LINE OF CREDIT AGREEMENT
THIS
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT (the “Agreement”) is made as of
the day
of
October, 31st, 2005 by and between Mosaic Financial Services, LLC, a
Delaware limited liability company, (the
“Provider”) having a business address at [Address]
and
eRXSYS, Inc., a Nevada Corporation, (the “Company”) having its principal place
of business and executive offices at 00000 Xxx Xxxx Xxxxxx, Xxxxx X0, Xxxxxx,
Xxxxxxxxxx 00000-0000.
W
I T N E S S E T H:
WHEREAS,
the
Provider is in the trade or business of advancing funds for businesses for
a
fee;
WHEREAS,
the
Company desires to avail itself of the services of the Provider under the terms
and conditions of this Agreement; and
WHEREAS,
the
Provider wishes to advance funds to the Company under the terms and conditions
of this Agreement.
NOW
THEREFORE, in
consideration of the mutual promises contained in this Agreement, the
sufficiency and receipt of which are hereby acknowledged, the parties agree
as
follows:
1. Definitions.
When
used
herein, the following terms shall have the following meanings.
1.1. “Account
Balance”shall
mean, on any given day, the gross amount of all Pledged Receivables unpaid
on
that day.
1.2.
“Account
Debtor”shall
have the meaning set forth in New York Uniform Commercial Code (hereinafter,
“NYUCC”) Section 9-102(a)(3) and shall include any person liable on any Pledged
Receivable, including without limitation, any guarantor of the Pledged
Receivable and any issuer of a letter of credit or banker’s
acceptance.
1.3. “Adjustments”shall
mean all discounts, allowances, returns, disputes, counterclaims, offsets,
defenses, rights of recoupment, rights of return, warranty claims, or short
payments, asserted by or on behalf of any Account Debtor with respect to any
Pledged Receivable.
1.4. “Advance”
shall
have the meaning set forth in Section 2.2 hereof.
1.5. “Collateral”
shall
have the meaning set forth in Section 8 hereof
1.6. “Collections”shall
mean all good funds received by the Provider from or on behalf of an Account
Debtor with respect to Pledged Receivables.
1.7. “Compliance
Certificate”shall
mean a certificate, in a form provided by the Provider to the Company, which
contains the certification of the chief financial officer of the
Company
that, among other things, the representations and warranties set forth in this
Agreement
are true and correct as of the date such certificate is delivered.
1.8. “Event
of Default”shall
have the meaning set forth in Section 9 hereof
1.9. “Finance
Charges”shall
have the meaning set forth in Section 3.2 hereof
1.10. “Obligations”shall
mean all advances, financial accommodations, liabilities, obligations, covenants
and duties owing, arising, due or payable by the Company to the Provider of
any
kind or nature, present or future, arising under or in connection with this
Agreement or under any other document, instrument or agreement, whether or
not
evidenced by any note, guarantee or other instrument whether arising on account
or by overdraft, whether direct or indirect (including those acquired by
assignment) absolute or contingent, primary or secondary, due or to become
due,
now owing or hereafter arising, and however acquired; including, without
limitation, all Advances, Finance Charges, fees, expenses, professional fees
and
attorney’s fees and any other sums chargeable to the Company hereunder or
otherwise.
1.11. “Pledged
Receivables”shall
mean all those accounts, receivables, chattel paper, instruments, contract
rights, documents, general intangibles, letters of credit, drafts, bankers
acceptances, and rights to payment, and all proceeds thereof (all of the
foregoing being referred to as “receivables”), arising out of the invoices and
other agreements to which the Company has a right to collect from an Account
Debtor for the first time on a date when there is an unpaid Advance
outstanding.
1.12. “Refund”shall
have the meaning set forth in Section 3.5 hereof.
1.13. “Reconciliation
Date”shall
mean the last calendar day of each calendar month.
2. Draw
upon Line of Credit; transfer of Receivables.
2.1
Activation. A
line of
credit (the “Line of Credit”) in the maximum amount of up to ONE MILLION DOLLARS
($1,000,000) is hereby activated in favor the Company effective on the date
of
this Agreement.
2.2. Draws
upon Line of Credit. During
the Term hereof, provided that there does not then exist any Event of Default
or
any event that with notice, lapse of time or otherwise would constitute an
Event
of Default, the Company may request a draw upon the line of credit against
the
receivables granted hereby (hereinafter, an “Advance”).
2.3. Acceptance
of Receivables. All
receivables due to the Company on Account Balances which become due for the
first time on a date when there is an outstanding and unpaid Advance due to
the
Provider shall become a Pledged Receivable. It shall be a condition to each
Advance that (a) all of the representations and warranties set forth in Section
8 of this Agreement be true and correct on and as of the date of the Advance
as
though made at and as of each such date, and (b) no Event of Default or any
event or condition that with notice, lapse of time or otherwise would constitute
an Event of Default shall have occurred and be continuing, or would result
from
such Advance.
2
2.4. Effectiveness
of Pledge to the Provider. Effective
upon the Provider’s payment of an Advance, and in consideration therefore and in
consideration of the covenants of this Agreement, the Company hereby absolutely
sells, transfers and assigns to the Provider, all of the Company’s right, title
and interest in and to each Pledged Receivable and all funds due or which may
become due on or with respect to such Pledged Receivable. The Provider shall
be
the absolute owner of each Pledged Receivable until such time as all outstanding
Advances and Obligations have been repaid to the Provider. The Provider shall
have, with respect to any goods related to the Pledged Receivable, all the
rights and remedies of an unpaid the Company under the NYUCC and other
applicable law, including the rights of replevin, claim and delivery,
reclamation and stoppage in transit.
2.5 Commitment
Fee.
On the
date of this Agreement, the Company shall pay to the Provider a one time
commitment fee (the “Commitment Fee”) equal to THREE PERCENT (3%) of the initial
amount of the Line of Credit.
3. Collections,
Finance Charges and Remittances.
3.1. Collections.
Upon
receipt by the Provider of Collections, the Provider shall promptly credit
such
Collections to the Company’s Account Balance on a daily basis; provided, that if
the Company is in default under this Agreement, the Provider shall apply all
Collections to the Company’s Obligations hereunder in such order and manner as
the Provider may determine. If an item of Collection is not honored or the
Provider does not receive good funds for any reason, the amount shall be
included in the Account Balance as if the Collections had not been received
and
Finance Charges under Section 3.2 shall continue to accrue thereon.
3.2. Finance
Charges.
On
each
Reconciliation Date the Company shall pay to the Provider a Finance Charge
in
the amount of ONE AND ONE HALF PERCENT (1.50%) of the amount of the then
available Line of Credit. The Provider shall deduct the accrued Finance Charges
from the Advances. In addition, the Company agrees to reimburse the Provider
for
the cost of wire transfers at the rate of THIRTY DOLLARS ($30.00) for each
transfer, and TWENTY DOLLARS ($20.00) for the delivery of documents by overnight
courier.
3.3. Accounting.
The
accrued Finance Charge for the preceding month shall be due and payable by
the
Company on or before the SEVENTH (7th)
calendar day following the close of each month. In the event that an amount
aside from the Finance Charge is due the Provider, the Company shall issue
its
draft to the Provider for the full amount due. All payments due hereunder shall
be made in the manner, and subject o the provisions of Section 4.2 hereof,
and
shall be subject to the Provider’s rights of offset and recoupment.
4. Recourse
and Repurchase Obligations.
4.1. Recourse.
The
Provider’s acquisition of Pledged Receivables from the Company shall be with
full recourse against the Company. In the event the Obligations exceed the
amount of Pledged Receivables and Collateral, the Company shall be liable for
any deficiency.
4.2. Company’s
Payment of the Amounts Due the Provider. When
any
amount
3
owing
to
the Provider becomes due, the Provider shall inform the Company of the manner
of
payment which may be any one or more of the following in the Provider’s sole
discretion: (a) in cash immediately upon demand therefor; (b) by delivery
of
additional receivables which shall thereupon become Pledged Receivables;
(c) by
deduction from or offset against the amount that otherwise would be forwarded
to
the Company in respect of any further Advances that may be made by the Provider;
or (f) by any combination of the foregoing as the Provider may in its sole
discretion choose from time to time.
5. Power
of Attorney. The
Company does hereby irrevocably appoint the Provider and its successors and
assigns as the Company’s true and lawful attorney in fact, and hereby authorizes
the Provider, regardless of whether there has been an Event of Default, (a)
to
sell, assign. transfer, pledge, compromise, or discharge the whole or any part
of the Pledged Receivables; (b) to demand, collect, receive, xxx, and give
releases to any Account Debtor for the funds due or which may become due upon
or
with respect to the Pledged Receivables and to compromise, prosecute, or defend
any action, claim, case or proceeding relating to the Pledged Receivables,
including the filing of a claim or the voting of such claims in any bankruptcy
case, all in the Provider’s name or the Company’s name, as the Provider may
choose; (c) to prepare, file and sign the Company’s name on any notice, claim,
assignment, demand. draft, or notice of or satisfaction of lien or mechanic’s
lien or similar document with respect to Pledged Receivables; (d) to notify
all
Account Debtors with respect to the Pledged Receivables to pay the Provider
directly; (e) to receive, open, and dispose of all mail addressed to the Company
for the purpose of collecting the Pledged Receivables: (f) to endorse the
Company’s name on any checks or other forms of payment on the Pledged
Receivables; (g) to execute on behalf of the Company any and all instruments,
documents, financing statements and the like to perfect the Provider’s interests
in the Pledged Receivables and Collateral; and (h) to do all acts and things
necessary or expedient, in furtherance of any such purposes. If the Provider
receives a check or item which is payment for both a Pledged Receivable and
another receivable, the funds shall first be applied to the Pledged Receivable
and, so long as there does not exist an Event of Default or an event that with
notice, lapse of time or otherwise would constitute an Event of Default, the
excess shall be remitted to the Company. Upon the occurrence and continuation
of
an Event of Default all of the power of attorney rights granted by the Company
to the Provider hereunder shall be applicable with respect to all Pledged
Receivables and all Collateral.
6. Representations,
Warranties and Covenants.
6.1. Receivables
Warranties, Representations and Covenants. To
induce
the Provider to service Pledged Receivables and to renders its services to
the
Company, and with full knowledge that the truth and accuracy of the following
are being relied upon by the Provider in determining whether to accept
receivables as Pledged Receivables. The Company represents, warrants, covenants
and agrees, with respect to each Pledged Receivable, that:
(A) The
Company is the absolute owner of each Pledged Receivable and has full legal
right to sell, transfer and assign such receivables;
(B) The
correct amount of each Pledged Receivable is as set forth in the invoice which
corresponds thereto and is not in dispute;
4
(C) The
payment of each receivable is not contingent upon the fulfillment of any
obligation or contract, past or future and any and all obligations required
of
the Company have been fulfilled as of the date of the rendering of the services
giving rise to the Pledged Receivable;
(D) Each
receivable is based on an actual sale and delivery of goods and/or services
actually rendered, is presently due and owing to the Company, is not past due
or
in default, has not been previously sold, assigned, transferred, or pledged,
and
is free of any and all liens, security interests and encumbrances other than
liens, security interests or encumbrances in favor of the Provider or an
affiliate of the Provider;
(E) There
are
no defenses, offsets, or counterclaims against any of the receivables, and
no
agreement has been made under which the Account Debtor may claim any deduction
or discount, except as otherwise identified by the Company;
(F) Each
Pledged Receivable shall be the property of the Provider and shall be collected
by the Provider, but if for any reason it should be paid to the Company, the
Company shall promptly notify the Provider of such payment, shall hold any
checks, drafts, or funds so received in trust for the benefit of the Provider,
and shall promptly transfer and deliver the same to the Provider;
(G) Provider
shall have the right of endorsement, and also the right to require endorsement
by the Company, on all payments received in connection with each Pledged
Receivable and any proceeds of Collateral;
(H) Company,
and to the Company’s best knowledge, each Account Debtor of a Pledged
Receivable, are and shall remain solvent as that term is defined in the United
States Bankruptcy Code and the NYUCC, and no such Account Debtor has filed
or
had filed against it a voluntary or involuntary petition for relief under the
United States Bankruptcy Code;
(I) Each
Account Debtor of a Pledged Receivable will not object to the payment for,
or
the quality or the quantity of the subject matter of, the receivable and is
liable for the amount set forth on each invoice;
(J) Each
Account Debtor shall promptly be notified by the Company, after acceptance
by
the Provider, that the Pledged Receivable has been transferred to and is payable
to the Provider, and the Company shall not take or permit any action to
countermand such notification; and
(K) All
receivables forwarded to and accepted by the Provider after the date hereof,
and
thereby becoming Pledged Receivables, shall comply with each and every one
of
the foregoing representations, warranties, covenants and agreements referred
to
above in this Section 6.1.
6.2. Additional
Warranties, Representations and Covenants. In
addition to the
5
foregoing
warranties, representations and covenants, to induce the Provider to buy
receivables and to render its services to the Company, the Company hereby
represents, warrants, covenants and agrees that:
(A) Company
will not assign, transfer, sell, or grant, or permit any lien or security
interest in any Pledged Receivables or Collateral to or in favor of any other
party, without the Providers prior written consent;
(B) The
Company’s name, form of organization, chief executive office, and the place
where the records concerning all Pledged Receivables and Collateral are kept
is
set forth at the beginning of this Agreement. Collateral is located only at
the
location set forth in the beginning of this Agreement, or, if located at any
additional location, as set forth on a schedule attached to this Agreement,
and
the Company will give the Provider at least thirty (30) days prior written
notice if such name, organization, chief executive office or other locations
of
Collateral or records concerning Pledged Receivables or Collateral is changed
or
added and shall execute any documents necessary to perfect the Provider’s
interest in the Pledged Receivables and the Collateral;
(C) Company
shall (i) pay all of its normal gross payroll for employees, and all federal
and
state taxes, as and when due, including without limitation all payroll,
withholding, income and state sales taxes; (ii) deliver at any time and from
time to time at the Provider’s request, evidence satisfactory to the Provider
that all such amounts have been paid to the proper taxing authorities; and
(iii)
if requested by the Provider, pay its payroll and related taxes through a bank
or an independent payroll service acceptable to the Provider;
(D) Company
has not, as of the time the Company delivers to the Provider a Pledged
Receivable, or as of the time the Company accepts any Advance from the Provider,
filed a voluntary petition for relief under the United States Bankruptcy Code
or
had filed against it an involuntary petition for relict;
(E) If
the
Company owns, holds or has any interest in, any copyrights (whether registered,
or unregistered), patents or trademarks, and licenses of any of the foregoing,
such interest has been disclosed to the Provider and is specifically listed
and
identified
on a schedule to this Agreement, and the Company shall immediately notify
the
Provider
if the Company hereafter obtains any interest in any additional copyrights,
patents, trademarks or licenses that are significant in value or are material
to
the conduct of its business;
(F) Company
shall provide the Provider with a Compliance Certificate (i) on a quarterly
basis to be received by the Provider no later than the FIFTH (5th) calendar
day
following each calendar quarter, and; (ii) on a more frequent or other basis
if
and as requested by the Provider;
(G) The
Company shall provide the Provider with an aged accounts receivable listing
upon
request; and
(H) On
request by the Provider, the Company will promptly furnish any information
6
the
Provider may reasonably request to determine the financial condition of the
Company including, but not limited to, all of the Company’s Obligations, and the
condition of any of the Company’s receivables which may include but are not
limited to Pledged Receivables.
7. Adjustments.
In
the
event of a breach of any of the representations, warranties, or covenants set
forth in Section 6.1, or in the event any Adjustment or dispute is asserted
by
any Account Debtor, the Company shall promptly advise the Provider and shall,
subject to the Provider’s approval, resolve such disputes and advise the
Provider of any adjustments. Unless the disputed Pledged Receivable is
repurchased by the Company and the full Repurchase Amount is paid, the Provider
shall remain the absolute owner of any Pledged Receivable which is subject
to
Adjustment or repurchase under Section 4.2 hereof, and any rejected, returned,
or recovered personal property, with the right to take possession thereof at
any
time. If such possession is not taken by the Provider, the Company is to resell
it for the Provider’s account at the Company’s expense with the proceeds made
payable to the Provider. While the Company retains possession of said returned
goods, the Company shall segregate said goods and xxxx them property of the
Provider.
8. Security
Interest. To
secure
the prompt payment and performance to the Provider of all of the Obligations,
the Company hereby grants to the Provider a continuing lien upon and security
interest in all of the Company’s now existing or hereafter arising rights and
interest in the following, whether now owned or existing or hereafter created,
acquired, or arising, and wherever located (collectively, the
“Collateral”):
(A) All
accounts, receivables, contract rights, chattel paper, instruments, documents,
letters of credit, bankers acceptances, drafts, checks, cash, securities, and
general intangibles (including, without limitation, all claims, causes of
action, deposit accounts, guaranties, rights in and claims under insurance
policies (including rights to
premium
refunds), rights to tax refunds, copyrights, patents, trademarks, rights In
and
under license agreements, and all other intellectual property;
(B) All
inventory, including the Company’s rights to any returned or rejected goods,
with respect to which the Provider shall have all the rights of any unpaid
the
Company, including the rights of replevin, claim and delivery, reclamation,
and
stoppage in transit;
(C) All
funds, refunds and other amounts due the Company, including, without limitation,
amounts due the Company under this Agreement (including the Company’s right of
offset end recoupment);
(D) All
equipment, machinery, furniture, furnishings, fixtures, tools, supplies and
motor vehicles;
(E) All
farm
products, crops, timber, minerals and the like (including oil and
gas);
(F) All
accessions to, substitutions for, and replacements of, all of the
foregoing;
(G) All
books
and records pertaining to all of the foregoing; and
7
(H) All
proceeds of the foregoing, whether due to voluntary or involuntary disposition,
including insurance proceeds. The Company is not authorized to sell, assign,
transfer or otherwise convey any Collateral without the Provider’s prior written
consent, except for the sale of finished inventory in the Company’s usual course
of business. The Company agrees to sign UCC financing statements, in a form
acceptable to the Provider, and any other instruments and documents requested
by
the Provider to evidence, perfect, or protect the interests of the Provider
in
the Collateral. The Company agrees to deliver to the Provider the originals
of
all instruments, chattel paper and documents evidencing or related to Pledged
Receivables and Collateral.
9. Default.
The
occurrence of any one or more of the following shall constitute an Event of
Default hereunder,
(A) Company
fails to pay any amount owed to the Provider as and when due;
(B) There
shall be commenced by or against the Company any voluntary or involuntary case
under the United States Bankruptcy Code, or any assignment for the benefit
of
creditors, or appointment of a receiver or custodian for any of its
assets;
(C) Company
shall become insolvent in that its debts are greater than the fair value of
its
assets, or the Company is generally not paying its debts as they become due
or
is left with unreasonably small capital;
(E) Company
shall breach any covenant, agreement, warranty, or representation set forth
herein, and the same is not cured to the Provider’s satisfaction within ten (10)
days after the Provider has given the Company oral or written notice thereof;
provided, that if such breach is incapable of being cured it shall constitute
an
immediate default hereunder;
(F) An
event
of default shall occur under any guaranty executed by any guarantor of the
Obligations of the Company to the Provider under this Agreement, or any material
provision of any such guaranty shall for any reason cease to be valid or
enforceable or any such guaranty shall be repudiated or terminated, including
by
operation of law;
(G) A
default
or event of default shall occur under any agreement between the Company and
any
creditor of the Company that has entered into a subordination agreement with
the
Provider: or
(H) Any
creditor that has entered into a subordination agreement with the Provider
shall
breach any of the terms of or not comply with such subordination
agreement.
10.
Remedies
Upon Default. Upon
the
occurrence of an Event of Default, (a) without implying any obligation to buy
receivables, the Provider may cease buying receivables or
8
extending
any financial accommodations to the Company; (b) all or a portion of the
Obligations shall be, at the option of and upon demand by the Provider, or
with
respect to an Event of Default described in Section 9(B), automatically and
without notice or demand, due and payable in full; and (c) the Provider shall
have and may exercise all the rights and remedies under this Agreement and
under
applicable law, including the rights and remedies of a secured party under
the
NYUCC, all the power of attorney rights described in Section 5 with respect
to
all Collateral, and the right to collect, dispose of, sell, lease, use, and
realize upon all Pledged Receivables and all Collateral in any commercially
reasonable manner. The Company and the Provider agree that any notice of sale
required to be given to the Company shall be deemed to be reasonable if given
FIVE (5) days prior to the date on or after which the sale may be
hold.
11. Accrual
of Interest. If
any
amount owed by the Company hereunder is not paid when due, such amounts shall
bear interest at a per annum rate equal to the per annum rate of the Finance
Charges for Pledged Receivables outstanding for less than 30 days, until the
earlier of (i) payment in good funds or (ii) entry of a final judgment thereof;
at which time the principal amount of any money judgment remaining unsatisfied
shall accrue interest at the highest rate allowed by applicable
law.
12. Fees,
Costs and Expenses; Indemnification. The
Company will pay to the Provider immediately upon demand all fees, costs and
expenses (including fees ofattorneys
and professionals and their costs and expenses) that the Provider incurs or
may
from time to time impose in connection with any of the following: (a) preparing,
negotiating, administering, and enforcing this Agreement or any other agreement
executed in connection herewith, including any amendments, waivers or consents
in connection with any of the foregoing, (b) any litigation or dispute (whether
instituted by the Provider, the Company or any other person) in any way relating
to the Pledged Receivables, the Collateral, this Agreement or any other
agreement executed in connection herewith or therewith, (d) enforcing any rights
against the Company or any guarantor, or any Account Debtor, (e) protecting
or
enforcing its interest in the Pledged Receivables or the Collateral, (f)
collecting the Pledged Receivables and the Obligations, and (g) the
representation of the Provider in connection with any bankruptcy case or
insolvency proceeding involving the Company, any Pledged Receivable, the
Collateral, any Account Debtor, or any guarantor. The Company shall indemnify
and hold the Provider harmless from and against any and all claims, actions,
damages, costs, expenses, and liabilities of any nature whatsoever arising
in
connection with any of the foregoing.
13. Severability,
Waiver, Choice of Law; and Forum.
In the
event that any provision of this Agreement is deemed invalid by reason of law,
this Agreement will be construed as not containing such provision and the
remainder of the Agreement shall remain in full force and effect, the Provider
retains all of its rights, even if it makes an Advance after an Event of
Default. If the Provider waives an Event of Default, it may enforce a later
Event of Default. Any consent or waiver under, or amendment of, this Agreement
must be in writing. Nothing contained herein, or any action taken or not taken
by the Provider at any time, shall be construed at any time to be indicative
of
any obligation or willingness on the part of the Provider to amend this
Agreement or to grant to the Company any waivers or consents. This Agreement
has
been transmitted by the Company to the Provider at the Provider’s office in the
State of New York and has been executed and accepted by the Provider in the
State of New York. This Agreement
9
shall
be
governed by and interpreted in accordance with the internal laws of the State
of
New York, without regard to any provisions relating to choice of laws.
In
the
event a dispute arises in connection with this Agreement, the courts located
in
the state and city of New York and the appropriate appellate courts therefrom
shall have exclusive jurisdiction and the parties hereby irrevocably submit
to
the jurisdiction of such courts.
14. Account
Collection Services. Certain
Account Debtors may require or prefer that all of the Company’s receivables be
paid to the same address and/or party, or the Company and the Provider may
agree
that all receivables with respect to certain Account Debtors be paid to one
party. In such event the Provider and the Company may agree that the Provider
shall collect all receivables whether owned by the Company or the Provider
and
(provided that there does not then exist an Event of Default or event that
with
notice, lapse or time or otherwise would constitute an Event of Default, and
subject to the Provider’s rights in the Collateral) the Provider agrees to remit
to the Company the amount of the receivables collections it receives with
respect to receivables other than Pledged Receivables. It is understood and
agreed by the Company that this Section does not impose any affirmative duty
on
the Provider to do any act other than to turn over such amounts. All such
receivables and collections are Collateral and in the event of the Company’s
default hereunder, the Provider shall have no duty to remit collections of
Collateral and may apply such collections to the obligations hereunder and
the
Provider shall have the rights of a secured party under the NYUCC.
15.
Notices.
All
notices shall be given to the Provider and the Company at the addresses or
faxes
set forth on the first page of this Agreement and shall be deemed to have been
delivered and received: (a) if mailed, three (3) calendar days after deposited
in the United States mail, first class, postage pre-paid, (b) one (1) calendar
day after deposit with an overnight mail or messenger service; or (c) on the
same date of confirmed transmission if sent by hand delivery, telecopier,
telefax or telex.
16. Jury
Trial. THE
COMPANY AND THE PROVIDER EACH HEREBY (a) WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY
TRIAL ON ANY CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, ANY RELATED AGREEMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY; (b)RECOGNIZE AND AGREE THAT THE FOREGOING WAIVER CONSTITUTES
A MATERIAL INDUCEMENT FOR IT TO ENTER IN TO THIS AGREEMENT; AND (c) REPRESENT
AND WARRANT THAT IT HAS REVIEWED THIS WAIVER, HAS DETERMINED FOR ITSELF THE
NECESSITY TO REVIEW THE SAME WITH ITS LEGAL COUNSEL, AND KNOWINGLY AND
VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.
17. Term
and Termination. The
term
of this Agreement shall be for one (1) year from the date hereof (the “Term”).
Notwithstanding the foregoing, any termination of this Agreement shall not
affect the Provider’s security interest in the Collateral and the Provider’s
ownership of the Pledged Receivables, and this Agreement shall continue to
be
effective, and the Provider’s rights and remedies hereunder shall survive such
termination, until all transactions entered into and Obligations incurred
hereunder or in connection herewith have been completed and satisfied in
full.
10
18. Titles
and Section Headings. The
titles and section headings used herein are for convenience only and shall
not
be used in interpreting this Agreement.
19. Other
Agreements. The
terms
and provisions of this Agreement shall not adversely affect the rights of the
Provider or any of its affiliates under any other document, instrument or
agreement. The terms of such other documents, instruments and agreements shall
remain in full force and effect notwithstanding the execution of this Agreement.
In the event of a conflict between any provision of this Agreement and any
provision of any other document, instrument or agreement between the Company,
on
the one hand, and the Provider or any affiliate, the Provider shall determine
in
its sole discretion which provision shall apply. The Company acknowledges
specifically that any security agreements, liens and/or security interests
currently securing payment of any obligations of the Company owing to the
Provider or any affiliate also secure the Company’s obligations under this
Agreement, and are valid and subsisting and are not adversely affected by
execution of this Agreement. The Company further acknowledges that (a) any
collateral under other outstanding security agreements or other documents
between the Company and the Provider or any affiliate secures the obligations
of
the Company under this Agreement and (b) a default by the Company under this
Agreement constitutes a default under other outstanding agreements between
the
Company and the Provider or any affiliate.
21. Conversion
Right.
(A) Conversion
Right.
The
Provider shall have a continuing right (the “Conversion Right”) during the Term
to convert all or a portion of the then outstanding amount of the Obligations
hereunder into a number of shares of the common stock (the “Common Stock”) of
the Company determined using a conversion price (the “Conversion Price”) equal
to the rolling SEVEN (7) trading day weighted average closing bid price for
the
Common Stock on the OTC:BB (or such other equivalent market on which the Common
Stock in then quoted) calculated as of the trading day immediately preceding
the
date the Conversion Right is exercised. Notwithstanding the foregoing, the
Conversion Price shall not be less than FORTY CENTS ($0.40) nor more than EIGHTY
CENTS ($0.80).
(B) Registration
Rights.
The
Provider shall be entitled to piggyback registration rights upon exercise of
this Conversion Right. Further, it is the intention of the parties that this
Section 21 shall, to the extent permitted by law, be deemed a right to purchase
the Common Stock that triggers the applicable holding period for the underlying
Common Stock for purposes of Rule 144.
(C) Notice
of Exercise.
The
Provider may exercise this Conversion Right by giving the Company written notice
specifying the amount of the Obligations elects to convert into Common
Stock.
IN
WITNESS WHEREOF, the Company and the Provider have executed this Agreement
on
the day and year above written.
11
MOSAIC
FINANCIAL SERVICES, LLC
By:
/s/ Xxxxxx Xxxxx
Name:
Xxxxxx Xxxxx
Title:
Member
ERXSYS,
Inc.
By:
/s/ Xxxxxx XxxXxxxxxx
Name: Xxxxxx
XxxXxxxxxx
Title:
12
SCHEDULE
6.2(B)
(location
of Collateral other than at the principal office of the Company)
13
SCHEDULE
6.2(E)
(Identification
of copyrights, patents, trademarks, licenses and other intellectual
property)
