INDEMNITY AGREEMENT FOR FACTOR AND SUPPLIER GUARANTEES

EXHIBIT 10.18

INDEMNITY AGREEMENT

FOR FACTOR AND SUPPLIER GUARANTEES

THIS INDEMNITY AGREEMENT (this "Agreement") is entered into as of January 1,

2006, between FTC COMMERCIAL CORP. ("FTC") and Blue Holdings, Inc. (the

"Client").

1. GUARANTEES. From time to time, in order to assist the Client in the

purchase of goods or for other purposes, the Client may request that FTC

guarantee payment of certain obligations of the Client. The decision to do so

shall be a matter of FTC's sole discretion. In the event FTC issues any such

guarantees (the "Guarantees"), the same shall be subject to the terms and

conditions of this Agreement. This Agreement supplements the Factoring Agreement

between FTC and the Client dated July 25, 2005 (as amended from time to time,

the "Factoring Agreement"), and all of the terms and provisions of the Factoring

Agreement are incorporated herein by reference. Capitalized terms used in this

Agreement, which are not defined in this Agreement, shall have the meanings set

forth in the Factoring Agreement. This Agreement, the Factoring Agreement and

all other present and future documents instruments and agreements between FTC

and the Client are referred to herein collectively as the "Factoring Documents".

The amount, extent, terms and conditions of the Guarantees and any documents

relating thereto, shall in all respects be determined solely by FTC and shall be

subject to change, modification and revision by FTC at any time and from time to

time, in its sole discretion.

2. CHARGES. Notwithstanding any provisions to the contrary in the Factoring

Agreement and unless FTC and the Client otherwise agree in writing, the Client

shall pay FTC a fee equal to one percent (1.0 %) of the face amount of each

Guarantee for each sixty (60) day period (or fraction thereof) from the date of

issuance of a Guarantee to the stated expiration date of the Guarantee; provided

however, that in no event shall the fee paid for any Guarantee be less than one

hundred fifty dollars ($150.00). Said fee shall be paid and shall be fully

earned upon the issuance of the Guarantee, regardless of any subsequent payment,

cancellation or termination prior to the stated expiration date of the

Guarantee. In addition, the Client shall reimburse FTC for all charges, fees and

expenses charged to FTC in connection with any Guarantee (all of which

conclusive on the Client). Said fee and all charges, fees and expenses charged

to FTC in connection with any Guarantee may be charged by FTC to the Client's

account.

3. INDEMNITY. The Client unconditionally agrees to indemnify, defend and hold

FTC harmless from any and all loss, claim, liability, cost or expense, of any

kind or nature, based upon, arising from or in any manner relating to, any and

all Guarantees or any transaction or occurrence relating to any or all

Guarantees, and all Guarantee Obligations (as defined below), including (without

limitation) any of the foregoing arising from any errors or omissions in

connection with any Guarantee (whether caused by FTC or otherwise). The Client's

unconditional obligation to FTC hereunder shall not be modified or diminished

for any reason or in any manner whatsoever.

4. GUARANTEE OBLIGATIONS. All of the Client's present and future

indebtedness, liabilities, and obligations to FTC of every nature whatsoever,

however arising, fixed or contingent, due or to become due, under this Agreement

or otherwise in any manner relating to any Guarantee are referred to herein as

the "Guarantee Obligations". The Guarantee Obligations include, without

limitation, the obligation of the Client to reimburse FTC for all sums which FTC

pays under or in connection with any Guarantee, all charges and expenses which

may pertain either directly or indirectly to any Guarantee, FTC's charges as

herein provided, and all attorneys' fees and all other costs and expenses. FTC

shall have the right, at any time and without notice to the Client, to charge

any of the Client's factoring or other accounts with FTC with the amount of any

and all Guarantee Obligations. Without limiting the fact that the amount of

advances FTC may make to the Client under the Factoring Documents is a matter of

FTC's sole discretion, FTC may reduce the amount of such advances which would

otherwise be available under the Factoring Documents by the amount of all

outstanding Guarantees and Guarantee Obligations.

5. NON-RESPONSIBILITY. If a Guarantee is issued in connection with the

purchase of goods by the Client ("Goods"), FTC shall not be responsible to the

Client for: the existence, character, quality, quantity, condition, packing,

value or delivery of the Goods; any difference or variation in the character,

quality, quantity, condition, packing, value or delivery of the Goods from that

expressed in any document or agreement relating thereto; the validity,

sufficiency or genuineness of any documents relating to any Goods or of any

endorsements thereon, even if such documents should in fact prove to be in any

or all respects invalid, insufficient, fraudulent or forged; the time, place,

manner or order in which shipment of any Goods is made; partial or incomplete

shipment of any Goods, or failure or omission to ship any or all of the Goods;

any deviation from instructions relating to any Goods; delay, default, or fraud

by the shipper, vendor or anyone else in connection with any Goods or the

shipping thereof; or any breach of contract between the shipper or vendor and

the Client; any other act or omission of any kind or nature of any person with

respect to, or in connection with, any Goods.