ex101


    
      

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 18021 Sky Park Circle, Suite G2, Irvine,
      California 92614-6570.

     

    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.

     

    
      
        
        

      

      
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    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 

     

    
      
        
        

      

      
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      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, sue, 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;

    


    
      
        
        

      

      
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    (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 

     

    
      
        
        

      

      
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      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
      

     

    
      
        
        

      

      
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      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 mark 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

    


    
      
        
        

      

      
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    (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;

    


    
      

(D) Any
      involuntary lien, garnishment, attachment or the like is issued against or
      attaches to the Pledged Receivables or any Collateral;

    


    (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 

     

    
      
        
        

      

      
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    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 

     

    
      
        
        

      

      
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    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.

     

    
      
        
        

      

      
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    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/ Haresh Sheth         
           

    Name:
      Haresh Sheth

    Title:
      Member

    


    ERXSYS,
      Inc.

     

    By:
      /s/ Robert DelVecchio          

    Name: Robert
      DelVecchio

    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)