HIRSCH INTERNATIONAL CORP
SUPPLY AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>ex103.txt
<DESCRIPTION>SUPPLY AGREEMENT
<TEXT>
                                SUPPLY AGREEMENT
                                ----------------

         This Supply Agreement (this "Agreement"), effective as of October 22,
2004 is by and between Embroidery Acquisition LLC, a Delaware limited liability
company ("EAL"), Hirsch International Corp., a Delaware corporation ("Hirsch")
and PCA LLC, a Delaware limited liability company ("PCA") (for purposes of
Section 6.1 only).

                              Background Statement

         Hirsch is in the business of manufacturing and selling embroidery
machines and related parts, accessories, software and supplies (the "Products").
EAL is in the business of operating and franchising retail embroidery service
centers in Wal-Mart stores and other retails locations, including, without
limitation, the resale of machinery, accessories and supplies to franchisees
(the "Business"). This Agreement establishes the terms and conditions of
purchases of the Products for use by EAL in the operation of the Business.

         The entering into of this Agreement by EAL and Hirsch is a condition
precedent to the closing of the transactions contemplated by the Asset Purchase
Agreement dated as of October 22, 2004 between EAL, Hirsch, Hometown Threads LLC
and PCA.

                             Statement of Agreement

         The parties agree as follows:

          1.   Purchase and Supply

          1.1  Purchase Orders. During the term of this Agreement, EAL may place
               purchase orders with Hirsch with respect to the Products  offered
               by Hirsch from time to time  ("Purchase  Orders").  Each Purchase
               Order will specify the quantity of each  Product  being  ordered,
               the location to which the  Products  are to be delivered  and the
               required  delivery  date.  Hirsch  agrees  to  accept  each  such
               Purchase Order and to supply EAL with Products in accordance with
               the standard  specifications  for the Products,  and the quantity
               and delivery terms in the Purchase Order. On ten (10) days' prior
               written  notice,  EAL may modify or terminate any Purchase  Order
               (other  than  Purchase   Orders  for  specialized  or  customized
               Products  that are not saleable by Hirsch in the ordinary  course
               of its  business)  placed  by EAL  under  this  Agreement.  EAL's
               liability to Hirsch with respect to such  modified or  terminated
               Purchase  Order shall be limited to: (i) Hirsch's  purchase price
               of all  components  for  the  Product  (not  usable  in  Hirsch's
               business  operations or salable to another  customer),  plus (ii)
               the  actual   costs   incurred   by  Hirsch  in   procuring   and
               manufacturing  the  Product  (not  usable  in  Hirsch's  business
               operations or salable to another customer), in each case prior to
               the date of modification or termination;  less (3) any salvage or
               resale value of the Product.  However,  no such charges  shall be
               payable  by EAL if  within  ninety  (90)  days  after  notice  of
               modification or termination,  substantially  similar Products are
               ordered by EAL. If requested,  Hirsch agrees to substantiate  any
               termination   or   modification   costs  with  proof   reasonably
               satisfactory to EAL.

         The terms and conditions of this Agreement shall apply to each sale by
Hirsch to EAL of the Products, and, except as otherwise expressly provided
herein, none of the additional or inconsistent terms and conditions in any
quotation, purchase order, acknowledgement or similar document shall apply. The
specifications for the current model of the Exclusive Product (as defined below)
are attached hereto as Exhibit A. Subject to the limitations set forth in
Section 6.5 hereof, Hirsch may, upon prior written notice to EAL, modify the
specifications from time to time during the term of this Agreement.

          1.2  Purchase Commitment. During the term of this Agreement, EAL shall
               purchase from Hirsch, and Hirsch shall supply to EAL, one hundred
               percent  (100%) of the Covered  Companies'  requirements  for the
               embroidery machines, software, supplies, parts and accessories of
               the general  type and  category  being  purchased  from Hirsch by
               Hometown Threads as of the date of this agreement (the "Exclusive
               Products")  for use in the Business.  "Covered  Companies"  means
               EAL, PCA and their  respective  affiliates as well as the assigns
               of any of the foregoing.

          2.   Pricing.

          2.1  [CONFIDENTIAL TREATMENT REQUESTED].

          2.2  Documentation.  Upon request by EAL, Hirsch shall promptly supply
               EAL with a copy of any invoice or other documentation  evidencing
               Hirsch's costs for any of the Products.

          2.3  Invoices.  Any sales,  use and similar taxes that must be paid by
               EAL  must  be  separately  itemized  on all  invoices.  At  EAL's
               request,  Hirsch  shall  contest  any such  taxes  that EAL deems
               improperly  levied.  Invoices  must be  submitted  to EAL at: 815
               Matthews-Mint  Hill Road,  Matthews,  North Carolina 28105.  Each
               invoice must include  Hirsch's  invoice number,  the quantity and
               price of each Product shipped and the total amount due under such
               invoice.

          2.4  Payment.  Payment on  invoices  shall be due sixty (60) days from
               the date of EAL's receipt of a correct and complete invoice.

          3.   Shipping Terms.

          3.1  Standard Delivery. Delivery shall be FOB Hirsch's N.Y. warehouse.
               Title and risk of loss shall pass upon  delivery to EAL.  Time is
               of the  essence.  All  Products  shall be shipped by Hirsch on or
               before  the  twenty-first  (21st)  day  following  receipt  of  a
               Purchase  Order from EAL.  If Hirsch is or will be  delayed  with
               respect to the  shipment of all or any portion of the Products in
               a Purchase  Order,  Hirsch  shall  notify EAL  immediately  after
               becoming  aware of any such delay or  anticipated  delay.  If the
               delay will extend beyond ten (10) days from the agreed ship date,
               then EAL shall have the right to cancel the  Purchase  Order,  in
               whole or in part,  at the time EAL is notified of the delay or at
               any time prior to shipment.  EAL shall have no liability for such
               cancellation  and shall  have the right to cover by  purchase  of
               substitute  products  (and to collect  any such cover  costs from
               Hirsch). Any such cover products shall be considered as purchases
               from Hirsch for  purposes of EAL's  purchase  requirements  under
               this Agreement.  In addition, EAL shall have the right to recover
               any other damages arising from the delayed delivery.

          3.2  Inspection.  EAL shall  have the right to  inspect  the  Products
               after they are  delivered.  However,  the making of or failure to
               make any  inspection  of, or payment for, any Product shall in no
               way limit  EAL's  right to  reject  non-conforming  or  defective
               Products  or to  exercise  its  rights  under  Section  4 of this
               Agreement.

          4.   Warranties and Allocation of Liability.

          4.1  Warranty.  In addition to the standard warranties provided by the
               manufacturer of the Products (which  warranties shall be assigned
               by  Hirsch  to EAL)  and by  Hirsch  to other  purchasers  of the
               Products,  Hirsch  warrants  free and clear title to all Products
               and that the  Products  will comply with the  specifications.  In
               addition,  Hirsch  warrants  that the Products  will be free from
               defects  in  workmanship  and  materials  and  warrants  that the
               Products have been manufactured in compliance with all applicable
               laws.

          4.2  Remedies. If any Product breaches any of the warranties set forth
               above  during  the  warranty   period,   Hirsch  shall  within  a
               commercially  reasonable  period of time  either  (i)  repair the
               Product  (provided that Hirsch shall provide EAL with a temporary
               replacement  Product  during the period of any repair,  such that
               EAL  shall  have  as  minimal  interruption  in its  Business  as
               reasonably possible (which in no event will be more than four (4)
               calendar  days) a  result  of the  repair)  or (ii)  replace  the
               Product with a new Product,  in either case at no additional cost
               to EAL, delivered to the same destination as that of the original
               shipment,  at Hirsch's expense.  All such repaired or replacement
               Products  shall be warranted for a full warranty  period.  In the
               event that  Hirsch is unable to repair or replace  the Product as
               provided  above,  EAL shall be entitled to recover any  resulting
               damages,  including the cost of cover,  that (after  commercially
               reasonable  efforts by EAL) have not been mitigated by EAL. EAL's
               rights and remedies set forth herein shall be  cumulative  and in
               addition to all other rights and remedies available to EAL in law
               or equity.

          4.3  Liability Insurance.  Hirsch, at its sole expense, shall maintain
               in effect during the term of this  Agreement  commercial  general
               liability insurance with a reputable insurer, covering risks that
               are typically covered within the industry, including products and
               completed  operations and  contractual  liability  coverage.  The
               commercial  general  liability  coverage  shall be  written on an
               occurrence  basis  with  limits of not less than  $1,000,000  per
               occurrence.

          4.4  Indemnification.  Hirsch shall  indemnify,  save and hold EAL and
               its  affiliates,   successors,   assigns,  officers,   directors,
               employees  and  agents  (for the  purpose  of this  Section,  the
               "Indemnified  Parties")  harmless  from and  against  any and all
               liabilities,   expenses,   losses,   damages,   claims,   workers
               compensation,   fines,   penalties  and  costs   (including   all
               reasonable  attorneys  fees  whether  incurred  by EAL or awarded
               against the Indemnified Parties)  (collectively,  "Damages") that
               the  Indemnified  Parties  may  reasonably  sustain or incur as a
               result of or  arising  out of:  (a) any injury or death of any of
               Hirsch's  personnel arising out of or in any way relating to this
               Agreement;  (b) damage to any property or person caused by an act
               or omission of Hirsch or Hirsch's  personnel;  (c) any negligence
               or  willful  misconduct  of  Hirsch  in the  performance  of this
               Agreement or the  manufacture  of the Products;  or (d) any claim
               that the Products or EAL's use of the Product is an  infringement
               of any patent,  copyright trademark,  trade name, service mark or
               any other proprietary right of a third party;  provided,  however
               that (i) Hirsch  shall be not be  responsible  for any Damages to
               the  extent  arising  primarily  from the  negligence  or willful
               misconduct   of  EAL;  and  (ii)  EAL  shall  take   commercially
               reasonable steps to mitigate such Damages.

          5.   Term and Termination.

          5.1  Period of Agreement.  This  Agreement  shall commence on the date
               hereof and shall  remain in effect until the earlier of: (i) five
               (5) years  from the date  hereof or (ii) the  purchase  by EAL of
               Exclusive Products for 200 EAL locations.

          5.2  Termination. Either party may terminate this Agreement during the
               term hereof if the other party breaches any material term of this
               Agreement  and fails to cure that breach within  forty-five  (45)
               days following  written notice thereof,  specifying in detail the
               nature of the breach. In addition, each party shall also have the
               right to  terminate  this  Agreement to the extent that the other
               party becomes the subject of any voluntary or involuntary  filing
               of a bankruptcy petition or similar proceeding under state law or
               all or any  substantial  part of this property shall be placed in
               the hands of a trustee,  receiver  or other  officer of the court
               for the  protection of creditors,  and such  proceedings  are not
               dismissed  within  ninety (90) calendar  days.  In addition,  EAL
               shall have the right to terminate this Agreement immediately upon
               written  notice to  Hirsch:  (i) at any time  after more than ten
               (10) Purchase  Orders (or any part thereof) are shipped after the
               required ship date during the term of this Agreement;  (ii) if at
               any time EAL determines,  in its reasonable discretion,  that the
               quality of the Exclusive  Products being  delivered is materially
               less  than the  quality  of the  Exclusive  Products  used in the
               Business   on  the  date  of  this   Agreement,   which   quality
               determination  shall  be  based on both  performance  and  repair
               record;  or (iii)  Hirsch  breaches  the Repair  and  Maintenance
               Agreement  between  the  parties  dated as of the date hereof and
               fails to cure such breach within  forty-five  (45) days following
               written notice thereof.

          5.3  Effect of Termination.  Unless otherwise set forth in writing and
               signed by all the parties  hereto,  termination of this Agreement
               shall not  terminate  the rights or  obligations  of either party
               with respect to Purchase  Orders and accounts  payables  that are
               outstanding on the effective date of termination.  The rights and
               obligations  of the  parties  set forth in Article IV (other than
               Section  4.3) and in Section 6.8 will  continue in full force and
               effect subsequent to the termination of this Agreement.

          6.   Miscellaneous Provisions.

          6.1  Guarantee of PCA LLC. PCA hereby guarantees to Hirsch the due and
               punctual  payment,  performance  and  observance  by EAL of EAL's
               obligations hereunder.  PCA shall be entitled to the defenses, if
               any, against payment and performance of such obligations that are
               both  permitted  by law and are  available to EAL under the terms
               and provisions of this Agreement (for the avoidance of doubt, PCA
               shall  not  have  the  benefit  of any  defense  relating  to the
               bankruptcy  or  insolvency  of EAL).  Except  for such  permitted
               defenses,   the  guaranty  provided  hereby  shall  be  absolute,
               continuing,  unconditional and irrevocable. The guaranty provided
               hereby is a guaranty of payment (and not merely  collection)  and
               Hirsch is not  required to make  demand upon or exhaust  remedies
               (or any similar matter) as against EAL before proceeding  against
               PCA.

          6.2  Plant Rules and Security  Requirements.  The employees and agents
               of each party shall,  while on the premises of the other,  comply
               with all plant rules and  regulations in effect at such premises,
               including security requirements.

          6.3  Models.  Hirsch  shall,  at no  cost,  provide  two  (2)  of  the
               Exclusive  Product to EAL for use as training  and  demonstration
               models.  If at any time during the term of this Agreement  Hirsch
               introduces  a new model of the  Exclusive  Product,  then  Hirsch
               shall promptly provide two (2) of such new model of the Exclusive
               Product to EAL for use as its training and demonstration  models.
               For a period of ninety (90) days following EAL's receipt of a new
               training  and  demonstration  model,  EAL shall have the right to
               retain both the old and new training and demonstration models. On
               or before the end of such ninety (90)-day  period,  EAL shall, at
               its option,  either (i) return the old training and demonstration
               models to Hirsch, at EAL's cost and expense, or (ii) purchase the
               old training and demonstration models at a mutually agreed price.

          6.4  Training.  If at any  time  during  the  term of this  Agreement,
               Hirsch introduces a new model of the Exclusive Product,  it shall
               provide EAL and its designated personnel with training on the use
               of such new model of the Exclusive Product. All training shall be
               provided at Hirsch's expense and at a time and location  mutually
               agreed by EAL and Hirsch.

          6.5  Manufacture of Discontinued Product.  Hirsch shall provide EAL at
               least one hundred  eighty (180) days prior written  notice if any
               Product  covered by this  Agreement  is to be  discontinued,  and
               Hirsch shall  accept  Purchase  Orders for such  Products for one
               hundred twenty (120) days following  Hirsch's notice.  Prices for
               such Product shall be as set forth in this Agreement.

          6.6  Material  Changes.  Hirsch  shall notify EAL at least one hundred
               eighty (180) days in advance,  in writing, of any proposed change
               in any of the Products that would effect the: (i)  reliability of
               the Product or (ii) the form, fit or function of the Product.  In
               the event  that the  proposed  change  would,  in the  reasonable
               discretion of EAL, render the Product unacceptable for use in the
               Business, EAL may terminate this Agreement.

          6.7  Force Majeure.  Neither  Hirsch nor EAL shall be responsible  for
               any delay or failure in performance of any part of this Agreement
               to the  extent  that such  delay or failure is caused by an event
               beyond  its  reasonable  control,  which may  include  but not be
               limited  to,  fire,  flood,  explosion,   war,  strike,  embargo,
               government  requirement,  civil or military authority and acts of
               God  ("Conditions").  A party  failing  or  delaying  performance
               hereunder  due to such  Conditions  shall (i)  promptly  give the
               other party written notice  thereof,  setting forth the cause and
               expected  duration  of any delay  and (ii) take all  commercially
               reasonable actions to eliminate,  cure and overcome such cause to
               the extent possible and resume performance  hereunder.  If Hirsch
               has a Condition that delays or will delay its  performance  under
               the  Agreement  for a period of more than  ninety  (90)  calendar
               days,  then EAL shall have the option to terminate the Agreement,
               immediately upon written notice to Hirsch.

          6.8  Hazardous Materials.  Hirsch shall promptly notify EAL in writing
               if  any  Products   supplied  under  this  Agreement  are  deemed
               hazardous under all laws,  rules or regulations of any applicable
               governmental or regulatory authority. All Product delivered under
               this Agreement shall be packaged, marked and shipped by Hirsch in
               compliance  with all laws,  rules and  regulations  of applicable
               governmental or regulatory authorities.

          6.9  Waiver.  No failure or delay by either party in enforcing  any of
               its rights under this Agreement shall be construed as a waiver of
               the right to  subsequently  enforce  any of its  rights,  whether
               relating to the same or a subsequent matter.

          6.10 Notices.  All  notices  and  other  communications   required  or
               permitted  under this Agreement  shall be in writing and shall be
               deemed  given when  delivered  by hand,  electronically,  or by a
               reputable  national  over-night  courier  service or by confirmed
               facsimile  transmission  or three (3) business days after mailing
               when mailed by  registered  or  certified  mail  (return  receipt
               requested), postage prepaid, to the parties identified below:

                  To EAL:

                  PCA LLC
                  815 Matthews - Mint Hill Road
                  Matthews, NC  28105
                  Attention:        Barry J. Feld, Chairman, President and CEO
                  Facsimile No.:            704-847-1548

                  With Copy to:

                  Robinson, Bradshaw & Hinson, P.A.
                  101 North Tryon Street, Suite 1900
                  Charlotte, NC  28246
                  Attention:        Steven D. Newmark
                  Facsimile No.:            704-378-4000

                  To Hirsch:

                  Hirsch International Corp.
                  200 Wireless Boulevard
                  Hauppauge, NY 11788
                  Attention Beverly Eichel, Chief Financial Officer
                  Facsimile No.:            631-952-0665

Any party may change the address to which notice is to be provided by providing
notice in the manner set forth above.

          6.11 Confidential  Information.  The parties  agree not to disclose to
               any third party (but specifically excluding any direct affiliates
               of the  parties)  and not to use,  except for the purpose of this
               Agreement,   any  technical  or  commercial   information   of  a
               confidential or proprietary nature that is not generally known in
               the  industry  and that is first made  available to either of the
               parties by the other party or which either party may have learned
               from  the  other   party  in  the   course   of  this   Agreement
               ("Confidential  Information").  Notwithstanding the foregoing,  a
               party  may  disclose  Confidential  Information  of the  other if
               required by law or judicial process;  provided; the party subject
               to such law or process  notifies  the other party and  reasonably
               cooperates,  at the other party's expense,  in efforts to prevent
               or limit such disclosure. All such Confidential Information shall
               be  returned  to  the  disclosing   party  at  its  request  upon
               termination of this  Agreement.  This provision shall survive any
               termination  of this Agreement and shall continue with respect to
               any Confidential  Information so long as that information remains
               not generally known in the industry.

          6.12 Assignment.  Neither  this  Agreement  nor  any  of  the  rights,
               interests  or  obligations  hereunder  may be  assigned by either
               party  without  the prior  written  consent  of the other  party.
               Notwithstanding  the foregoing,  EAL may assign this Agreement to
               any of its  affiliates  upon  written  notice  to  Hirsch  if the
               guarantee of PCA  continues  in effect for EAL and its  assignee,
               and  upon  such  assignee's   assumption  of  EAL's   obligations
               hereunder in a writing reasonably satisfactory to Hirsch. EAL may
               also assign this Agreement to an unaffiliated third party to whom
               EAL sells or transfers  all or  substantially  all of its assets,
               upon the prior  written  consent  of Hirsch,  which  shall not be
               unreasonably  withheld and, in such event,  PCA shall be released
               from its guarantee.  Notwithstanding  the  foregoing,  Hirsch may
               assign this  Agreement to any third party to whom Hirsch sells or
               transfers all or substantially all of its assets,  upon the prior
               written consent of EAL, which shall not be unreasonably withheld.

          6.13 Governing Law. The execution,  interpretation,  construction  and
               performance of this  Agreement  shall be governed by the internal
               laws of the State of New York, without regard to the conflicts of
               law rules thereof.  The United  Nations  Convention for Contracts
               for the International Sale of Goods shall not apply.

          6.14 Severability.  The  invalidity  of any portion of this  Agreement
               shall not  invalidate  any other portion of this  Agreement  and,
               except for such invalid  portion,  this Agreement shall remain in
               full force and  effect.  If for any  reason,  any portion of this
               Agreement is illegal or  unenforceable,  such  provision  will be
               severed and the remainder of this Agreement  shall be interpreted
               in a manner that will not affect the enforcement of the remaining
               provisions.

          6.15 Headings.   The  paragraph  headings  contained  herein  are  for
               reference  only and shall not affect in any way the  meaning  and
               interpretation of the terms and conditions set forth herein.

          6.16 Entire Agreement. This Agreement (including the Schedules hereto)
               embodies the entire  agreement and  understanding  of the parties
               with  respect  of  the  subject  matter  of  this  Agreement  and
               supersedes   all   prior   and   contemporaneous    negotiations,
               undertakings and agreements  between the parties.  This Agreement
               supersedes   all  prior  and   contemporaneous   agreements   and
               understandings   between   the  parties   with   respect  to  the
               transactions  contemplated hereby. This Agreement may be amended,
               modified or supplemented  only by written agreement of all of the
               parties hereto.
<PAGE>


         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.


                                                     EMBROIDERY ACQUISITION LLC


                                                 By:          /s/ Barry J. Feld
                                                 ------------------------------
                                                 Name:        Barry J. Feld
                                                 Title:       President



                                                     HIRSCH INTERNATIONAL CORP.


                                                     By:      /s/ Paul Gallagher
                                                     ---------------------------
                                                     Name:    Paul Gallagher
                                                     Title:   President

PCA executes this Agreement
solely for the purpose of being bound by
Section 6.1.

PCA LLC


By: /s/ Barry J. Feld
------------------------------
Name: Barry J. Feld
Title: President



</TEXT>
</DOCUMENT>
