AGREEMENT ---------

============================================

REVOLVING LOAN AGREEMENT

between

XXXXXX, INC.

And

XXXXXX UNITED BANK

============================================

Dated: December 23, 2002

REVOLVING LOAN AGREEMENT
------------------------

This REVOLVING LOAN AGREEMENT is made this 23rd day of December, 2002,
between XXXXXX, INC. ("Borrower"), a corporation organized and existing pursuant
to the laws of the State of Delaware having an address at 000 00xx Xxxxxx, Xxxx
Xxx Xxxx, Xxx Xxxxxx 00000 and XXXXXX UNITED BANK ("Lender"), a New Jersey
corporation, with a place of business at 0000 XxxXxxxxx Xxxxxxxxx, Xxxxxx, Xxx
Xxxxxx 00000.

W I T N E S S E T H:
--------------------

WHEREAS, Borrower has requested that Lender extend a THIRTY-TWO MILLION
and 00/100 ($32,000,000.00) DOLLAR revolving credit facility, the proceeds of
which will be used to repay existing indebtedness to Fleet Bank N.A. and to
provide Borrower with working capital support including, without limitation, the
issuance of letters of credit.

WHEREAS, Lender is willing to extend the credit facility on the terms
and subject to the conditions set forth in this Agreement.

AGREEMENT
---------

1. DEFINITIONS. As used herein, the following terms shall have
the following meanings (terms defined in the singular to have the same meaning
when used in the plural and vice versa):

1.1. "Account Debtor" shall mean any Person who is or may
become obligated under or on account of any Receivable.

1.2. "Advance" shall mean any loan or advance made by
Lender in connection with the Revolving Loan.

1.3. "Affiliate" shall mean any Person which, directly or
indirectly, through one or more intermediaries controls, or is controlled by, or
is under common control with, Borrower. For purposes hereof, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting stock or other equity interests, by contract or otherwise.

1.4. "Authenticate" shall mean to sign or to execute or
otherwise adopt a symbol, or encrypt or similarly process a record in whole or
in part, with the present intent of the authenticating person to identify the
person and adopt or accept a Record.

1.5. "Bank Accounts" shall have the meaning set forth in
Section 5.23 of this Agreement.

1.6. "Banking Day" shall mean any day on which commercial
banks are not authorized or required to close in New Jersey.

1.7. "Borrower" shall mean Xxxxxx, Inc.
--------

1.8. "Borrowing Base Certificate" shall mean a borrowing
base certificate substantially in the form of Exhibit C attached hereto.

1.9. "Intentionally omitted"
---------------------

1.10. "Code" shall mean the Internal Revenue Code of the
United States.

1.11. "Collateral" shall mean all of the Property and
interests in Property described in the General Security Agreement, and all other
personal property of Borrower and interests of Borrower in personal property
that now or hereafter secures the payment and performance of any of the
Obligations pursuant to any of the Loan Documents or otherwise including,
without limitation, any proceeds and insurance proceeds of the foregoing.

1.12. "Default" shall mean an event or condition the
occurrence of which would, with the lapse of time or the giving of notice, or
both, become an Event of Default, whether or not Lender has declared an Event of
Default to have occurred.

1.13. "Effective Tangible Net Worth" shall mean the total
assets, less intangible assets, less due from Affiliates, officers and
shareholders, less total liabilities plus subordinated debt, all as reflected on
the financial statements of Borrower submitted to Lender in accordance with
Article 6.

1.14. "Eligible Inventory" shall mean Inventory which has
been identified and described on the monthly reports to be submitted in
accordance with Section 6.2 and the quarterly inventory report to be submitted
in accordance with Section 6.4, is represented by Borrower (by its acceptance of
Revolving Loans thereon) as meeting all of the following criteria on the date of
any Revolving Loan based thereon and thereafter while any Obligation is
outstanding:

(a) Borrower or a Guarantor is the sole owner of the
Inventory; none of the Inventory is being held or shipped by Borrower or the
Guarantor on a consignment or approval basis; Borrower or the Guarantor has not
sold, assigned or otherwise transferred all or any portion thereof; and none of
the Inventory is subject to any claim, lien or security interest;

(b) If any of the Inventory is represented or covered by
any document of title, instrument or chattel paper, Borrower is the sole owner
of all such documents, instruments and chattel paper, all thereof are in the
possession of Borrower to the extent that such possession is necessary for the
perfection of Lender's security interest therein pursuant to the UCC, none
thereof has been sold, assigned or otherwise transferred, and none thereof is
subject to any claim, lien or security interest other than the foregoing
security interest in favor of Lender; and

(c) The Inventory consists of saleable non-obsolete
finished goods manufactured or acquired by Borrower in the ordinary course of
Borrower's business, as conducted, subject to its contract or sole possession
and located in compliance with Section 5.15 of this Agreement or at locations
for which, if requested by Lender, landlord or bailee waivers in form and
substance approved by Lender, which approval will not be unreasonably withheld,
have been executed and delivered by such landlord or bailee to Lender, or in
transit by ship from foreign manufacturers pursuant to Letters of Credit.

1.15. "Eligible Receivables" shall mean and include only
Receivables of Borrower or a Guarantor, the records and accounts of which are
located in compliance with Section 5.14 of this Agreement, arise out of sales in
the ordinary course of Borrower's business, made by Borrower to a Person which
is not an Affiliate of Borrower nor an employee of Borrower nor controlled by an
Affiliate of Borrower, which do not then violate in any material respect any
warranty with respect to Eligible Receivables set forth in the General Security
Agreement and except for receivables from Wal-Mart, Kohl's, Sears, Target
Corporation, and May's Department Stores, such receivables are insured pursuant
to credit insurance described in Section 8.6. No Receivable shall be an Eligible
Receivable if more than ninety (90) days have passed since the original invoice
date and the Inventory covered by such Receivable were shipped to the customer
on or prior to the invoice date, or the services described in such invoice were
provided on or prior to the invoice date. Lender may treat any Receivable as
ineligible if:

(a) any warranty contained in this Agreement or
in the General Security Agreement with respect to Eligible Receivables or any
warranty with respect to such Receivable contained in this Agreement or in the
General Security Agreement has been breached in any material respect; or

(b) the Account Debtor has disputed liability
with respect to more than fifty (50) percent of the face amount thereof (except
that

with respect to such Receivable the undisputed amount shall be considered
eligible provided such Receivable would otherwise be considered an Eligible
Receivable), or made any claim with respect to such Receivable or with respect
to any other Receivable due from such customer or Account Debtor to Borrower,
with respect to any Receivable which Lender, in the good faith exercise of its
credit judgment, deems material; or

(c) the Account Debtor has filed a case for
bankruptcy or reorganization under the Bankruptcy Code, or if any case under the
Bankruptcy Code has been filed against the Account Debtor, or if the Account
Debtor has assigned for the benefit of creditors, or if the Account Debtor has
failed, suspended business operations, become insolvent, or had or suffered a
receiver or a trustee to be appointed for all or a significant portion of its
assets or affairs; or

(d) if the Account Debtor is also a supplier to
or creditor of Borrower or if the Account Debtor has or asserts any right of
offset with respect to any Receivable or asserts any claim or counterclaim
against Borrower with respect to any Receivable or otherwise in each case in
excess of fifty (50) percent of the face amount of the applicable Receivable
(except that with respect to such Receivable the undisputed amount shall be
considered eligible provided such Receivable would otherwise be considered an
Eligible Receivable); or

(e) the sale is to an Account Debtor outside the
United States, unless the sale is on letter of credit, acceptance or other terms
acceptable to Lender; or

(f) fifty (50) percent or more of the
Receivables of any Account Debtor and its Affiliates is ineligible, then all the
Receivables of such Account Debtor and its Affiliates may be deemed ineligible
by Lender under this Agreement; or

(g) it relates to a sale of goods or services to
the United States of America, or any agency or department thereof, unless
Borrower assigns its right to payment of such Receivable to Lender, in form and
substance satisfactory to Lender, so as to comply with the Assignment of Claims
Act of 1940, as amended; or

(h) it relates to sale of goods or services to a
state or local governmental authority or an agent or department thereof; or

(i) it relates to intercompany sales, employee
sales or any Receivable due from an Affiliate of Borrower; or

(j) it consists of a sale to an Account Debtor
on consignment, xxxx and hold, guaranteed sale, sale or return, sale on
approval, payment plan, scheduled installment plan, extended payment terms or
any other repurchase or return basis; or

(k) the Account Debtor is located in a state in
which Borrower is deemed to be doing business under the laws of such state and
which denies creditors access to its courts in the absence of qualifications to
transact business in such state or of the filing of any reports with such state,
unless Borrower has qualified as a foreign corporation authorized to do business
in such state or has filed all required reports; or

(l) the Receivable is evidenced by chattel paper
or an instrument of any kind which has not been assigned or endorsed and
delivered to Lender and such endorsement is necessary to perfect the security
interest in and to such chattel paper or instrument granted by Borrower in favor
of Lender pursuant to the General Security Agreement; or

(m) the Receivable arises from a sale of goods
or services to an individual who is purchasing such goods primarily for
personal, family or household purposes; or

(n) except with respect to any Receivable for
which credit insurance described in Section 8.6 shall have been obtained, if
Lender believes, in the exercise of its good faith credit judgment, that
collection of such Receivable is insecure or that such Receivable may not be
paid by reason of the Account Debtor's financial inability to pay.

1.16. "Environment" shall mean any water or water vapor,
any land surface or subsurface, air, fish, wildlife, biota and all other natural
resources.

1.17. "Environmental Laws" shall mean all federal, state
and local environmental, land use, zoning, health, chemical use, safety and
sanitation laws, statutes, ordinances and codes relating to the protection of
the Environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of "hazardous
substances" and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.

1.18. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.

1.19. "Events of Default" shall have the meaning set forth
in Article 12 of this Agreement.

1.20. "Fiscal Year" shall mean with respect to any Person,
a year of 365 or 366 days, as the case may be, ending on the last day of June in
any calendar year.

1.21. "GAAP" shall mean generally accepted accounting
principles consistently applied and maintained throughout the period indicated
and consistent with the prior financial practice of Borrower, except for changes
mandated or permitted to be adopted by the Financial Accounting Standards Board
or any similar accounting authority of comparable standing. Whenever any
accounting term is used herein which is not otherwise defined, it shall be
interpreted in accordance with GAAP.

1.22. "General Security Agreement" shall mean the general
security agreement dated the date hereof executed and delivered by Borrower to
Lender as the same may be amended, modified or supplemented from time to time.

1.23. "Governmental Rules" shall have the meaning given to
such term in Section 5.24 of this Agreement.

1.24. "Guarantor" shall mean Xxxxxx International (Hong
Kong) Ltd., JLN, Inc., The Bag Factory Inc., Investments (JLN) Inc., Xxx X.
Xxxxxxxx, Inc., Topsville, Inc., Josell Global Sourcing Ltd., and any other
Person who shall, at any time, agree to be a guarantor or surety for Borrower.

1.25. "Indebtedness" shall mean and include all obligations
for borrowed money of any kind or nature, including funded debt and unfunded
liabilities, contingent obligations under guaranties or letters of credit, and
all obligations for the acquisition or use of any fixed asset, including
capitalized leases, or improvements which are payable over a period longer than
one year, regardless of the term thereof or the Person or Persons to whom the
same is payable and the Obligations, but only to the extent that such
obligations are required to be capitalized on the financial statements of the
Person incurring such obligations.

1.26. "Inventory" shall have the meaning given to such term
in the General Security Agreement.

1.27. "Letter of Credit" shall mean any documentary letter
of credit issued by Lender for the account of Borrower or any Guarantor for the
acquisition of Inventory or any air releases, guaranties or similar documents
issued by Lender in connection therewith.

1.28. "LIBOR" shall mean the London Inter-Bank Offered Rate
as quoted in the "Money Rates" section of The Wall Street Journal.

1.29. "Loan Documents" shall mean this Agreement, the
General Security Agreement and all other documents and instruments to be
delivered by Borrower or any other Person under or in connection with this
Agreement or the Loans, as the same may be amended, modified or supplemented
from time to time.

1.30. "Loan Interest Rate" shall mean Lender's Prime Rate.

1.31. "Loans" shall mean the loans and advances made by
Lender under this Agreement, including all Advances.

1.32. Intentionally omitted
---------------------

1.33. "Material Adverse Effect" shall mean any material
adverse effect on (a) the business, assets, operations, prospects or condition,
financial or otherwise, of Borrower and the Guarantors taken as a whole; (b)
Borrower's ability to pay or perform the Obligations in accordance with their
terms; (c) the value, collectability or salability of the Collateral taken as a
whole or the perfection or priority of Lender's liens; (d) the validity or
enforceability of this Agreement or any of the Loan Documents; or (e) the
practical realization of the benefits, rights and remedies inuring to Lender
under this Agreement and the other Loan Documents.

1.34. "Maximum Facility" shall mean THIRTY-TWO MILLION and
00/100 (32,000,000.00) Dollars.

1.35. "Notice of Borrowing" shall mean a borrowing request
in a Record substantially in the form of Exhibit B attached hereto.

1.36. "Obligations" shall mean and include all loans
(including the Loans), advances, debts, liabilities, obligations, covenants and
duties owing by Borrower to Lender of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, under or in
connection with this Agreement and the other Loan Documents, including, without
limitation, Lender's indemnity obligations to Fleet National Bank in accordance
with Section 2.B hereof, whether direct or indirect, absolute or contingent, due
or to become due, now due or hereafter arising and howsoever acquired including,
without limitation, all interest, charges, expenses, fees, reasonable out of
pocket attorneys' fees and expenses, and any other sum chargeable to Borrower
under this Agreement or the other Loan Documents.

1.37. "Person" shall mean an individual, partnership,
limited liability company, limited liability partnership, corporation, joint
venture, joint stock company, land trust, business trust or unincorporated
organization, or a government or agency or political subdivision thereof.

1.38. "Plan" shall mean an employee benefit plan or other
plan now or hereafter maintained for employees of Borrower or any subsidiary of
Borrower and covered by Title IV of ERISA

1.39. "Prime Rate" means the fluctuating rate of interest,
which is determined periodically, announced from time to time by Lender as its
"Prime Rate".

1.40. "Property" shall have the meaning set forth in the
General Security Agreement.

1.41. "Receivables" shall have the meaning set forth in the
General Security Agreement.

1.42. "Record" shall mean information that is inscribed on
a tangible medium or which is stored in an electronic or other medium and is
retrievable in perceivable form. If Lender so specifies with respect to a
particular type of Record, that type of Record shall be signed or otherwise
authenticated by Borrower.

1.43. "Reportable Event" shall have the meaning assigned to
that term in Title IV of ERISA.

1.44. "Revolving Loan" shall mean the Advances to be made
by Lender to Borrower pursuant to Section 2.1 of this Agreement, and all
interest thereon and all fees, costs and expenses payable by Borrower in
connection therewith.

1.45. "Revolving Note" shall mean, the promissory note
substantially in the form annexed hereto as Exhibit A, to be given by Borrower
to Lender to evidence the Revolving Loan.

1.46. "Solvent" shall mean when used with respect to any
Person, such Person (i) owns property the fair value of which is greater than
the amount required to pay all of such Person's Indebtedness (including
contingent debts), (ii) owns property the present fair salable value of which is
greater than the amount that will be required to pay the probable liabilities of
such Person on its then existing Indebtedness as such become absolute and
matured, (iii) is able to pay all of its Indebtedness as such Indebtedness
matures, and (iv) has capital sufficient to carry on its then existing business.

1.47. "Termination Date" shall mean the earlier of December
1, 2004, or the date on which Lender terminates this Agreement pursuant to
Section 12.1 of this Agreement.

1.48. "UCC" means the Uniform Commercial Code as in effect
from time to time.

2. THE REVOLVING LOAN.
------------------

2.1. Advances. Subject to the terms and conditions of this
Agreement including, without limitation, the Maximum Facility and relying upon
the representations and warranties set forth in this Agreement, for so long as
no Default or Event of Default shall have occurred and shall be continuing,
Lender shall make Advances to Borrower on its request, from time to time during
the term of this Agreement in an amount ("Borrowing Capacity") not to exceed at
any one time outstanding the lesser of:

(a) TWENTY-TWO MILLION and 00/100
(22,000,000.00) Dollars, or

(b) the sum of (i) eighty-five (85) percent of
the face amount of Borrower's Eligible Receivables, (ii) fifty (50) percent of
the Value of Borrower's Eligible Inventory, and (iii) fifty (50) percent of the
outstanding face amount of Letters of Credit issued under this Agreement,

plus in each case, for the period from July 1 through September 30 only,
$5,000,000.00 provided an officer of Borrower submits to Lender an Authenticated
Record within ten (10) days of the end of July, August and September stating
that sixty-five (65) percent of the value of all Eligible Inventory is subject
to confirmed bona fide purchase orders with unrelated third parties. Value shall
mean the lower of cost or the fair market value of such Inventory, as reflected
on the books and records of Borrower.

For the purpose of calculating the Borrowing Capacity under
Subsection 2.1(b), the face of all Letters of Credit shall be deducted from such
sum. Within the limits of the Borrowing Capacity, and subject to the limitations
set forth in this Agreement, Borrower may borrow, repay and reborrow Advances.

2.2. Overline. Borrower acknowledges that Lender has
advised Borrower that Lender does not intend to permit Borrower to incur
Obligations at any time in an outstanding principal amount exceeding either the
Borrowing Capacity or the Maximum Facility; however, it is agreed that should
the Obligations of Borrower to Lender incurred under the Loans or otherwise
exceed either then, all such Obligations shall (a) constitute Obligations under
this Agreement, (b) be entitled to the benefit of all security and protection
under this Agreement and the other Loan Documents, (c) be secured by the
Collateral and (d) be payable immediately without notice or demand by Lender.

2.3. Reserves. The Borrowing Capacity shall be subject to
such reserves as Lender shall deem necessary in the exercise of its good faith
credit judgment.

2.4. Manner of Borrowing. Each Advance shall be requested
in an Authenticated Record sent via facsimile or electronic transmission
including, without limitation, via e-mail by a Notice of Borrowing executed by
an authorized officer of Borrower, not later than 3:00 p.m. Eastern Time on any
Banking Day on which an Advance is requested. Provided that Borrower shall have
satisfied all conditions precedent set forth in this Agreement, including the
reaffirmation of the representations and warranties and covenants as required
under Article 10 of this Agreement, and Borrower shall have sufficient Borrowing
Capacity to permit an Advance under this Agreement in accordance with Section
2.1 of this Agreement, Lender shall make the Advance to Borrower in the amount
requested in the Record by Borrower in immediately available funds for credit to
any account of Borrower (other than a payroll account) at Lender.

2.5. Evidence of Borrower's Obligations. Borrower's
obligation to pay the principal of, and interest on, the Advances made to
Borrower shall be evidenced by the Revolving Note executed by Borrower and
delivered to Lender.

2.6. Payment on Termination Date. Notwithstanding anything
herein to the contrary, the entire outstanding principal balance of the Loans,
plus all accrued and unpaid interest thereon and all fees and other amounts
payable under this Agreement and the Loan Documents, shall be due and payable in
full, on the Termination Date.

2.A Letters of Credit. At the request of Borrower or a
Guarantor, and upon execution of Lender's customary Letter of Credit
documentation, Lender shall issue Letter(s) of Credit on behalf of Borrower or a
Guarantor. The Letters of Credit shall be on terms mutually acceptable to Lender
and Borrower or the Guarantor, as the case may be, and no Letter of Credit shall
have an expiration date later than ninety (90) days after the Termination Date
and shall not contain an evergreen clause or any other automatic renewal
provision. Any drawing under the Letter of Credit shall be deemed an Advance
made to Borrower, without request therefore, immediately upon payment on any
such draft or drawing. In connection with the issuance of a Letter of Credit,
Borrower shall pay to Lender an issuance fee of $275.00 and a wire fee of
$35.00. In addition, Lender shall charge Borrower its standard discrepancy fees
as they may vary from time to time. If there is any dispute between the
beneficiary and Borrower or the Guarantor regarding the terms and conditions of

any Letter of Credit or the issuance or the payment of any drawing(s) under any
such Letter of Credit, any such dispute shall be solely between the beneficiary
and Borrower and/or the Guarantor and Borrower shall be obligated to pay to
Lender any and all amounts paid by Lender, in the absence of Lender's gross
negligence or willful misconduct, to the beneficiary of the Letter of Credit
without any defense, counterclaim or set-off, all of which are expressly waived.

Subject to the terms and conditions of this Agreement, for so
long as no Event of Default shall exist and be continuing, Lender shall issue
Letters of Credit in its discretion at the request of Borrower or a Guarantor
having an aggregate outstanding face amount equal to the lesser of (a) the
Maximum Facility or (b) the amount calculated in accordance with Subsection
2.1(b). The sum calculated in accordance with clause (b) of the immediately
preceding sentence shall be reduced by the outstanding principal balance of all
Revolving Loans as they may vary from time to time.

Lender has previously issued Letters of Credit for the account
of Borrower and/or Guarantors. These Letters of Credit shall be considered
issued under and in accordance with the terms and conditions of this Agreement
and shall be subject to all of the benefits of and secured by the Collateral
described in the General Security Agreement and the various Guaranty and
Security Agreements.

2.B. Fleet Indemnity.
---------------

At the request of Borrower, Lender has executed and indemnity
letter in favor of Fleet National Bank as set forth on Exhibit F hereto. Such
indemnity letter indemnifies Fleet National Bank in connection with letters of
credit issued on behalf of Borrower or its Affiliates. Pursuant to such
indemnity letter, Lender is obligated to indemnify and reimburse Fleet National
Bank for claims arising out of such letters of credit. Lender's obligations in
connection with such indemnity letter shall be considered an Obligation or
Obligations under this Agreement. So long as the indemnity letter is in effect,
the maximum amount of Lender's liability to Fleet National Bank thereunder shall
reduce the amount of funds the Borrower may obtain under Section 2 hereof. If
there is any dispute between Fleet National Bank and Borrower and/or Lender
arising out of any such letter of credit (including, without limitation, any
drawing under any such letter of credit), any such dispute shall be solely the
Borrower's responsibility, and Borrower shall be obligated to pay Lender any and
all amounts paid by Lender to Fleet National Bank without any defense,
counterclaim or setoff, all of which are expressly waived; provided, that the

foregoing shall not be considered a waiver of any defense, counterclaim or
setoff that may be available to Borrower against or in respect of Fleet National
Bank.

3. LENDER'S COMPENSATION.
---------------------

3.1. Interest on Advances. Except as provided below,
Borrower shall pay interest monthly, in arrears, on the first day of each month,
commencing January 1, 2003 on the average daily unpaid principal amount of the
Revolving Loan at a fluctuating rate which is equal to the Loan Interest Rate
or, as provided below, the LIBOR rate. Notwithstanding the foregoing, on and
after the occurrence and during the continuance of an Event of Default, Borrower
shall pay interest on the Revolving Loan at a rate which is three (3) percent
per annum above the Prime Rate; provided, however, in no event shall any
interest to be paid under this Agreement or under any Loan Document exceed the
maximum rate permitted by law.

Notwithstanding the foregoing, Borrower, at the time of any
Advance, shall be permitted to fix the interest rate payable on such advance for
a period of one, two or three months based on the corresponding LIBOR rate for
such time period plus two hundred fifty (250) basis points. The interest on any
such fixed rate Advance shall be due and payable on the maturity date of such
Advance.

3.2. Field Examination Fees. Borrower shall promptly
reimburse Lender for all reasonable out of pocket costs and expenses associated
with periodic field examinations as deemed necessary by Lender; provided, that
so long as no Event of Default shall have occurred and is continuing, Lender
shall only conduct one such periodic field examination during any twelve (12)
month period; and further, provided, that the total amount of costs and expenses
for which Borrower shall be required to reimburse Lender in any twelve (12)
month period during the term of this Agreement shall not exceed $5,000.00 except
the initial field examination in connection with the closing of the Loans.

3.3. Computation of Interest and Fees. All interest and
fees under this Agreement shall be computed on the basis of a year consisting of
three hundred sixty (360) days for the number of days actually elapsed.

3.4. Payments. All payments with respect to the
Obligations shall be charged by Lender to Borrower's demand account deposit
maintained with Lender without any defense, offset or counterclaim of any kind.
Whenever any payment to be made shall otherwise be due on a day that is not a

Banking Day, such payment shall be made on the next succeeding Banking Day and
such extension of time shall be included in computing interest in connection
with any such payment. Lender may make an Advance to reimburse itself for any
payments on the Obligations (including fees and expenses payable by Borrower),
which are not paid when due, without notice or demand to Borrower. Any delay or
failure by Lender submitting any invoice for such interest or fee or in the
making of an Advance against the Revolving Loan shall not discharge or relieve
Borrower of its obligation to make such interest or fee payment.

4. APPLICATION OF PROCEEDS. The proceeds of the Advances shall be
used solely by Borrower to repay existing indebtedness incurred in connection
therewith, for working capital purposes, and otherwise as permitted by this
Agreement and the other Loan Documents.

5. INDUCING REPRESENTATIONS. In order to induce Lender to make
the Loans, Borrower makes the following representations and warranties to
Lender:

5.1. Organization and Qualifications. Borrower is a
corporation duly organized and existing under the laws of the State of Delaware.
Borrower's tax identification number is 00-0000000, and its organizational
identification number is 0684419. Borrower is qualified to do business in every
jurisdiction where the nature of its business requires it to be so qualified,
except where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect.

5.2. Name and Address. During the preceding five (5)
years, Borrower has not been known by any other corporate or fictitious name,
except as set forth on Schedule 5.2 attached hereto. Borrower's principal office
on the date hereof is at the address set forth above.

5.3. Structure. Borrower has no subsidiaries or Affiliates
on the date hereof, except as set forth on Schedule 5.3 attached hereto.

5.4. Legally Enforceable Agreement. The execution,
delivery and performance of this Agreement, each and all of the other Loan
Documents and each and all other instruments and documents to be delivered by
Borrower or the Guarantors under this Agreement and the creation of all liens
and security interests provided for herein are within Borrower's corporate
power, have been duly authorized by all necessary or proper corporate action

(including the consent of shareholders where required), are not in contravention
of any agreement or indenture to which Borrower is a party or by which it is
bound, or of the Certificate of Incorporation or By-Laws of Borrower, and are
not in contravention of any provision of law and the same do not require the
consent or approval of any governmental body, agency, authority or any other
Person which has not been obtained and a copy thereof furnished to Lender, other
than agreements that comprise Collateral and that by their respective terms may
not be pledged, assigned or otherwise transferred and which, individually or in
the aggregate, are not material.

5.5. Solvent Financial Condition. Borrower is Solvent.
---------------------------

5.6. Financial Statements. The unqualified audited
financial statements of Borrower as of June 30, 2002, copies of which have been
delivered to Lender, fairly present Borrower's financial condition and results
of operations as relevant and as of such date and there has been no Material
Adverse Effect since such date. Borrower has no contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments, or unrealized
or unanticipated losses from any unfavorable commitments which were required to
be disclosed in such financial statements but which were not disclosed.

5.7. Joint Ventures. On the date hereof, Borrower is not
engaged in any joint venture or partnership with any other Person.

5.8. Real Estate. Attached hereto as Schedule 5.8 is a
list showing all real property owned or leased by Borrower, and if leased, the
correct name and address of the landlord and the date and term of the applicable
lease.

5.9. Patents, Trademarks, Copyrights and Licenses.
Borrower owns or possesses all the patents, trademarks, service marks, trade
names, copyrights and licenses necessary for the present and planned future
conduct of its business and, to the best of Borrower's knowledge, without any
conflict with the rights of others. All such registered patents, registered
trademarks, service marks, trade names, registered copyrights and licenses for
the manufacture or sale of products in the ordinary course of business existing
on the date hereof are listed on Schedule 5.9 attached hereto, if any.

5.10. Existing Business Relationship. To the knowledge of
Borrower, there exists no actual or threatened termination, cancellation or
limitation of, or any adverse modification or change in, the business
relationship of Borrower with any supplier, customer or group of customers which
individually or in the aggregate would have a Material Adverse Effect.

5.11. Investment Company Act: Federal Reserve Board
Regulations. Borrower is not an "investment company", or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company", as
such terms are defined in the Investment Company Act of 1940, as amended (15
U.S.C. xx.xx. 80(a)(1), et seq.). The making of the Loans under this Agreement
by Lender, the application of the proceeds and repayment thereof by Borrower and
the performance of the transactions contemplated by this Agreement will not
violate any provision of such Act, or any rule, regulation or order issued by
the Securities and Exchange Commission thereunder. Borrower does not own any
margin security as that term is defined in Regulation U of the Board of
Governors of the Federal Reserve System and the proceeds of the Loans made
pursuant to this Agreement will be used only for the purposes contemplated under
this Agreement. None of the proceeds will be used, directly or indirectly, for
the purpose of purchasing or carrying any margin security or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry margin security or for any other purpose which might constitute any of
the Loans under this Agreement a "purpose credit" within the meaning of said
Regulation U or Regulations T or X of the Federal Reserve Board. Borrower will
not take, or authorize any agent acting on its behalf to take, any action which
might cause this Agreement or any document or instrument delivered pursuant
hereto to violate any regulation of the Federal Reserve Board.

5.12. Tax Returns. Borrower and the Guarantors have filed
all tax returns (Federal, state or local) required to be filed and paid all
taxes shown thereon to be due including interest and penalties or has provided
adequate reserves therefor. No assessments have been made against Borrower or
any Guarantor(s), by any taxing authority nor has any penalty or deficiency been
made by any such authority. To the best of Borrower's knowledge, no Federal
income tax return of Borrower or any Guarantor, is being examined on the date
hereof by the Internal Revenue Service nor are the results of any prior
examination by the Internal Revenue Service or any State or local tax authority
being contested on the date hereof by Borrower or any Guarantor.

5.13. Litigation. Except as disclosed in Schedule 5.13, no
action or proceeding is now pending or, to the knowledge of Borrower, is
threatened against Borrower or any Guarantor, at law, in equity or otherwise,
before any court, board, commission, agency or instrumentality of the Federal or
state government or of any municipal government or any agency or subdivision
thereof, or before any arbitrator or panel of arbitrators, which, in any case,

would, individually or in the aggregate, have a Material Adverse Effect and
neither Borrower nor any Guarantor, has accepted liability for any such action
or proceeding. There is no proceeding pending before any governmental agency
(Federal, state or local) and, to the best of Borrower's knowledge, no
investigation has been commenced before any such governmental agency the effect
of which, if adversely decided, would, individually or in the aggregate, have a
Material Adverse Effect.

5.14. Receivables Locations. Annexed hereto as Schedule
5.14 is a list showing all places at which Borrower presently maintains records
relating to Receivables on the date hereof.

5.15. Inventory Locations. Annexed hereto as Schedule 5.15
is a list showing all places where Borrower on the date hereof maintains
Inventory. Such list indicates whether the premises are owned or leased by
Borrower or whether the premises are the premises of a warehouseman or other
third party, and if owned by a third party, the name and address of such third
party.

5.16. Equipment List and Locations. Annexed hereto as
Schedule 5.16 is a list showing the places where Borrower's Equipment is located
on the date hereof. Such list indicates whether such premises are owned or
leased by Borrower or whether the premises are the premises of another third
party, and if leased, the name and address of such third party.

5.17. Title/ Liens. Borrower has good and marketable title
to the Collateral as sole owner thereof. There are no existing liens on any
Property of Borrower, except for (i) liens in favor of Lender, (ii) liens
described in Schedule 5.17 and (iii) liens permitted by Section 9.5.

5.18. Existing Indebtedness. Borrower has no existing
Indebtedness except the Indebtedness described in Schedule 5.18.

5.19. ERISA Matters. The present value of all accrued
vested benefits under any Plan (calculated on the basis of the actuarial
evaluation for the Plan) did not exceed as of the date of the most recent
actuarial evaluation for such Plan the fair market value of the assets of such
Plan allocable to such benefits. Borrower is not aware of any information since
the date of such evaluation which would affect the information contained
therein. Such Plan does not presently have an accumulating funding deficiency,
as that term is defined in Section 302 of ERISA or Section 412 of the Code
(whether or not waived), no liability to the Pension Benefit Guaranty
Corporation (other than required premiums which have become due and payable, all
of which have been paid) has been incurred with respect to the Plan which would

have a Material Adverse Effect, and there has not been any Reportable Event
which presents a risk of termination of the Plan by the Pension Benefit Guaranty
Corporation which would have a Material Adverse Effect. Borrower has not engaged
in any transaction which would subject Borrower to tax, penalty or liability for
prohibited transactions imposed by ERISA or the Code which would have a Material
Adverse Effect.

5.20. O.S.H.A. Borrower has duly complied with, and its
facilities, business, leaseholds, Equipment and other property are in compliance
in all respects with, the provisions of the federal Occupational Safety and
Health Act and all rules and regulations thereunder and all similar state and
local Governmental Rules except for failure to comply which would not have a
Material Adverse Effect. There are no outstanding citations, notices or orders
of non-compliance issued to Borrower or relating to its facilities, business,
leaseholds, Equipment or other property under any such Governmental Rules which
would, individually or in the aggregate, have a Material Adverse Effect.

5.21. Intentionally omitted.
---------------------

5.22. Labor Disputes. There are no pending or, to
Borrower's knowledge, threatened labor disputes which could have a Material
Adverse Effect.

5.23. Location of Bank and Securities Accounts. Annexed
hereto as Schedule 5.23 hereto sets forth a complete and accurate list of all
deposit, checking and other bank accounts, all securities and other accounts
maintained with any broker dealer and all other similar accounts maintained by
Borrower on the date hereof (collectively, "Bank Accounts"), together with a
description thereof.

5.24. Compliance With Laws. Borrower is in compliance with
all Federal, state and local governmental rules, ordinances and regulations
("Governmental Rules") applicable to its ownership or use of properties or the
conduct of its business except where the failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect.

5.25. No Other Violations. Borrower is not in violation of
any term of its Certificate of Incorporation or By-laws and no event or
condition has occurred or is continuing which constitutes or results in (or
would constitute or result in, with the giving of notice, lapse of time or other
condition) (a) a breach of, or a default under, any agreement, undertaking or
instrument to which Borrower is a party or by which it or any of its Property
may be affected, which would have a Material Adverse Effect, or (b) the
imposition of any lien on any Property of Borrower.

5.26. Survival of Representations and Warranties. Borrower
covenants, warrants and represents to Lender that all representations and
warranties of Borrower contained in this Agreement or in any other Loan
Documents shall be true in all material respects at the time of Borrower's
execution of this Agreement and the other Loan Documents, and Lender's right to
bring an action for breach of any such representation or warranty or to exercise
any remedy under this Agreement based upon the breach of such representation or
warranty shall survive the execution, delivery and acceptance hereof by Lender
and the closing of the transactions described herein or related hereto until the
Obligations are finally and irrevocably paid in full.

6. FINANCIAL STATEMENTS AND INFORMATION; CERTAIN NOTICES TO
LENDER. So long as Borrower shall have any Obligations to Lender under this
Agreement, Borrower shall deliver to Lender, or shall cause to be delivered to
Lender:

6.1. Borrowing Base Certificate. Monthly (within twenty
(20) days after the end of each month) and contemporaneously with each request
for an Advance, a completed and executed Borrowing Base Certificate.

6.2. Monthly Reports. Within twenty (20) days after the
end of each month, an accounts receivable aging, an inventory, designation
statement and a corporate daybook summary of sales and backlog, all in form
approved by Lender, which approval will not be unreasonably withheld, prepared
by Borrower together with a compliance certificate in the form of Exhibit D
attached hereto; provided, that the inventory designation statement only shall
not be required for the last month of a quarter for which a physical inventory
required by Section 6.4 shall be required.

6.3. Annual Financial Statements. Within one hundred fifty
(150) days after the close of each Fiscal Year of Borrower, a complete copy of
Borrower's annual report on Form 10-K filed with the United Stated Securities
and Exchange Commission containing an unqualified audit report on the financial
statements of Borrower contained therein prepared by an independent certified
public accountant, consisting of a balance sheet, statements of operations,
statements of stockholders' equity and statements of cash flow.

6.4. Quarterly Inventory Report. Within thirty (30) days
after the end of each quarter, a complete copy of Borrower's physical inventory
performed as of the end of such quarter together with such other information
related thereto as Lender may reasonably request.

6.5. Insurance. Annually, within thirty (30) days of the
renewal date of such insurance policy, evidence of insurance in form and content
approved by Lender which approval will not be unreasonably withheld and
otherwise in compliance with Section 8.6 of this Agreement, together with a copy
of the original insurance policy.

6.6. Notice of Event of Default and Adverse Business
Developments. Promptly after becoming aware of the existence of an Event of
Default including, without limitation, the following:

(a) any dispute that may arise between Borrower
and any governmental regulatory body or law enforcement authority, including any
action relating to any tax liability of Borrower or Guarantor if any which
adversely determined, would have, individually or in the aggregate, a Material
Adverse Effect;

(b) any labor controversy resulting in or
threatening to result in a strike or work stoppage against Borrower;

(c) any proposal by any public authority to
exercise its eminent domain powers to acquire the assets or business of
Borrower;

(d) the location of any Collateral other than at
Borrower's place of business or as permitted under this Agreement;

(e) any proposed or actual change of Borrower's
name, identity, state of organization or corporate structure; or

(f) any other matter which has resulted or may
result in a Material Adverse Effect.

In each case, Borrower will provide Lender with telephonic notice
followed by notice in a Record specifying and describing the nature of such
Default, Event of Default or development or information, and such anticipated
effect.

6.7. Other Information. Such other information respecting
the financial condition of Borrower or any Guarantor, or any Property of
Borrower or a Guarantor in which Lender may have a lien as Lender may from time
to time reasonably request.

7. ACCOUNTING. Lender may account monthly to Borrower with
respect to the amounts due in connection with the Loans and Letters of Credit.
Each and every account shall be deemed final, binding and conclusive upon
Borrower in all respects, as to all matters reflected therein, unless Borrower,
within one hundred twenty (120) days after the date the account was rendered,
delivers to Lender notice in a Record of any objections which Borrower may have
to any such account and in that event only those items expressly objected to in

such notice shall be deemed to be disputed by Borrower. If Borrower disputes the
correctness of any statement, Borrower's notice shall specify in detail the
particulars of its basis for contending that such statement is incorrect.

8. AFFIRMATIVE COVENANTS. Borrower represents and warrants that,
so long as it shall have any Obligations to Lender under this Agreement,
Borrower will:

8.1. Business and Existence. Preserve and maintain
Borrower's separate existence and rights, privileges and franchises.

8.2. Trade Names. Transact business in Borrower's own name
other than for the trade names set forth on Schedule 5.9 and invoice all of
Borrower's Receivables in Borrower's own name or the names "Xxxxxx", "Xxxxxx
Apparel", "Aetna", "Banner New York" and/or "Xxxxx" unless Borrower shall have
provided thirty (30) days prior notice in writing to Lender of the use of a new
or additional name.

8.3. Transactions with Affiliates. Whenever Borrower
engages in transactions with any of Borrower's Affiliates, conduct the same on
an arms-length basis or other basis more favorable to Borrower.

8.4. Taxes. Pay and discharge all taxes, assessments,
government charges and levies imposed upon Borrower, Borrower's income or
Borrower's profits or upon any Property belonging to Borrower prior to the date
on which penalties attach thereto, except where the same may be contested in
good faith by appropriate proceedings, if necessary, being diligently conducted,
or appropriate reserves therefore have been established. Borrower will pay all
costs to be paid on taxes, assessments or governmental charges levied, assessed,
imposed or payable upon or with respect to the Inventory, Equipment or other
Collateral or any part thereof except where the same may be contested in good
faith, by appropriate proceedings, if necessary, being diligently conducted or
appropriate reserves therefore have been established.

8.5. Compliance with Laws. Comply with all Governmental
Rules applicable to Borrower including, without limitation, all laws and
regulations regarding the collection, payment and deposit of employees' income,
unemployment and Social Security taxes, where the failure to comply would have
individually or in the aggregate a Material Adverse Effect.

8.6. Maintain Properties: Insurance. Safeguard and protect
all Property used in the conduct of Borrower's business and keep all of
Borrower's Property insured with insurance companies licensed to do business in
the states where the Property is located against loss or damage by fire or other
risk under extended coverage endorsement and against theft, burglary, and
pilferage together with such other hazards as Lender may from time to time
reasonably request, in amounts usually carried on similar Property by similar
companies. In addition to the foregoing, Borrower shall maintain credit
insurance in form and content acceptable to Lender in the exercise of its
reasonably credit judgment insuring all of Borrower's and each Guarantor's
Eligible Receivables except for those from Wal-Mart, Kohl's, Target, Sear's and
May Department Stores with insurance companies and in amounts acceptable to
Lender in the exercise of its reasonable credit judgment. As of the date of this
Agreement, Xxxxxx Insurance Company and its Affiliates are acceptable to Lender
as insurance carriers. If requested by Lender, Borrower shall deliver complete,
certified to be true copies of each insurance policy or policies or certificates
of insurance to Lender containing endorsements in form satisfactory to Lender
naming Lender as lender/loss payee with reference to the foregoing credit
insurance and hazard insurance insuring the Collateral, and as additional
insured with respect to the foregoing required insurance other than credit
insurance and hazard insurance insuring the Collateral, and providing that the
insurance shall not be canceled, amended or terminated except upon thirty (30)
days' prior written notice to Lender. All insurance proceeds received by Lender
shall be retained by Lender and shall promptly be applied to the payment of such
portion of the Obligations as Lender may determine in Lender's sole discretion;
provided, that if no Obligations shall then be outstanding, Lender shall, within
three (3) Banking Days, deliver such proceeds, in kind, to Borrower. Borrower
shall promptly notify Lender of any event or occurrence causing a material loss
or a material decline in the value of Property or the existence of an event
justifying a material claim under any insurance and the estimated amount
thereof.

8.7. Business Records. Keep adequate records and books of
account with respect to Borrower's business activities in which proper entries
are made in accordance with sound bookkeeping practices reflecting all financial
transactions of Borrower; and Borrower shall maintain its primary operating
account with Lender.

8.8. Litigation. Give Lender prompt notice of any suit at
law or in equity against Borrower involving money or property except where the
uninsured portion of such claim would be less than $100,000.00.

8.9. Damage or Destruction of Inventory. Maintain or cause
to be maintained in good condition and preserve the Inventory from material
loss, damage, or destruction of any nature whatsoever and provide Lender with
prompt notice in a Record of any material destruction or material damage to any
Inventory and of the occurrence of any condition or event which has caused, or
may cause, material loss or depreciation in the value of the Inventory.

8.10. Name Change. Provide Lender with not fewer than
thirty (30) days notice in an Authenticated Record prior to any proposed change
of name or the creation of any subsidiary.

8.11. Access to Books and Records. Provide Lender with such
reports and with such access, upon reasonable advance notice and during
Borrower's normal business hours, to Borrower's books and records and permit
Lender to copy and inspect such reports and books and records all as Lender
deems necessary or desirable to enable Lender to monitor the credit facilities
extended hereby. Upon reasonable advance notice, Lender may examine and inspect
the Inventory, Equipment or other Collateral and may examine, inspect and copy
all books and records with respect thereto at any time during Borrower's normal
business hours. Borrower shall maintain records respecting Inventory, including
a perpetual inventory, and all other Collateral at all times that are full,
accurate and complete in all material respects.

8.12. Solvent. Continue to be Solvent.
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8.13. Compliance With Environmental Laws. Comply with all
applicable Environmental Laws except where the failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect.

8.14. Compliance with ERISA and other Employment Laws.
Comply with all applicable provisions of ERISA and the Internal Revenue Code of
1986, as amended, and any other applicable laws, rules or regulations relating
to the compensation of employees and funding of employee pension plans except
where the failure to comply would not, individually or in the aggregate, have a
Material Adverse Effect.

8.15. Intentionally Omitted.
---------------------

8.16. Delivery of Documents. Notify Lender if any proceeds
of Receivables shall include, or any of the Receivables shall be evidenced by,
notes, trade acceptances or instruments or documents, or if any Inventory is
covered by documents of title or chattel paper, whether or not negotiable, and

if required by Lender, in order to perfect its security interest in and to such
Property or, after the occurrence and during the continuance of an Event of
Default and in connection with the exercise of the rights and remedies of Lender
pursuant to the Loan Documents or applicable law, to realize the full value of
such Property, promptly deliver them to Lender appropriately endorsed. Borrower
waives protest regardless of the form of the endorsement. If Borrower fails to
endorse any instrument or document, Lender is authorized to endorse it on
Borrower's behalf.

8.17. Securities and Exchange Commission. File any and all
reports required to be filed with the Securities and Exchange Commission under
the Securities Act of 1933 or the Securities and Exchange Act of 1934 as amended
as and when due (after taking into account such extensions as shall be available
under such laws).

8.18. Inactive Affiliates. Promptly notify Lender in
writing if Aetna Handbags of Haiti S.A., Bonlyn Taiwan Co. Ltd. and/or
Cosmopolitan of Haiti S.A. actively commence doing business. If any such entity
commences actively conducting business, Borrower shall cause such entity to
grant Lender a perfected security interest in all the tangible and intangible
assets of such entity and to execute and deliver to Lender a guaranty and
security agreement in the form executed by the Guarantors and such other
documents as Lender may reasonably request.

8.19. Insurance on Guarantors' Property. Cause each
Guarantor to safeguard and protect all of its Property, used in the conduct of
its business and keep all of its Property insured with insurance companies
licensed to do business in the states where the Property is located against loss
or damage by fire or other risk under extended coverage endorsement and against
theft, burglary, and pilferage together with such other hazards as Lender may
from time to time reasonably request, in amounts usually carried on similar
Property by similar companies. All insurance proceeds received by Lender shall
be retained by Lender and shall immediately be applied to the payment of such
portion of the Obligations as Lender may determine in Lender's sole discretion;
provided, that if no Obligations shall then be outstanding, Lender shall, within
three (3) Banking Days, deliver such proceeds, in kind, to Borrower on behalf of
the Guarantor incurring the particular insured loss. Borrower shall cause each
Guarantor to promptly notify Lender of any event or occurrence causing a
material loss or a material decline in the value of Guarantor's Property or the
existence of an event justifying a material claim under any insurance and the
estimated amount thereof.

9. NEGATIVE COVENANTS. So long as Borrower shall have any
Obligation to Lender under this Agreement and unless Lender has first consented
thereto in an Authenticated Record, Borrower shall not:

9.1. Indebtedness. Create, incur, assume or suffer to
exist, voluntarily or involuntarily, any Indebtedness, except (i) Obligations to
Lender, (ii) trade debt incurred in the ordinary course of Borrower's business;
(iii) purchase money financing and equipment leases for new equipment which
together with all purchase money financing and equipment leases for new
equipment of all Guarantors does not exceed in the aggregate $100,000.00 in any
Fiscal Year; and (iv) existing Indebtedness described on Schedule 7.18.

9.2. Mergers; Consolidations; Acquisitions. Enter into any
merger, consolidation, reorganization or recapitalization with any other Person
other than a Guarantor, or acquire all or any substantial part of the Properties
of any Person except (i) a Guarantor, or (ii) where the cost of any such
merger(s), consolidation(s) or acquisition(s) in any Fiscal Year does not exceed
$1,000,000.00 in the aggregate and Borrower is the surviving entity; or take any
steps in contemplation of dissolution or liquidation; except for Guarantors and
other subsidiaries of Borrower who shall become Guarantors and who shall grant
Lender a security interest in all of its assets, conduct any part of its
business through any corporate subsidiary, unincorporated association or other
Person other than for independent sales representatives and agents and other
similar Persons engaged by Borrower in the ordinary course of business, or other
than upon not less than thirty (30) days' written notice to Lender and, further
provided such Person becomes a Guarantor and provides Lender with a security
interest in all of its assets; acquire the stock or assets of any Person,
whether by merger, consolidation, purchase of stock or otherwise where the cost
of any such merger(s), consolidation(s) or acquisition(s) in any Fiscal Year
does not exceed $1,000,000.00 in the aggregate.

9.3. Sale or Disposition. Sell or dispose of all or any
Properties or grant any Person an option to acquire any such Property, provided,
however, that the foregoing shall not prohibit sales of Inventory in the
ordinary course of Borrower's business, or the sale of obsolete, worn out
Property or Property no longer used in the ordinary course of Borrower's
business.

9.4. Defaults. Permit the landlord of the leased premises
of Topsville, Inc. located in Medlay, Florida, or any other landlord of any
other premises leased by Borrower or any Guarantor, to declare a default under
any lease with respect to such leased premises while Inventory of Borrower or
any Guarantor is stored at such leased premises, which default remains uncured
after any stated cure period or for a period in excess of thirty (30) days from
its occurrence, whichever is less, unless such default is being contested by
Borrower in good faith (and by appropriate proceedings if such proceedings are
required to make a good faith contest) and such good faith contest is being
diligently conducted.

9.5. Limitations on Liens. Suffer any lien, encumbrance,
mortgage or security interest on any of its Property, except (i) purchase money
liens on new equipment securing not more than $100,000.00 in the aggregate in
any Fiscal Year less the aggregate amount of purchase money financing secured by
liens, encumbrance, mortgage or liens on any Property of any Guarantor; (ii)
liens for taxes, assessments and other governmental charges not yet due and
payable or which are being contested as contemplated by this Agreement and for
which adequate reserves have been established; (iii) liens of lessors,
landlords, and carriers, vendors, warehousemen, mechanics, laborers, repairmen,
materialmen and the like incurred in the ordinary course of business for sums
not yet due and payable or which are being contested as contemplated by this
Agreement and which, individually or in the aggregate, are not material; (iv)
liens incurred or deposits made in the ordinary course of business (1) in
connection with workers' compensation, unemployment insurance and other types of
social security, (2) to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, performance bonds, purchase,
construction or sales contracts and similar obligations, in each case to the
extent not incurred or made in connection with the borrowing of money, which
individually or in the aggregate, are not material; (v) other deposits made to
secure liability to insurance carriers under insurance arrangements; (vi) any
attachment or judgment lien, unless the judgment it secures is not, within
thirty (30) days discharged or appealed; (vii) as to real property owned by
Borrower, leases or subleases granted to others, easements, rights-of-way,
restrictions, and other similar charges and encumbrances granted, entered into
or created in the ordinary course of business and which do not, individually or
in the aggregate, present a reasonable, likelihood of a Material Adverse Effect;
and (viii) such liens as appear on Schedule 5.17 attached hereto, if any.

9.6. Distributions. Make any capital distribution in
Property or return of capital, or purchase or redeem any of its stock or other
securities, or retire any of its stock, or take any action which would have an
effect equivalent to any of the foregoing provided, however, that so long as no
Event of Default shall have occurred and be continuing, Borrower may purchase or
redeem its stock or other securities or retire its stock up to an aggregate
amount of $1,000,000.00 during the term of this credit facility.

9.7. Borrower's Name and Offices. Transfer Borrower's
chief executive office or change its organizational name or office where it
maintains its records (including computer printouts and programs) with respect
to Receivables or any other Collateral, except on not less than thirty (30)
days' prior written notice to Lender.

9.8. Fiscal Year. Change its Fiscal Year except on not
less than thirty (30) days' prior written notice to Lender.

9.9. Change of Management. Promptly notify Lender by an
Authenticated Record, if the chief financial officer is other than Xxxxxxx
Xxxxxxxx or the president is other than Xxxxxx Xxxxxxxx.

9.10. Guaranties; Contingent Liabilities. Assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
upon the obligation of any Person other than a Guarantor, except by the
endorsement of negotiable instruments for deposit or collection or similar
transactions in its ordinary course of business as currently conducted.

9.11. Removal of Collateral. Remove, or cause or permit to
be removed, any of the Collateral or other Property from the premises where such
Collateral or Property is currently located and as set forth on Schedule 5.14,
5.15 or 5.16 of this Agreement, except on not less than thirty (30) days' prior
written notice to Lender and except for sales of Inventory in the ordinary
course of business.

9.12. Transfer of Notes or Accounts. Sell, assign,
transfer, discount or otherwise dispose of any Receivables or any promissory
note or other instrument payable to it with or without recourse except in the
ordinary course of business.

9.13. Settlements. Compromise, settle or adjust any claim
relating to any Receivable in excess of $350,000.00.

9.14. Change of Business. Cause or permit a material change
in the nature of its business as conducted on the date of this Agreement.

9.15. Change of Accounting Practices. Change its present
accounting principles or practices in any respect, except, upon notice to Lender
in a Record, as may be required or by changes in, or permitted by GAAP.

9.16. Inconsistent Agreement. Enter into any agreement
containing any provision which would be violated by the performance of
Borrower's Obligations or other obligations under this Agreement or any other
Loan Document if the result thereof would, individually or in the aggregate, be
a Material Adverse Effect.

9.17. Loan or Advances. Make any loans or advances to any
Person other than loans and advances to employees incurred in the ordinary
course of business not in excess of $100,000.00 in the aggregate at any one time
outstanding, and other than extensions of trade credit or similar advances to
third parties in the ordinary course of business.

9.18. Investments. Make any investment in any Person
including, without limitation, in any Affiliates or form any Affiliates or
subsidiaries not existing on the date hereof, except (a) as permitted by
Sections 9.2. and 9.6 and the other sections of this Agreement, and (b)
investments in cash and cash equivalents, and, to the extent not included in the
foregoing, the following: (i) direct obligations of the United States or any
agency thereof, (ii) commercial paper of a domestic issuer rated highest by one
of the major rating agencies, and (iii) stock, obligations and securities
received in the settlement of debts created in the ordinary course of business
not in excess of $100,000.00 in the aggregate at any one time outstanding.

9.19. Effective Tangible Net Worth. Permit Borrower's
Effective Tangible Net Worth to be less than the amounts set forth below, tested
quarterly, during the periods set forth below:

Amount Time Period
------ -----------

10,500,000.00 Fiscal Year ending June 2002

11,000,000.00 Fiscal Year ending June 2003

12,000,000.00 Fiscal Year ending June 2004
------------- ----------------------------

10. CONDITIONS TO ADVANCES.
----------------------

10.1. Lender's Right to Take Certain Actions. Lender's
obligation to make any Advance is subject to the condition that, as of the date
of the Advance, no Event of Default shall have occurred and be continuing and
that the representations and warranties set forth in Article 5 of this Agreement
and the representations and covenants set forth in the other Loan Documents
continue to be true and complete in all material respects (provided, that as to
representations and warranties that relate to a particular time or date, such
representations and warranties shall continue to be true and correct in all
material respects as of such particular time or date). Borrower's acceptance of
each Advance under this Agreement shall constitute a confirmation of the
foregoing. If requested by Lender, Borrower shall further confirm such matters
by delivery of a Record dated the day of the Advance and signed by an authorized
officer of Borrower.

11. TERM. Unless sooner terminated by Lender pursuant to the terms
of this Agreement, the period during which the Revolving Loan shall be available
shall initially be a period commencing on the date hereof and concluding on the
Termination Date.

12. EVENTS OF DEFAULT.
-----------------

12.1. Defaults. Upon the happening of any of the following
events (individually, an "Event of Default," collectively, "Events of Default"):

(a) if Borrower shall fail to make any payment
when due on any Obligation under this Agreement or any other Loan Document and
such failure shall continue for a period of five (5) days; or

(b) if Borrower shall fail to maintain the
insurance required by Section 8.6 or Section 8.19 of this Agreement; or

(c) if Borrower shall fail to comply with any
term, condition, covenant or warranty of or in this Agreement other than the
failure to maintain insurance in compliance with Section 8.6 and Section 8.19 of
this Agreement, and such failure continues for a period in excess of fifteen
(15) days after notice thereof is given by Lender to Borrower; or

(d) if Borrower shall fail to comply with any
term, condition, covenant, warranty or representation contained in any other
agreement between Lender and Borrower executed and/or delivered in connection
with the mortgage loan from the Lender to Borrower in original principal amount
of $3,250,000.00 and the continuance of such failure beyond any applicable grace
and/or notice period; or

(e) if Borrower shall cease to be Solvent, make
an assignment for the benefit of its creditors, call a meeting of its creditors
to obtain any general financial accommodation, suspend business or if any case
under any provision of the Bankruptcy Code including provisions for
reorganizations, shall be commenced by or against Borrower (and if commenced
against Borrower, such case shall not have been discharged or dismissed within
forty-five (45) days of its commencement) or if a receiver, trustee or
equivalent officer shall be appointed for all or any of the Properties of
Borrower; or

(f) if any statement or representation contained
in any financial statement or certificate delivered by Borrower to Lender shall
be false, in any material respect, when made; or

(g) if any federal or state tax lien is filed of
record against Borrower or any Guarantor(s), if any, and is not bonded or
discharged within sixty (60) days of filing, unless such lien is being contested
by Borrower in good faith and, if necessary, by appropriate proceedings
diligently conducted, or appropriate reserves therefore have been established
and which, individually or in the aggregate, are not material; or

(h) intentionally omitted; or

(i) if a judgment shall be entered against
Borrower in any action or proceeding and shall not be stayed, vacated, bonded,
paid or discharged within thirty (30) days of entry, except a judgment where the
uninsured portion of the claim together with the uninsured portion of all
judgments against all Guarantors is less than $100,000.00 in the aggregate and
the insurance companies has accepted liability for the insured portion of such
judgments in writing; or

(j) if any obligation of Borrower in respect of
any Indebtedness (other than Indebtedness to Lender) in an amount in excess of
$500,000.00 shall be declared to be or shall become due and payable prior to its
stated maturity; or

(k) upon the happening of any Reportable Event
which constitutes grounds for the termination of any Plan, or if a trustee shall
be appointed by an appropriate United States District Court or other court or
administrative tribunal to administer any Plan, or if the Pension Benefit
Guaranty Corporation shall institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan, and, in each case, such event,
individually or in the aggregate, would result in a Material Adverse Effect; or

(l) upon the occurrence and continuance of any
Material Adverse Effect which impairs Lender's security, increases Lender's
risks; or impairs Borrower's ability to perform under this Agreement or under
the other Loan Documents; or

(m) upon the happening of any of the events
described in Subsections 12.1 (d), (e), (f), (g), (h), (i) or (j) with respect
to any Guarantor, if any, or if any such Guarantor purports to terminate its
guaranty or upon the death of a Guarantor, if any, that is a natural person, if
any.

Then, and in any such event, Lender may terminate this
Agreement without prior notice or demand to Borrower or may demand payment in
full of all Obligations (whether otherwise then payable on demand or not)
without terminating this Agreement and shall, in any event, be under no further
responsibility to extend any credit or afford any financial accommodation to
Borrower, whether under this Agreement or otherwise.

12.2. Obligations Immediately Due. Upon the Termination
Date for any reason, all of Borrower's Obligations to Lender including, but not
limited to, the Loans shall immediately become due and payable without further
notice or demand.

12.3. Continuation of Security Interests. Notwithstanding
any termination, until all Obligations of Borrower shall have been fully paid
and satisfied, Lender shall retain all security in and title to all existing and
future Receivables, General Intangibles, Inventory, Equipment, Fixtures,
Investment Property, and other Collateral held by Lender under the General
Security Agreement or under any other Loan Document.

13. REMEDIES OF LENDER. Upon the occurrence and during the
continuance of any Event of Default or upon any termination of this Agreement,
then Lender shall have, in addition to all of its other rights under this
Agreement all of the rights and remedies provided in the General Security
Agreement.

14. GENERAL PROVISIONS.
------------------

14.1. Rights Cumulative. Lender's rights and remedies under
this Agreement shall be cumulative and non-exclusive of any other rights or
remedies which Lender may have under any other agreement or instrument, by
operation of law or otherwise.

14.2. Successors and Assigns. This Agreement is entered
into for the benefit of the parties hereto and their successors and assigns. It
shall be binding upon and shall inure to the benefit of the parties, their
successors and assigns. Lender shall have the right, without the necessity of

any further consent or authorization by Borrower, to sell, assign, securitize or
grant participation in all, or a portion of, Lender's interest in the Loans, to
other financial institutions of the Lender's choice and on such terms as are
acceptable to Lender in its sole discretion.

14.3. Notice. Wherever this Agreement provides for notice
to any party (except as expressly provided to the contrary), it shall be given
by messenger, facsimile, certified U.S. mail with return receipt requested, or
nationally recognized overnight courier with receipt requested, effective when
either received or receipt rejected by the party to whom addressed, and shall be
addressed as follows, or to such other address as the party affected may
hereafter designate:

If to Lender: Xxxxxx United Bank
000 Xxxx Xxxxxxxx Xxxx
Xxxxx Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000

With a copy to: Xxxx & Xxxxxx LLC
0000 Xxxxx 000 Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000

If to Borrower: Xxxxxx, Inc.
000 00xx Xxxxxx
Xxxx Xxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx Xxxxxxxx,
President
Attn: Xxxxxxx Xxxxxxxx,
Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000

With a copy to: Xxxxxxx X. Xxxxxxxx, Esq.
Jenkens & Xxxxxxxxx Xxxxxx
Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000

14.4. Strict Performance. The failure, at any time or times
hereafter, to require strict performance by Borrower of any provision of this
Agreement shall not waive, affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by
Lender of any Default or Event of Default by Borrower under this Agreement or
any other Loan Document shall not suspend, waive or affect any other Default or
Event of Default by Borrower under this Agreement or any other Loan Document,
whether the same is prior or subsequent thereto and whether of the same or a
different type.

14.5. Waiver. Borrower waives presentment, protest, notice
of dishonor and notice of protest upon any instrument on which it may be liable
to Lender as maker, endorser, guarantor or otherwise.

14.6. Construction of Agreement. The parties hereto agree
that the terms and language of this Agreement were the result of negotiations
between the parties, and, as a result, there shall be no presumption that any
ambiguities in this Agreement shall be resolved against either party. Any
controversy over the construction of this Agreement shall be decided mutually
without regard to events of authorship or negotiation.

14.7. Expenses. If, at any time or times prior or
subsequent to the date hereof, regardless of whether or not a Default or an
Event of Default then exists or any of the transactions contemplated under this
Agreement are concluded, Lender employs counsel for advice or other
representation, or incurs legal expenses, or consulting fees and expenses, or
other costs or out-of-pocket expenses in connection with: (A) the negotiation
and preparation of this Agreement or any other Loan Document, or any amendment
of or modification of this Agreement or any other Loan Document; (B) the
administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby; (C) periodic audits and appraisals
performed by Lender; (D) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender, Borrower or any other Person) in any way
relating to the Collateral, this Agreement or any other Loan Document or
Borrower's affairs; (E) the perfection of any lien on the Collateral; (F) any
attempt to enforce any rights or remedies of Lender against Borrower or any
other Person which may be obligated to Lender by virtue of this Agreement or any

other Loan Document including, without limitation, the Account Debtors; or (G)
any attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral; then, in any
such event, the reasonable attorneys' fees and expenses arising from such
services and all reasonable expenses, costs, charges and other fees of such
counsel of Lender or relating to any of the events or actions described in this
Section 14.7 shall be payable by Borrower to Lender, and shall be additional
Obligations under this Agreement secured by the Collateral. Additionally, if any
taxes (excluding taxes imposed upon or measured by the net income of Lender, but
including any intangibles tax, stamp tax or recording tax) shall be payable on
account of the execution or delivery of this Agreement, or the execution,
delivery, issuance or recording of any other Loan Document, or the creation of
any of the Obligations under this Agreement, by reason of any existing or
hereafter enacted federal or state statute, Borrower will pay (or will promptly
reimburse Lender for the payment of) all such taxes including, but not limited
to, any interest and penalties thereon, and will indemnify, defend and hold
Lender harmless from and against any liability in connection therewith. Borrower
shall also reimburse Lender for all other reasonable expenses incurred by Lender
in connection with the transactions contemplated under this Agreement or the
other Loan Documents.

14.8. Reimbursements Charged to Revolving Loan. With
respect to any amount advanced by Lender and required to be reimbursed by
Borrower pursuant to the foregoing provisions of Section 14.7, it is hereby
agreed that Lender may charge any such amount to Borrowers' Revolving Loan on
the dates such reimbursement is made. Borrower's obligations under Section 14.7
shall survive termination of the other provisions of this Agreement.

14.9. Waiver of Right to Jury Trial.
-----------------------------

A. Borrower and Lender recognize that in
matters related to the Loans and this Agreement, and as it may be subsequently
modified and/or amended, any such party may be entitled to a trial in which
matters of fact are determined by a jury (as opposed to a trial in which such
matters are determined by a federal or state judge). By execution of this
Agreement, Lender and Borrower will give up their respective right to a trial by
jury. Borrower and Lender each hereby expressly acknowledge that this waiver is
entered into to avoid delays, minimize trial expenses, and streamline the legal
proceedings in order to accomplish a quick resolution of claims arising under or
in connection with the Note and this Agreement.

B. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT
NOT PROHIBITED BY LAW, BORROWER AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHT THAT BORROWER OR LENDER MAY HAVE TO A TRIAL
BY JURY IN RESPECT TO ANY LITIGATION, DIRECTLY OR INDIRECTLY, AT ANY TIME
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE LOAN, THIS AGREEMENT, OR ANY
TRANSACTION CONTEMPLATED THEREBY OR HEREBY, BEFORE OR AFTER MATURITY.

C. CERTIFICATIONS. BORROWER HEREBY CERTIFIES
THAT NEITHER ANY REPRESENTATIVE NOR AGENT OF LENDER NOR LENDER'S COUNSEL HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT LENDER WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. BORROWER ACKNOWLEDGES
THAT LENDER HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATION HEREIN.

14.10. Indemnification by Borrower/Waiver of Claims.
Borrower hereby covenants and agrees to indemnify, defend (with counsel selected
by Lender) and hold harmless Lender and its officers, partners, employees,
consultants and agents from and against any and all claims, damages,
liabilities, costs and expenses (including, without limitation, the actual fees
and expenses of counsel) which may be incurred by or asserted against Lender or
any such other Person in connection with:

(a) any investigation, action or proceeding
arising out of or in any way relating to this Agreement, any of the Loans, any
of the other Loan Documents, any other agreement relating to any of the
Obligations, any of the Collateral, or any act or omission relating to any of
the foregoing; or

(b) any taxes, liabilities, claims or damages
relating to the Collateral or Lender's liens thereon; or

(c) the correctness, validity or genuineness of
any instrument or document that may be released or endorsed to Borrower by
Lender (which shall automatically be deemed to be without recourse to Lender in
any event), or the existence, character, quantity, quality, condition, value or
delivery of any goods purporting to be represented by any such documents; or

(d) any broker's commission, finder's fee or
similar charge or fee in connection with the Loans and the transactions
contemplated in this Agreement.

14.11. Savings Clause for Indemnification. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in Section
14.10 above may be unenforceable because it is violative of any law or public
policy, Borrower shall contribute the maximum portion which it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
matters referred to under Section 14.10.

14.12. Waiver. To the extent permitted by applicable law, no
claim may be made by Borrower or any other Person against Lender or any of its
Affiliates, partners, officers, employees, agents, attorneys or consultants for
any special, indirect, consequential or punitive damages in respect of any claim
for breach of contract, tort or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or the other Loan
Documents or any act, omission or event occurring in connection therewith; and
Borrower hereby waives, releases and agrees not to xxx upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor. Neither Lender nor any of its Affiliates, partners,
officers, employees, agents, attorneys or consultants shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the transactions contemplated hereby, except for its or their
own gross negligence or willful misconduct.

14.13. Entire Agreement; Amendments; Lender's Consent. This
Agreement (including the Exhibits and Schedules thereto) and the other Loan
Documents supersede, with respect to their subject matter, all prior and
contemporaneous agreements, understandings, inducements or conditions between
the respective parties, whether express or implied, oral or written. No
amendment or waiver of any provision of this Agreement or any other Loan
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in a Record Authenticated by Lender, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

14.14. Cross Default. Borrower hereby agrees that all the
agreements between Borrower and Lender in connection with the mortgage loan from
Lender to Borrower in the original principal amount of $3,250,000.00 are hereby
amended so that an Event of Default under this Agreement is a default under all
such other agreements and an Event of Default under any one of the other
agreements is an Event of Default under this Agreement.

14.15. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.

14.16. Severability of Provisions. Any provision of this
Agreement or any of the other Loan Documents that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or the other Loan Documents or affecting the
validity or enforceability of such provision in any other jurisdiction.

14.17. Table of Contents; Headings. The table of contents
and headings preceding the text of this Agreement are inserted solely for
convenience of reference and shall not constitute a part of this Agreement or
affect its meaning, construction or effect.

14.18. Exhibits and Schedules. All of the Exhibits and
Schedules to this Agreement are hereby incorporated by reference herein and made
a part hereof.

15. GOVERNING LAW; CONSENT TO JURISDICTION.
--------------------------------------

(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
JERSEY, AND MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW JERSEY,
AND THE PROCEEDS OF THE REVOLVING NOTE DELIVERED PURSUANT THERETO WERE DISBURSED
FROM THE STATE OF NEW JERSEY, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREIN,
AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
JERSEY APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, IT BEING UNDERSTOOD THAT, TO THE
FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW
JERSEY SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS
AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO
THE FULLEST EXTENT PERMITTED BY LAW, LENDER AND BORROWER HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVE ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT AND THE REVOLVING NOTE, AND THIS AGREEMENT AND THE
REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW JERSEY.

(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER
OR BORROWER, ANY GUARANTOR OR OTHER PARTY TO THIS TRANSACTION ARISING OUT OF OR
RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN THE SOLE OPTION OF LENDER IN

ANY FEDERAL OR STATE COURT LOCATED IN NEW JERSEY, AND LENDER AND BORROWER WAIVE
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING, AND LENDER AND BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
BORROWER SHALL DESIGNATE FROM TIME TO TIME AN AUTHORIZED AGENT HAVING AN OFFICE
IN THE STATE OF NEW JERSEY TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF
ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING
AND AGREES THAT SERVICE OF PROCESS UPON SUCH AGENT AT SUCH ADDRESS AND WRITTEN
NOTICE OF SUCH SERVICE ON SUCH BORROWER MAILED OR DELIVERED TO SUCH BORROWER IN
THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF
PROCESS UPON SUCH BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE
OF NEW JERSEY. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGE OF
ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO
TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW JERSEY (WHICH
OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (III)
SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO
HAVE AN OFFICE IN NEW JERSEY OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
BORROWER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS CONSENT TO
JURISDICTION PROVISION WITH ITS LEGAL COUNSEL, AND HAS MADE THIS WAIVER
KNOWINGLY AND VOLUNTARILY.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized on the day and year first
above written.

WITNESS: XXXXXX UNITED BANK

/s/ XXXXXXX X. XXXX By: /s/ XXXXX X. XXXXXXXXXX
------------------------------------ -------------------------------------
Xxxxxxx X. Xxxx Xxxxx X. Xxxxxxxxxx
Senior Vice President

WITNESS: XXXXXX, INC.

/s/ XXXXXXX X. XXXXXXXX By: /s/ XXXXXXX XXXXXXXX
------------------------------------ -------------------------------------
Xxxxxxx X. Xxxxxxxx Name: Xxxxxxx Xxxxxxxx
Title: Chief Financial Officer
& Treasurer

EXHIBIT A
---------

REVOLVING NOTE

EXHIBIT B
---------

FORM OF NOTICE OF BORROWING

Xxxxxx United Bank
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000

Re: Request for loan/advance

The undersigned requests a $__________ loan advance pursuant to Section
2.1 of the Revolving Loan Agreement dated December 23, 2002 between Xxxxxx
United Bank and the undersigned (the "Loan Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings given to them in
the Loan Agreement.

Please deposit the requested loan advance to our operating account
number _________. Please call the undersigned to confirm receipt of this fax at
____________.

Thank you.

XXXXXX, INC.

By:______________________________________
(title)

EXHIBIT C
---------

BORROWING BASE CERTIFICATE

EXHIBIT D
---------

COMPLIANCE CERTIFICATE

Xxxxxx, Inc. ("Borrower") hereby certifies to XXXXXX UNITED BANK in accordance
with the provisions of a Revolving Loan Agreement between Borrower and Lender
dated the 23rd day of December 2002, as the same from time to time may be
amended, supplemented or otherwise modified (the "Agreement") that:

A. General

(i) Borrower has complied in all material respects with
all the terms, covenants and conditions of the Agreement which are binding upon
them;

(ii) no Event of Default as defined in the Agreement has
occurred and is continuing;

(iii) the representations and warranties contained in the
Agreement are true in all material respects with the same effect as though such
representations and warranties had been made on the date hereof except for those
representations and warranties that relate to a particular time or date, which
representations and warranties are true and correct in all material respects as
of such particular time or date; and

B. Financial Covenants

As of the date hereof or, from such period as may be
designated below, the computations, ratios and calculations as set forth below,
are true and correct:

(a) Effective Tangible Net Worth

WITNESS the signature of the undersigned duly authorized
officer of Borrower on _____________, 20__.

XXXXXX, INC.

By_______________________________________

Name: ___________________________________

Title:___________________________________

Schedule 5.2

Other Corporate and Fictitious Names
------------------------------------

None

Schedule 5.3

Subsidiaries and Affiliates
---------------------------

1. A list of the subsidiaries of Borrower is attached hereto,
which list is incorporated by reference herein and made a part hereof.

2. Xxx Xxxxxxxx, Chairman of the Executive Committee of Borrower,
Xxxxx Xxxxxxxx, Chairman of Borrower, Xxxxxx Xxxxxxxx, President of Borrower,
and Xxxxxx Xxxxxxxx, Vice Chairman of Borrower, certain other family members,
trusts and custodianships for the benefit of such individuals and family
members, and Borrower are parties to an amended and restated stockholders
agreement dated as of July 30, 1996 (the "Stockholders Agreement"). The
Stockholders Agreement, among other things, entitles Xxx Xxxxxxxx, Xxxxx
Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx, in their capacity as a
stockholders' committee (in such capacity, collectively, the "Stockholders
Committee"), acting by the vote of at least two-thirds, or by the unanimous
written consent, of the members of the Stockholders Committee, for a period of
ten years from the date of the Stockholders Agreement, to direct the voting of
the shares of Common Stock, $1.00 par value per share (the "Common Stock"), of
Borrower with respect to which the signatory stockholders have or share, or may
hereafter have or share, voting power with respect to all matters submitted to
stockholders of the Company at any annual or special meeting of stockholders of
the Company or pursuant to a written consent in lieu thereof. At October 21,
2002, the Stockholders Committee was entitled, pursuant to the Stockholders
Agreement, to direct the vote as to 1,003,820 shares of Common Stock (39.2%).
Borrower does not consider the members of the Stockholders Committee to be
Affiliates for purposes of the Agreement and shall not be considered employees
for purposes of Section 9.17.

3. Borrower does not consider the directors or officers of
Borrower to be Affiliates of Borrower for purposes of the Agreement. The names
of each such director and officer has previously been furnished in writing to
Lender.

SUBSIDIARIES OF BORROWER
------------------------

Percentage of Voting
Jurisdiction of Securities Owned by
Name Incorporation the Registrant
---- ------------- --------------

Xxxxxx International (Hong
Kong) Ltd. Hong Kong 100%

Aetna Handbags of Haiti, S.A. Haiti 100%

Bonlyn Taiwan Co., Ltd. Taiwan 100%

Cosmopolitan of Haiti, S.A. Haiti 100%

JLN, Inc. (1) Delaware 100%

The Bag Factory Inc. (2) New Jersey 100%

Investments (JLN) Ltd. Delaware 100%

Xxx X. Xxxxxxxx, Inc. Pennsylvania 100%

Topsville, Inc. Florida 100%(3)

Josell Global Sourcing Ltd. Hong Kong 100%(4)

-----------------------------
(1) In the past, this entity also did business under the name "Xxxxxxx USA."
Such name is not presently used.
(2) In the past, this entity also did business under the name "Satchels." Such
name is not presently used.
(3) Owned 100% by Xxx X. Xxxxxxxx, Inc. which is a wholly-owned direct
subsidiary of the Registrant.
(4) Owned 100% by Topsville, Inc., which is a wholly-owned indirect subsidiary
of the Registrant.

Schedule 5.8

Real Estate
-----------

1. Owned Facilities:
----------------

0000 Xxxxxxxxx Xxxxxx
Xxxx Xxx Xxxx, XX 00000
(also known as:
000 00xx Xxxxxx
Xxxx Xxx Xxxx, XX 07093)

Owned within the last 5 years:
------------------------------

000 Xxxxx Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
(by JLN, Inc.)

2. Leased Properties:
-----------------

0000 Xxxxxxxx (0xx Xxxxx)
Xxx Xxxx, XX 00000
(Banner New York division of Xxxxxx, Inc.)
Landlord Name and Address: Statecourt Enterprises, Inc.
c/o Williams Real Estate Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000

00 Xxxx 00xx Xxxxxx (0xx Xxxxx)
Xxx Xxxx, XX 00000
(Xxxxxx Apparel/Xxxxxxx Road/X. Xxxxx division of
Xxxxxx, Inc.)
Landlord Name and Address: Xxxxx Xxxxxxxx as Trustee
d/b/a/ Elk Investors
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000

000 Xxxxx Xxx.
Xxx Xxxx, XX 00000
(Xxxxxx/Xxxxx/ Kiddie division of Xxxxxx, Inc.)
Landlord Name and Address: Skyler 330 LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000

Excluded from the foregoing list is a sourcing office of Borrower located in
Shanghai, China.

3. Public Warehouses (finished goods shipping points)
-------------------------------------------------

Integrated Distribution Systems Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Landlord Name and Address: Same as above

Pacific Connections
0000 XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Landlord Name and Address: Same as above

Three Star Distributors, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Landlord Name and Address: Same as above

Erlanger Distribution*
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Landlord Name and Address: Same as above

Merchandise Warehouse Co., Inc.*
0000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Landlord Name and Address: Same as above

Schenker Indianapolis Warehouse
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 000000
Landlord Name and Address: Same as above

-------------------------------
This location has been used in the past as an outside warehouse location but is
not presently being used by Borrower as a location of its inventory or other
assets.

Schedule 5.9

Registered Patents, Trademarks and Copyrights
---------------------------------------------

Borrower has no registered patents or copyrights. A list of the
registered trademarks and applications for registration of trademarks of
Borrower is attached hereto, which list in incorporated by reference herein and
made a part hereof.

Borrower also uses the following tradenames: Jaclyn, Bonnie, Xxxxx,
Aetna, Xxxxxx Apparel, JLN and Banner New York. In addition, in connection with
sales of its products in the ordinary course of business, Xxxxxx uses the
following names which, to its knowledge, are owned or may be used by the
following companies: Coldwater Creek, Xxxxx, Xxxxx Xxxxxx, Faded Glory (Wal
Mart) and Cherokee (Target Stores).

Borrower is a party to the license agreements listed as items 3 and 4
on Schedule 5.17.

XXXXXX, INC. AND SUBSIDIARIES
REGISTERED TRADEMARKS/APPLICATIONS
U.S. Patent and Trademark Office
--------------------------------

Trademark Application/Registration No.
--------- ----------------------------

111 MAIN (application) 76/429,676 (application no.)
XXXXXXX-XXX 2,332,941
TURTLE CREEK 2,156,659
XXXXXXX ROAD 2,091,425
XXXXX XXXX 2,032,129
ON TOUR 1,990,042
REDWOOD FALLS 2,099,782
ANDE 2,099,769
SMOKE VALLEY 2,074,163
EURO TREND 2,062,451
XXXXX XXXX 1,806,109
SADDLE RIVER 1,495,108
ANDE 1,480,805
SADDLE RIVER 1,402,172
SMOKE VALLEY 1,352,815
TRAVEL-PAK 1,259,427
MR. G 938,364
I-XXXXX 876,584
CITY SPRITES BY XXXXXX 820,961
XXXXXX U.S.A. 784,632
SMART TIME 784,057
VANITY FAIR BY AETNA 768,333
ME & COMPANY 2,190,719
--------------------

Schedule 5.13

Litigation
----------

None

Schedule 5.14

Locations of Records Relating to Receivables
--------------------------------------------

1. 000 00xx Xxxxxx
Xxxx Xxx Xxxx, XX 00000

2. 00000 XX 000 Xxxx
Xxxxxx, Xxxxxxx 00000
(Topsville, Inc.)

Schedule 5.15

Inventory Locations
-------------------

Reference is made to the information contained on Schedule 5.8 of these
Schedules, which information is incorporated by reference herein and made a part
hereof.

Schedule 5.16

Equipment Locations
-------------------

Reference is made to the information contained on Schedule 5.8 of these
Schedules, which information is incorporated by reference herein and made a part
hereof.

Schedule 5.17

Liens
-----

1. Liens in favor of Lender pursuant to the Mortgage dated August 14, 2002
between Borrower and Lender, including Uniform Commercial Code financing
statements in favor of Lender in connection therewith.

2. Liens in favor of Fleet National Bank ("Fleet") in connection with the
Indebtedness of Borrower to Fleet which will be discharged in connection with
the closing of the Loans.

3. Pursuant to the License Agreement dated February 12, 1999 between
Warner Bros., a division of Time Warner Entertainment Company L.P. ("Warner")
and Borrower (with regard to "Looney Tunes" cartoon characters), Borrower has
granted in favor of Warner a security interest in Borrower's inventory of
Licensed Products (as defined in such License Agreement) to secure amounts due
from Borrower to Warner under such License Agreement. Pursuant to the License
Agreement, such security interest is subordinate to any security interest that
Borrower's bank may have in Borrower's inventory.

4. Pursuant to the License Agreement dated July 31, 2000 between Warner
and Borrower (with regard to "Xxxxx Xxxxxx"), Borrower has granted in favor of
Warner a security interest in Borrower's inventory of Licensed Products (as
defined in such License Agreement) to secure amounts due from Borrower to Warner
under such License Agreement. Pursuant to the License Agreement, such security
interest is subordinate to any security interest that Borrower's bank may have
in Borrower's inventory.

5. On June 18, 1996, XxXxxxxxx Industries ("XxXxxxxxx") transferred to
Borrower all right, title and interest in and to the registered trademarks
Redwood Falls, Saddle River, Smoke Valley and Ande, and certain trademark
applications relating thereto. Borrower understands that liens appear on the
official records of the United States Patent and Trademark Office reflecting the
filing, after June 18, 1996, by Finova Capital Corporation of liens against such
trademarks that purportedly were granted by XxXxxxxxx. Borrower has not granted
any such liens as to these trademarks (which are not material to the operation
of the present or the anticipated future business of Borrower).

6. A list of additional liens is attached hereto, which list is
incorporated by reference and made a part hereof.

Schedule 5.18

Indebtedness
------------

1. Indebtedness to Lender pursuant to a promissory note dated August 14,
2002 in the original principal amount of $3,250,000.

2. Indebtedness to Fleet in connection with documentary letters of credit
issued by Fleet with an aggregate face amount not in excess of $3,000,000.

Schedule 5.23

List of Bank and Securities Accounts
------------------------------------

Account Owner Account Description Account Location Account No.
------------- ------------------- ---------------- ----------
--------------------------------------------------------------------------------------------------

Xxxxxx, Inc. Payroll Fleet National Bank 0000-000-000
--------------------------------------------------------------------------------------------------
Xxxxxx, Inc. Operating Fleet National Bank 0000-000-000
--------------------------------------------------------------------------------------------------
Xxxxxx, Inc. Customs ACH Fleet National Bank 0000-000-000
--------------------------------------------------------------------------------------------------
Xxxxxx, Inc. Money Market Fleet National Bank 0000-00-000
--------------------------------------------------------------------------------------------------
JLN, Inc. Operating Fleet National Bank 0000-000-000
--------------------------------------------------------------------------------------------------
JLN, Inc. Payroll Bank of America 0000-0000-0000
--------------------------------------------------------------------------------------------------
Investments (JLN) Ltd. Operating Fleet National Bank 0000-000-000
--------------------------------------------------------------------------------------------------
Xxxxxx International (Hong Operating (Hong Kong$) Citibank 00000000
Kong) Ltd.
--------------------------------------------------------------------------------------------------
Xxxxxx International (Hong Operating (US$) Citibank 00000000
Kong) Ltd.
--------------------------------------------------------------------------------------------------
Xxxxxx, Inc. Stock Repurchase First Institutional 07F-428043
Securities, LLC
--------------------------------------------------------------------------------------------------

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