Document:

Prepared by MERRILL CORPORATION

SECURITY AGREEMENT

 

 

This Security Agreement

is dated as of July 18, 2001 by and between Primix Solutions Inc., a Delaware

corporation (“Pledgor”), and Lennart Mengwall (the “Pledgee”).

WHEREAS, the parties

hereto wish to secure the Obligations (as hereinafter defined) under that

certain Promissory Note (the “Note”) in the amount of $2,500,000

dated of even date herewith made by Pledgor in favor of Pledgee by a

subordinated security interest in all of Pledgor’s assets.

NOW, THEREFORE, in

consideration of the foregoing and other good and valuable consideration the

receipt and sufficiency of which is hereby acknowledged, Pledgor hereby agrees

with Pledgee as follows:

1.                Definitions. 

Capitalized terms used but not otherwise defined herein shall have the

meanings so defined in the Note.  As

used herein, (i) the term “Event of Default” shall have the

meaning set forth in the Note and (ii) the term “Obligations” shall

mean all present and future liabilities and obligations of Pledgor to Pledgee,

whether now existing or hereafter arising under the Note, whether liquidated,

unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,

legal, equitable, direct or indirect.

2.             Security.

2.1.1                                Grant of

Security.  As security for the

payment and performance of the Obligations, Pledgor hereby mortgages, pledges

and collaterally grants and assigns to Pledgee, and creates a subordinated

security interest in favor of Pledgee in, all of Pledgor’s right, title and

interest in and to (but none of its obligations or liabilities with respect to)

all assets of Pledgor whether now owned or existing or hereafter acquired or

arising (the “Security”), including, without limitation, all of

Pledgor’s right, title and interest in and to (i) all accounts (as defined in

the Massachusetts Uniform Commercial Code) (“Accounts”); (ii) all

equipment and fixtures; (iii) all intellectual property including (a)

inventions (whether patentable or unpatentable and whether or not reduced to

practice), all improvements thereto, and all patents, patent applications and

patent disclosures, together with all reissuances, continuations,

continuations-in-part, revisions, extensions and reexaminations thereof, (b)

all trademarks, service marks, trade dress, logos, trade names and corporate

names, together with all translations, adaptations, derivations and

combinations thereof and including all goodwill associated therewith, and all

applications, registrations and renewals in connection therewith, (c) all

original works, all copyrights, and all applications, registrations and

renewals in connection therewith, (d) all trade secrets and confidential

business information (including ideas, research and development, know-how,

formulas, compositions, manufacturing and production processes and techniques, technical

data, designs, drawings, specifications, customer and supplier lists, pricing

and cost information, and business and marketing plans and proposals), (e) all

computer software (including data and related documentation), (f) all other

proprietary rights, and (g) all copies and tangible embodiments of the

foregoing (in whatever form or medium); (iv) all other general intangibles; (v)

all documents and instruments, whether negotiable or non-negotiable; (vii) all

securities, whether certificated or uncertificated (the “Stock”); and (viii)

all files, records (including, without limitation, computer programs, tapes and

related electronic data processing software) and writings of Pledgor in which

Pledgor has an interest in any way relating to the foregoing property and all

rights of Pledgor of retrieval from third parties of information pertaining to

any of such property.

2.1.2                                Proceeds and

Products. The Security shall include all proceeds, including insurance

proceeds, and products of the items of Security described or referred to in

Section 2.1.1 hereof.

2.1.3                                Excluded

Property.  Notwithstanding herein to

the contrary, the payment and performance of the Obligations shall not be

secured by any rights or property of the Company to the extent that any valid

and enforceable law or regulation applicable to such rights or property

prohibits the pledge or the creation of a security interest therein.

2.1.4                                Subordination.  Notwithstanding anything herein to the

contrary, the security interest in the Security granted hereunder shall be

subordinated to the secured borrowings of the Company incurred under that certain Accounts Receivable Financing

Agreement dated as of April 16, 2001 (and as it may be amended) and any

purchase money security interests (collectively, the “Senior Security Interests”).

2.2                                Representations,

Warranties and Covenants with Respect to Security and Other Matters.  Pledgor hereby represents, warrants and

covenants that:

2.2.1                                Authority.  Pledgor has the requisite corporate

authority for the making and performance of this Agreement, and Pledgor has

taken all necessary action to be taken by it to make this Agreement the legal,

valid, binding and enforceable obligation it purports to be.

2.2.2                                No Legal

Obstacle to Agreement.  Neither the

execution and delivery of this Agreement nor the fulfillment of the terms

hereof will constitute or result in a breach of the provisions of any material

instrument, contract or agreement to which Pledgor is a party or by which it is

bound, or the violation of any law, judgment, decree or governmental or

administrative order, rule or regulation applicable to it, or has resulted in

or will result in the creation under any agreement or instrument of any

security interest, lien or encumbrance upon any of its assets (except for the

security interest, liens and encumbrances created hereby and the Senior

Security Interests).  No approval,

authorization or other action by, or declaration to or filing with, any

governmental or administrative authority is required to be obtained or made by

Pledgor in connection with the execution, delivery or performance of this

Agreement other than the filing of financing statements that may be required

for the perfection of Pledgee’s security interest in the Security pursuant to

Section 2.3 hereof.

2.2.3                                No Sales of

Assets, Liens or Transfers.  Pledgor

shall not transfer, sell or dispose of any item of Security outside the

ordinary course of business.  Except for

the Senior Security Interest, the security interests granted hereby and any

restrictions on transfer as may be imposed by state and federal regulatory

laws, all Security is currently and shall be free and clear of any security

interests, mortgages, pledges, liens, encumbrances and restrictions on the

transfer thereof.

2.2.4                                Name for

Conducting Business.  Pledgor will

not adopt or do business under any name other than Primix Solutions Inc. or any

other name specified by a written notice delivered to Pledgee not less than

thirty (30) days prior to the conduct of business under such name.

2.3                                Perfection of

Security Interests.  Upon Pledgee’s

written request from time to time, Pledgor will make, execute, acknowledge and

deliver, and file and record in the proper filing and recording places all such

instruments, including, without limitation appropriate financing statements,

and will take all such other action as Pledgee deems advisable to carry out the

intent and purposes of this Agreement or for perfecting Pledgee’s security

interest in the Security as provided hereunder, in each cased subject to and in

subordination of the Senior Security Interests.

2.4                                Use of

Security.  Until Pledgee provides

written notice to the contrary after an Event of Default has occurred, Pledgor

may use, commingle and dispose of any part of the Security in the ordinary course

of its business.

3.             Right to Realize Upon Security.  Except to the extent prohibited by

applicable law and subject to the Senior Security Interests, the following

provisions shall govern Pledgee’s right to realize upon the Security after an

Event of Default has occurred, in addition to any rights and remedies available

at law or in equity:

3.1                                Remedies. 

If an Event of Default shall have occurred and be continuing, Pledgee

shall thereafter have the following rights and remedies (to the extent permitted

by applicable law and subject to the Senior Security Interests), all such

rights and remedies being cumulative, not exclusive, and enforceable

alternatively, successively or concurrently, at such time or times as Pledgee

deems expedient:

(a)             If Pledgee so elects and gives

notice of such election to Pledgor, Pledgee may vote any or all shares of the

Stock and give all consents, waivers and ratifications in respect of the Stock

and otherwise act with respect thereto as though it were the outright owner thereof

(Pledgor hereby irrevocably constituting and appointing Pledgee the proxy and

attorney-in-fact of Pledgor, with full power of substitution, to do so);

(b)            Pledgee may demand, sue for, collect

or make any compromise or settlement Pledgee deems suitable in respect of the

Security;

(c)             Pledgee may sell, resell, assign

and deliver, or otherwise dispose of any or all of the Security, for cash

and/or credit and upon such terms at such place or places and at such time or

times and to such persons, firms, companies or corporations as Pledgee thinks

expedient, all without demand for performance by Pledgor or any notice or

advertisement whatsoever except such as may be required by law; and

(d)            Pledgee may cause all or any part of

the Security held by him to be transferred into his name or the name of his

nominee or nominees.

                Pledgee may enforce his rights hereunder without any

other notice and without compliance with any other condition precedent now or

hereunder imposed by statute, rule of law or otherwise, to the fullest extent

permitted by law.  Pledgor acknowledges

that ten (10) calendar days’ notice of any public sale or of that date on or

after which a private sale may be effected is reasonable notice.  Pledgee may buy any part or all of the

Security at any public sale, and if any part or all of the Security is of a

type customarily sold in a recognized market or is of the type which is the

subject of widely-distributed standard price quotations, Pledgee may buy at a

private sale and may make payments thereof by any means.  Pledgee may apply the cash proceeds actually

received from any sale or other disposition of the Security to the reasonable

expenses of retaking, holding, preparing for sale, selling and the like, to

reasonable attorneys’ fees, and all legal expenses, travel and other expenses

which may be incurred by Pledgee in attempting to collect the Obligations or to

enforce this Agreement or in the prosecution or defense of any action or

proceeding related to the subject matter of this Agreement; and then to the

Obligations, and any surplus shall be paid to Pledgor.

                Pledgor recognizes that Pledgee

may be unable to effect a public sale of the Stock by reason of certain

prohibitions contained in the Securities Act of 1933, as amended, but may be

compelled to resort to one or more private sales thereof to a restricted group

of purchasers.  Pledgor agrees that any

such private sales may be at prices and other terms less favorable to the

seller than if sold at public sales and that such private sales shall not by

reason thereof be deemed not to have been made in a commercially reasonable

manner.  Pledgee shall be under no

obligation to delay a sale of any of the Stock for the period of time necessary

to permit the issuer of such securities to register such securities for public

sale under the Securities Act of 1933, as amended, even if the issuer would

agree to do so.

                In all events, Pledgee shall

give Pledgor not less than ten (10) calendar days’ written notice of any

proposed disposition of the Security.

3.2                                Marshalling.  Pledgee

shall not be required to marshal any present or future security for (including

but not limited to the Security), or guarantees of, the Obligations, or to

resort to such security or guarantees in any particular order; and all of its rights

hereunder and in respect of such security and guarantees shall be cumulative

and in addition to all other rights, however existing or arising.  To the extent that he lawfully may, Pledgor

hereby agrees that he will not invoke any law relating to the marshalling of

collateral which might cause delay in or impede the enforcement of Pledgee’s

rights under this Agreement or under any other instrument evidencing any of the

Obligations or under which any of the Obligations is outstanding or by which

any of the Obligations is secured or guaranteed, and to the extent that it

lawfully may Pledgor hereby irrevocably waives the benefits of all such laws.

4.                Pledgor’s

Obligations Not Affected.  The obligations

of Pledgor hereunder shall remain in full force and effect without regard to,

and shall not be impaired by: (a) any bankruptcy, insolvency, reorganization,

arrangement, readjustment, composition, liquidation or the like of Pledgee; (b)

any exercise or nonexercise, or any waiver, by Pledgee of any right, remedy,

power or privilege under or in respect of the Obligations or any of any

security therefor (including this Agreement); (c) any amendment to or

modification of any instrument (other than this Agreement) securing any of the

Obligations; or (d) the taking of additional security for, or any guaranty of,

any of the Obligations or the release or discharge or termination of any

security or guaranty for any of the Obligations; whether or not Pledgor shall

have notice or knowledge of any of the foregoing.

5.                Pledgee’s Exoneration.  Under no circumstances shall Pledgee be

deemed to assume any responsibility for or obligation or duty with respect to

the Security or any matter or proceedings arising out of or relating thereto,

other than to exercise reasonable care in the physical custody of any item of

Security, if applicable.  Pledgee shall

not be required to take any action of any kind to collect, preserve or protect

its or Pledgor’s rights in the Security or against other parties thereto, other

than to exercise reasonable care in the physical custody of any item of

Security, if applicable.

6.             No

Waiver, Etc.  No act, failure or delay by Pledgee shall

constitute a waiver of its rights and remedies hereunder or otherwise.  No single or partial waiver by Pledgee of any

default or right or remedy which it may have shall operate as a waiver of any

other default, right or remedy or of the same default, right or remedy on a

future occasion.  Pledgor hereby waives

presentment, notice of dishonor and protest of all instruments, included in or

evidencing any of the Obligations, and any and all other notices and demands

whatsoever (except as expressly provided herein

7.             Notice,

Etc.  All communications herein provided shall be

in writing and shall be sufficient if sent by United States mail, registered or

certified, postage prepaid, delivered by messenger, overnight delivery service

or facsimile, addressed as follows:

	

  If to Pledgor:

  	

   

  	

  Primix Solutions Inc.

  
	

   

  	

   

  	

  311 Arsenal Street

  
	

   

  	

   

  	

  Watertown, MA 02472

  
	

   

  	

   

  	

  Facsimile:  (617) 923-6565

  
	

   

  	

   

  	

  Attention:  Chief Financial Officer

  
	

   

  	

   

  	

   

  
	

  If to

  Pledgee:

  	

   

  	

  Lennart

  Mengwall

  
	

   

  	

   

  	

  20 Shady

  Acres

  
	

   

  	

   

  	

  Darien,

  CT  06820

  
	

   

  	

   

  	

  Facsimile:  (203) 655-6915

  

 

or to such

other address as the party to receive any such communication or notice may have

designated by written notice to the other party.

                Any notice given pursuant to

this Section shall be deemed to have been given and received when actually

delivered, upon receipt of electronic confirmation if by facsimile, one

business day after dispatch by a recognized overnight delivery service, or

three (3) business days after mailing by certified or registered mail with

proper postage affixed and return receipt requested.

8.                Defeasance;

Termination. When

all Obligations have been indefeasibly paid and performed in full and

discharged, this Agreement shall cease and terminate and the Security furnished

hereunder by Pledgor shall revert to Pledgor and the estate, rights, title, and

interest of Pledgee therein shall cease, terminate and become void, whereupon

on Pledgor’s written request Pledgee shall execute proper instruments (without

recourse to Pledgee), acknowledging satisfaction of and discharging this

Agreement, and shall return to Pledgor the Security furnished hereunder by

Pledgor then in his possession.

9.                Miscellaneous

Provisions.

(a)             Neither this Agreement nor any term

hereof may be changed, waived, discharged or terminated except by a written

instrument expressly referring to this Agreement and to the provisions so

modified or limited, and executed by the party to be charged.

(b)            This Agreement is personal and may

not be assigned by either party hereto without the consent of the other

party.  This Agreement and all

obligations of Pledgor hereunder shall be binding upon his heirs, executors and

administrators.

(c)             This Agreement and the obligations

of Pledgor hereunder shall be governed by and construed in accordance with the

laws of The Commonwealth of Massachusetts without regard to the conflict of

laws principles thereof.

(d)            The descriptive section headings have

been inserted for convenience of reference only and do not define or limit the

provisions hereof.  If any term of this

Agreement shall be held to be invalid, illegal or unenforceable, the validity

of all other terms hereof shall be in no way affected thereby, and this

Agreement shall be construed and be enforceable as if such invalid, illegal or

unenforceable term had not been included herein.

(e)             This Agreement may be executed in

counterparts, each of which shall be deemed an original and all of which together

shall be deemed to be one and the same instrument.

                                (f)                To the extent permitted by

applicable law, each of the parties hereto hereby waives trial by jury in any

proceeding brought for the interpretation or enforcement of this Agreement or

for a determination of the rights of the parties hereunder.

 

10.           Consent to Jurisdiction.  Pledgor and

Pledgee irrevocably consent and submit to the jurisdiction of the United States

District Court for the District of Massachusetts, and the Courts of The

Commonwealth of Massachusetts in connection with any action proceeding of claim

arising our of or relating to this Agreement and/or any instrument or document

required hereby or incident or collateral hereto.

 

 

[Remainder of Page

Intentionally Left Blank]

 

IN WITNESS WHEREOF, the parties hereto have duly

executed this Agreement as of the day and year first above written.

 

 

	

   

  	

  PLEDGOR:

  
	

   

  	

   

  
	

   

  	

  PRIMIX SOLUTIONS INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ David W. Chapman

  
	

   

  	

   

  	

  Name:  David

  W. Chapman

  Chief Financial Officer

  
	

   

  	

   

  
	

   

  	

  PLEDGEE:

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  /s/ Lennart Mengwall

  
	

   

  	

  Lennart MengwallPrepared by MERRILL CORPORATION

 

PACIFIC BUSINESS FUNDING

20195 STEVENS CREEK BLVD. • SUITE #220 •

CUPERTINO, CA.  95014

TEL: (408) 255-9300   FAX (408) 255-9313

 

FACTORING AGREEMENT

 

                This

Factoring Agreement (the "Agreement"), dated as of AUGUST 15, 2001,

is entered into by and between PRIMIX SOLUTIONS INC. a [ý

corporation, o partnership, o

sole proprietorship] ("Seller") having its principal place of

business and chief executive office at the address set forth below Seller's

signature, and Pacific Business Funding, a division of Cupertino National Bank

("Purchaser") having an office at the address identified above.

 

Capitalized terms used in this

Agreement shall have the meanings assigned to them in Section 13, Definitions.

 

1.

                Purchase of Accounts.

 

                1.1.                Schedule

of Accounts. Seller may, at any time, request that

Purchaser purchase Accounts. Any such request by Seller shall be made by

delivering to Purchaser a Schedule of Accounts (the "Schedule of

Accounts") which describes in detail the Accounts Seller is requesting Purchaser

to purchase, including, (a) the name and address of the Account Debtor of each

such Account, (b) the amount owed by the Account Debtor of each such Account,

and (c) the date and number of the invoice evidencing each such Account. Each

Schedule of Accounts shall have attached to it an invoice for each Account

described on the Schedule of Accounts, and shall be signed by an authorized

representative of Seller.

                1.2.                Discretionary

Approval of Accounts.  Purchaser may, in its sole discretion, purchase any Account included

in a Schedule of Accounts, but is under no obligation to purchase any such

Account. Purchaser may exercise its sole discretion in approving each Account

and the credit of each Account Debtor before purchasing any Account.

                1.3.                Payment

of Advance; Creation of a Book Reserve. Upon approval, in

Purchaser's sole discretion, of any of the Accounts described on a Schedule of

Accounts, Purchaser shall pay to Seller as the purchase price for any  approved Account EIGHTY percent (80%) of the

face amount of such approved Account (the "Advance"). Purchaser may,

from time to time, in its discretion, upon notice to Seller, change the

percentage of the Advance. Upon payment of the Advance to Seller, Purchaser

shall also create a reserve on Purchaser's books and records with respect to

each Purchased Account in an amount equal to the face amount of the Purchased

Account minus the Advance for such Purchased Account (the "Reserve").

Notwithstanding the foregoing, in no event shall the Reserve with respect to

all Purchased Accounts outstanding at any time be less than TWENTY percent

(20%) of the Account Balance. Purchaser may, in its discretion, upon notice to

Seller, increase the percentage of the Reserve at any time.

                1.4.                Transfer

of Accounts.  At the time

Purchaser pays the Advance with respect to any Account, such Account shall

constitute a Purchased Account, and Seller hereby absolutely sells, transfers

and assigns to Purchaser, all of Seller's right, title and interest in and to

each Purchased Account. Seller also hereby sells, transfers and assigns to

Purchaser all of the goods represented by each Purchased Account, all of

Seller's rights and remedies as an unpaid seller under the California Uniform

Commercial Code and other applicable law, including the rights of stoppage in

transit, replevin, reclamation, and claim and delivery, and all of Seller's

rights in and to all security for each such Purchased Account and guaranties

thereof, and all rights against third parties with respect thereto. Any goods

recovered or received by Seller shall be set aside, marked with Purchaser's

name, and held for Purchaser's account as owner.

                1.5.                Collection

of Accounts.  Each Purchased

Account shall be collected directly by Purchaser. At the request of Purchaser,

Seller and Purchaser shall jointly notify each Account Debtor by letter that

Purchased Accounts owed by such Account Debtor have been assigned and are

payable to Purchaser. Such notification shall be in form and substance

satisfactory to Purchaser. Seller shall not take or permit any action to change

or revoke any notification without Purchaser's prior written consent and shall

not request any Account Debtor to pay any Purchased Account to Seller.

Notwithstanding the foregoing, in the event Seller receives any payments of any

Purchased Accounts, Seller shall (A) immediately notify Purchaser of such

payment, (B) hold such payment in trust and safekeeping for Purchaser, and (C)

immediately turn over to Purchaser the identical checks, monies or other forms

of payment received, with any necessary endorsement or assignment. Purchaser

shall have the right to endorse Seller's name on all payments received in

connection with each Purchased Account and on any other proceeds of Collateral.

If Purchaser receives a check or item which is payment for both a Purchased

Account and a non-Purchased Account, the funds shall first be applied to the

Purchased Account and, so long as there does not then exist an Event of Default

or an event that with notice or lapse of time would constitute an Event of

Default, the excess shall be remitted to Seller. In the event Purchaser

receives any other payments of non-Purchased Accounts, Purchaser shall remit to

Seller the collections of such non-Purchased Accounts; provided, that if any Event of Default or

event that with notice or lapse of time or otherwise would constitute an Event

of Default then exists, Purchaser shall have no duty to remit any such

collections, which collections constitute Collateral, and may apply such

collections to reduce the Obligations.

                1.6.                Full

Recourse.  The purchase by

Purchaser of Purchased Accounts from Seller shall be with full recourse against

Seller. Seller shall be liable for any deficiency in the event the Obligations

exceed the amount of Purchased Accounts and the other Collateral.

 

2.             Fees and Customer Payments.

                2.1.                Finance

Fees.  Seller

shall pay to Purchaser on each Settlement Date, a finance fee in an amount

equal to ONE percent (1%) per month of the average daily Account Balance

outstanding during the Settlement Period ending on such Settlement Date (the

"Finance Fees"). Such accrued Finance Fees shall be netted against

the Reserve as described in Section 3.3.

                2.2.                Administrative

Fee.  Seller shall pay to

Purchaser on each Settlement Date, an Administrative Fee equal to ONE HALF

percent (.5%) of the face amount of each Account purchased by Purchaser during

the Settlement Period ending on such Settlement Date (the "Administrative

Fee"). All Administrative Fees shall be netted against the Reserve as

described in Section 3.3.

                2.3.                Maximum

Lawful Rate.  In no event

shall any charges that may constitute interest hereunder exceed the highest

rate permitted under applicable law. In the event that a court of competent

jurisdiction makes a final determination that Purchaser has received interest

hereunder in excess of the maximum lawful rate, then such excess shall be

deemed a payment of principal and the interest payable hereunder deemed amended

to the amount payable under the maximum lawful rate.

                2.4.                Crediting

Customer Payments.  Upon

Purchaser's receipt of payment of a Purchased Account, Purchaser shall promptly

credit such customer payment (the "Customer Payments") to the amount

outstanding with respect to such Purchased Account. Notwithstanding the

foregoing, if any Customer Payment is subsequently dishonored or Purchaser does

not receive good funds for any reason, the amount of such uncollected Customer

Payment shall be included in the Account Balance as if such Customer Payment

had not been received, and Finance Fees shall accrue thereon, and the credit to

the specific Purchased Account shall be reversed. Notwithstanding the

foregoing, upon the occurrence of an Event of Default, Purchaser shall apply

all Customer Payments to Seller's Obligations under this Agreement in such

order and manner as Purchaser shall, in its sole discretion, determine.

                2.5.                Accounting.  Purchaser shall deliver to Seller after each

Settlement Date, a statement of Seller's account which shall include an

accounting of the transactions for that Settlement Period, including the amount

of all Finance Fees, Administrative Fees, Adjustments, Chargeback Amounts,

Customer Payments and Purchased Accounts. The accounting shall constitute an

account stated and shall be binding on Seller and deemed correct unless Seller

delivers to Purchaser a written objection within thirty (30) days after such

accounting is mailed to Seller.

3.                Adjustments, Chargebacks and

Remittances.

 

                3.1.                Adjustments.  In the event any Account Debtor asserts any

offset, defense, counterclaim, dispute, discount, allowance, right of return,

right of recoupment, or warranty claim with respect to a Purchased Account, or

pays less than the face amount of such Purchased Account (each, an

"Adjustment"), Purchaser may, in its sole discretion, either (A)

deduct the amount of the Adjustment in calculating the Remittance, or (B)

chargeback to Seller the Purchased Account with respect to which the Adjustment

is asserted. Seller shall advise Purchaser immediately upon learning of any

Adjustment asserted by any Account Debtor.

 

                3.2.                Chargebacks.  Purchaser shall have the right to chargeback

to Seller any Purchased Account:

 

	

  (A)

  	

   

  	

  which

  remains unpaid ninety (90) calendar days after the invoice date;

  
	

  (B)

  	

   

  	

  with respect

  to which there has been a breach of any warranty, representation, covenant or

  agreement set forth in this Agreement;

  
	

  (C)

  	

   

  	

  with respect

  to which the Account Debtor asserts any Adjustment; or

  
	

  (D)

  	

   

  	

  which is

  owed by an Account Debtor who has filed, or has had filed against it, any

  bankruptcy cases, insolvency proceeding, assignment for the benefit of

  creditors, receivership or insolvency proceeding, or who has become insolvent

  (as defined in the United States Bankruptcy Code) or who is generally not

  paying its debts as such debts become due.

  

 

Upon demand by Purchaser,

Seller shall pay to Purchaser the full face amount of any Purchased Account

which has been charged back to Seller pursuant to this Section 3.2, or to the

extent partial payment has been made, the amount by which the face amount of

such Purchased Account exceeds such partial payment, together with any

attorneys' fees and costs incurred by Purchaser in connection with collecting

such Purchased Account (collectively, the "Chargeback Amount").

Purchaser shall advise Seller regarding how the Chargeback Amount shall be

paid, which may be by any one or a combination of the following. In Purchaser's

sole discretion: (1) payment in cash immediately upon demand; (2) deduction

from or offset against any Remittance that would otherwise be payable to

Seller; (3) payment from any Advances that may otherwise be made to Seller; (4)

adjustment to the Reserve pursuant to Section 1.3 hereof; or (5) delivery of

substitute Accounts and a Schedule of Accounts acceptable to Purchaser, which

Accounts shall constitute Purchased Accounts.

 

                3.3.                Remittance.  Purchaser shall remit to Seller after the

Settlement Date, the amount, if any, which Purchaser owes to Seller at the end

of the Settlement Period based on the following calculations set forth below

(the "Remittance"); provided, that if there then exists any Event of

Default or any event or condition that with notice or lapse of time would

constitute an Event of Default, Purchaser shall not be obligated to remit any

payments to Seller. If the amount resulting from the following calculation is a

positive number, such amount is the amount of the Remittance for such

Settlement Period. If the resulting amount is a negative number, such amount is

the amount owed by Seller to Purchaser.

 

                                The calculation to be used are as follows:

 

	

  (A)

  	

   

  	

  The sum of

  the following:

  
	

   

  	

   

  	

  (1)

  	

   

  	

  The Reserve

  as of the beginning of the subject Settlement Period, plus

  
	

   

  	

   

  	

  (2)

  	

   

  	

  The Reserve

  created for each Account purchased during the subject Settlement Period;

  
	

   

  	

   

  	

   

  	

   

  	

   

  

MINUS

 

	

  (B)

  	

   

  	

  The sum of

  the following:

  
	

   

  	

   

  	

  (1)

  	

   

  	

  Finance Fees

  accrued during the subject Settlement Period; plus

  
	

   

  	

   

  	

  (2)

  	

   

  	

  Administrative

  Fees accrued during the subject Settlement Period; plus

  
	

   

  	

   

  	

  (3)

  	

   

  	

  Adjustments

  during the subject Settlement Period; plus

  
	

   

  	

   

  	

  (4)

  	

   

  	

  Chargeback

  Amounts, to the extent Purchaser has agreed to accept payment of any such

  Chargeback Amount by deduction from the Remittance; plus

  
	

   

  	

   

  	

  (5)

  	

   

  	

  All

  professional fees and expenses as set forth in Section 10 for which oral or

  written demand has been made by Purchaser during the subject Settlement

  Period; plus

  
	

   

  	

   

  	

  (6)

  	

   

  	

  The Reserve

  for the Account Balance as of the first day of the following Settlement

  Period in the minimum percentage set forth in Section 1.3 hereof.

  

 

If the foregoing calculations

result in a Remittance payable to Seller, Purchaser shall make such payment by

check, subject to Purchaser's rights of offset and recoupment, and its right to

deduct any Chargeback Amount as set forth in Section 3.2. If the foregoing

calculations result in an amount due to Purchaser from Seller, Seller shall

make such payment by any one or a combination of the methods set forth in

Section 3.2 hereof for chargebacks, as determined by Purchaser in its

discretion.

 

4.             Power of Attorney.  Seller hereby appoints Purchaser and its

designees as Seller's true and lawful attorney in fact, to exercise in

Purchaser's discretion, and regardless of whether an Event of Default is then

existing, all of the following powers, such powers being coupled with an

interest: (A) to notify all Account Debtors with respect to the Purchased

Accounts to make payment directly to Purchaser; (B) to receive, deposit, and

endorse Seller's name on all checks, drafts, money orders and other forms of

payment relating to the Purchased Accounts; (C) to demand, collect, receive,

sue, and give releases to any Account Debtor for the monies due or which may

become due on or in connection with the Purchased Accounts; (D) to compromise,

prosecute, or defend any action, claim, case, or proceeding relating to the

Purchased Accounts, including the filing of a claim or the voting of such

claims in any bankruptcy case, all in Purchaser's name or Seller's name, as

Purchaser may elect; (E) to sell, assign, transfer, pledge, compromise, or

discharge any Purchased Accounts; (F) to receive, open, redirect and dispose of

all mail addressed to Seller for the purpose of collecting the Purchased

Accounts and to take all the actions permitted in subsection (B) above with

respect to any payment in such mail; (G) to execute in the name of Seller and file

against Seller in favor of Purchaser such financing statements and other

agreements as Purchaser deems necessary to evidence or perfect its security

interest in the Purchased Accounts and the other Collateral; and (H) to do all

acts and things necessary or expedient, in furtherance of any such purposes.

Upon the occurrence of an Event of Default, all of the power of attorney rights

granted by Seller to Purchaser hereunder shall be applicable with respect to

all Collateral.

 

5.                Continuing Representations,

Warranties and Covenants.  To induce Purchaser to enter into this Agreement and purchase

Accounts, and with full knowledge that Purchaser is relying on the truth and

accuracy of the following in determining whether to purchase any Account, Seller

represents, warrants, covenants and agrees as follows, which representations,

warranties, covenants and agreements shall survive the execution and delivery

of this Agreement:

 

	

  (A)

  	

   

  	

  The

  information contained in each Schedule of Accounts is true and correct;

  
	

  (B)

  	

   

  	

  Each

  Schedule of Accounts is signed by an authorized representative of Seller, and

  Purchaser shall have the right to rely on such signature as an authorized

  signature of Seller;

  
	

  (C)

  	

   

  	

  Seller is

  the sole and absolute owner of each Account described in each Schedule of

  Accounts and has the legal right to sell, transfer and assign such Account to

  Purchaser;

  
	

  (D)

  	

   

  	

  Seller has

  performed all obligations required by the Account Debtor in connection with

  each Account described in each Schedule of Accounts and payment of each such

  Account is not contingent upon the fulfillment of any obligation or contract,

  past or future;

  
	

  (E)

  	

   

  	

  Each Account

  described on each Schedule of Accounts is correctly stated therein, is not in

  dispute, is presently and unconditionally owing at the time stated in the

  invoice evidencing such account as attached to the Schedule of Accounts, is

  not past due or in default, represents a bona fide indebtedness arising from

  the actual sale of goods or performance of services to an Account Debtor in the

  ordinary course of Seller's business which has been received and finally

  accepted by the Account Debtor;

  
	

  (F)

  	

   

  	

  Each Account

  set forth on each Schedule of Accounts is not subject to any offset, defense

  or counterclaim of any kind, whether bona fide or otherwise, and no agreement

  has been made under which the Account Debtor may claim any deduction or

  discount, except as otherwise stated in the Schedule of Accounts;

  
	

  (G)

  	

   

  	

  Each Account

  Debtor identified on each Schedule of Accounts is liable for the amount set

  forth on such Schedule of Accounts and will not object to payment for, or the

  quality or the quantity of the goods or services to which any Account

  described on such Schedule of Accounts relates;

  
	

  (H)

  	

   

  	

  Seller, and

  to Seller's best knowledge, each Account Debtor set forth in each Schedule of

  Accounts, is and shall remain solvent in that the present saleable value of

  such entity's assets exceeds the total entity's liabilities;

  
	

  (I)

  	

   

  	

  Seller has

  not, as of the time Seller accepts an Advance from Purchaser, filed or had

  filed against it a petition for relief under the United States Bankruptcy

  Code;

  
	

  (J)

  	

   

  	

  Each Account

  and all other Collateral are free and clear of any and all liens, security

  interests and encumbrances of any kind, other than those in favor of Purchaser,

  and Seller will not assign, transfer, or grant any lien or security interest

  in any Accounts or other Collateral to any other party, without Purchaser's

  prior written consent;

  
	

  (K)

  	

   

  	

  Seller has

  not sold, assigned, transferred, pledged or otherwise conveyed any Purchased

  Accounts to any party other than Purchaser, and Seller shall not sell,

  assign, transfer, pledge or otherwise convey any Collateral without

  Purchaser's prior consent, except for the sale of Accounts to Purchaser and

  the sale of finished inventory in Seller's normal course of business;

  
	

  (L)

  	

   

  	

  Seller's

  name and form of organization are as set forth at the beginning of this

  Agreement, and Seller's chief executive office, place of business and place

  where Collateral and records concerning Accounts and other Collateral are

  kept are as set forth below Seller's signature, and Seller will give

  Purchaser at least thirty (30) days prior written notice if such name,

  organization, place of business, location of Collateral or records concerning

  Collateral is to be changed or added and shall execute any documents

  necessary to perfect Purchaser's interest in the Purchased Accounts and the

  other Collateral; and

  
	

  (M)

  	

   

  	

  Seller shall

  pay all of its normal gross payroll for employees, and all federal and state

  taxes, as and when due, including all payroll and withholding taxes and state

  sales taxes.

  
					

 

6.             Grant of Security Interest.  To secure the prompt payment and performance

of all of Seller's Obligations to Purchaser, Seller hereby grants to Purchaser

a continuing lien upon and security interest in, and right of set off with

respect to, all of Seller's right, title and interest in, to and under the

following, whether now owned by or owing to, or hereafter acquired by or

arising in favor of, Seller, and regardless of where located (collectively the

"Collateral"):

 

	

  (A)

  	

   

  	

  All

  accounts, accounts receivable, chattel paper, contract rights, documents,

  instruments, letters of credit, banker's acceptances, drafts, securities and

  general intangibles, including all claims, causes of action, deposit

  accounts, rights to receive tax refunds, rights in and claims under insurance

  policies (including rights to unearned premiums), customer lists, copyrights,

  patents, trademarks, license agreements, goodwill associated with trademarks

  and trademark licenses, and other intellectual property of every kind and

  other rights to payment;

  
	

  (B)

  	

   

  	

  All

  inventory;

  
	

  (C)

  	

   

  	

  All monies,

  remittances, and other amounts due under this Agreement and any other

  agreement between Purchaser and Seller;

  
	

  (D)

  	

   

  	

  All

  equipment, machinery, motor vehicles, furniture, fixtures, tools and

  supplies;

  
	

  (E)

  	

   

  	

  All

  investment securities;

  
	

  (F)

  	

   

  	

  All farm

  products, crops, timber, minerals and the like (including oil and gas);

  
	

  (G)

  	

   

  	

  All books

  and records relating to the foregoing, including all computer programs,

  printed output and computer readable data;

  
	

  (H)

  	

   

  	

  All

  accessions to, and substitutions and replacements for, all of the foregoing;

  and

  
	

  (I)

  	

   

  	

  All proceeds

  and products of the foregoing, whether due to voluntary or involuntary

  disposition, including insurance proceeds. Seller shall sign and deliver to

  Purchaser UCO financing statements, in form acceptable to Purchaser. Seller

  agrees to deliver to Purchaser the originals of all instruments, chattel

  paper and documents evidencing or related to Purchased Accounts and other

  Collateral.

  

 

 

7.             Default.  The occurrence of any one or more of the

following shall constitute an event of default under this Agreement (each, as

"Event of Default"):

 

	

  (A)

  	

   

  	

  Seller fails

  to pay any amount owed to Purchaser as and when due under this Agreement or

  fails to pay any other Obligations as and when due;

  
	

  (B)

  	

   

  	

  Any warranty

  or representation by Seller to Purchaser under this Agreement is incorrect or

  untrue when made or thereafter becomes untrue or incorrect;

  
	

  (C)

  	

   

  	

  Seller fails

  to perform or breaches any covenant or agreement set forth in Agreement or

  any other agreement between Purchaser and Seller;

  
	

  (D)

  	

   

  	

  There shall

  be commenced by or against Seller 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 Seller's

  assets;

  
	

  (E)

  	

   

  	

  Seller shall

  become insolvent in that its debts are greater than the fair value of its

  assets, or Seller is generally not paying its debts as they become due or is

  left with unreasonably small capital;

  
	

  (F)

  	

   

  	

  Any

  involuntary lien, garnishment, attachment or the like is issued against or

  attaches to the Purchased Accounts or the other Collateral;

  
	

  (G)

  	

   

  	

  An event of

  default shall occur under any guaranty executed by any guarantor of the

  Obligations, 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; or 

  
	

  (H)

  	

   

  	

  A default or

  event of default shall occur under any agreement between Seller and any

  creditor of Seller who has entered into a subordination agreement with

  Purchaser.

  

 

8.                Remedies Upon Default.  Upon the occurrence of an Event of Default,

Purchaser may, without notice, (A) without implying any obligation to buy

Accounts, cease buying Accounts; (B) accelerate the payment of all Obligations

by requiring Seller to repurchase all or any portion of the Purchased Accounts

then outstanding for cash in an amount equal to the Advance made for each

Purchased Account, and all accrued Finance Fees, Administrative Fees,

attorneys' fees and other Obligations then outstanding, which Obligations shall

be due and payable in full without demand; (C) exercise all the rights and

remedies under this Agreement and under applicable law, including the rights

and remedies of a secured party under the California Uniform Commercial Code.

Without limiting the generality of the foregoing, Purchaser may (1) exercise

all of the power of attorney rights described in Section 4 with respect to all

Collateral, and (2) collect, dispose of, sell, lease, use, and realize upon all

Purchased Accounts and other Collateral in any commercially reasonable manner.

Seller and Purchaser agree that any notice of sale required to be given to

Seller shall be deemed to be reasonable if given five (5) days prior to the

date on or after which any sale may be held. All remedies set forth herein

shall be cumulative and none exclusive.

 

9.             Accrual of Interest.   If any amount owed by Seller hereunder is

not paid when due, including any amounts under Section 3.3, Chargeback Amounts,

professional fees and expenses under Section 10 and any other Obligations, such

amounts shall bear interest at a per annum rate equal to the rate of used to

calculate the Finance Fees, annualized, until payment in good funds in the full

amount of all such obligations.

 

10.                Attorneys' Fees.  Seller shall pay to Purchaser immediately

upon demand, all costs and expenses, including reasonable fees and expenses of

attorneys and other professionals, that Purchaser incurs in connection with any

and all of the following: (A) preparing, amending, supplementing, negotiating

and enforcing this Agreement, or any other agreement executed in connection

herewith; (B) perfecting, protecting or enforcing Purchaser's interest in the

Purchased Accounts and the other Collateral; (C) collecting the Purchased

Accounts and the Obligations; (D) defending or in any way addressing claims

made or litigation initiated by or against Purchaser as a result of Purchaser's

relationship with Seller or any guarantor; and (E) representing Purchaser in

connection with any bankruptcy case or insolvency proceeding involving Seller,

any Purchased Account, or other Collateral or any Account Debtor. Any

attorneys' fees and expenses may, at Purchaser's option, be netted against the

reserve as set forth in Section 3.3.

 

11.          Term and Termination.  The term of this Agreement shall be for one

(1) year from the date hereof, and from year to year thereafter unless

terminated in writing by Purchaser or Seller. Seller and Purchaser shall each

have the right to terminate this Agreement at any time. Notwithstanding the

foregoing, any termination of this Agreement shall not affect Purchaser's

security interest in the Collateral and Purchaser's ownership of the Purchased

Accounts and this Agreement shall continue to be effective, and Purchaser'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.

 

12.                Miscellaneous.

 

                12.1.                Severability.  In the event that any provision of this

Agreement is held to be invalid or unenforceable, this Agreement will be

construed as not containing such provision and the remainder of the Agreement

shall remain in full force and effect.

                12.2.                Choice

of Law.  This Agreement shall

be governed by and interpreted in accordance with the laws of the State of

California, without giving effect to principles of conflicts of law.

                12.3.                Notices.  All notices shall be given to Purchaser and

Seller at the addresses set forth in 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 prepaid; (B) one (1)

calendar day after deposit with an overnight mail or messenger service; or (C)

on the same date of transmission if sent by hand delivery, telecopy, telefax or

telex.

                12.4.                Titles

and Section Headings.  The

titles and section headings used herein are for convenience only and shall not

be used in interpreting this Agreement.

 

13.                Definitions.  All terms used

herein which are defined in the California Uniform Commercial Code shall have

the meaning given therein unless otherwise defined in this Agreement. The term

"including" is not limiting or exclusive. When used herein, the

following terms shall have the following meanings.

 

                13.1                "Account"

shall mean all accounts, accounts receivable, chattel paper, contract rights,

documents, general intangibles, instruments, letters of credit, banker's

acceptances, and other rights to payment, and proceeds thereof.

                13.2.                "Account

Balance" shall mean, on any given day, the gross face amount of

all Purchased Accounts unpaid on that day.

                13.3.                "Account

Debtor" shall have the meaning set forth in the California

Uniform Commercial Code and shall include any person liable on any Purchased

Account, including any guarantor of the Purchased Account and any issuer of a

letter of credit or banker's acceptance.

                13.4.                "Adjustment(s)"

shall have the meaning set forth in Section 3.1.

                13.5.                "Administrative

Fee" shall have the meaning as set forth in Section 2.2.

                13.6.                "Advance"

shall have the meaning set forth in Section 1.3.

                13.7.                "Chargeback

Amount" shall have the meaning set forth in Section 3.2.

                13.8.                "Collateral"

shall have the meaning set forth in Section 6.

                13.9.                "Customer

Payments" shall have the meaning set forth in Section 2.4.

                13.10.                "Event

of Default" shall have the meaning set forth in Section 7.

                13.11.                "Finance

Fees" shall have the meaning set forth in Section 2.1.

                13.12.                "Schedule

of Accounts" shall have the meaning set forth in Section 1.1.

                13.13.                "Obligations"

shall mean all advances, obligations, indebtedness and duties owing by Seller

to Purchaser of any kind or nature, present or future, arising under or in

connection with this Agreement or any other agreement entered into between

Purchaser and Seller, weather direct or indirect, including all Advances,

Finance Fees, Administrative Fees, Chargeback Amounts, attorneys' fees and

expenses.

                13.14.                "Purchased

Accounts" shall mean all Accounts identified on any Schedule of

Accounts delivered by Seller to Purchaser which Purchaser elects to purchase

and for which Purchaser makes an Advance, and all monies due or to become due

thereunder.

                13.15.                "Remittance"

shall have the meaning set forth in Section 3.3.

                13.16.                "Reserve"

shall have the meaning set forth in Section 1.3.

                13.17.                "Settlement

Date" shall mean the last calendar day of each Settlement

Period.

                13.18.                "Settlement

Period" shall mean each calendar month of each year.

 

IN WITNESS WHEREOF, Seller and

Purchaser have executed this Agreement on the day and year written above.

 

	

  "PURCHASER"

  	

   

  	

  "SELLER"

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  PACIFIC

  BUSINESS FUNDING, a division of Cupertino National Bank

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By

  	

  /s/ William Chronert

  	

   

  	

  By

  	

  /s/ David W. Chapman

  
	

  Title

  	

  President

  	

   

  	

  Title

  	

  Chief Financial Officer

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Other Locations of Collateral, if any, in Addition to Above:

  	

   

  	

  Address of Seller, Chief Executive Office and Location of Collateral

  
	

   

  	

   

  	

  Street:

  	

  311 Arsenal Street

  
	

   

  	

   

  	

  City:

  	

  Watertown

  
	

   

  	

   

  	

  State:

  	

  MA

  
	

   

  	

   

  	

  Zip Code:

  	

  02472

  
	

   

  	

   

  	

  Telephone

  No.:

  	

  (617)

  923-6500

  
	

   

  	

   

  	

  Facsimile

  No.:

  	

  (617) 923-6565

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
						

 

AMENDMENT TO FACTORING AGREEMENT

 

This Amendment to Factoring

Agreement (this "Amendment") is entered into as of this 15 day of

AUG., 2001, by and among PRIMIX SOLUTIONS INC. ("Seller") and Pacific

Business Funding, a division of Cupertino National Bank

("Purchaser").

                WHEREAS, pursuant to that certain Factoring

Agreement dated as of 08.15.01, by and between Seller and Purchaser, as from

time to time amended, restated, supplemented or otherwise modified, (the

"Factoring Agreement"), Purchaser has made or will hereafter make,

Advances to Seller for the purchase of Accounts. All capitalized terms used but

not otherwise defined in this Amendment shall have the respective meanings

assigned to such terms in the Factoring Agreement.

                WHEREAS, pursuant to the terms of the

Factoring Agreement, Seller has granted to Purchaser a security interest in its

personal property assets to secure its Obligations.

                NOW, THEREFORE, for good and valuable

consideration, the receipt and sufficiency of which are hereby acknowledged,

the parties hereto agree as follows

	

  1.

  	

   

  	

  Granting

  Clause. Section 6 of the Factoring Agreement is hereby amended and restated

  to read in its entirety as follows:

  
	

   

  	

   

  	

  "6.   Grant of Security Interest; Other

  Agreements.

  
	

   

  	

   

  	

  61   To secure the prompt payment and

  performance of all of Seller's Obligations to Purchaser, Seller hereby grants

  to Purchaser a continuing lien upon and security interest in, and right of

  set off with respect to, all of Seller's rights, title and interest in, to and

  under all personal property and other assets, whether now owned by or owing

  to, or hereafter acquired by or arising in favor of, Seller, and regardless

  of where located, including the following (collectively, the

  "Collateral"):

  
	

   

  	

   

  	

   

  	

  (A)   All accounts, accounts receivable,

  chattel paper, contract rights, documents, instruments, letters of credit,

  letter-of-credit rights, supporting obligations, bankers' acceptances,

  drafts, securities and general intangibles, including all software, payment

  intangibles, claims, causes of action, rights to receive tax refunds, rights

  in and claims under insurance policies (including rights to unearned

  premiums), customer lists, copyrights, patents, trademarks, license

  agreements, goodwill associated with trademarks and trademark licenses, and

  other intellectual property of every kind and other rights to payment;

  
	

   

  	

   

  	

   

  	

  (B)   All inventory;

  
	

   

  	

   

  	

   

  	

  (C)   All deposit accounts and deposits

  therein;

  
	

   

  	

   

  	

   

  	

  (D)   All monies, remittances, and other

  amounts due under this Agreement and any other agreement between Purchaser

  and Seller;

  
	

   

  	

   

  	

   

  	

  (E)   All equipment, machinery, motor vehicles,

  furniture, tools and supplies;

  
	

   

  	

   

  	

   

  	

  (F)   All investment property;

  
	

   

  	

   

  	

   

  	

  (G)   All farm products, crops, timber,

  minerals and the like (including oil and gas);

  
	

   

  	

   

  	

   

  	

  (H)   the following commercial tort claims [insert specific case captions or description per

  Official Comment 5 to Section 9-108 of the Uniform Commercial Code];

  
	

   

  	

   

  	

   

  	

  (I)   All books and records relating to the

  foregoing, including all computer programs, printed output and computer

  readable data; and

  
	

   

  	

   

  	

   

  	

  (J)   to the extent not otherwise included, all

  proceeds, tort claims, insurance claims and other rights to payments not

  otherwise included in the foregoing and products of the foregoing and all

  accessions to, substitutions and replacements for, and rents and profits of,

  each of the foregoing.

  
	

   

  	

  62   Seller hereby irrevocably authorizes the

  Purchaser at any time and from time to time to file in any filing office in

  any Uniform Commercial Code jurisdiction any initial financing statements and

  amendments thereto that (a) indicate the Collateral (i) as all assets of

  Seller or words of similar effect, regardless of whether any particular asset

  comprised in the Collateral falls within the scope of Article 9 of the Code

  or such jurisdiction, or (ii) as being of an equal or lesser scope or with

  greater detail, and (b) contain any other information required by part 5 of

  Article 9 of the Code for the sufficiency or filing office acceptance of any

  financing statement or amendment, including (i) whether Seller is an

  organization, the type of organization and any organization identification

  number issued to Seller, and (ii) in the case of a financing statement filed

  as a fixture filing or indicating Collateral as as-extracted collateral

  or  timber to be cut, a sufficient

  description of real property to which the Collateral relates. Seller agrees

  to furnish any such information Purchaser promptly upon request. Seller also

  ratifies its authorization for Purchaser to have filed in any Uniform

  Commercial Code jurisdiction any initial financing statements or amendments

  thereto if filed prior to the date hereof.

  
	

   

  	

  63   Seller shall sign and deliver to

  Purchaser UCC financing statements, in form acceptable to Purchaser as to

  those jurisdictions that are not Uniform Commercial Code jurisdictions.

  
	

   

  	

  64   Seller shall deliver to Purchaser the

  originals of all instruments, certificated securities, chattel paper and

  documents evidencing or related to Purchased Accounts and other Collateral.

  
	

   

  	

  65   Seller shall obtain signed

  acknowledgements of Purchaser's security interests from bailees having

  possession of Seller's goods that they hold for the benefit of Purchaser.

  
	

   

  	

  66   At the request of Purchaser, Seller shall

  obtain authenticated control letters from each issuer of uncertificated

  securities, securities intermediary, or commodities intermediary issuing or

  holding any financial assets or commodities to or for Seller.

  
	

   

  	

  67   Seller shall maintain all of its deposit

  accounts with Purchaser.

  
	

   

  	

  68   If Seller is or becomes the beneficiary

  of a letter of credit, Seller shall promptly, and in any event within two (2)

  business days after becoming a beneficiary, notify Purchaser thereof and

  enter into a tri-party agreement with Purchaser and the issuer and/or

  confirmation bank with respect to letter-of-credit rights assigning such

  letter-of-credit rights to Purchaser.

  

 

	

   

  	

  69   Seller shall take all steps necessary to

  grant the Purchaser control of all electronic chattel paper in accordance

  with the Code and all "transferable records" as defined in each of

  the Uniform Electronic Transactions Act and the Electronic Signatures in

  Global and National Commerce Act.

  
	

   

  	

  610    Seller shall promptly, and in any event

  within two (2) Business Days after the same is acquired by it, notify

  Purchaser of any commercial tort claim (as defined in the Code) acquired by

  it and unless otherwise consented by Purchaser, Seller shall enter into a

  supplement to this Factoring Agreement, granting to Purchaser a security interest

  in such commercial tort claim.

  
	

  2.

  	

   

  	

  Section 5(L)

  of the Factoring Agreement is hereby amended and restated to read in its

  entirety as follows:

  
	

   

  	

   

  	

  (L)   Seller's name as it appears in official

  filings in the state of its incorporation or other organization, the type of

  entity of Seller (including corporation, partnership, limited partnership or

  limited liability company), organizational identification number issued by

  Seller's state of incorporation or organization or a statement that no such

  number has been issued, Seller's state or organization or incorporation, the

  location of Seller's chief executive office, principal place of business,

  offices, all warehouses and premises where Collateral is stored or located,

  and the locations of its books and records concerning the Collateral are set

  forth below Seller's signature. Seller has only one state of incorporation or

  organization."

  
	

  3.

  	

   

  	

  Additional

  Covenants.  The following clauses (N),

  and (O) are added to Section 5 of the Factoring Agreement:

  
	

   

  	

   

  	

  (N)   Seller shall not reincorporate or

  reorganize itself under the laws of any jurisdiction other than the

  jurisdiction in which it is incorporated or organized as of the date hereof

  without the prior written consent of Purchaser; and

  
	

   

  	

   

  	

  (O)   Seller acknowledges that it is not

  authorized to file any financing statement or amendment or termination

  statement with respect to any financing statement without the prior written

  consent of Purchaser and agrees that it will not do so without the prior

  written consent of Purchaser, subject to Seller's rights under Section

  9509(d)(2) of the Code.

  
	

  4.   The following are hereby added as new

  definitions to Section 13 of the Factoring Agreement:

  
	

  "Code"

  means the California Commercial Code as in effect on July 1, 2001, as the

  same may be amended from time to time. 

  "Uniform Commercial Code jurisdiction" means any

  jurisdiction that had adopted all or substantially all of Article 9 as

  contained in the 2000 Official Text of the Uniform Commercial Code, as

  recommended by the National Conference of Commissioners on Uniform State Laws

  and the American Law Institute, together with any subsequent amendments or

  modifications to the Official Text.

  
	

  5.   The definition of "Account" in

  Section 13.1 of the Factoring Agreement is hereby amended and restated to

  read as follows:

  
	

  "Account"

  shall mean all accounts, accounts receivable, chattel paper, contract rights,

  documents, general intangibles, instruments, letters of credit,

  letter-of-credit rights, supporting obligations, banker's acceptances, and

  other rights to payment, and proceeds thereof.

  
	

  6.   Effect on Factoring Agreement.  All references in the Factoring Agreement

  to the Factoring Agreement shall be deemed to refer to the Factoring

  Agreement as amended hereby.

  
	

  7.   Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF

  CALIFORNIA (WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAW RULES).

  
	

  8.   Counterparts.  This Amendment may be executed in any number of counterparts,

  each of which shall be deemed an original but all of which together shall

  constitute one and the same instrument.

  

 

                IN WITNESS WHEREOF, each of the parties

hereto has caused this Amendment to be executed and delivered by its duly

authorized officer as of the date first set forth above.

 

	

  "Seller"

  	

   

  	

  "Purchaser"

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  PACIFIC

  BUSINESS FUNDING,  a division of

  Cupertino National Bank

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ William Chronert

  	

   

  	

  By:

  	

  /s/ David W. Chapman

  
	

  Name:

  	

  William Chronert

  	

   

  	

  Name:

  	

  David W. Chapman

  
	

  Title:

  	

  President

  	

   

  	

  Title:

  	

  Chief Financial Officer

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  State of

  Formation:

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Organizational

  Identification Number:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]