Exhibit 10.1

 

ACCOUNTS RECEIVABLE PURCHASING AGREEMENT

 

THIS ACCOUNTS RECEIVABLE PURCHASING AGREEMENT (“ARPA”) is made this the         
day of December 2009 (“Effective Date”), by and between Xplore Technologies
Corporation of America (the “Seller”), a Delaware corporation, and DSCH CAPITAL
PARTNERS, LLC DBA FAR WEST CAPITAL, a Texas limited liability company (the
“Purchaser”), on the following terms and conditions:

 

1.                                       Definitions.  The following terms used
herein shall have the following meaning.  All capitalized terms not herein
defined shall have the meaning set forth in the UCC:

 

1.1                                 “Account” — as applicable to Purchased
Accounts means any right of the Seller to payment as a result of the Seller’s
sale of goods and/or the full, complete and unconditional performance of
services, and the proceeds thereof as well as all security interests and
guaranties therefor, whether now existing or hereafter created; as to
Collateral, the term Account shall be as defined by the UCC.

 

1.2                                 “Account Debtor” — means the party or
parties obligated to pay an Account.

 

1.3                                 “AR Purchase Certificate” — A document
titled “Accounts Receivable Purchase Certificate,” a form of which is attached
hereto as Exhibit “B,” wherein Seller identifies such of its Accounts as it
requests that Purchaser purchase under this ARPA, and, by delivery of same to
Purchaser, thereby transfers, assigns and sells such Accounts to Purchaser in
accordance with the terms of this ARPA, subject only to Purchaser’s acceptance
thereof as set forth in Section 2 of this ARPA.

 

1.4                                 “Affiliated” — means, with respect to a
given person, any person or entity which, directly or indirectly, controls, is
controlled by, or is under common control with, the given person.

 

1.5                                 “Audit Fee” — $650.00 per day (onsite &
write-up) plus expenses, each 365 days.

 

1.6                                 “Avoidance Claim” — any claim that any
payment received by Purchaser from or for the account of an Account Debtor is
avoidable under the Bankruptcy Code or any other debtor relief statute.

 

1.7                                 “Clearance Days”  — (0) Days

 

1.8                                 “Client Reference Manual” — the Purchaser’s
Manual of policies, procedures, rules, and regulations, as such may exist
presently, and as may be revised and/or amended from time to time at the
Purchaser’s discretion.

 

1.9                                 “Closed” — a Purchased Account is closed
upon the first to occur of (i) receipt of full payment by Purchaser or (ii) the
unpaid Face Amount has been charged to the Reserve Account by Purchaser pursuant
to the terms hereof.

 

1.10                           “Collateral” — all now owned and hereafter
acquired personal property and fixtures, and proceeds thereof (including
proceeds of proceeds), including without

 

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limitation Accounts, Chattel Paper, Inventory, Equipment, Instruments (including
Promissory Notes), Investment Property, Documents, General Intangibles of Seller
and that portion of the Reserve Account payable to Seller.

 

1.11                           “Cost of Funds Fee” — an amount equal to the
daily balance of Net Funds Employed multiplied by an annual rate of the Wall
Street Journal Prime Lending Rate plus 11.50%, to accrue daily and be payable
monthly.

 

1.12                           “Delay Discount” — .10959% per day.

 

1.13                           “Discount” — the Discount Percent multiplied by
the original Face Amount of each Purchased Account.

 

1.14                           “Discount Percent” — 0.52% of the gross original
Face Amount of all Purchased Accounts for the first 90 days.

 

1.15                           “Eligible Account” — an Account which is
acceptable for purchase as determined by Purchaser in the exercise of its sole
judgment and determination and as set forth in a duly executed and delivered AR
Purchase Certificate.  Eligible Accounts include all sales in North America and
sales outside of North America if Seller has purchased credit insurance for such
account.  The eligible portion of non-North America sales cannot exceed the
insurance coverage.

 

1.16                           “Events of Default” — as defined by Section, 13.1
of this ARPA.

 

1.17                           “Face Amount” — the face amount due on an Account
at the time of purchase by Purchaser.

 

1.18                           “Invoice” — the document that evidences or is
intended to evidence an Account.  Where the context so requires, reference to an
Invoice shall be deemed to refer to the Account to which it relates.

 

1.19                           “Invoice Date” — the date the invoice
representing the Purchase Account is first transmitted to the Account Debtor.

 

1.20                           “Late Payment Date” — the date which is ninety
(90) days from the Invoice Date.

 

1.21                           “Maximum Amount” — $4,750,000.00

 

1.22                           “Misdirected Payment Fee” — fifteen percent (15%)
of the amount of any payment on account of a Purchased Account which has been
received by Seller and not delivered in kind to Purchaser within three
(3) business days following the date of receipt by Seller.

 

1.23                           “Missing Notation Fee” — equal to 15% of the Face
Amount.

 

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1.24                           “Net Funds Employed” — the amount equal to the
total of: a) the Purchase Price of Purchased Accounts less the amount of the
Reserve Account, b) the amount of the Reserve Shortfall, c) any unpaid fees due
from Seller under this ARPA, and d) any unpaid reimbursable expenses due from
Seller under this ARPA.

 

1.25                           “Notation” or “Notification” — Upon and during
the continuance of an Event of Default, a legend must be affixed to the face of
all Invoices issued at such time which reads, “This Account has been sold and
assigned and is payable directly and exclusively to DSCH CAPITAL PARTNERS, LLC
DBA FAR WEST CAPITAL, at P.O. Box 3427, Cedar Park, Texas 78630, to whom notice
of any claim or dispute must be advised, whether in writing or by telephone at
(512) 528-1490.” At all times (so long as any Obligations are outstanding,
whether or not an Event of Default has occurred and is continuing), the
remittance on the Invoices must read “Please send payment to Far West Capital at
P.O. Box 3427, Cedar Park, Texas 78630.”

 

1.26                           “Obligations” — all present and future
obligations owing by Seller to Purchaser hereunder whether or not for the
payment of money or evidenced by any note or other instrument, direct or
indirect, absolute or contingent, due or to become due, joint or several,
primary or secondary, liquidated or unliquidated, secured or unsecured, original
or renewed or extended, arising before, during or after the commencement of any
Bankruptcy Case in which Seller is a Debtor, including, but not limited to, any
obligations arising pursuant to letters of credit or acceptance transactions or
any other financial accommodations.

 

1.27                           “Origination Fee” —  0%

 

1.28                           “Purchase Date” — the date on which Seller has
been advised in writing that Purchaser has agreed to purchase an Account or the
date of purchase of the Account as provided under section 2.1.4 of this ARPA.

 

1.29                           “Purchase Price” — the Face Amount less the
Discount.

 

1.30                           “Purchased Accounts” —Accounts purchased
hereunder which have not been repurchased.

 

1.31                           “Repurchased” — an Account has been repurchased
when Seller has paid to Purchaser the then unpaid Face Amount.

 

1.32                           “Required Reserve Amount” — the Reserve
Percentage multiplied by the unpaid balance of Purchased Accounts.

 

1.33                           “Reserve Account” — an account representing an
unpaid portion of the Purchased Price, maintained by Purchaser to secure
Seller’s Obligations in the event that Seller’s performance of the provisions
hereof are not satisfied.

 

1.34                           “Reserve Percentage” — 15%.

 

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1.35                           “Reserve Shortfall” — the amount by which the
Reserve Account is less than the Required Reserve Amount as reflected by a fully
updated and reconciled AR Purchase Certificate submitted by the Seller.

 

1.36                           “Termination Date” — the earlier of (i) one year
from the date hereof, or (ii) the date on which Purchaser or Seller elects to
terminate this ARPA pursuant to the terms herein.

 

1.37                           “UCC” — means the Uniform Commercial Code in
effect from time to time in the State of Texas.

 

2.                                       Sale; Purchase Price; Billing; Reserve.

 

2.1                                 Assignment and Sale.

 

2.1.1                        Seller shall present Accounts for purchase in
accordance with Section 2 of this ARPA no less than once every week.

 

2.1.2                        Seller shall sell to Purchaser as absolute owner,
with full recourse, such of Seller’s Accounts as are listed from time to time
and no less than once every week, on the AR Purchase Certificate.

 

2.1.3                        Each AR Purchase Certificate shall be accompanied
by such documentation supporting and evidencing the Accounts as Purchaser shall
from time to time reasonably request.

 

2.1.4                        Purchaser may purchase from Seller such Accounts as
Purchaser determines to be Eligible Accounts, so long as the unpaid balance of
Purchased Accounts does not exceed, before and after such purchase, the Maximum
Amount.  Notwithstanding, in the event Purchaser purchases Accounts in excess of
the Maximum Amount, all of Purchaser’s rights and Seller’s duties under this
ARPA shall apply.

 

2.1.5                        Purchaser shall pay the Purchase Price, less any
amounts due to Purchaser from Seller under this ARPA, including, without
limitation, any amounts due under Section 2.3.1 hereof, of any Purchased
Account, to any demand Deposit Account maintained by Seller, or represented by
an executive officer of Seller to be maintained by Seller, within one
(1) business day of the Purchase Date, whereupon the Accounts shall be deemed
purchased hereunder.

 

2.2                                 Billing.  Purchaser may send statements,
invoices or other documents evidencing Account(s) to Account Debtors for the
purpose of verifying or confirming account balances; however, Purchaser is under
no obligation to do so.  All Account Debtors will be instructed that all
Accounts have been sold and assigned to Purchaser and to make payments to
Purchaser.

 

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2.3                                 Reserve Account.

 

2.3.1                        Seller shall pay to Purchaser on demand the amount
of any Reserve Shortfall.

 

2.3.2                        Purchaser shall pay to Seller on a monthly basis,
or weekly basis if requested by Seller in each instance, subject to any of
Purchaser’s rights in the Reserve Account, any amount by which collected funds
in the Reserve Account are greater than the Required Reserve Amount; provided,
that Seller shall not be entitled to make such demand more than twice in any one
(1) week.

 

2.3.3                        Purchaser may charge the Reserve Account with any
Obligation, including any amounts due from Seller to Purchaser hereunder.

 

2.3.4                        Purchaser may pay any amounts due Seller hereunder
by a credit to the Reserve Account.

 

2.3.5                        Upon termination of this ARPA, Purchaser may retain
the Reserve Account for ninety days thereafter to be applied to payment of any
Obligations whether known or unknown to Purchaser at the time of termination,
provided, however, that the foregoing ninety-day hold-back period shall not
apply where all Purchased Accounts have been paid in full at the time of
termination.

 

3.                                       Authorization for Purchases.   Subject
to the terms and conditions of this ARPA, Purchaser is authorized to purchase
Accounts upon telephonic, facsimile or other instructions received from anyone
purporting to be an executive officer of Seller.

 

4.                                       Fees and Expenses.  Seller shall pay to
Purchaser:

 

4.1                                 Origination Fee.  The Origination Fee, which
may be deducted from the Purchase Price payable by Purchaser on those Accounts
identified in the first AR Purchase Certificate.  To the extent that said
Purchase Price is less than the Origination Fee, the unpaid balance shall be due
thirty days from the date hereof.

 

4.2                                 Missing Notation Fee.  The Missing Notation
Fee with respect to any Invoice sent by Seller to an Account Debtor, which
Invoice does not contain the Notation or Notification as required under
Section 1.25 hereof.

 

4.3                                 Misdirected Payment Fee.  Any Misdirected
Payment Fee immediately upon its accrual.

 

4.4                                 Cost of Funds Fee.  The Cost of Funds Fee,
which shall accrue daily and be payable monthly.

 

4.5                                 Delay Discount.  The Delay Discount, on
demand, on:

 

4.5.1                        All past due amounts due from Seller to Purchaser
hereunder; and

 

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4.5.2                        The amount of any Reserve Shortfall.

 

4.6                                 Out-of-pocket Expenses.  The out-of-pocket
expenses directly incurred by Purchaser in the administration of this ARPA such
as wire transfer fees, postage and Audit Fees, including any out-of-pocket
expenses related to the inspection or review of any Collateral or of Seller’s
records upon and during the continuance of an Event of Default.  Seller shall
not be required to pay for more than two audits per twelve-month period unless
the cause of an audit is due to Seller committing an Event of Default.

 

5.                                       Repurchase Of Accounts.

 

5.1                                 Requirement to Repurchase.  Upon the
occurrence of one of the following conditions, Purchaser may require that Seller
repurchase, by payment of the then unpaid Face Amount thereof, together with any
unpaid fees due hereunder relating to the Purchased Account, on demand, or, at
Purchaser’s option, by Purchaser’s charge to the Reserve Account:

 

5.1.1                        Any Purchased Account, the payment of which has
been disputed in writing by the Account Debtor obligated thereon, Purchaser
being under no obligation to determine the bona fides of such dispute;

 

5.1.2                        Any Purchased Account for with Seller has breached
a covenant under Sections 11.1, 11.3, 11.7, 11.10, 11.11, 11.13, 11.14, 11.15 or
a representation or warranty under section 12 hereunder (excluding
Section 12.7);

 

5.1.3                        All Purchased Accounts upon and during the
continuance of an Event of Default, or upon the termination date of this ARPA;
and

 

5.1.4                        Any Purchased Account which remains unpaid beyond
the Late Payment Date.

 

5.2                                 Security Interest in Repurchased Accounts. 
All such Accounts repurchased by the Seller shall continue to serve as
Collateral, to secure all Obligations of Seller hereunder.

 

6.                                       Security Interest.  As Seller’s assets
securing the Obligations, Seller grants to Purchaser a continuing first priority
security interest in and lien upon the Collateral.  Notwithstanding the granting
to Purchaser of a security interest, the relationship of the parties as to the
Purchased Accounts shall be that of Purchaser and Seller of accounts, and not
that of lender and borrower.

 

7.                                       Guaranty.  As further security for the
payment of the Obligations, Xplore Technologies Corp. has fully and
unconditionally guaranteed the Seller’s obligations and performance of this
ARPA, as evidenced by the commercial guaranty agreement

 

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executed contemporaneously herewith.  Such Commercial Guaranty shall be fully
enforceable in accordance with its terms.

 

8.                                       Clearance Days.  For all purposes under
this ARPA, Clearance Days will be added to the date on which any payment is
received by Purchaser.

 

9.                                       Authorization to Purchaser.

 

9.1                                 Rights Relating to Collateral.  So long as
the Obligations remain outstanding, Seller hereby irrevocably authorizes
Purchaser, at Seller’s expense, at any time, and from time to time, in the
Purchaser’s sole discretion, to exercise at any time any of the following powers
until all of the Obligations have been paid in full: (a) receive, take, endorse,
assign, deliver, accept and deposit, in the name of Purchaser or Seller, any and
all cash, checks, commercial paper, drafts, remittances and other instruments
and documents relating to the Collateral or the proceeds thereof, (b) take or
bring, in the name of Purchaser or Seller, all steps, actions, suits or
proceedings deemed by Purchaser necessary or desirable to effect collection of
or other realization upon the accounts and other Collateral (c) upon and during
the continuance of an Event of Default, change the address for delivery of mail
to Seller and to receive and open mail addressed to Seller and to the extent
mail appears to be unrelated to Purchaser’s interests, make such mail available
to Seller for pick-up or otherwise transfer such mail to Seller which duty to
transfer such mail shall commence thirty (30) days after Purchaser first
receives physical possession of Seller’s mail, (d) upon and during the
continuance of an Event of Default, extend the time of payment of, compromise or
settle for cash, credit, return of merchandise, and upon any terms or
conditions, any and all accounts or other Collateral which includes a monetary
obligation and discharge or release any Account Debtor or other obligor
(including filing of any public record releasing any lien granted to Seller by
such account debtor), without affecting any of the Obligations, (e) pay any sums
necessary to discharge any lien or encumbrance which is senior to Purchaser’s
security interest in the Collateral, which sums shall be included as Obligations
hereunder, and in connection with which sums the Delay Discount shall accrue and
shall be due and payable, (f) file in the name of Seller or Purchaser or both,
(1) mechanics lien or related notices or (2) claims under any payment bond, in
connection with goods or services sold by Seller in connection with the
improvement of realty, and (g) notify any Account Debtor obligated with respect
to any Account, that the underlying Account has been assigned to Purchaser by
Seller and that payment thereof is to be made to the order of and directly and
solely to Purchaser, and (h), communicate directly with Seller’s Account Debtors
to verify the amount and validity of any Account created by Seller.

 

9.2                                 Financing Statements.  So long as this
Agreement is in effect, the Seller irrevocably authorizes the Purchaser at any
time and from time to time to file any initial financing statements and
amendments thereto that Purchaser deems reasonably necessary as a result of this
ARPA, including those that:

 

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9.2.1                     indicate the Collateral as “all assets” of the Seller
or words of similar effect, regardless of whether any particular asset comprised
in the Collateral falls within the scope of Article 9 of the UCC, or as being of
an equal or lesser scope or with greater detail;

 

9.2.2                     contain any other information required by part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether the Seller is an
organization, the type of organization, the state of organization and any
organization identification number issued to the Seller and, (ii) in the case of
a financing statement filed as a fixture filing or indicating Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates; and

 

9.2.3                     advises third parties that any contact with Seller’s
Account Debtors may be tortiously interfering with Purchaser’s collection
rights.

 

9.3                               Release.  Seller hereby releases and
discharges Purchaser, its officers, employees, designees, from any liability
arising from any acts of Purchaser under this ARPA, or in furtherance thereof,
whether of omission or commission, and whether based upon any error of judgment
or mistake of law or fact, except for acts of gross negligence or willful
misconduct. In no event will Purchaser have any liability to Seller for lost
profits or other special or consequential damages.  Without limiting the
generality of the foregoing, Seller releases Purchaser from any claims which
Seller may now or hereafter have arising out of Purchaser’s endorsement and
deposit of checks issued by Seller’s customers stating that they were in full
payment of an account, but issued for less than the full amount which may have
been owed on the account.  Further, the Purchaser shall have no liability to the
Seller for any mistake in its dealings with any Account Debtors or in the
application of any payment received by it with respect to any Account except to
the extent of the amount of the misapplication unless based on willful
misconduct or gross negligence.

 

9.4                               Authorization to Deposit.  So long as this
Agreement is in effect, Seller authorizes Purchaser to accept, indorse and
deposit on behalf of Seller any checks tendered by an Account Debtor “in full
payment” of its obligation to Seller.  Seller shall not assert against Purchaser
any claim arising therefrom, irrespective of whether such action by Purchaser
effects an accord and satisfaction of Seller’s claims, under §3-311 of the UCC,
or otherwise.  This Section 9.4 of this ARPA shall survive termination of this
ARPA.

 

9.5                               Offset Rights.  The Purchaser shall have the
right to offset from amounts received by Purchaser any amounts due from Seller
to Purchaser hereunder.  As to any Account proceeds that do not represent
Purchased Accounts, and so long as no Event of Default has occurred and is
continuing, Purchaser shall be deemed to have received any such proceeds of
Accounts as a pure pass-through for and on account of Seller.

 

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10.                               ACH Authorization.   In order to satisfy any
of the Obligations, Purchaser is hereby authorized by Seller to initiate
electronic debit or credit entries through the ACH system from and/or to any
deposit account maintained by Seller wherever located.  Purchaser shall promptly
notify Seller when it debits Seller’s account.

 

11.                               Covenants By Seller.

 

11.1                        With Respect to Accounts.  Seller shall not, without
the prior written consent of Purchaser in each instance, other than in the
ordinary course of business, provided such act is within common industry
standards, (a) grant any extension of time for payment of any of the Accounts
and/or other Collateral, (b) compromise or settle any of the Accounts and/or
other Collateral for less than the full amount thereof, (c) release in whole or
in part any Account Debtor, or (d) grant any credits, discounts, allowances,
deductions, return authorizations or the like with respect to any of the
Accounts and/or other Collateral.

 

11.2                        Access.  From time to time as requested by
Purchaser, at the sole expense of Seller, Purchaser or its designee shall have
access, during reasonable business hours if prior to an Event of Default and at
any time during the continuance of an Event of Default, to Seller’s primary
business premises as well as all other premises where Collateral is located for
the purposes of inspecting (and removing, if after the occurrence of an Event of
Default) any of the Collateral, including Seller’s books and records, and Seller
shall permit Purchaser or its designee to make copies of such books and records
or extracts therefrom as Purchaser may request. During the continuance of an
Event of Default, without expense to Purchaser, Purchaser may use any of
Seller’s equipment, including computer equipment, programs, printed output and
computer readable media, supplies and premises for the collection of accounts
and realization on other Collateral as Purchaser, in its sole discretion, deems
appropriate, and may make reasonable use of Seller’s personnel for the purpose
of assisting Purchaser in the collection of Accounts.  Seller hereby irrevocably
authorizes and shall direct each current or later engaged accountant and third
party to disclose and deliver to Purchaser on a confidential basis at Seller’s
expense all financial information, books and records, work papers, management
reports and other information in their possession relating to Seller.

 

11.3                        Invoice Notification.  Before sending any Invoice to
an Account Debtor, Seller shall mark same with a Notation as defined and set
forth in Section 1.25 hereof.

 

11.4                        Taxes.  Seller shall pay when due all payroll and
other taxes, and shall provide upon written request proof thereof to Purchaser
in such form as Purchaser shall reasonably require.  Seller will notify
Purchaser in writing, reasonably soon after upon learning of the imposition or
assessment of any lien, levy, tax lien, assessment or similar action against
Seller or any of Seller’s assets, other than liens in the ordinary course for
taxes not yet due.

 

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11.5                        No Creation by Seller of Certain Liens.  Except for
liens in favor of Purchaser, Seller shall not create, incur, assume or permit to
exist any security interest, lien or encumbrance upon or with respect to any
Account and/or other Collateral now owned or hereafter acquired by Seller, other
than liens in effect on the date hereof and other liens to the extent such liens
that have been subordinated to Purchaser’s liens pursuant to a fully executed
subordination agreement between Purchaser and the subordinating creditor.  In
addition, Seller will not, without prior written notice and consent of
Purchaser, sell, assign or factor its Accounts other than to Purchaser until all
Obligations due Purchaser have been fully satisfied and Purchaser has filed a
UCC termination statement.

 

11.6                        Insurance.  Seller shall maintain insurance on all
insurable property owned or leased by Seller in the manner, to the extent and
against at least such risks (in any event, including but not limited to fire and
business interruption insurance) as usually maintained by owners of similar
businesses and properties in similar geographic areas.  All such insurance shall
be in amounts and form and with insurance companies reasonably acceptable to
Purchaser, and shall reflect the Purchaser as the loss payee; and that the
Purchaser shall be listed in the policy as an additional insured entitled to
receive notices.  Seller shall furnish to Purchaser: (a) upon written request,
any and all information concerning such insurance carried; (b) as requested by
Purchaser, loss payable endorsements (or their equivalent) in favor of
Purchaser.  All policies of insurance shall provide for not less than thirty
(30) day’s prior written cancellation notice to Purchaser.

 

11.7                        Payments Received by Seller.  Notwithstanding that
Seller has agreed to pay the Misdirected Payment Fee, if the Seller shall
receive any payments with respect to any Accounts sold to the Purchaser, then
the Seller shall hold such payments in trust for the benefit of the Purchaser,
and shall turn over the check in kind, or if payment was made electronically,
the funds, within three (3) business day following the date of receipt by Seller
of the payment on account of a Purchased Account.  Seller shall use commercially
reasonable efforts to request each Account Debtor to comply with any Notation or
Notification and make payment to Purchaser in accordance therewith, whether
indebted on a Purchased Account or a non-Purchased Account.

 

11.8                        Covenants Relating to Collateral.  Seller hereby
warrants and covenants: Any tangible Collateral will be kept at 14000 Summit
Drive Suite 900 Austin, Texas 78728; and such Collateral will not be removed
from the Premises other than in the ordinary course of business. (b) The
Seller’s place of business is 14000 Summit Drive Suite 900, Austin, Texas 78728
and Seller will immediately notify Purchaser in writing of any change in or
discontinuance of Seller’s place of business. (c) The Seller will not sell,
dispose, or otherwise transfer the Collateral or any interest therein, other
than in the ordinary course of business, without the prior written consent of
Purchaser. (d) The Seller shall make all repairs, replacements, additions, and
improvements necessary to maintain any equipment in good working order and
condition. At its option, Purchaser may discharge

 

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taxes, liens, or other encumbrances at any time levied or placed on the
Collateral, may pay insurance due on the Collateral and may pay for the
maintenance and preservation of the Collateral. Seller agrees to reimburse
Purchaser on demand for any payment made, or any expense incurred by Purchaser
pursuant to the foregoing authorization.

 

11.9                        Negative Covenants.  Seller agrees that:

 

11.9.1.           it will not, without prior written consent by the Purchaser
which in the case of clauses (a) and (b) shall not be unreasonably withheld,
conditioned or delayed, (a) use any trade name other than that set out at the
beginning of this ARPA, (b) change its name or use an assumed name; (c) change
its jurisdiction of organization (d) merge or consolidate with any other
corporation or entity; or (e) dissolve or cease its operations as they are now
conducted, or (f) take any action that would cause or could reasonably be
expected to induce any Account Debtor or any Account to fail to pay the Account
in a timely manner.

 

11.9.2              it will not make any cash payments to its shareholders or
other investors other than (i) the reimbursement of ordinary and necessary
business expenses incurred by any shareholder or other investors on behalf of
Seller and salaries at the annual rate as of the date hereof, (ii) dividends or
distributions required under its preferred stock, (iii) provided no Event of
Default has occurred or is continuing, interest on subordinated indebtedness,
(iv) the payment of fees in connection with any capital raising activities, or
(v) the payment of any director fees.

 

11.9.3              it shall not declare any cash dividends on, or purchase,
redeem, retire or otherwise acquire any of its capital stock or make any
distribution of its assets to any of its shareholders or other investors other
than required distributions of common stock to its preferred stockholders or
interest owed on subordinated indebtedness or distributions with respect to
approved company benefit plans.

 

11.10                 Returned Merchandise Held in Trust.  Seller covenants and
agrees that in the event any Goods sold giving rise to a Purchased Account shall
be returned to or repossessed by the Seller, such Goods shall be held by the
Seller in trust for the Purchaser, separate and apart from the Seller’s own
property;

 

11.11                 Covenants With Respect to Returned Goods.  With respect to
any returned or repossessed Goods, the Seller at its sole cost and expense,
shall (a) provide proper storage therefor, (b) maintain adequate insurance
coverage thereon, (c) prepare the same for sale, (d) defend title thereto,
(e) take all other actions necessary for the protection thereof, (f) pay freight
and related shipping costs, (g) be responsible for any other costs or expenses
incurred in connection with the foregoing, including reasonable attorneys’ fees,
and (h) immediately notify Purchaser of any authorization Seller provides for
the return of Goods;

 

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11.12                 Collection Efforts.  Seller acknowledges that the
Purchaser itself does not intend to make collection efforts, enforce collection
rights, or exercise any other duties or diligence in connection therewith,
except as to Purchased Accounts where Purchaser elects to do so in its sole
discretion.  Purchaser shall at all times retain the sole and exclusive
discretion as to whether or to who, Purchaser may assign the Accounts, the
Collateral or any other of its rights to another party, all of the Purchaser’s
rights and interests hereunder being fully assignable and transferable;

 

11.13                 Notification of Account Debtors. Seller agrees that it
will at all times be required to include in the remittance section of all
Invoices a notation which reads “Please send payment to Far West Capital at
P.O. Box 3427, Cedar Park, Texas 78630,” In addition, upon and during the
continuance of an Event of Default, Seller will be required to include the
following notation on all Invoices: “This Account has been sold and assigned and
is payable directly and exclusively to DSCH CAPITAL PARTNERS, LLC DBA FAR WEST
CAPITAL, at P.O. Box 3427, Cedar Park, Texas 78630, to whom notice of any claim
or dispute must be advised, whether in writing or by telephone at (512)
528-1490.” Other than for acts involving Purchaser’s gross negligence or willful
misconduct,  Seller in advance waives any rights and claims which it may
hereafter have, or hereafter claim to have, against Purchaser based in any way
upon such contacts with and/or notifications to such account debtors, including
but not limited to claims for disparagement, interference with business
relationships, or any other form of damage to the Seller or its business (es).

 

11.14                 Information Requirements.  Seller shall provide the
following to Purchaser to be held by Purchaser on a confidential basis:

 

11.14.1       Within thirty (30) days of the close of each fiscal quarter:

 

11.14.1.1                     Unaudited management prepared balance sheet,
income statement;

 

11.14.1.2                     Detailed accounts receivable aging;

 

11.14.1.3                     Detailed accounts payable aging;

 

11.14.2       Copy of Texas Sales Tax Return, as filed with the appropriate
taxing authority, with proof that the payment has been made within ten (10) days
of filing.

 

11.14.3       On an annual basis within thirty (30) days of the date on which
the following is required to be filed, copies of:

 

11.14.3.1                     All federal, state and county income or franchise
tax returns or reports; and

 

11.14.3.2                     All federal and state payroll tax returns; and

 

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11.14.3.3                     Financial statements of commercial guarantor of
Seller’s Obligations hereunder.

 

11.15         Avoidance Claims.  Seller shall (i) indemnify Purchaser from any
loss arising out of the assertion of any Avoidance Claim, and shall pay to
Purchaser on demand the amount thereof; and (ii) notify Purchaser within five
(5) business days of it becoming aware of the assertion in writing of an
Avoidance Claim.  This provision shall survive termination of this ARPA.

 

11.16         Client Reference Manual.  Purchaser agrees to provide Seller with
a copy of the Purchaser’s Client Reference Manual reasonably soon after the
execution of this ARPA, and Seller covenants and agrees to use commercially
reasonable efforts to comply with the Purchaser’s Client Reference Manual, as
such may exist presently, and as may be reasonably revised and/or amended from
time to time at the Purchaser’s discretion, upon notice to Seller to the extent
such amendment or revision does not change the commercial terms between the
parties in effect as of the Effective Date or otherwise materially and adversely
affect Seller’s rights under this ARPA.

 

11.17         Taxpayer Information.  Seller shall fully complete and execute, as
taxpayer, prior to or immediately upon the execution of this Agreement, a form
8821 (Rev. April 2004) and/or form 4506 (Rev. October 2008) or form 4506-T (Rev.
January 2008) issued by the Department of the Treasury, Internal Revenue Service
or such other forms as may be requested by Purchaser, irrevocably authorizing
Purchaser to, among other things, inspect or receive tax information relating to
any type of tax, tax form, years or periods or otherwise desired by Purchaser on
an ongoing basis during the term of this ARPA and/or after termination in the
event the Obligations remain outstanding.

 

12.                               Representations and Warranties.  Seller
represents and warrants that:

 

12.1                        Authority.  It is fully authorized to enter into
this ARPA and to perform its obligations hereunder;

 

12.2                        Binding Nature.  This ARPA constitutes its legal,
valid and binding obligation of Seller;

 

12.3                        Solvent and Good Standing.  Seller is solvent and in
good standing in the state of its organization; and

 

12.4                        Nature of Accounts.  The Purchased Accounts are:

 

12.4.1                              bona fide existing obligations created by
the unconditional sale and delivery of goods or the complete, full and
unconditional rendition of services in the ordinary course of Seller’s business;

 

12.4.2                              unconditionally owed to Purchaser without
defenses, including, but not limited to, any disputes, offsets, counterclaims,
or rights of return or cancellation, regardless of the bona fides of any such
defenses;

 

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12.4.3                              sales not made to any entity that is
Affiliated with Seller or in any way not an “arms length” transaction;

 

12.5                        No Notice of Bankruptcy.  Seller has not received
notice of actual or imminent bankruptcy, insolvency, or material impairment of
the financial condition of any applicable Account Debtor regarding Purchased
Accounts;

 

12.6                        Restriction on Accounts.  Seller will not assign to
the Purchaser any Accounts (i) that have been fully or partially paid,
satisfied, or discharged or (ii) to which any defenses have been asserted, which
are in dispute, or for which the goods or services have not been delivered or
performed;

 

12.7                        Account Purchase Transaction.  Seller understands
and agrees that none of the payments contemplated by this ARPA shall constitute
a transaction for the use, forbearance, or detention of money; and that all
transactions contemplated hereby are account purchase transactions, as defined
in the Texas Finance Code, Section 306.001;

 

13.                               Default.

 

13.1                        Events of Default.  The occurrence of any one (1) or
more of the following events will constitute an Event of Default hereunder:
(a) Seller defaults in the payment of any Obligations or in the performance of
any provision hereof or of any other agreement now or hereafter entered into
with Purchaser hereunder and such default remains uncured for a period of ten
(10) days following written notice thereof, unless such default is of such a
nature that it cannot reasonably be expected to be cured, in which case
Purchaser shall not be required to give notice of default or opportunity to cure
to Seller, or any warranty or representation contained herein proves to be false
in any way and such breach would reasonably be expected to have a material
adverse effect on Purchaser and/or Seller, the gravity of such effect to be
determined by Purchaser at its sole discretion; (b) any guarantor of the
Obligations becomes subject to any debtor-relief proceedings, fails to perform
or observe any of such guarantor’s obligations to Purchaser or shall notify
Purchaser of its intention to rescind, modify, terminate or revoke any guaranty
of the Obligations, or any such guaranty shall cease to be in full force and
effect for any reason whatever; (c) Purchaser for any reason, in good faith,
deems itself insecure with respect to the prospect of repayment or performance
of the Obligations; (d) Seller shall generally not pay, or shall be unable to
pay, or shall admit in writing its inability to pay its debts as such debts
become due, (e) Seller shall make an assignment for the benefit of creditors, or
petition or apply to any tribunal for the appointment of a custodian, receiver,
or trustee for it or a substantial part of its assets, (f) Seller shall commence
any proceeding under any bankruptcy, reorganization, arrangement, readjustment
of debt, dissolution, or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect, (g) Seller shall have had any such petition or
application filed or any such proceeding commenced against it in which an order
for relief is entered or an adjudication or appointment is made, (h) Seller
shall take any corporate action indicating its consent to, approval of, or
acquiescence in any such petition, application, proceeding, or order for relief
or the appointment of a custodian, receiver, or trustee for all or any

 

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substantial part of its properties, and (i) Seller shall suffer any such
custodianship, receivership, or trusteeship. Seller acknowledges that the
information Purchaser has currently made available to Seller through online,
internet services as outlined in the Client Reference Manual constitutes and
satisfies any duty to respond to a Request for an Accounting or Request
regarding a Statement of Account that is referenced in § 9-210 of the UCC.

 

13.2                        Effect of Default.  Upon and during the continuance
of any Event of Default,           Purchaser may:

 

13.2.1                              immediately deem Seller in default under
this ARPA, at which time all Obligations shall immediately become due and
payable without notice;

 

13.2.2                              exercise any and all other remedies allowed
under this ARPA and/or;

 

13.2.3                              to take any action otherwise allowed by law
and/or in equity, including with respect to Collateral, exercising all rights
and remedies afforded to secured parties under the UCC.

 

13.3                        Subject to Seller’s release of claims as set forth
in paragraph 9.3 of this ARPA, and only in the event such release is deemed
inapplicable or contrary to law by a court of proper jurisdiction and except for
Purchaser’s gross negligence or willful misconduct, Seller’s sole remedy for any
breach alleged to have been committed by Purchaser of any obligation or duty
owed under, arising out of or relating to this ARPA or any other agreement
between the Seller and Purchaser shall be limited to any amount in the Reserve
Account at the time notice of such breach is first given to Purchaser, in
writing.  Under no circumstances shall Purchaser be liable for any incidental,
special or consequential damages, including, but not limited to, loss of
goodwill, loss of profit, or any other losses associated therewith, whether
Purchaser did or did not have any reason to know of a loss that may result from
any general or particular requirement of Seller.

 

14.                               Account Statement.  Purchaser shall provide
Seller with information on the Purchased Accounts and a detailed monthly
reconciliation of the factoring relationship relating to billing, collection and
account maintenance such as aging, posting, error resolution and mailing of
statements.  All of the foregoing shall be in a format and in such detail, as
Purchaser and Seller agree acting in good faith, deems appropriate including,
but not limited to, electronic access on a website hosted by Purchaser.  Each
statement, report, or accounting rendered, issued or other information regularly
made available by Purchaser to Seller on any website shall be deemed
conclusively accurate and binding on Seller absent clear error or Purchaser’s
knowledge of its inaccuracy, unless within fifteen (15) days after the date of
issuance of any written statement or the first of each month as to Purchaser’s
website content Seller notifies Purchaser to the contrary by notice hereunder,
setting forth with specificity the reasons why Seller believes such statement,
report, accounting or website information is inaccurate, as well as what Seller
believes to be correct amount(s) therefore.

 

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15.                               Waiver.

 

15.1                        No failure to exercise and no delay in exercising
any right, power, or remedy hereunder shall impair any right, power, or remedy
which Purchaser may have, nor shall any such delay be construed to be a waiver
of any of such rights, powers, or remedies, or any acquiescence in any breach or
default hereunder; nor shall any waiver by Purchaser of any breach or default by
Seller hereunder be deemed a waiver of any default or breach subsequently
occurring.  All rights and remedies granted to Purchaser hereunder shall remain
in full force and effect notwithstanding any single or partial exercise of, or
any discontinuance of action begun to enforce, any such right or remedy.  The
rights and remedies specified herein are cumulative and not exclusive of each
other or of any rights or remedies that Purchaser would otherwise have.  Any
waiver, permit, consent or approval by Purchaser of any breach or default
hereunder must be in writing and shall be effective only to the extent set forth
in such writing and only as to that specific instance.

 

15.2                        FURTHER, PURCHASER’S FAILURE TO CHARGE OR ACCRUE
CHARGES OR FEES AT ANY “DEFAULT” OR “PAST DUE” RATE SHALL NOT BE DEEMED A WAIVER
BY PURCHASER OF ITS CLAIM THERETO.

 

16.                               Termination; Effective Date.

 

16.1                        This ARPA shall take effect on the Effective Date
set forth on the signature page hereto and shall remain in full force for a
period of twelve (12) months (the “Initial Term”). The ARPA shall be
automatically extended and renewed for successive one (1) year periods following
the Initial Term (each such one (1) year period, a “Renewal Term”), unless
notice of non-renewal is provided by either party as hereinafter provided.
Notice of non-renewal under this ARPA must be in writing and delivered to the
other party not less than ninety (90) days prior to the conclusion of the
Initial and/or Renewal Term.

 

16.2                        The ARPA may be terminated: by Purchaser (i) at any
time upon one-hundred and fifty (150) days prior written notice of termination
to Seller, or (ii) without notice of termination, upon the occurrence and during
the continuance of an Event of Default; and by Seller upon sixty (60) days prior
written notice of termination provided that Seller has satisfied all Obligations
hereunder on the date of termination.  In the event of termination by Seller
under this Section 16.2, Seller shall be obligated to pay the Termination Fee as
defined and set forth in Section 16.4 of this ARPA.

 

16.3                        Upon the effective date of termination all
Obligations of Seller to Purchaser shall become immediately due and payable
without further notice or demand irrespective of any maturity dates established
prior thereto, and Seller shall be obligated to satisfy all Obligations which
shall include the repurchase of all Purchased Accounts as described in Section 5
for a repurchase price equal to the aggregate Obligations to Purchaser on the
date of repurchase.  No termination of this ARPA will in any way affect or
impair any right of Purchaser arising prior thereto or by reason thereof, nor
will any such termination relieve Seller of any duty to Purchaser under, nor
deny Purchaser any benefit from, this ARPA or otherwise until all of Obligations
have been fully discharged. In recognition of the Purchaser’s right to have its
reasonable attorneys’ fees and other expenses incurred in connection with this
ARPA secured by the Collateral, as well

 

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as all indemnities of Seller with respect to dishonored payment items and
Avoidance Claims, notwithstanding payment in full of all Obligations by Seller,
if Purchaser has not been grossly negligent or engaged in willful misconduct,
Purchaser shall not be required to record any terminations or satisfactions of
any of Purchaser’s liens on the Collateral unless and until Seller has executed
and delivered to Purchaser a general release in the approximate form of
Exhibit “A” hereto. Except as otherwise provided herein, Seller understands that
this provision constitutes a waiver of its rights under §9-513 of the UCC.

 

16.4                        In the event Purchaser terminates this ARPA as a
result of an Event of Default and/or this ARPA is terminated by Seller prior to
the end of the Initial Term or any Renewal Term as allowed under Section 16.2
hereof, Seller will pay to Purchaser, in addition to any other Obligations due
and owing upon termination, a penalty equal to the total Discounts accruing
under this ARPA for the ninety day period prior to the effective date of
termination.  Seller agrees that the penalty provisions set forth herein are
cumulative and in no way impair or limit the rights and remedies of Purchaser
under this ARPA.

 

17.                               Amendment.  Neither this ARPA nor any
provisions hereof may be changed, waived, discharged or terminated, nor may any
consent to the departure from the terms hereof be given, orally (even if
supported by new consideration), but only by an instrument in writing signed by
all parties to this ARPA.  Any waiver or consent so given shall be effective
only in the specific instance and for the specific purpose for which given.

 

18.                               Associated Entities.  During the term of this
ARPA or while Seller remains liable to Purchaser for any Obligations under this
ARPA, in the event Seller’s principal(s) including, but not limited to, its
officer(s) and/or or director(s), directly or indirectly, including acting by,
through or in conjunction with any other person, form or cause to be formed a
new entity or otherwise become associated with any new or existing entity,
whether corporation, partnership, limited liability company or otherwise, in a
business similar to or competitive with that of Seller, and such new or
associated entity is assigned any of the Collateral by Seller,  such entity
shall be deemed to have expressly assumed the Obligations due Purchaser under
this ARPA.  With respect to any such entity, provided the conditions in the
first sentence of this Section have been satisfied, (i) Purchaser shall be
deemed to have been granted an irrevocable power of attorney with authority to
file with the Texas Secretary of State, or any other UCC filing office, an
initial UCC-1 financing statement, naming such newly formed or existing entity
as Debtor; (ii) Seller shall indemnify and hold Purchaser harmless from any and
all claims brought by the new or associated entity or any other party relating
to or arising from Purchaser’s authentication and filing of any such financing
statement or the resulting perfection of Purchaser’s ownership and/or security
interests in such new or associated entity’s assets; and (iii) Purchaser shall
have the right to notify such new or associated entity’s Account Debtors of
Purchaser’s rights, and shall have the further right to collect all Accounts,
and to notify any creditor of such new or associated entity that Purchaser has
such rights in such entity’s assets.

 

19.                               Conflict.  Unless otherwise expressly stated
in any other agreement between Purchaser and Seller, if a conflict exists
between the provisions of this ARPA and the provisions of such other agreement
between the parties, the provisions of this ARPA shall control.

 

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20.                               Survival of Agreement, Representations,
Warranties and Covenants.  All warranties, representations and covenants made by
Seller herein or in any other instrument delivered by Seller or on Seller’s
behalf in connection with this ARPA shall be considered to have been relied upon
by Purchaser and shall survive the purchase of the Purchased Accounts regardless
of any investigation made by Purchaser or on Purchaser’s behalf and shall
continue in full force and effect so long as any amount due or to become due
hereunder is outstanding and unpaid and so long as this ARPA has not
terminated.  Specifically, all warranties, representations and covenants made by
Seller in this ARPA shall be deemed reaffirmed by Seller upon execution and
delivery of each AR Purchase Certificate.

 

21.                               Severability.  In the event any one or more of
the provisions contained in this ARPA is held to be invalid, illegal or
unenforceable in any respect, then such provision shall be ineffective only to
the extent of such prohibition or invalidity, and the validity, legality, and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

 

22.                               Enforcement.  This ARPA and all agreements
relating to the subject matter hereof shall be deemed to be the product of
negotiation and preparation by and among each party and its respective
attorneys, and shall be construed accordingly.

 

23.                               Relationship of Parties.  Purchaser shall at
no time be deemed a fiduciary of the Seller.

 

24.                               Attorneys Fees.  Seller agrees to reimburse
Purchaser on demand for:

 

24.1                        Costs and Expenses.  The actual amount of all
out-of-pocket costs and expenses, including reasonable attorneys’ fees, which
Purchaser has incurred in:

 

24.1.1                                      negotiating, preparing, or
administering this ARPA and any documents prepared in connection herewith, all
of which shall be paid contemporaneously with the execution hereof;

 

24.1.2                                      protecting, preserving or enforcing
any lien, security interest or other right granted by Seller to Purchaser or
arising under applicable law, whether or not suit is brought, including but not
limited to the defense of any Avoidance Claims.

 

24.1.3                                      collecting any Accounts from Account
Debtors

 

24.2                        Enforcement.  Purchaser is entitled to recover from
the Seller the actual amount of all out-of-pocket costs and expenses, including
reasonable attorneys’ fees, which Purchaser may incur in enforcing this ARPA and
any documents prepared in connection herewith, or in connection with any federal
or state insolvency proceeding commenced by or against Seller, including those
(i) arising out the automatic stay or (ii) seeking relief under § 523 or § 727
of the Bankruptcy Code.

 

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25.                               JURY TRIAL WAIVER.  IN RECOGNITION OF THE
HIGHER COSTS AND DELAY WHICH MAY RESULT FROM A JURY TRIAL, THE PARTIES HERETO
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(A) ARISING HEREUNDER, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT HERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY FURTHER WAIVES ANY RIGHT TO
CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

 

26.                               Choice of Law.  This ARPA and all transactions
contemplated hereunder and/or evidenced hereby shall be governed by, construed
under, and enforced in accordance with the laws of the State of Texas, without
regard to choice of law principals.

 

27.                               Alternative Dispute Resolution.

 

27.1                        Mediation.  In the event of a dispute between the
parties concerning any aspect of this ARPA and except for any matters pertaining
to Seller’s commission of an Event of Default pursuant to sections 13.1(a), (f),
(h) or (i) (“Alternative Dispute Exceptions”), the parties shall first meet
within two (2) business days of receipt of any request and, in good faith, seek
to resolve the dispute. If the parties fail to reach an agreement at the
meeting, the parties agree to submit the dispute to non-binding, expedited
mediation prior to the initiation of any litigation.  The Alternative Dispute
Exceptions shall not be subject to the mediation requirements of this
paragraph.   Seller and Purchaser reserve all of their respective rights in the
event that no agreed resolution is reached in the mediation procedure and
neither party shall be deemed to be precluded from commencing an action while
the mediation procedure is pending or continuing.

 

28.                               Notice.  Any notice or communication required
or permitted hereunder shall be deemed to be delivered when delivered by hand,
deposited in the United States mail, postage fully prepaid, registered or
certified mail, return receipt requested, or sent by overnight courier and
addressed to the intended recipient at the address on the signature page of this
ARPA.  Any address for notice may be changed by written notice delivered as
provided herein.

 

29.                               Determination of Purchase Price.  The Purchase
Price of the Accounts has been determined pursuant to negotiations between
Purchaser and Seller and represents the fair market value thereof, after due
consideration has been given to the nature of the Accounts, the probability of
prompt collection thereof, the credit worthiness of the Account Debtor, the
payment history of the Account Debtor and other economical factors relative to
the Accounts. Further, in arriving at the Purchase Price, consideration has been
given to services rendered and services that will be rendered in the future by
Purchaser in connection with credit investigations of Account Debtor,
supervising the ledgering of accounts purchased, supervising the collection of
accounts purchased, and the assumption of certain credit risks.  The parties
hereto acknowledge that the purchase of the Accounts by Purchaser constitutes an
outright conveyance by the Seller to Purchaser.

 

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30.                               Power of Attorney.  For so long as any
Obligations are owed under this ARPA or any Accounts remain outstanding,
Purchaser is hereby irrevocably authorized as Seller’s Attorney-in-Fact, with
full authority in the place of Seller and in the name of Seller or otherwise, in
Purchaser’s discretion, to take any action and to execute any instrument which
Purchaser may deem reasonably necessary or advisable to accomplish the purposes
of this ARPA, but only to the extent such actions are not otherwise inconsistent
with the other provisions of this ARPA, including, without limitation:

 

30.1                        Endorsement.  To endorse in the name of Seller, and
to take all actions necessary to collect for deposit to Purchaser’s account, all
checks, drafts and other forms of trade acceptances, negotiable instruments and
other forms of payment (hereinafter collectively referred to as the “Payments”)
which are tendered in payment of Accounts or in payment of insurance claims
relating to the Accounts or which are received by Purchaser.  The authorization
includes, without limitation, the power to open, cash, endorse, deposit and
otherwise collect all such Payments in the event they are not made payable to
Purchaser;

 

30.2                        Contact Account Debtors.  To contact Account Debtors
at any time in order to verify and/or collect Accounts;

 

30.3                        Contact IRS.   To contact the Internal Revenue
Service and other State and local taxing authorities in order to ascertain
Seller’s tax liability;

 

30.4                        Insurance.  To obtain and adjust insurance required
to be paid to Purchaser;

 

30.5                        With Regard to Accounts.  To ask, demand, collect,
sue for, recover, compound, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Accounts;

 

30.6                        Filings.  To file, at Seller’s expense, any claims
or take any action or institute any proceedings which Purchaser may deem
necessary or desirable for the collection of any of the Accounts or any of the
collateral securing payment of the Accounts or otherwise to enforce the rights
of Purchaser with respect to the Accounts.

 

This Power of Attorney is irrevocable and coupled with an interest.  Seller
hereby acknowledges that Seller is not entitled to any notice, demand or
presentation with respect to payment of any Account and agrees that Purchaser
may extend or renew from time to time the payment of any Account without notice
to or consent by Seller.

 

31.                               No Obligation to Purchase Further
Receivables.  Seller specifically acknowledges and agrees that, anything herein
to the contrary notwithstanding, Purchaser has the right to approve or reject
any or all future accounts receivable proposed for sale under this ARPA in its
sole discretion, and no course of conduct or prior course of dealing shall
establish any commitment, obligation or agreement to purchase future accounts
receivable.

 

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32.                               Headings, Construction.  The headings
contained in this ARPA are for reference purposes only and shall not modify or
affect the terms of this ARPA in any manner.

 

33.                               Saturday, Sunday or Legal Holiday.  If any day
provided in this ARPA for the performance of any obligation should fall on a
Saturday, Sunday or Legal Holiday, the compliance with such obligation or
delivery shall be deemed acceptable on the next business day following such day.

 

34.                               Receipt of Payment.  Any payment received by
Purchaser on a Saturday, Sunday or day on which DSCH Capital Partners, LLC dba
Far West Capital doing business in the State of Texas are closed for regular
business (a “Legal Holiday”), or any payment that is received by Purchaser after
3:00 p.m., shall be deemed received on the next day that is not a Saturday,
Sunday or Legal Holiday.

 

35.                               Submission to Jurisdiction.

 

35.1                        WILLIAMSON COUNTY.  ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS ARPA OR ANY OTHER DOCUMENTS TO WHICH SELLER AND PURCHASER
ARE A PARTY MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES LOCATED IN WILLIAMSON COUNTY, TEXAS AND, BY EXECUTION AND DELIVERY OF
THIS ARPA, EACH PARTY HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF
SELLER’S PROPERTY, UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS
WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. EACH PARTY FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY HAND DELIVERY
OR OVERNIGHT COURIER TO SUCH PARTY PURSUANT TO SECTION 28, SUCH SERVICE TO
BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING IN THIS ARPA
SHALL AFFECT THE RIGHT OF PURCHASER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
SELLER IN ANY OTHER JURISDICTION.

 

35.2                        VENUE. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS ARPA BROUGHT IN THE COURTS REFERRED TO IN THIS SECTION 35 AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH ACTION
THAT SUCH ACTION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

21

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36.                               Use of Facsimiles.  The parties acknowledge
and agree that it is anticipated that execution of this ARPA, as well as
schedules or other documents executed in connection herewith, may be evidenced
by facsimile signatures, and such documents containing facsimile signatures
shall be of the same force and effect as if original signatures had been
obtained.

 

37.                               Counterparts.  This ARPA may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if all signatures were upon the same instrument.  Delivery of an executed
counterpart of the signature page to this ARPA by facsimile shall be effective
as delivery of a manually executed counterpart of this ARPA, and any party
delivering such an executed counterpart of the signature page to this ARPA by
facsimile to any other party shall thereafter also promptly deliver a manually
executed counterpart of this ARPA to such other party, provided that the failure
to deliver such manually executed counterpart shall not affect the validity,
enforceability, or binding effect of this ARPA.

 

38.                               Entire ARPA.  This ARPA contains the entire
understanding and agreement between the parties, and supersedes all other prior
or contemporaneous agreements and understandings between the parties, verbal or
written, express or implied, relating to the subject matter hereof.  No
promises, warranties, representations, or understandings of any kind have been
made by Purchaser or any third party that are not contained in this ARPA.

 

39.                               Confidentiality.  Purchaser hereby agrees to
keep strictly confidential and not disclose to any other party or person (other
than its attorneys, accountants and representatives who agree to maintain
confidentiality), all non-public, confidential information regarding Seller and
its affiliates and their business and shall not otherwise use any and all of
such confidential information they have been furnished or have access to in
connection herewith in any manner detrimental to Seller.  Purchaser shall be
responsible for any breach of this provision by Purchaser or any of its
attorneys, accountants and representatives and Purchaser agrees, at its sole
expense, to take all reasonable measures (including but not limited to court
proceedings) to restrain its attorneys, accountants and representatives from
prohibited or unauthorized disclosure or use of the confidential information. 
Notwithstanding the foregoing,  Purchaser shall have the right at all times to
disclose information of Seller, whether public or non-public, that is relevant
and related to an unpaid account/invoice, solely in connection with and for the
purpose of collecting on such account or protecting Purchaser’s interest in such
account; provided that such information shall not include any information which
Purchaser knows or should be reasonably expected to know Seller is prohibited
from disclosing pursuant to confidentiality or other obligations.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Parties have executed this agreement on the day and year
first above written.

 

PURCHASER:

SELLER:

 

 

DSCH CAPITAL PARTNERS, LLC

Xplore Technologies Corporation of America

DBA FAR WEST CAPITAL

 

 

 

 

 

 

 

 

By:

/s/ Brian Center

 

 

By:

/s/Michael J. Rapisand

Name:

Brian Center

 

 

Name:

Michael J Rapisand

Title:

Chief Operating Officer

 

Title:

CFO

Address:

715 Discovery Blvd., Suite 214

 

Address:

14000 Summit Drive, Suite 900

 

Cedar Park, TX 78613

 

 

Austin, TX 78728

 

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EXHIBIT “A”

 

GENERAL RELEASE

 

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are
hereby acknowledged, the undersigned and each of them (collectively “Releasor”)
hereby forever releases, discharges and acquits DSCH Capital Partners, LLC dba
Far West Capital (“Releasee”), its parent, officers, directors, shareholders,
agents and employees, of and from any and all claims of every type, kind,
nature, description or character, and irrespective of how, why, or by reason of
what facts, whether heretofore existing, now existing or hereafter arising, or
which could, might, or may be claimed to exist, of whatever kind or name,
whether known or unknown, suspected or unsuspected, liquidated or unliquidated,
each as though fully set forth herein at length, to the extent that they arise
out of or are in way connected to or are related to that certain Accounts
Receivable Purchase Agreement and all exhibits, riders or addenda thereto, all
of even date herewith.

 

Releasor agrees that the matters released herein are not limited to matters
which are known or disclosed.

 

Releasor acknowledges that factual matters now unknown to it may have given or
may hereafter give rise to Claims which are presently unknown, unanticipated and
unsuspected, and it acknowledges that this Release has been negotiated and
agreed upon in light of that realization and that it nevertheless hereby intends
to release, discharge and acquit the Releasee from any such unknown Claims.

 

Acceptance of this Release shall not be deemed or construed as an admission of
liability by any party released.

 

Releasor acknowledges that either (a) it has had advice of counsel of its own
choosing in negotiations for and the preparation of this release, or (b) it has
knowingly determined that such advice is not needed.

 

RELEASOR/SELLER:

 

Xplore Technologies Corporation of America

 

 

 

 

 

By:

 

 

Name:

Michael J Rapisand

 

Title:

CFO

 

Address:

14000 Summit Drive, Suite 900

 

 

Austin, TX 78728

 

 

 

 

DATED:

 

 

 

 

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