whom any
      enforcement of any waiver, change modification or discharge is
      sought.

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    THIS
      REVOLVING CREDIT NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
      THE
      LAWS OF THE STATE OF CONNECTICUT APPLICABLE TO CONTRACTS MADE AND TO BE
      PERFORMED WHOLLY WITHIN THE STATE OF CONNECTICUT. BORROWER HEREBY WAIVES THE
      RIGHT TO A JURY TRIAL AND CONSENTS TO THE EXCLUSIVE JURISDICTION IN THE FEDERAL
      OR STATE COURTS OF THE STATE OF CONNECTICUT WITH RESPECT TO THE ENFORCEMENT
      OF
      THE TERMS HEREOF AND THE COLLECTION OF THE OBLIGATIONS
      HEREUNDER.

    

    

    IN
      WITNESS WHEREOF, the Borrower has duly executed this Revolving Credit Note
      the
      day and year first above written.

     

    
      	 	 	 
	 	
              PETALS
                DECORATIVE ACCENTS, INC.

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:

            
	 	
              Title:

            

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    

    
      	
              GRID
                SCHEDULE

            
	
              Date
                of Transaction

            	
              Amount
                of Loan

            	
              Principal
                Payments

            	
              Interest
                Payments

            	
              Unpaid
                Principal Balance

            	
              Person
                Making Notation

            
	
              7/24/06

            	
              $160,000

            	 	 	
              $160,000

            	 
	
              9/08/06

            	
              $200,000

            	 	 	
              $200,000

            	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 

    

    

    

    
      
         

      

      
        -4-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]