Document:

collateral.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
      10.03

    

    

    

    AGREEMENT
      TO ACCEPT COLLATERAL

    IN
      SATISFACTION OF OBLIGATIONS

    

    THIS
      AGREEMENT TO ACCEPT COLLATERAL IN SATISFACTION OF OBLIGATIONS (the
      "Agreement") is made as of August __, 2007, by and among, Dalrada
      Financial Corp., a Delaware corporation (the "Debtor"), Barbara R.
      Mittman, as collateral agent ("Collateral Agent"), Longview Fund, L.P.
      ("Longview") and the other parties identified on Schedule A hereto
      (together with Longview, "Secured Creditors") and Fenix Capital, LLC, a
      Delaware limited liability company ("Newco").

    

    RECITALS
      AND ACKNOWLEDGEMENTS

    

    As
      the basis for, and as further
      consideration for this Agreement, the parties hereto hereby acknowledge and
      agree as follows:

    

    1.           Debtor
      is indebted and obligated to Secured Creditors pursuant to secured convertible
      notes issued February 13, 2006 and more specifically identified in Schedule
      A hereto in the aggregate principal amount of approximately $7,435,093.00
      (collectively, the "Secured Notes") and on which approximately
      $8,085,592.00 in principal, accrued interest and other amounts is outstanding
      as
      of the date hereof.

    

    2.           The
      Solvis Group, Inc., a Nevada corporation, The Solvis Group, Inc., a Michigan
      corporation and Sourceone Group, Inc., a Delaware corporation (collectively,
      "Guarantors") are indebted and obligated to the Secured Creditors
      pursuant to guaranties of the Secured Notes dated February 13, 2006 for the
      benefit of Secured Creditors (the "Guaranties").

    

    3.           Each
      of the Secured Creditors is the holder of a properly perfected valid and fully
      enforceable security interest in all of the assets of the Debtor (collectively,
      the "Collateral"), including without limitation the assets set forth in
Section 2 below, pursuant to (a) a Security Agreement dated February
      13,
      2006 by and among Debtor, Guarantors, Collateral Agent and Secured Creditors
      (the "Security Agreement" ) and (b) UCC-1 financing statements filed in
      connection therewith.

    

    4.           Debtor
      is in default of its obligations to Secured Creditors under the Secured Notes
      for failure to pay principal or interest pursuant to Section 3.1 of the Secured
      Notes, among other reasons, and Guarantors are in default of their obligations
      to Secured Creditors under the Guaranties for failure to pay the outstanding
      obligations of Debtor under the Secured Notes pursuant to Section 3.1 of the
      Guaranties, among other reasons; as a result of such defaults by Debtor and
      Guarantors, Secured Creditors are entitled to enforce their rights and remedies
      as provided in the Security Agreement, the Guaranties and under applicable
      law.

    

    
      
        1

      

      
         

        
          

        

      

      
         

      

    

    5.         Secured
      Creditors have fully performed under the Secured Notes, and Debtor has no claim
      or cause of action against Secured Creditors arising under the Secured Notes
      or
      as to the Collateral or for any other reason.

    

    6.         Secured
      Creditors have assigned all of their rights in the Secured Notes, the Security
      Agreement and the Collateral to Newco, and Newco is now the holder of the
      security interests in the Collateral referenced in the Agreement.

    

    7.         Debtor
      acknowledges and agrees that the amount of indebtedness outstanding under the
      Secured Notes exceeds the value of the Collateral.  Nevertheless, in
      exchange for the consensual and expedient resolution of Debtor's defaults,
      Debtor and Secured Creditors have agreed that Newco as the secured creditor
      shall accept, in full and complete satisfaction of Debtor's indebtedness and
      obligations under the Secured Notes, (i) the transfer of the Collateral to
      Newco
      as described in Section 2 below and (ii) the agreement of Debtor to
      comply with the other terms, conditions and covenants set forth in this
      Agreement.

    

    NOW,
      THEREFORE, in consideration of the
      above recitals and agreements and other good and valuable consideration, the
      receipt and sufficiency of which are hereby acknowledged, the parties hereby
      agree as follows:

    

    1.           Incorporation
      of Recitals and Agreements.  The introduction, recitals and
      agreements above, and the defined terms contained therein, are hereby
      incorporated into this Agreement by this reference.

    

    2.           Acceptance
      of Collateral.

    

    2.1           Acknowledgements,
      Waivers and Representations Relating to New York Uniform Commercial
      Code.

    

    (a)           This
      Agreement constitutes Debtor's present and immediate agreement to Newco's
      acceptance of the Collateral, as provided in Section 9-620(c)(2) of the New
      York
      Uniform Commercial Code (the "NY-UCC"), and Debtor waives any right to
      any further notice or any right to object as provided therein.

    

    (b)           Debtor
      waives any right to redeem the Collateral under Sections

    9-623
      and
      9-624(c) of the NY-UCC.

    

    (c)           Pursuant
      to Section 9-622 of the NY-UCC, Debtor and Newco acknowledge and agree that,
      upon the Closing (as defined in Section 5), Newco's acceptance of the
      Collateral (i) discharges the obligations of Debtor under the Secured Notes
      and
      is consented to by Debtor; (ii) transfers to Newco all of Debtor's rights in
      the
      Collateral; (iii) discharges the security interest that is the subject of the
      Security Agreement and any subordinate security interest or other subordinate
      lien; and (iv) terminates any other subordinate interest (provided that any
      obligations of the Guarantors under the Guaranties, other than obligations
      relating to the Secured Notes, shall survive).

    

    
      
        2

      

      
         

        
          

        

      

      
         

      

    

    (d)           Debtor
      represents and warrants to Secured Creditors and Newco that, other than as
      set
      forth on Schedule B, during the past thirty (30) calendar days through
      the date of this Agreement there has not been, there currently is not, and
      there
      will not be during the period from the date hereof through the Closing, any
      Person (as defined below) other than Secured Creditors or Newco holding a
      security interest, lien or other interest in the Collateral, whether or not
      perfected.  Debtor represents and warrants to Secured Creditors and
      Newco that, notwithstanding anything set forth on Schedule B, Newco (as a
      result of the assignment from Secured Creditors to Newco) holds a properly
      perfected valid and fully enforceable security interest in the Collateral that
      is first in right over any and all of the liens and other interests set forth
      on
Schedule B.  "Person" means an individual, corporation,
      partnership, limited liability company, limited liability partnership,
      syndicate, person, trust, association, organization or other entity, including
      any governmental authority, and including any successor, by merger or otherwise,
      of any of the foregoing.

    

    2.2           Transfer
      of Collateral.  Pursuant to Section 9-620 of the NY-UCC, Newco and
      Debtor agree that Newco hereby accepts at the Closing the Collateral in full
      and
      complete satisfaction of Debtor's indebtedness and obligations to Newco under
      the Secured Notes.  The Collateral includes, without limitation, the
      following (capitalized terms used in this Section 2.2 but not defined in
      this Section 2.2 or elsewhere in this Agreement shall have the respective
      meanings ascribed to them in Article IX of the NY-UCC):

    

    (a)           All
      right, title and interest of Debtor in, to and in respect of all Accounts,
      Goods, real or personal property, all books and records relating to the
      foregoing and all products and Proceeds of the foregoing, and as set forth
      below:

    

    (i)           All
      right, title and interest of Debtor in, to and in respect of all: Accounts,
      interests in goods represented by Accounts, returned, reclaimed or repossessed
      goods with respect thereto and rights as an unpaid vendor; contract rights;
      Chattel Paper; investment property; General Intangibles (including but not
      limited to, tax and duty claims and refunds, registered and unregistered
      patents, trademarks, service marks, certificates, copyrights trade names,
      applications for the foregoing, trade secrets, goodwill, processes, drawings,
      blueprints, customer lists, licenses, whether as licensor or licensee, choses
      in
      action and other claims, and leasehold interests in equipment, real estate
      and
      fixtures); Documents; Instruments; letters of credit, bankers' acceptances
      or
      guaranties; cash moneys, deposits; securities, bank accounts, deposit accounts,
      credits and other property owned or held in any capacity by Debtor, as well
      as
      agreements or property securing or relating to any of the items referred to
      above;

    

                                    (ii)           Goods:  All
      right, title and interest of Debtor in, to and in respect of goods, including,
      but not limited to:

    

    
      
        3

      

      
         

        
          

        

      

      
         

      

    

    (A)           All
      Inventory, wherever located, of whatever kind, nature or description, including
      all raw materials, work-in-process, finished goods, and materials to be used
      or
      consumed in Debtor's business; finished goods, timber cut or to be cut, oil,
      gas, hydrocarbons, and minerals extracted or to be extracted, and all names
      or
      marks affixed to or to be affixed thereto for purposes of selling same by the
      seller, manufacturer, lessor or licensor thereof and all Inventory returned
      to
      Debtor by its customers or repossessed by Debtor and all of Debtor's right,
      title and interest in and to the foregoing (including all of Debtor's rights
      as
      a seller of goods);

    

    (B)           All
      Equipment and fixtures, wherever located, including, without limitation, all
      machinery, furniture and fixtures, and any and all additions, substitutions,
      replacements (including spare parts), and accessions thereof and thereto
      (including, but not limited to Debtor's rights to acquire any of the foregoing,
      whether by exercise of a purchase option or otherwise);

    

    (iii)           Property:  All
      right, title and interests of Debtor in, to and in respect of any other personal
      property in or upon which Debtor has a security interest, lien or right of
      setoff;

    

                          (iv)           Books
      and Records:  All books and records relating to any of the above
      including, without limitation, all computer programs, printed output and
      computer readable data in the possession or control of the Debtor, any computer
      service bureau or other third party; and

    

                          (v)           Products
      and Proceeds:  All products and Proceeds of the foregoing in
      whatever form and wherever located, including, without limitation, all insurance
      proceeds and all claims against third parties for loss or destruction of or
      damage to any of the foregoing.

    

    (b)           All
      right, title and interest of Debtor in, to and in respect of the
      following:

    

    (i)           the
      shares of stock, partnership interests, member interests or other equity
      interests acquired by Debtor of any and all entities (such entities, being
      hereinafter referred to collectively as the "Pledged Issuers" and
      individually as a "Pledged Issuer"), the certificates representing such
      shares, partnership interests, member interests or other interests all options
      and other rights, contractual or otherwise, in respect thereof and all
      dividends, distributions, cash, instruments, investment property and other
      property received, receivable or otherwise distributed in respect of or in
      exchange for any or all of such shares, partnership interests, member interests
      or other interests;

    
 

    (ii)           all
      additional shares of stock, partnership interests, member interests or other
      equity interests acquired by Debtor, of any Pledged Issuer, the certificates
      representing such additional shares, all options and other rights, contractual
      or otherwise, in respect thereof and all dividends, distributions, cash,
      instruments, investment property and other property received, receivable or
      otherwise distributed in respect of or in exchange for any or all of such
      additional shares, interests or equity; and

    

    
      
        4

      

      
         

        
          

        

      

      
         

      

    

    (iii)           all
      security entitlements of Debtor in, and all Proceeds of, any and all of the
      foregoing acquired by Debtor and howsoever its interest therein may arise or
      appear (whether by ownership, security interest, lien, claim or
      otherwise).

    

    Notwithstanding
      the above, the Collateral shall not include any personal property which is
      subject to a purchase money mortgage or other purchase money lien or security
      interest (including capital leases).

    

    2.3           Specific
      Components of Collateral.  Without limiting the broad scope of
Section 2.2, Debtor acknowledges that the Collateral includes the
      following:

    

    (a)           all
      accounts receivable of Debtor;

    

    (b)           all
      customer lists of Debtor, including without limitation the customer lists
      attached hereto as Schedule C; and

    

    (c)           all
      rights of Debtor pursuant to the Stock Purchase and Sale Agreement dated
      September 1, 2006 by and among the shareholders of All Staffing, Inc., a
      Tennessee corporation ("All Staffing"), and Debtor (including all rights
      to ownership of the Shares referenced therein).

    

    3.           Covenants
      of Debtor.

    

    3.1           Non-Solicitation;
      Reasonableness; Referral.

    

    

    (a)           Non-Solicitation.  For
      a period of five (5) years after the Closing Date, Debtor shall not, and
      shall cause its affiliates, directors, officers, employees and agents not to,
      either directly or indirectly, as a stockholder, investor, partner, director,
      officer, employee, consultant or otherwise, solicit business from any Person
      (as
      defined in Section 2.1(d)) that is an existing customer, or was a
      customer within the prior three (3) years, of Debtor (the
      "Customers"), including without limitation those customers identified on
Schedule C.  For purposes of this Section 3.1(a),
      the "Territory" shall mean the United States and any other place where
      Debtor has previously conducted its business.

    

    (b)           Reasonableness.  Debtor
      acknowledges that the duration and geographic scope of the non-solicitation
      provisions set forth in Section 3.1(a) are reasonable.  In
      the event that any court determines that the duration or the geographic scope,
      or both, are unreasonable and that such provision is to that extent
      unenforceable, the provision shall remain in full force and effect for the
      greatest time period and in the greatest area that would not render it
      unenforceable.  Debtor and Newco intend that this non-solicitation
      provision will be deemed to be a series of separate covenants, one for each
      and
      every county in the Territory.

    

    
      
        5

      

      
         

        
          

        

      

      
         

      

    

    (c)           Referral.  For
      a period of five (5) years after the Closing Date, Debtor shall, and shall
      cause its affiliates, directors, officers, employees and agents to, refer all
      business inquiries from the Customers to Newco or such Person (as defined in
      Section 2.1(d)) as Newco may designate in writing to Debtor from time to
      time.  Debtor and its affiliates shall not independently pursue any
      such inquiries without the prior written consent of Newco.

    

    3.2           Maintenance
      of Collateral.  Between the signing hereof through the Closing,
      Debtor (a) shall not transfer any of the Collateral to any Person (as defined
      in
Section 2.1(d)) without the prior written consent of Longview and (b)
      shall use best commercial efforts to preserve in tact the Collateral and to
      preserve the value thereof.

    

    3.3           Legal
      Requirements.  Debtor shall take all actions necessary to comply
      promptly with all legal requirements which may be imposed on Debtor with respect
      to the consummation of the transfers contemplated by this Agreement and will
      promptly cooperate with and furnish information to such other party or parties
      in connection with any such requirements as may be imposed upon such other
      party
      or parties in connection with the consummation of the transfers contemplated
      by
      this Agreement.  Debtor shall take all necessary actions to obtain
      (and to cooperate with such other party or parties) any consent, authorization,
      order or approval of, or any exemption by, any governmental or regulatory
      authority, or other third party, required to be obtained or made by such party
      or parties in connection with this Agreement.

    

    3.4           Proprietary
      Information.  From and after the Closing Date, Debtor shall hold
      in confidence, and shall cause its affiliates, directors, officers, employees
      and agents to hold in confidence, all knowledge, information and documents
      of a
      confidential nature or not generally known to the public with respect to the
      Collateral (including, but not limited to, customer lists, financial
      information, intellectual property rights, technical information or
      data).

    

    4.           No
      Liabilities Assumed.  Notwithstanding anything contained herein,
      Secured Creditors and Newco shall not assume or become responsible for, and
      Debtor shall retain and remain solely liable for and obligated to discharge
      and
      indemnify and hold Secured Creditors and Newco harmless for, any and all
      liabilities, indebtedness, guarantees or obligations of any kind, character
      or
      description (whether known or unknown, whether absolute or contingent, whether
      disputed or undisputed, whether liquidated or unliquidated, whether accrued
      or
      unaccrued, whether secured or unsecured, whether joint or several, whether
      due
      or to become due, whether vested or unvested, and whether claims with respect
      thereto are asserted before or after the Closing) of Debtor (collectively,
      the
      "Debtor Liabilities"), including without limitation the
      following:

     

    (a)           all
      liabilities related to or arising in connection with the activities of Debtor
      or
      its business or otherwise;

     

    (b)           all
      liabilities and obligations of Debtor under this Agreement and instruments
      of
      conveyance contemplated by this Agreement;

     

    (c)           all
      federal, state and local taxes, and any charges, penalties, interest, fees,
      imposts, duties or other assessments with respect thereto ("Tax" or
      collectively "Taxes") arising out of the operation of Debtor's business
      or relating to the Collateral, including income, gross receipts, excise,
      employment, sales, use, transfer, license, payroll, franchise, severance, stamp,
      occupation, environmental, customs, duties, tariffs, ad valorem, value added
      or
      other fees or taxes, and also including all liabilities and obligations for
      Taxes arising in connection with the completion of the transfers contemplated
      by
      this Agreement;

     

    
      
        6

      

      
         

        
          

        

      

      
         

      

    

    (d)           all
      liabilities and obligations under any agreement, contract, lease or license
      to
      which any Debtor is a party;

     

    (e)           all
      liabilities ascribed to Secured Creditors or Newco by operation of successor
      liability provisions of applicable laws;

     

    (f)           all
      liabilities and obligations pursuant to any law, rule or regulation, any
      judgment, decree or order of any governmental entity, or any
      permit;

     

    (g)           all
      liabilities arising out of any claim, suit, action, arbitration, proceeding,
      investigation or other similar matter, whether based on negligence, gross
      negligence, intentional misconduct, fraud, breach of warranty, breach of
      contract, strict liability, enterprise liability or otherwise, (whether now
      pending or hereafter initiated);

     

    (h)           all
      liabilities to or in respect of any former or existing security holder, officer,
      director, employee, consultant, contractor, customer, supplier, joint venturer,
      partner or agent, whether under any plan, policy, agreement (written, oral,
      express or implied), arrangement, instrument, law, rule, regulation, order,
      charter provision or otherwise, including but not limited to any salaries,
      accrued vacation time, personal time and sick leave payable, bonuses and
      employee severance obligations; and

     

    (i)           any
      liability under any environmental law.

     

               5.           The
      Closing.

     

    5.1           Time;
      Place; Location.  The closing of the transfers contemplated by
      this Agreement (the "Closing") shall take place at the offices of Gibson,
      Dunn & Crutcher LLP, 3161 Michelson, Irvine, California 92612 at
      10:00 a.m. local time on the date hereof; provided that the
      transfers contemplated by this Agreement may be reversed in the sole discretion
      of Longview following the Closing in the event that, in the sole judgment of
      Longview, one or more of the conditions subsequent set forth in Section 6
      has occurred; provided, further, that, in the event Longview so
      elects to reverse the transfers contemplated by this Agreement, this Agreement
      shall be deemed to have been terminated pursuant to Section 9 and the
      Closing shall be deemed never to have occurred.  The date on which the
      Closing occurs shall be referred to herein as the "Closing
      Date."

     

    5.2           Transfer
      to Newco.  At the Closing, Debtor hereby transfers, or agrees to
      cause to be transferred, to Newco all of the Collateral (and all of their right,
      title and interest thereto), including without limitation the specific assets
      identified on Schedule D hereto.  Without limiting the
      foregoing, Debtor shall cause all tangible Collateral to be delivered, at the
      expense of Debtor, to such place or places and in such manner as shall be
      designated by Longview or Newco in their complete discretion at or subsequent
      to
      the Closing.  [Note to Debtor: Subject to further review and
      revision based upon contents of Schedule
      D.]

    

    
      
        7

      

      
         

        
          

        

      

      
         

      

    

    6.           Conditions
      Subsequent.

    

                          6.1           Conditions
      Subsequent to Obligations of Secured Creditors and Newco.  The
      transfers contemplated by this Agreement may be reversed by Longview in
      accordance with Section 5.1 within the one-hundred-eighty (180) calendar
      days following the Closing Date in the event that, in the sole judgment of
      Longview, one or more of the following conditions subsequent has occurred
      following the Closing:

     

                          (a)           Debtor
      has not performed and complied with all obligations, covenants and conditions
      herein required to be performed or complied with by Debtor.

     

    (b)           Debtor
      has not obtained all authorizations, consents, orders and approvals of all
      governmental entities and officials and all third party consents that are
      necessary or desirable for the consummation of the transfers contemplated by
      this Agreement.

     

    (c)           Longview
      is not satisfied, in its sole and complete discretion, that the Closing is
      advisable to Secured Creditors and Newco.

     

    (d)           Longview
      or Newco has not obtained agreements, waivers and/or consents from All Staffing
      and/or the prior shareholders of All Staffing that Longview and/or Newco deems
      necessary in connection with the transfers contemplated by this Agreement in
      their absolute discretion, in forms acceptable to Longview and Newco in their
      absolute discretion.

     

    (e)           The
      requirements relating to consent of the Internal Revenue Service and notice
      of a
      non-judicial sale of property pursuant to Section 7425(c) of the Internal
      Revenue Code of 1986, as amended, and Internal Revenue Service Publication
      786
      have not been satisfied, in the sole determination of Longview.

     

    (f)           Secured
      Creditors and Newco are not satisfied in their absolute discretion that all
      applicable notices to be provided by Secured Creditors or Newco under the NY-UCC
      and other applicable law have been provided.

     

    

    6.2           Conditions
      to Obligations of Debtor.  The obligations of Debtor to complete
      the transfers contemplated by this Agreement are not subject to any conditions
      of any kind.

    

    7.           Further
      Assurances.  At any time and from time to time after the Closing
      Date, at the request of Longview or Newco, Debtor shall execute and deliver
      such
      other instruments of transfer, conveyance or assignment and take such action
      as
      Longview or Newco may reasonably request in order to transfer, convey and assign
      to Newco and to confirm Newco's rights to, title in and ownership of the
      Collateral and to place Newco in actual possession and operating control
      thereof.

    

    8.           Indemnification
      for Benefit of Secured Creditors and Newco.  Debtor shall
      indemnify, and shall cause its affiliates to jointly and severally indemnify,
      Secured Creditors and Newco and their affiliates in respect of, and hold Secured
      Creditors and Newco and their affiliates harmless against, any and all debts,
      obligations and other liabilities (whether absolute, accrued, contingent, fixed
      or otherwise, or whether known or unknown, or due or to become due or
      otherwise), monetary damages, fines, fees, penalties, interest obligations,
      deficiencies, diminutions in value of assets, losses and expenses (including
      amounts paid in settlement, court costs, costs of investigators, reasonable
      fees
      and expenses of attorneys, accountants, financial advisors and other experts,
      and other expenses of litigation) ("Damages") incurred or suffered by
      Secured Creditors, Newco or any of their affiliates resulting from, relating
      to,
      constituting or arising out of this Agreement, including without limitation
      (a)
      any failure of Debtor to perform any covenant or agreement of Debtor contained
      in this Agreement, (b) any breach of any representation or warranty of Debtor
      contained in this Agreement and (c) the Debtor Liabilities.

    

    
      
        8

      

      
         

        
          

        

      

      
         

      

    

    9.           Termination.  This
      Agreement may be terminated only by Longview in accordance with Sections
5.1 and 6.1, without any liability of any kind on the part of
      Secured Creditors or Newco to Debtor or any other Person (as defined in
Section 2.1(d)).  In the event of the termination of this
      Agreement pursuant to the foregoing sentence, the obligations of the parties
      to
      complete the transactions contemplated by this Agreement shall expire and none
      of the parties shall have any further obligations under this Agreement, except
      as provided in Sections 8 and 11.6.  For the avoidance
      of doubt and without limiting the foregoing, should this Agreement be terminated
      by Longview, Section 2.1(c), Section 2.2 and any other provision
      of this Agreement purporting to discharge any obligation of Debtor or Guarantors
      shall be void and of no force or effect whatsoever.  Debtor may not
      terminate this Agreement for any reason.

    

    10.           Collateral
      Agent Consent, Covenants and Waiver.  Collateral Agent
      hereby

    (i)
      consents to the disposition of the Collateral contemplated by this Agreement,
      including without limitation for purposes of Section 10 of the Credit Agreement
      and hereby waives any notice requirements in connection therewith under the
      Security Agreement; (ii) hereby transfers its rights pursuant to the Security
      Agreement to Secured Creditors to the extent necessary to effect the transfers
      contemplated by this Agreement; (iii) consents to the transfer to Newco
      described in paragraph 6 of the Recitals and Acknowledgements of this Agreement;
      and

    (iv)
      covenants to take all other commercially reasonable actions necessary to effect
      the transfers contemplated by this Agreement.  Collateral Agent hereby
      waives the requirement set forth in Section 11(g) of that certain Collateral
      Agent Agreement dated as of February 13, 2006 among Collateral Agent and Secured
      Creditors, which provides for Secured Creditors to pay to Collateral Agent
      the
      sum of $10,000 to apply against hourly fees for services rendered pursuant
      to
      such agreement, in the Event of Default (as defined therein).  Secured
      Creditors hereby instruct Collateral Agent to enter into this Agreement and
      all
      other agreements deemed necessary by Longview to effect the transfers
      contemplated by this Agreement.

    

    11.           Miscellaneous.

    

    11.1           Secured
      Creditors acknowledge and agree that the transfers contemplated by this
      Agreement have been agreed to by each of Secured Creditors, and, to the extent
      inconsistent with the terms of this Agreement, Secured Creditors hereby waive
      any requirements relating to pro rata distribution contained in the
      Security Agreement, including such requirement contained in Section 10.3
      thereof.

    

    
      
        9

      

      
         

        
          

        

      

      
         

      

    

    11.2           This
      Agreement and the other documents referred to herein contain the entire
      agreement among the parties with respect to the subject matter hereof, and
      no
      representation, undertaking, promise or condition concerning the subject matter
      hereof shall be binding upon the parties unless clearly expressed in this
      Agreement.  No statement or writing subsequent to the date hereof
      which purports to modify or add to the terms or conditions hereof shall be
      binding unless contained in a writing which makes specific reference to this
      Agreement and which is signed by the parties hereto to be charged with the
      terms
      thereof.

    

    11.3           No
      course of dealing among the parties hereto or failure or delay on the part
      of
      Secured Creditors or Newco in exercising any rights or remedies hereunder shall
      operate as a waiver of any rights or remedies of Secured Creditors or Newco
      under this Agreement or any other agreement.  No single or partial
      exercise of any rights or remedies hereunder by Secured Creditors or Newco
      shall
      operate as a waiver or shall preclude the exercise of any other rights or
      remedies of Secured Creditors or Newco hereunder.

    

    11.4           Neither
      this Agreement nor any of the rights, interests or obligations hereunder may
      be
      assigned by Debtor without the prior written consent of Longview or
      Newco.  A change in control of Debtor or a transfer of all or
      substantially all of Debtor's assets shall constitute an assignment for such
      purposes.  Secured Creditors and Newco may assign this Agreement at
      any time with the consent of Longview.

    

    11.5           The
      provisions of this Agreement shall inure to the benefit of and be binding upon
      the parties and their respective permitted successors and
      assigns.  This Agreement is solely for the benefit of the parties
      hereto and their permitted successors and assigns.  No other Person
      (as defined in Section 2.1(d)) shall have any rights, benefits or
      remedies under or because of the existence of this Agreement.

    

    11.6           The
      acknowledgements, agreements, representations and warranties of Debtor contained
      in this Agreement shall survive the expiration or other termination of this
      Agreement.

    

    11.7           If
      any term or provision of this Agreement or the application thereof to any party
      or circumstance shall be held to be invalid, illegal or unenforceable in any
      respect by a court of competent jurisdiction, the validity, legality and
      enforceability of the remaining terms and provisions of this Agreement shall
      not
      in any way be affected or impaired thereby, and the affected term or provision
      shall be modified to the minimum extent permitted by law so as to achieve most
      fully the intention of this Agreement.

    

    11.8           This
      Agreement is governed by and is to be construed and enforced as though made
      and
      to be fully performed in the State of New York, without regard to the conflicts
      of law rules.  Any and all disputes are to be resolved in the courts
      of the state of New York located in New York County.

    

    11.9           Debtor
      acknowledges and agree that irreparable damage would occur in the event that
      any
      of its obligations hereunder are not performed or satisfied in accordance with
      the specific terms applicable thereto.  Accordingly, it is agreed that
      Secured Creditors or Newco shall be entitled to seek an injunction or
      injunctions to prevent breaches of this Agreement and to enforce specifically
      the terms and provisions of this Agreement in any state or federal court, in
      addition to any other remedy to which they are entitled at law or in
      equity.

    

    
      
        10

      

      
         

        
          

        

      

      
         

      

    

    11.10                      This
      Agreement is executed by Debtor voluntarily and not pursuant to any
      duress.  Furthermore, it is executed in mutual good faith among the
      parties and is not given or intended to hinder, delay, or defraud any creditor,
      or to contravene any of the bankruptcy laws of the United States, laws governing
      fraudulent conveyances or any other applicable laws.  Debtor
      represents that all of the transfers made and all of the obligations incurred
      pursuant to this Agreement are for fair consideration and for reasonably
      equivalent value with respect to valid, existing, secured indebtedness due
      to
      Newco, as the assignee of Secured Creditors.

    

    11.11                      The
      parties agree to sign, deliver and file any and all additional documents and
      to
      take any and all other actions that may reasonably be required or appropriate
      for a full and complete consummation of the transactions and matters covered
      by
      this Agreement.

    

    11.12                      THE
      PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDINGS INITIATED
      PURSUANT TO EITHER THIS AGREEMENT OR ANY DOCUMENT OR AGREEMENT REFERRED TO
      HEREIN.

    

    11.13                      This
      Agreement may be signed in any number of counterparts with the same effect
      as if
      the signatures thereto and hereto were upon the same
      instrument.  Facsimile copies of signatures shall be binding as
      original signatures.

    

    
      
        11

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Debtor, the Collateral Agent, the Secured Creditors and
      Newco have caused this Agreement to be executed in their respective names and
      by
      their duly authorized officers, as of the date first written above.

    

    "DEBTOR"

    

    DALRADA
      FINANCIAL CORP.

    

    

    

    By:           

    Name:

    Title:

    

    

    "COLLATERAL
      AGENT"

    

    

    

    

    BARBARA
      R. MITTMAN

    

    

    "SECURED
      CREDITORS"

    

    LONGVIEW
      FUND, L.P.

    

    

    

    By:           

    Name:

    Title:

    

    

    LONGVIEW
      EQUITY FUND, L.P.

    

    

    

    By:           

    Name:

    Title:

    

    

    
      
        12

      

      
         

        
          

        

      

      
         

      

    

    LONGVIEW
      INTERNATIONAL EQUITY FUND, L.P.

    

    

    

    By:           

    Name:

    Title:

    

    

    ALPHA
      CAPITAL AKTIENGESELLSCHAFT

    

    

    

    By:           

    Name:

    Title:

    

    

    BALMORE,
      S.A.

    

    

    

    By:           

    Name:

    Title:

    

    

    

    

    

    HOWARD
      SCHRAUB

    

    

    "NEWCO"

    

    FENIX
      CAPITAL, LLC

    

    

    

    By:           

    Name:

    Title:

    
      
        13

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
      A

    

    SECURED
      NOTES

    

    

    
      	
              SECURED
                CREDITOR

            	
              APPROXIMATE
                PRINCIPAL

              AMOUNT
                OF SECURED CONVERTIBLE NOTE ISSUED ON

              FEBRUARY
                13, 2006

               

            
	
              LONGVIEW
                FUND, LP

              600
                Montgomery Street, 44th Floor

              San
                Francisco, CA 94111

              Fax:
                (415) 981-5301

            	
              $3,500,000.00

            
	
              LONGVIEW
                FUND, LP

              600
                Montgomery Street, 44th Floor

              San
                Francisco, CA 94111

              Fax:
                (415) 981-5301

            	
              $261,707.00

            
	
              LONGVIEW
                EQUITY FUND, LP

              600
                Montgomery Street, 44th Floor

              San
                Francisco, CA 94111

              Fax:
                (415) 981-5301

            	
              $1,005,000.00

            
	
              LONGVIEW
                INTERNATIONAL EQUITY FUND, LP

              600
                Montgomery Street, 44th Floor

              San
                Francisco, CA 94111

              Fax:
                (415) 981-5301

            	
              $495,000.00

            
	
              ALPHA
                CAPITAL AKTIENGESELLSCHAFT

              Pradafant
                7

              9490
                Furstentums

              Vaduz,
                Lichtenstein

              Fax:
                011-42-32323196

            	
              $492,426.00

            
	
              BALMORE,
                S.A.

              P.O.
                Box 146, Road Town

              Tortola,
                BVI

              Fax:

            	
              $1,380,960.00

            
	
              HOWARD
                SCHRAUB

              c/o
                G. Howard Associates Inc.

              525
                East 72nd
                Street

              New
                York, NY 10021

              Fax:
                (212) 737-7467

            	
              $300,000.00

            
	
              TOTAL

            	
              $7,435,093.00

            

    

    

    

    
      
        14solvisclaim.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
      10.04

    

    

    

    HORIZON
LAW
GROUP
      LLP

    dbrewster@horizonlawgroup.com

    August
      21, 2007

    VIA
      OVERNIGHT MAIL and ELECTRONIC MAIL

    Mr.
      Brian
      Bonar

    CEO

    and

    Mr.
      David
      Lieberman

    CFO

    Dalrada
      Financial Corporation

    9449
      Balboa, Suite 210

    San
      Diego, CA 92123

    Re:
      The Solvis Group v. Dalrada Financial Corporation, et al.

    Our
      File
      No. : SOL01-02

    Gentlemen:

    This
      firm
      represents The Solvis Group, Inc. (“Solvis”) with regard to claims against
      Dalrada Financial Corporation (“Dalrada”) and its representatives. Any further
      communication regarding this matter should be copied to this firm.

    

    Solvis
      is
      aware of and is currently investigating several wrongful acts by Dalrada its
      representatives, agents and principals. Absent immediate actions by Dalrada
      and
      its representatives to rectify these matters, Solvis will have no choice but
      to
      pursue all available remedies though the judicial system. We summarize the
      bulk
      of Solvis’ complaints below.

    Dalrada
      entered into two Promissory Notes, dated January 2, 2007, for payment to Solvis
      of $3,240,000.00 and $8,060,000.00, respectively. Dalrada has not made a single
      payment of any kind whatsoever on either of the Notes, despite repeated demands
      for performance by Solvis. Both notes are now five (5) months in arrears.
      Pursuant to paragraph 3 (actual paragraph 4) of the Notes regarding an Event
      of
      Default, Solvis has now elected to accelerate all amounts due under the Notes.
      Therefore, the full amount of $11,300,000.00, plus all accrued interest, is
      now
      due and owing. By this letter, demand is made to immediately pay the balance
      of
      the Notes in full. Be advised that pursuant to paragraph 11 (actual paragraph
      12) of the Notes, Solvis is entitled to recover all attorneys’ fees and related
      collection costs. Dalrada’s payment obligations under the Notes are absolute and
      not subject to any conditions precedent, performance by Solvis or other rights
      of offset. Therefore, Solvis is comfortable that it will quickly prevail on
      summary judgment if judicial action is required to collect under the
      Notes.

    

    1920
      Main Street, Suite
      210 ● Irvine, CA 92614 ● tel: 949.261.2500 ● fax: 949.261.2515 Mr. Brian
      Bonar CEO Mr. David Lieberman CFO Dalrada Financial Corporation August 21,
      2007
      Page 2

    
      
        1

      

      
         

        
          

        

      

      
         

      

    

    Further,
      based on Dalrada’s failure to even attempt payment, it appears that the company
      never actually intended to issue payment to Solvis and/or that it knew or should
      have known that it could not make the required payments. Thus, in additional
      to
      the simple breach of contract claims, Solvis shall also assert intentional
      and
      negligent misrepresentation (fraud and fraudulent inducement) claims against
      Dalrada, as well as personally against Mr. Bonar, Mr. Lieberman and each member
      of the Board of Directors of Dalrada involved in approving or ratifying these
      transactions. Be advised that damages based on fraud are not dischargeable
      in
      bankruptcy.

    It
      appears that Dalrada, Mr. Bonar, Mr. Lieberman and the Board induced Solvis
      into
      the Separation Agreement dated January 2, 2007, simply to fraudulently convert
      the assets of Solvis Financial Services (“Solvis Financial”) and leave it with
      substantial debts, with no ability to pay them. As further evidence of this,
      Dalrada depleted its cash reserves, all which could have been used to pay
      Solvis, on discretionary items, leaving Dalrada unable to perform on the
      Notes.

    Solvis
      is
      also disturbed by other facts that have come to light regarding Dalrada’s prior
      management and control of the Solvis entities. As you are aware, Solvis
      Financial incurred a huge tax obligation under the management of Dalrada for
      unpaid payroll taxes. These debts were incurred while Mr. Bonar was the CEO
      of
      Solvis Financial, and Mr. Bonar was aware of these debts when he entered into
      the Separation Agreement.

    In
      addition, Mr. Lieberman has exposed himself to significant personal liability
      through his failure to properly apply funds to pay the payroll taxes. It is
      Solvis’ understanding that in November 2006, Dalrada, through Mr. Lieberman,
      took control of Solvis Financial’s banking, cash and accounts receivable. During
      the period of control, Solvis Financial’s assets were used to pay for Dalrada
      operations, rather than to fulfill Solvis Financial’s tax obligations. Such a
      breach of fiduciary duty, and misuse of Solvis Financial’s corporate funds may
      be actionable against both of you personally and, potentially, all the members
      of Dalrada’s board.

    Solvis
      also believes that Mr. Lieberman, CFO and a member of the Board of Directors
      of
      Dalrada, has taken violated his fiduciary duties to the shareholders by taking
      actions solely for the benefit of The Longview Fund, which placed Mr. Lieberman
      on the Board. For example, allegations have been made that Mr. Lieberman shared
      material, non-public information about Dalrada with Peter Benz of the Longview
      Fund. Both this action, and a failure to remedy it in accordance with Regulation
      FD, are violations of both SEC regulations and Mr. Lieberman’s fiduciary duties.
      In addition, if Dalrada Board members were aware of this illegal disclosure,
      their failure to disclose it in accordance with SEC regulations could also
      subject the Board members to fines and other SEC penalties. Mr. Brian Bonar
      CEO
      Mr. David Lieberman CFO Dalrada Financial Corporation August 21, 2007 Page
      3

    
      
        2

      

      
         

        
          

        

      

      
         

      

    

    To
      the
      extent Mr. Lieberman or anyone acted under the authority of Peter Benz and/or
      The Longview Fund, and in the best interest of, those persons and/or entities
      may have liability as well, including those related to interference with
      economic relations. To the extent that The Longview Fund enjoyed the benefits
      of
      the funds that should have been paid to tax liability, it may also be liable
      to
      disgorge the benefits of those funds.

    Dalrada
      has further violated SEC disclosure rules by failing to include material
      information in its Form 10-Qs and 10-Ks filed with the SEC. For example, Dalrada
      did not properly disclose the payroll tax liabilities, failing to report them
      altogether in some instances and improperly attempting to disguise them with
      inadequate descriptions in the financial statements. Dalrada has also failed
      to
      disclose that it is in breach of its obligations under the Notes. This is
      material information that any reasonable investor would expect to be informed
      of, and would consider in making a decision to purchase or sell Dalrada’s
      securities. Mr. Bonar and Mr. Lieberman have each personally signed and filed
      certifications with the SEC for the Form 10-Qs and Form 10-Ks, stating that
      each
      report “does not contain any untrue statement of a material fact or omit to
      state a material fact necessary to make the statements made, in light of the
      circumstances under which such statements were made, not

    misleading
      with respect to the period covered by this report” and that “the financial
      statements, and other financial information included in this report, fairly
      present in all material respects the financial condition, results of operations
      and cash flows” of Dalrada. These certifications are clearly false, creating
      substantial personal liability to shareholders and possible sanctions from
      the
      SEC.

    The
      damages to Solvis from these improper SEC filings could be quite significant.
      To
      the extent that any damages arise from this issue and/or Solvis is faced with
      SEC investigations and/or sanctions as a result of Dalrada’s actions, including
      the reports filed for Solvis Financial when Mr. Bonar was it CEO, Solvis, and
      its shareholders will seek to recover from the responsible parties, including
      individual officers and board members. Solvis is still investigating its
      obligations in this regard, but to the extent it must report this action to
      the
      SEC, it will comply with the law.

    Additionally,
      Solvis is aware that Mr. Lieberman has attempted to obtain a new Federal Tax
      Identification Number (“FEIN”) for Solvis Financial and has approved the use one
      of Solvis’ other affiliates’ FEIN for Solvis Financials former employees, both
      in an apparent attempt to avoid problems associated with the tax liability.
      Most
      disturbingly, Mr. Lieberman has instructed Solvis employees to engage in this
      fraudulent action. Solvis is currently investigating its obligations, if any
      to
      report this issue to the appropriate taxing authority, as well as the potential
      damage to Solvis caused by this activity, including damages resulting from
      investigations by a taxing authority or disputes as to Solvis’ tax reporting. At
      a minimum, it appears the shareholders have claims for breach of fiduciary
      duty
      related to theses actions and for injunctive relief to ensure no further damages
      occur. At a maximum, this activity could arise to the level of tax fraud. Mr.
      Brian Bonar CEO Mr. David Lieberman CFO Dalrada Financial Corporation August
      21,
      2007 Page 4

    
      
        3

      

      
         

        
          

        

      

      
         

      

    

    Solvis
      has no desire to engage in a protracted and expensive litigation to enforce
      its
      rights and to cure the issues listed above. However, absent Dalrada’s immediate
      action to resolve these issues, Solvis will have no choice but to seek whatever
      relief if has available under both State and Federal law.

    Sincerely,

    David
      A.
      Brewster

    cc:
      The
      Solvis Group

    

    

    
      
        4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]