Document:

SALE
      OF ACCOUNTS AND SECURITY AGREEMENT

    

    

    Date:
      August 17, 2005.

    Coda
      Octopus Group, Inc., a Delaware corporation (“Seller”), having offices at 245
      Park Avenue, 39th
      Floor,
      New York, New York 10167.

    

    Seller
      and Faunus Group International, Inc., a Delaware corporation (“FGI”), having
      offices at 80 Pine Street, 32nd
      Floor,
      New York, New York 10005, hereby agree to the terms and conditions set forth
      in
      this Sale of Accounts and Security Agreement (“Agreement”): 

     

      Section
      1.1 Definitions.
      For the
      purposes of this Agreement and unless defined otherwise herein, all terms used
      shall have the meanings assigned to them on Schedule “A”.

     

    Section
      1.2 Other
      Referential Provisions.

    

    (a) Except
      as
      otherwise expressly provided herein, all accounting terms not specifically
      defined or specified herein shall have the meanings generally attrib-uted to
      such terms under GAAP including, without limitation, applicable statements
      and
      interpretations issued by the Financial Accounting Standards Board and
      bulletins, opin-ions, interpretations and statements issued by the American
      Institute of Certified Public Accountants or its committees.

    

    (b) All
      personal pronouns used in this Agreement, whether used in the mas-cu-line,
      feminine or neuter gender, shall include all other genders; the singular shall
      include the plural, and the plural shall include the singular.

    

    (b) The
      words
“hereof”, “herein” and “hereunder” and words of similar import when used in this
      Agreement shall refer to this Agreement as a whole and not to any particular
      provisions of this Agreement.

    

    (d) Titles
      of
      Articles and Sections in this Agreement are for convenience only, do not
      constitute part of this Agreement and neither limit nor amplify the pro-vi-sions
      of this Agreement, and all references in this Agreement to Articles, Sections,
      Sub-sections, paragraphs, clauses, sub clauses, Schedules or Exhibits shall
      refer to the cor-res-ponding Article, Section, Subsection, paragraph, clause
      or
      sub clause of, or Schedule or Exhibit attached to, this Agreement, unless
      specific reference is made to the articles, sec-tions or other subdivisions
      or
      divisions of, or to schedules or exhibits to, another docu-ment or
      instrument.

    

    (e) Each
      definition of a document in this Agreement shall include such doc-u-ment as
      amended, modified, supplemented or restated from time to time in accordance
      with
      the terms of this Agreement.

    

    (f) Except
      where specifically restricted, reference to a party to this Agreement includes
      that party and its successors and assigns.

    

    (g) All
      capitalized terms in this Agree-ment shall have the meanings given those terms
      in the UCC.

    

    Section
      1.3  Exhibits
      and Schedules.
      All
      Exhibits and Schedules attached here-to are by reference made a part
      hereof.

    

    Section
      2.  Purchase
      & Sale of Accounts.

    

    (a) Seller
      hereby offers to sell, assign, transfer, convey and deliver to FGI, as absolute
      owner, in accordance with the procedure detailed herein, all of Seller’s right,
      title and interest in and to Seller’s Accounts. 

    

    (b) All
      Accounts shall be submitted to FGI on a Schedule of Accounts listing each
      Account separately. The Schedule of Accounts shall be in the form attached
      hereto as Schedule “2,” or in such other form as required by FGI, and shall be
      signed by a person acting or purporting to act on behalf of Seller. At the
      time
      the Schedule of Accounts is presented, Seller shall also deliver to FGI one
      copy
      of a sales contract, purchase order, and invoice for each Account together
      with
      evidence of shipment, furnishing and/or delivery of the Goods or rendition
      of
      service(s). All invoices shall plainly state on their face the amounts payable
      hereunder are payable to FGI at the remittance address or by the wire
      instructions set forth below. 

    

    
      
        
        

      

      
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    Wire
      Instructions:                                       
Mailing
      Address:

    Commerce
      Bank,
      N.A.                                   
80
      Pine
      Street

    (Comm
      BK
      Marlton)                                       32nd
      Floor

    Cherry
      Hill,
      NJ                                                
New
      York,
      NY 10005

    SWIFT:
      CBNAUS33

    ABA/Routing
      #: 026013673

    Credit
      to: FGI Finance

    Account
      #: 7918598116

    

    (c) Any
      and
      all Purchased Accounts shall be purchased on either a Credit Approved or with
      Full Recourse basis. In the absence of written Credit Approval, the Purchased
      Accounts shall be purchased at Full Recourse. If Goods are shipped or services
      are provided based on a verbal approval, it is Seller’s responsibility to ensure
      that such approval is received in writing in a timely manner. Credit Approval(s)
      may be withdrawn, either orally or in writing, in FGI’s discretion at any time
      if, in FGI’s opinion, a Customer’s credit standing becomes impaired before
      actual delivery of Goods or rendering of services. Credit Approval(s) shall
      be
      limited to the specific terms and amounts indicated, and, notwithstanding any
      information subsequently provided to Seller by FGI, such Credit Approval(s)
      are
      automatically rescinded and withdrawn if the terms of sale vary from the terms
      approved by FGI, or if the terms of sale are changed by Seller without FGI’s
      written Credit Approval on the new terms, or if the Purchased Account is not
      assigned to FGI within ten (10) days from the date of the invoice. Seller
      further acknowledges that if Seller ships Goods or provides services to a
      customer who has outstanding Accounts from Seller, and such customer’s credit
      line and/or outstanding Credit Approval(s) have been withdrawn by FGI, and
      the
      Accounts created thereby, whether or not they are sold and assigned to FGI,
      exceed ten percent (10%) of the amount outstanding on FGI’s books, that any
      Credit Approvals applying to those Purchased Accounts outstanding on FGI’s books
      are cancelled and all outstanding Purchased Accounts from that customer are
      with
      Full Recourse.

    

    (d) With
      regard to sales without Credit Approval or in excess of any Credit Approvals
      to
      any given Customer, Seller agrees that any payments or credits applying to
      any
      Account owing by such Customer will be applied: first,
      to any
      Credit-Approved Purchased Accounts outstanding on FGI’s books; second,
      to any
      Full Recourse Purchased Accounts outstanding on FGI’s books; and, third,
      to any
      Accounts outstanding on Seller’s books. This order of payment applies regardless
      of the respective dates the sales occurred and regardless of any notations
      on
      payment items. 

    

    (e) If
      FGI
      fails to collect a Purchased Account within ninety (90) days of its maturity
      for
      which Credit Approval has been given, FGI shall pay to Seller the Net Invoice
      Amount of such Purchased Account less fees, within a reasonable time period,
      subject to the terms and provisions stated herein. Any Purchased Account for
      freight, samples or miscellaneous sales (including, without limitation, the
      sale
      of Goods and/or in quantities not regularly sold by Seller) is always assigned
      to FGI at Full Recourse, notwithstanding any written Credit Approval from FGI.
      

    

    (f) FGI
      shall
      have no liability of any kind for declining or refusing to give, or for
      withdrawing, revoking, or modifying, any Credit Approval pursuant to the terms
      of this Agreement, or for exercising or failing to exercise any rights or
      remedies FGI may have under this Agreement or otherwise. In the event FGI
      declines to give Credit Approval on any order received by Seller from a Customer
      and in advising Seller of such decline FGI furnishes Seller with information
      as
      to the credit standing of the Customer, such information shall be deemed to
      have
      been requested of FGI by Seller and FGI’s advice containing such information is
      recognized as a privileged communication. Seller agrees that such information
      shall not be given to Seller’s Customer or to Seller’s sales representative(s).
      If necessary, Seller shall merely advise its Customer(s) that credit has been
      declined on the account and that any questions should be directed to FGI. Each
      Full Recourse Account(s) assigned to and purchased by FGI is with full recourse
      to Seller and at Seller’s sole credit risk. FGI shall have the right to charge
      back to Seller’s Reserve Account the amount of such Full Recourse Receivables at
      any time and from time to time either before or after their maturity. Seller
      agrees to pay FGI upon demand the full amount thereof, together with all
      expenses incurred by FGI up to the date of such payment, including reasonable
      attorney’s fees in attempting to collect or enforce such payment or payment of
      such Account(s). FGI’s Credit Approval shall only begin after the first fifteen
      percent (15%) of all Purchased Accounts relating to each Account Debtor. For
      purposes of determining FGI’s Credit Approval hereunder, the Purchased
      Account(s) balance due FGI from any given customer shall be calculated as the
      aggregate amount owed by that Customer less any credits to which such Customer
      may be entitled, and is not to be construed to mean individual invoices owed
      by
      that customer.

    

    
      
        
        

      

      
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    Section
      3. Purchase Price
      and Commissions.

    

    (a) The
      purchase price that FGI shall pay to Seller for each Purchased Account shall
      equal the Net Invoice Amount thereof less FGI’s service commission, as specified
      below. No discount, credit, allowance or deduction with respect to any Purchased
      Account, unless shown on the face of an invoice, shall be granted or approved
      by
      Seller to any Customer without FGI’s prior written consent.

    

    (b) The
      purchase price (as computed above), less (i) any Required Reserve Amount or
      credit balance that FGI, in FGI’s sole discretion, determines to hold, (ii)
      moneys remitted, paid, or otherwise advanced by FGI to or on behalf of Seller
      (including any amounts which Seller may reasonably be obligated to pay in the
      future), and (iii) any other charges provided for by this Agreement, shall
      be
      payable by Seller to FGI on the Date of Collection. 

    

    (c) FGI
      shall
      be entitled to withhold a Required Reserve Amount, and may revise the Required
      Reserve Account or Reserve Percentage at any time and from time to time if
      FGI
      deems it necessary to do so in order to protect FGI’s interests. In no event
      shall Seller permit a Reserve Shortfall to occur. FGI may charge against the
      Required Reserve Account any amount for which Seller may be obligated to FGI
      at
      any time, whether under the terms of this Agreement, or otherwise, including
      but
      not limited to the repayment of any over advance, any damages suffered by FGI
      as
      a result of Seller’s breach of any provision of Section 4 hereof (whether
      intentional or unintentional), any adjustments due and any attorneys’ fees,
      costs and disbursements due. Seller recognizes that the Required Reserve Account
      represents bookkeeping entries only and not cash funds. It is further agreed
      that with respect to the balance in the Required Reserve Account, FGI is
      authorized to withhold, without giving prior notice to Seller, such payments
      and
      credits otherwise due to Seller under the terms of this Agreement for reasonably
      anticipated claims or to adequately satisfy reasonably anticipated obligation(s)
      Seller may owe FGI. If an Event of Default has occurred and is continuing,
      or,
      in the event Seller shall cease selling Accounts to FGI, FGI shall be under
      no
      obligation to pay the amount in the Required Reserve Account until all Accounts
      listed on all Schedules of Accounts have been collected or FGI has determined,
      in its sole discretion, that it will make no further efforts to collect any
      Accounts and all sums due FGI hereunder have been paid.

    

    (d) In
      FGI’s
      sole discretion, in accordance with the terms of this Agreement, FGI may from
      time to time advance to Seller against the purchase price of Purchased Accounts
      purchased by FGI hereunder, sums up to eighty percent (80%) of the aggregate
      purchase price of Purchased Accounts outstanding at the time any such advance
      is
      made, less: (1) Any such Purchased Accounts that are in dispute; (2) any such
      Purchased Accounts that are not credit approved; and (3) any fees, actual or
      estimated, that are chargeable to the Reserve Account. Any advance shall be
      payable on demand and shall bear interest at the rate set forth in subsection
      (e) below from the date such advance is made until the date FGI would otherwise
      be obligated hereunder to pay the purchase price of the Purchased Account(s)
      against which such advance was made.

    

    (e) Interest
      upon the daily net balance of any monies remitted, paid, advanced or otherwise
      charged to Seller’s or for Seller’s account before the payment date (including
      any advance made pursuant to subsection 2(d), and interest applicable to the
      charges or to the expenses referred to in this Agreement) shall be charged
      to
      Seller’s Reserve Account as of the last day of each month at a rate greater of
      eight percent (8%), per annum or three and one half percent (3.5%) above the
      rate of interest designated by FGI as its “Prime Rate” or “Base Rate’, as the
      case may be (which as of the date hereof is based upon the Wall Street Journal,
      Money Rates Section which is subject to change) on the net daily balance of
      all
      outstanding Purchased Accounts. In the event that the Wall Street Journal ceases
      to publish a Prime Rate, then the Prime Rate shall be the average of the three
      largest U.S. money center commercial banks, as determined by FGI. All such
      interest shall be computed for the actual number of days elapsed on the basis
      of
      a year consisting of three hundred sixty (360) days. Any adjustment in FGI’s
      interest rate, whether downward or upward will become effective on the first
      day
      of the month following the month in which the prime rate of interest is reduced
      or increased. If during any month, a net credit balance (i.e., the reserve
      or
      credit balance exceeds outstanding Receivables), then you agree to credit our
      reserve account as of the last day of each month with interest at a rate equal
      to two percent (2%) below the Prime Rate. All such interest, whether charged
      or
      credited to our reserve account, shall be computed for the actual number of
      days
      elapsed on the basis of a year consisting of three hundred sixty (360) days.
      Any
      adjustment in your interest rate, whether downward or upward, will become
      effective on the first day of the month following the month in which the prime
      rate of interest is reduced or increased.

    

    
      
        
        

      

      
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    (f) For
      FGI’s
      services hereunder, Seller shall pay and FGI shall be entitled to receive a
      service commission equal to one and eighty five hundredths of one percent
      (1.85%) of the gross invoice amount of each Purchased Account, which commission
      shall be due and payable to FGI on the date such Purchased Account arises for
      the initial thirty (30) day term, plus an additional fifteen (15) days.
      Thereafter, FGI shall be entitled to receive an additional fee of one half
      of
      one percent (0.5%) for each ten (10) day period after the initial forty five
      (45) days. Service commissions shall be chargeable to Seller’s Required Reserve
      Account. The minimum service commission on each invoice or credit memo shall
      be
      Five Dollars ($5.00). FGI shall be entitled to receive a surcharge equal to
      two
      percent (2%) of the gross invoice amount of all Accounts arising out of sales
      to
      any Chapter 11, Debtor-In-Possession. The minimum service commission on each
      invoice or credit memo shall be Five Dollars ($5.00).

    

    (g) FGI’s
      commission is based upon Seller’s maximum selling terms of net thirty (30) days,
      and Seller will not grant additional dating to any customer without FGI’s prior
      written approval. If and when such extended terms or additional dating are
      given
      to Seller’s customers, FGI’s commission with respect to the Purchased Accounts
      represented thereby shall be increased by two percent (2%) for each thirty
      (30)
      days, or portion thereof, of extended or additional dating.

    

    (h) The
      minimum aggregate service commissions payable under this Agreement for each
      contract year hereof shall be thirty five thousand dollars ($35,000). To the
      extent of any deficiency (after giving effect to commissions payable under
      the
      foregoing subsections), the difference between the minimum and the amount
      already charged shall be chargeable to Seller’s Required Reserve Account, or at
      FGI’s option, payable by Seller on FGI’s demand.

    

    (i) IT
      IS THE INTENTION OF THE PARTIES HERETO THAT AS TO ALL PURCHASED ACCOUNTS, THE
      TRANSACTIONS CONTEMPLATED HEREBY SHALL CONSTITUTE A TRUE PURCHASE AND SALE
      OF
      ACCOUNT(S) UNDER § 9-318 OF THE UCC AND AS SUCH, THE SELLER SHALL HAVE NO LEGAL
      OR EQUITABLE INTEREST IN THE ACCOUNTS SOLD. NEVERTHELESS, IN THE EVENT ANY
      PORTION OF THIS TRANSACTION IS CHARACTERIZED AS A LOAN, THE PARTIES HERETO
      INTEND TO CONTRACT IN STRICT COMPLIANCE WITH APPLICABLE USURY LAW FROM TIME
      TO
      TIME IN EFFECT. IN FURTHERANCE THEREOF SUCH PARTIES STIPULATE AND AGREE THAT
      NONE OF THE TERMS AND PROVISIONS CONTAINED IN THIS AGREEMENT SHALL EVER BE
      CONSTRUED TO CREATE A CONTRACT TO PAY, FOR THE USE, FORBEARANCE OR DETENTION
      OF
      MONEY, INTEREST IN EXCESS OF THE MAXIMUM RATE (AS HEREINAFTER DEFINED) FROM
      TIME
      TO TIME IN EFFECT. NEITHER SELLER, ANY PRESENT OR FUTURE GUARANTOR OR ANY OTHER
      PERSON HEREAFTER BECOMING LIABLE FOR THE PAYMENT OF THE ADVANCES, SHALL EVER
      BE
      LIABLE FOR ANY OBLIGATION THAT MAY BE CHARACTERIZED AS UNEARNED INTEREST THEREON
      OR SHALL EVER BE REQUIRED TO PAY ANY OBLIGATION THAT MAY BE CHARACTERIZED AS
      INTEREST THEREON IN EXCESS OF THE MAXIMUM AMOUNT THAT MAY BE LAWFULLY CHARGED
      UNDER APPLICABLE LAW FROM TIME TO TIME IN EFFECT, AND THE PROVISIONS OF THIS
      SECTION SHALL CONTROL OVER ALL OTHER PROVISIONS OF THIS AGREEMENT WHICH MAY
      BE
      IN CONFLICT THEREWITH. IF ANY INDEBTEDNESS OR OBLIGATION OWED BY SELLER
      HEREUNDER IS DETERMINED TO BE IN EXCESS OF THE LEGAL MAXIMUM, OR FGI SHALL
      OTHERWISE COLLECT MONEYS WHICH ARE DETERMINED TO CONSTITUTE INTEREST WHICH
      WOULD
      OTHERWISE INCREASE THE INTEREST ON ALL OR ANY PART OF SUCH OBLIGATIONS TO AN
      AMOUNT IN EXCESS OF THAT PERMITTED TO BE CHARGED BY APPLICABLE LAW THEN IN
      EFFECT, THEN ALL SUCH SUMS DETERMINED TO CONSTITUTE INTEREST IN EXCESS OF SUCH
      LEGAL LIMIT SHALL, WITHOUT PENALTY, BE PROMPTLY APPLIED TO REDUCE THE THEN
      OUTSTANDING OBLIGATIONS OR, AT FGI’S OPTION, RETURNED TO SELLER OR THE OTHER
      PAYOR THEREOF UPON SUCH DETERMINATION. IF AT ANY TIME THE RATE AT WHICH INTEREST
      IS PAYABLE HEREUNDER EXCEEDS THE MAXIMUM RATE, THE AMOUNT OUTSTANDING HEREUNDER
      SHALL CEASE BEARING INTEREST UNTIL SUCH TIME AS THE TOTAL AMOUNT OF INTEREST
      ACCRUED HEREUNDER EQUALS (BUT DOES NOT EXCEED) THE MAXIMUM RATE APPLICABLE
      HERETO. AS USED IN THIS SECTION, THE TERM “APPLICABLE LAW” MEANS THE LAWS OF THE
      STATE OF NEW YORK OR, IF DIFFERENT, THE LAWS OF THE STATE OR TERRITORY IN WHICH
      THE SELLER RESIDES, WHICHEVER LAW ALLOWS THE GREATER RATE OF INTEREST, AS SUCH
      LAWS NOW EXIST OR MAY BE CHANGED OR AMENDED OR COME INTO EFFECT IN THE FUTURE
      AND THE TERM “MAXIMUM RATE” MEANS THE MAXIMUM NONUSURIOUS RATE OF INTEREST THAT
      FGI IS PERMITTED UNDER APPLICABLE LAW TO CONTRACT FOR, TAKE, CHARGE OR RECEIVE
      WITH RESPECT TO THE ADVANCES.

    

    
      
        
        

      

      
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    (j) Transfer.
      Upon
      FGI’s acceptance of each Purchased Account, FGI shall be the sole owner and
      holder of such Purchased Account. Seller hereby sells, transfers, conveys and
      assigns to FGI all of its right, title and interest in and to each Purchased
      Account effective at the time of acceptance thereof by FGI. Seller agrees to
      execute and deliver to each Account Debtor obligated under an Account and/or
      a
      Purchased Account such written notice of sale of the Purchased Account as FGI
      may request.

    

    (k) Accounting
      Information.
      FGI
      shall provide Seller with information on the Purchased Accounts and a monthly
      reconciliation of the relationship relating to billing, collection and account
      maintenance such as aging, posting, error resolution and mailing of statements.
      All of the foregoing shall be in a format and in such detail, as FGI, in its
      sole discretion, deems appropriate. FGI’s books and records shall be admissible
      in evidence without objection as prima facie evidence of the status of the
      Purchased and non-purchased Accounts and Required Reserve Account between FGI
      and Seller. Each statement, report, or accounting rendered or issued by FGI
      to
      Seller shall be deemed conclusively accurate and binding on Seller unless within
      fifteen (15) days after the date of issuance Seller notifies FGI to the contrary
      by registered or certified mail, setting forth with specificity the reasons
      why
      Seller believes such statement, report, or accounting is inaccurate, as well
      as
      what Seller believes to be correct amount(s) therefore. Seller’s failure to
      receive any monthly statement shall not relieve it of the responsibility to
      request such statement and Seller’s failure to do so shall nonetheless bind
      Seller to whatever FGI’s records would have reported.

    

    Section
      4. Seller’s
      Representations and Covenants.
      Seller,
      as well as each of Seller’s principals, represent, warrant and covenant to FGI
      that:

    

    (a) Seller
      is
      either a corporation, limited liability company, limited partnership or other
      form of Registered Organization, is duly organized, validly existing and in
      good
      standing under the laws of the state of its incorporation or organization and
      is
      qualified and authorized to do business and is in good standing in all states
      in
      which such qualification and good standing are necessary or desirable.

    

    (b) The
      execution, delivery and performance by Seller of this Agreement does not and
      will not constitute a violation of any applicable law, violation of Seller’s
      articles of incorporation or organization or bylaws or any material breach
      of
      any other document, agreement or instrument to which Seller is a party or by
      which Seller is bound. 

    

    (c) The
      Agreement is a legal, valid and binding obligation of Seller enforceable against
      it in accordance with its terms.

     

    (d) Immediately
      prior to the execution and at the time of delivery of each Schedule of Account,
      Seller is the sole owner and holder of each of the Account described thereon
      and
      that upon FGI’s acceptance of each Purchased Account; it shall become the sole
      owner and holder of such Purchased Account(s).

    

    (e) No
      Purchased Account shall have been previously sold or transferred or be subject
      to any lien, encumbrance, security interest or other claim of any kind of
      nature. Seller will not factor, sell, transfer, pledge or give a security
      interest in any of its Accounts to anyone other than FGI. There are no financing
      statements now on file in any public office covering any Collateral of Seller
      of
      any kind, real or personal, in which Seller is named in or has signed as the
      debtor, except the financing statement or statements filed or to be filed in
      respect of this Agreement or those statements now on file that have been
      disclosed in writing by Seller to FGI as reflected on the attached Schedule
      4(e). Seller will not execute any financing statement in favor of any other
      Person, except FGI, during the Term of this agreement.

    

    
      
        
        

      

      
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    (f) The
      amount of each Purchased Account is due and owing to Seller and represents
      an
      accurate statement of a bona fide sale, delivery and acceptance of Goods or
      performance of service by Seller to or for an Account Debtor. The terms for
      payment of Purchased Accounts are thirty (30) days from date of invoice and
      the
      payment of such Purchased Accounts is not contingent upon the fulfillment by
      Seller of any further performance of any nature whatsoever. Each Account
      Debtor’s business is solvent to the best of Seller’s knowledge.

    

    (g) There
      are
      and shall be no set-offs, allowances, discounts, deductions, counterclaims,
      or
      disputes with respect to any Purchased Account, either at the time it is
      accepted by FGI for FGI or prior to the date it is to be paid. Seller shall
      inform FGI, in writing, immediately upon learning that there exists any Account,
      which is subject to a Dispute. Seller shall accept no returns and shall grant
      no
      allowance or credit to any Account Debtor without notice to and the prior
      written approval of FGI. Seller shall provide to FGI for each Account Debtor
      who
      is indebted on a Purchased Account that has been purchased, a weekly report
      in a
      form and substance satisfactory to FGI itemizing all such returns and allowances
      made during the previous week with respect such Purchased Accounts and at FGI’s
      option a check (or wire transfer) payable to FGI for the amount thereof or
      in
      FGI’s sole and exclusive discretion, FGI may accept the issuance of a Credit
      Memo and apply same to Seller’s Required Reserve Account.

    

    (h) Seller’s
      address, as set forth in any Application submitted to FGI, is Seller’s mailing
      address, its chief executive office, principal place of business and the office
      where all of the books and records concerning the Purchased Accounts are
      maintained which shall not be changed without giving thirty (30) days prior
      written notice to FGI.

    

    (i) Seller
      shall maintain its books and records in accordance with GAAP and shall reflect
      on its books the absolute sale of the Purchased Accounts to FGI. Seller shall
      furnish FGI, upon request, such information and statements, as FGI shall request
      from time to time regarding Seller’s business affairs, financial condition and
      results of its operations. Without limiting the generality of the foregoing,
      Seller shall provide FGI, on or prior to the 30th
      day of
      each month, unaudited financial statements with respect to the prior month
      and,
      within ninety (90) days after the end of each of Seller’s fiscal years, annual
      financial statements and such certificates relating to the foregoing as FGI
      may
      request including, without limitation, a monthly certificate from the president
      and chief financial officer of Seller stating whether any Events of Default
      have
      occurred and stating in detail the nature of the Events of Default. Seller
      will
      furnish to FGI upon request a current listing of all open and unpaid accounts
      payable and Accounts, and such other items of information that FGI may deem
      necessary or appropriate from time to time. Unless otherwise expressly provided
      herein or unless FGI otherwise consents, all financial statements and reports
      furnished to FGI hereunder shall be prepared and all financial computations
      and
      determinations pursuant hereto shall be made in accordance with GAAP,
      consistently applied.

     

    (j) Seller
      has paid and will pay all taxes and governmental charges imposed with respect
      to
      sale of Goods and furnish to FGI upon request satisfactory proof of payment
      and
      compliance with all federal, state and local tax requirements.

    

    (k) Seller
      will promptly notify FGI of (i) the filing of any lawsuit against Seller
      involving amounts greater than $10,000.00, and (ii) any attachment or any other
      legal process levied against Seller.

    

    (l) The
      Application made or delivered by or on behalf of Seller in connection with
      this
      Agreement, and the statements made therein are true and correct at the time
      that
      this Agreement is executed. There is no fact which Seller has not disclosed
      to
      FGI in writing which could materially adversely affect the properties, business
      or financial condition of Seller, or any of the Purchased Accounts or
      Collateral, or which is necessary to disclose in order to keep the foregoing
      representations and warranties from being misleading.

    

    (m) In
      no
      event shall the funds paid to Seller hereunder be used directly or indirectly
      for personal, family, household or agricultural purposes.

    

    (n) Seller
      does business under no trade or assumed names except as indicated
      below:

    

    (None)

    

    (o) Any
      invoice or written communication that is issued by Seller to FGI by facsimile
      transmission is a duplicate of the original.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (p) Any
      electronic communication of data, whether by e-mail, tape, disk, or otherwise,
      Seller remits or causes to be remitted to FGI shall be authentic and
      genuine.

    

    Section
      5. Notice
      of Purchase.
      Seller
      shall execute and deliver to FGI and/or file at such times and places as FGI
      may
      designate such financing statements, continuations and amendments thereto as
      are
      necessary or desirable to give notice of FGI's purchase of the Purchased
      Accounts under the UCC in effect in any applicable jurisdiction and FGI’s
      security interest in Seller’s Collateral as provided in Section 6
      below.

    

    Section
      6. Collateral.
      In
      order to secure the payment of all indebtedness and obligations of Seller to
      FGI, in addition to the sale of Purchased Accounts, Seller hereby grants to
      FGI
      a security interest in and lien upon all of Seller’s right, title and interest
      in and to all of Seller’s Collateral. Seller agrees to comply with all
      appropriate laws in order to perfect FGI’s security interest in and to the
      Collateral and to execute such documents as FGI may, from time to time, require
      and to deliver to FGI a list of all locations of its Inventory, Equipment and
      Goods. Seller shall provide written notice to FGI of any change in the locations
      at which it keeps its Inventory, Equipment and Goods at least thirty (30) days
      prior to any such change. The occurrence of any Event of Default shall entitle
      FGI to all of the default rights and remedies (without limiting the other rights
      and remedies exercisable by FGI either prior or subsequent to an Event of
      Default) as available to a Secured Party under the UCC in effect in any
      applicable jurisdiction.

    

    Section
      7. Collection.
      

    

    (a) Seller
      shall notify all Account Debtors and take other necessary or appropriate means
      to insure that all of Seller’s Account(s), whether or not purchased by FGI,
      shall be paid directly to FGI at the remittance address or by the wire
      instructions set forth below. FGI shall have the right at any time, either
      before or after the occurrence of an Event of Default and without notice to
      Seller, to notify any or all Account Debtors of the assignment to FGI and to
      direct such Account Debtors to make payment of all amounts due or to become
      due
      to Seller directly to FGI. As to any Account proceeds that do not represent
      Purchased Accounts, and so long as Seller is not in default, FGI shall be deemed
      to have received any such proceeds of Accounts as a pure pass-through for and
      on
      account of Seller.

    

    Wire
      Instructions:                                       
Mailing
      Address:

    Commerce
      Bank,
      N.A.                                   
80
      Pine
      Street

    (Comm
      BK
      Marlton)                                      
32nd
      Floor

    Cherry
      Hill,
      NJ                                                
New
      York,
      NY 10005

    SWIFT:
      CBNAUS33    

    ABA/Routing
      #: 026013673

    Credit
      to: FGI Finance

    Account
      #: 7918598116

    

    (b) FGI,
      as
      the sole and absolute owner of the Purchased Accounts, shall have the sole
      and
      exclusive power and authority to collect each such Purchased Account, through
      legal action or otherwise, and FGI may, in its sole discretion, settle,
      compromise, or assign (in whole or in part) any of such Purchased Accounts,
      or
      otherwise exercise, to the maximum extent permitted by applicable law, any
      other
      right now existing or hereafter arising with respect to any of such Purchased
      Accounts. If Seller receives payment of all or any portion of any of such
      Purchased Accounts or any other Account, Seller shall notify FGI immediately
      and
      shall hold all checks and other instruments so received in trust for FGI and
      shall deliver to FGI such checks and other instruments without
      delay.

    

    Section
      8. Payments
      Received by Seller. Should
      Seller receive payment of all or any portion of any Purchased Account, Seller
      shall immediately notify FGI of the receipt of the payment, hold said payment
      in
      trust for FGI separate and apart from Seller’s own property and funds, and shall
      deliver said payment to FGI without delay in the identical form in which
      received. Should Seller receive any check or other payment instrument with
      respect to a Purchased Account or after default any Account and fail to
      surrender and deliver to FGI said check or payment instrument within two (2)
      business days, FGI shall be entitled to charge Seller a Misdirected Payment
      Fee
      to compensate FGI for the additional administrative expenses that the parties
      acknowledge is likely to be incurred as a result of such breach. In the event
      any Goods, the sale of which gave rise to a Purchased Account, are returned
      to
      or repossessed by Seller, such Goods shall be held by Seller in trust for FGI,
      separate and apart from Seller’s own property and subject to FGI’s sole
      direction and control.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    Section
      9. Power
      of Attorney.
      Seller
      grants to FGI an irrevocable power of attorney authorizing and permitting FGI,
      at its option, with or without notice to Seller to do any or all of the
      following: (a) Endorse the name of Seller on any checks or other evidences
      of
      payment whatsoever that may come into the possession of FGI regarding Purchased
      Accounts or Collateral, including checks received by FGI pursuant to Section
      9
      hereof; (b) Receive, open and dispose of any mail addressed to Seller and put
      FGI’s address on any statements mailed to Account Debtors; (c) Pay, settle,
      compromise, prosecute or defend any action, claim, conditional waiver and
      release, or proceeding relating to Purchased Accounts or Collateral; (d) Upon
      the occurrence of an Event of Default, notify in the name of the Seller, the
      U.S. Post Office to change the address for delivery of mail addressed to Seller
      to such address as FGI may designate, however, FGI shall turn over to Seller
      all
      such mail not relating to Purchased Accounts or Collateral; (e) File any
      financing statement deemed necessary or appropriate by FGI to protect FGI’s
      interest in and to the Purchased Accounts or Collateral, or under any provision
      of this Agreement; (f) Effect debits to any Demand Deposit or other account
      that
      Seller or Seller’s principals who have executed a guaranty agreement maintain at
      any Bank for any sums due to or from the Seller under this Agreement; and (g)
      To
      do all other things necessary and proper in order to carry out this Agreement.
      The authority granted to FGI herein is irrevocable until this Agreement is
      terminated and all Obligations are fully satisfied.

    

    Section
      10. Default
      and Remedies.
      An
      Event of Default shall be deemed to have occurred hereunder and FGI may
      immediately exercise its rights and remedies with respect to the Purchased
      Accounts and the Collateral under this Agreement, upon the happening of one
      or
      more of the following: (a) Seller shall fail to pay as and when due any amount
      owed to FGI; (b) There shall be commenced by or against Seller any voluntary
      or
      involuntary case under the Federal Bankruptcy Code, or any assignment for the
      benefit of creditors, or appointment of a receiver or custodian; (c) 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; (d)
      Any
      involuntary lien, garnishment, attachment or the like shall be issued against
      or
      shall attach to the Purchased Accounts, the Collateral or any portion thereof
      and the same is not released within ten (10) days; (e) Seller suffers the entry
      against it for a final judgment for the payment of money in excess of
      $10,000.00, unless the same is discharged within thirty (30) days after the
      date
      of entry thereof or an appeal or appropriate proceeding for review thereof
      is
      taken within such periods and a stay of execution pending such appeal is
      obtained; (f) Seller shall breach any covenant, warranty or representation
      set
      forth herein or same shall be untrue when made; (g) Any report, certificate,
      schedule, financial statement, profit and loss statement or other statement
      furnished by Seller, or by any other person on behalf of Seller, to FGI is
      not
      true and correct in any material respect; (h) Seller shall have a federal or
      state tax lien filed against any of its properties, or shall fail to pay any
      federal or state tax when due, or shall fail to file any federal or state tax
      form as and when due; or (i) A material adverse change shall have occurred
      in
      Seller’s financial conditions, business or operations. Upon an Event of Default,
      all obligations due FGI shall become immediately due and owing and FGI shall
      be
      entitled to any form of equitable relief that may be appropriate without having
      to establish any inadequate remedy at law or other grounds other than to
      establish that its Collateral is subject to being improperly used, moved,
      dissipated or withheld from FGI. FGI shall be entitled to freeze, debit and/or
      effect a set-off against any fund or account Seller may maintain with any Bank.
      In the event FGI deems it necessary to seek equitable relief, including, but
      not
      limited to, injunctive or receivership remedies, as a result of and Event of
      Default, Seller waives any requirement that FGI post or otherwise obtain or
      procure any bond. Alternatively, in the event FGI, in its sole and exclusive
      discretion, desires to procure and post a bond, FGI may procure and file with
      the court a bond in an amount up to and not greater than $10,000.00
      notwithstanding any common or statutory law requirement to the contrary. Upon
      FGI’s posting of such bond it shall be entitled to all benefits as if such bond
      was posted in compliance with state law. Seller also waives any right it may
      be
      entitled to, including an award of attorney’s fees or costs, in the event any
      equitable relief sought by and awarded to FGI is thereafter, for whatever
      reason(s), vacated, dissolved or reversed. All post-judgment interest shall
      bear
      interest at either the contract rate, 18% per annum or such higher rate as
      may
      be allowed by law. 

    

    Section
      11. Cumulative
      Rights; Waivers.
      All
      rights, remedies and powers granted to FGI in this Agreement, or in any other
      instrument or agreement given to Seller to FGI or otherwise available to FGI
      in
      equity or at law, are cumulative and may be exercised singularly or concurrently
      with such other rights as FGI may have. These rights may be exercised from
      time
      to time as to all or any part of the Purchased Accounts purchased hereunder
      or
      the Collateral as FGI in its discretion may determine. In the event that any
      part of this transaction between Seller and FGI is construed to be a loan from
      FGI to Seller, any advances or payments made as the Purchase Price for all
      Purchased Accounts shall be secured by the Purchased Accounts and the Collateral
      and FGI shall have all rights and remedies available to FGI in addition to
      its
      rights and remedies hereunder. FGI may not be held to have waived its rights
      and
      remedies unless the waiver is in writing and signed by FGI. A waiver by FGI
      of a
      right, remedy or default under this Agreement on one occasion is not a waiver
      of
      any right, remedy or default on any subsequent occasion. Any failure by FGI
      to
      exercise, or any delay by FGI of such right or any other right, nor in any
      manner impair the subsequent exercise by FGI of any of its rights.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    Section
      12. Notices.
      Any
      notice or communication with respect to this Agreement shall be given in
      writing, sent by (i) personal delivery, or (ii) expedited delivery service
      with
      proof of delivery, or (iii) United States mail, postage prepaid, registered
      or
      certified mail, or (iv) prepaid telegram, telex or telecopy, addressed to each
      party hereto at its address set forth below or to such other address or to
      the
      attention of such other person as hereafter shall be designated in writing
      by
      the applicable party sent in accordance herewith. Any such notice or
      communication shall be deemed to have been given either at the time of personal
      delivery or, in the case of delivery service or mail, as of the date of first
      attempted delivery at the address and in the manner provided herein, or in
      the
      case of telegram, telex or telecopy, upon receipt. 

    FGI
      Finance                                                        
Coda
      Octopus

    80
      Pine
      Street                                         245
      Park
      Avenue

    32nd
      Floor                                            
39th
      Floor

    New
      York,
      NY 10005                              
New
      York,
      NY 10005

     

    Section
      13. Term.
      The
      Original Term of this Agreement shall be from the date hereof until September
      1,
      2006, provided that this Agreement shall be extended automatically for an
      additional one (1) year for each succeeding year unless written notice of
      termination is given by one party hereto to the other party hereto at least
      sixty (60) days, but not more than ninety (90) days, prior to the end of the
      Original Term or any extension thereof. Any such notice of termination, however,
      and notwithstanding payment in full of all Obligations by Seller, is conditioned
      on Seller’s delivery, to FGI, of a general release in a form reasonably
      satisfactory to Purchaser. Seller understands that this provision constitutes
      a
      waiver of its rights under § 9-513 of the UCC. FGI shall not be required to
      record any terminations or satisfactions of any of FGI’s liens on the Collateral
      unless and until Seller has executed and delivered to FGI said general release
      and Seller shall have no authority to do so without FGI’s express written
      consent. In the event prior to maturity this Agreement is terminated for any
      reason, Seller shall pay to FGI an early Termination Fee in the amount of thirty
      five thousand dollars ($35,000). Any termination of this Agreement shall not
      affect FGI’s security interest in the Collateral and FGI’s ownership of the
      Purchased Accounts, and this Agreement shall continue to be effective, until
      all
      transactions entered into and obligations incurred hereunder have been completed
      and satisfied in full. Notwithstanding anything to the contrary, and assuming
      no
      default by Seller in which event FGI may terminate without notice, FGI may
      terminate this Agreement at any time by giving not less than thirty (30) days
      notice in which event, Seller shall not be obligated to pay any Termination
      Fee.

    

    Section
      14. Attorney’s
      Fees.
      Seller
      agrees to reimburse FGI upon demand for all reasonable attorney’s fees, court
      costs and other expenses incurred by FGI in preparation, negotiation and
      enforcement of this Agreement and protecting or enforcing its interest in the
      Accounts or the Collateral, in collecting the Accounts or the Collateral, or
      in
      the representation of FGI in connection with any bankruptcy case or insolvency
      proceeding involving Seller, the Collateral, any Account Debtor or any Accounts
      including any defense of any Avoidance Claims. Seller hereby authorizes FGI,
      at
      FGI’s sole discretion, to deduct such fees, costs and expenses from the Required
      Reserve Account or may make demand therefore. Notwithstanding the existence
      of
      any law, statute or rule, in any jurisdiction which may provide Seller with
      a
      right to attorney’s fees or costs, Seller hereby waives any and all rights to
      hereafter seek attorney’s fees or costs hereunder and Seller agrees that FGI
      exclusively shall be entitled to indemnification and recovery of any and all
      attorney’s fees or costs in respect to any litigation based hereon, arising out
      of, or related hereto, whether under, or in connection with, this and/or any
      agreement executed in conjunction herewith, or any course of conduct, course
      of
      dealing, statements (whether verbal or written) or actions of either
      party.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    Section
      15. Indemnity.
      Seller
      hereby indemnifies and agrees to hold harmless and defend FGI from and against
      any and all claims, judgments, liabilities, fees and expenses (including
      attorney’s fees) which may be imposed upon, threatened or asserted against FGI
      at any time and from time to time in any way connected with this Agreement
      or
      the Collateral. The foregoing indemnification shall apply whether or not such
      indemnified claims are in any way or to any extent owed, in whole or in part,
      under any claim or theory of strict liability, or are caused, in whole or in
      part, by any negligent act or omission of FGI.

    

    Section
      16. Severability.
      Each
      and every provision, condition, covenant and representation contained in this
      Agreement is, and shall be construed to be, a separate and independent covenant
      and agreement. If any term or provision of this Agreement shall to any extent
      be
      invalid or unenforceable, the remainder of the Agreement shall not be affected
      thereby.

    

    Section
      17. Parties
      in Interest.
      All
      grants, covenants and agreements contained in this Agreement shall bind and
      inure to the benefit of the parties hereto and their respective successors
      and
      assigns; provided, however, that Seller may not delegate or assign any of its
      duties or obligations under this Agreement without the prior written consent
      of
      FGI. FGI reserves the right to assign its rights and obligations under this
      agreement in whole or in part to any person or entity.

    

    Section
      18. Governing
      Law: Submission to Process and Venue. This
      agreement shall be deemed a contract made under the laws of the State of New
      York and shall be construed and enforced in accordance with and governed by
      the
      internal laws of the State of New York, without reference to the rules thereof
      relating to conflicts of law. Seller hereby irrevocably submits itself to the
      exclusive jurisdiction of the state and federal courts located in New York,
      and
      agrees and consents that service of process may be made upon it in any legal
      proceeding relating to this agreement, the purchase of Accounts or any other
      relationship between FGI and Seller by any means allowed under state or federal
      law. Any legal proceeding arising out of or in any way related to this
      Agreement, the purchase of Accounts or any other relationship between FGI and
      Seller shall be brought and litigated in any of the state or federal courts
      located in the State of New York in any county in which FGI has a business
      location, the selection of which shall be in the exclusive discretion of FGI.
      Seller hereby waives and agrees not to assert, by way of motion, as a defense
      or
      otherwise, that any such proceeding, is brought in any inconvenient forum or
      that the venue thereof is improper.

    

    Section
      19. Complete
      Agreement. This
      Agreement, the written documents executed pursuant to this Agreement, if any,
      and the acknowledgment delivered in connection herewith set forth the entire
      understanding and agreement of the parties hereto with respect to the
      transactions contemplated herein and may not be contradicted by evidence of
      prior, contemporaneous, or subsequent oral agreements of the parties. No
      modification or amendment of or supplement to this Agreement shall be valid
      or
      effective unless the same is in writing and signed by the party against whom
      it
      is sought to be enforced.

    

    Section
      20. Miscellaneous. 

    

    (a) Seller
      acknowledges that there is no, and it will not seek or attempt to establish
      any,
      fiduciary relationship between FGI and Seller, and Seller waives any right
      to
      assert, now or in the future, the existence or creation of any fiduciary
      relationship between FGI and Seller in any action or proceeding (whether by
      way
      of claim, counterclaim, crossclaim or otherwise) for damages.

    

    (b) This
      Agreement shall be deemed to be one of financial accommodation and not assumable
      by any debtor, trustee or debtor-in-possession in any bankruptcy proceeding
      without FGI’s express written consent and may be suspended in the event a
      petition in bankruptcy is filed by or against Seller.

    

    (c) In
      the
      event Seller’s principals, officers or directors form a new entity, whether
      corporate, partnership, limited liability company or otherwise, similar to
      that
      of Seller during the term of this Agreement, such entity shall be deemed to
      have
      expressly assumed the obligations due FGI by Seller under this Agreement. Upon
      the formation of any such entity, FGI shall be deemed to have been granted
      an
      irrevocable power of attorney with authority to execute, on behalf of the newly
      formed successor business, a new UCC-1 or UCC-3 financing statement and have
      it
      filed with the appropriate secretary of state or UCC filing office. FGI shall
      be
      held-harmless and be relieved of any liability statement or the resulting
      perfection of a lien in any of the successor entity’s assets. In addition, FGI
      shall have the right to notify the successor entity’s account debtors of FGI’s
      lien rights, its right to collect all Accounts, and to notify any new FGI or
      lender who has sought to procure a competing lien of FGI’s right is in such
      successor entity’s assets.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (d) Seller
      expressly authorizes FGI to access the systems of and/or communicate with any
      shipping or trucking company in order to obtain or verify tracking, shipment
      or
      delivery status of any Goods regarding a Purchased Account.

    

    (e) Seller’s
      principal(s) acknowledge that the duty to accurately complete each Schedule
      of
      Accounts is critical to this Agreement and as such all obligations with respect
      thereto are non-delegable. Each of Seller’s principal(s) acknowledge that he/she
      shall remain fully responsible for the accuracy of each Schedule of Accounts
      delivered to FGI regardless of who is delegated the responsibility to prepare
      and/or complete such Schedule of Accounts.

    

    (f) Seller
      shall indemnify FGI from any loss arising out of the assertion of any Avoidance
      Claim. Seller shall notify FGI within two (2) business days of it becoming
      aware
      of the assertion of an Avoidance Claim.

    

    (g) Seller
      agrees to execute any and all forms (i.e. Forms 8821 and/or 2848) that FGI
      may
      require in order to enable FGI to obtain and receive tax information issued
      by
      the Department of the Treasury, Internal Revenue Service, or receive refund
      checks.

    

    (h) Seller
      will cooperate with FGI in obtaining a control agreement in form and substance
      satisfactory to FGI with respect to Collateral consisting of: Deposit Accounts;
      Investment Property; Letter-of-credit rights; and Electronic chattel
      paper.

    

    Section
      21. Waiver of
      Jury Trial, Punitive and Consequential Damages, Etc. Seller and FGI hereby
      (a)
      irrevocably waive any right either may have to a trial by jury in respect of
      any
      litigation directly or indirectly at any time arising out of, under or in
      connection with this Agreement or any transaction contemplated hereby or
      associated herewith; (b) Seller irrevocably waives, to the maximum extent not
      prohibited by law, any right it may have to claim or recover in any such
      litigation any special, exemplary, punitive or consequential damages, or damages
      other than, or in addition to, actual damages and Seller hereby releases and
      exculpates FGI, its officers, employees and designees, from any liability
      arising from any acts under this Agreement or in furtherance thereof whether
      of
      omission or commission, and whether based upon any error of judgment or mistake
      of law or fact, except for willful misconduct ; (c) and Seller certifies that
      no
      party hereto nor any representative or agent or counsel for any party hereto
      has
      represented, expressly or otherwise, or implied that such party would not,
      in
      the event of litigation, seek to enforce the foregoing waivers; and (d) Seller
      acknowledges that FGI has been induced to enter into this Agreement and the
      transactions contemplated hereby, in part, as a result of the mutual waivers
      and
      certifications contained in this Section.

    

    

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    In
      Witness Whereof, the parties have set their hands and seals on the day and
      year
      first hereinabove written.

    

    

    _______________________   FAUNUS
      GROUP INTERNATIONAL, INC.

    Witness  

    

    By:__________________________________

    Name:
      David M. DiPiero

    Title:
      President 

    

    

    _______________________   CODA
      OCTOPUS GROUP, INC.

    Witness

    By:__________________________________

    Name:_______________________________

    Title:_________________________________

    

    STATE
      OF
      ___________)

    COUNTY
      OF
      _________)

    

    I
      HEREBY
      CERTIFY that on this day personally appeared before me, officers duly authorized
      to administer oaths and take acknowledgements, ________________________, as
      ______________ of __________________________, a ____________ Corporation (
      ) who
      has produced the following identification: _____________ or ( ) who is
      personally known to me, and who acknowledged before me that he executed the
      same
      for the purposes therein expressed, as the act and deed of said
      corporation.

    

    WITNESS
      my hand and official seal in the County and State last aforesaid on this ______
      day of ______________, 200_.

    

    _________________________________

    Notary
      Public, State of ____________

    My
      Commission Expires:

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    SCHEDULE
      “A”

    

    

    Definitions

    

    

    “Account(s)”
      includes a
      right
      to payment of a monetary obligation, whether or not earned by performance,
      (i)
      for property that has been or is to be sold, leased, licensed, assigned, or
      otherwise disposed of or (ii) for services rendered or to be rendered.

     

    “Account
      Debtor” or “Customer”
means
      any Person who is obligated on an Account, Chattel Paper or General
      Intangible.

    

    “Advance”
means
      amounts advanced by FGI to the Seller under this Agreement.

    

    “Agreement”
means
      this Agreement, including the Ex-hibits and any Schedules hereto, and all
      amendments, modifications and supple-ments hereto and thereto and restatements
      hereof and thereof.

    

    “Application”
means
      each application
      made by Seller in connection with this Agreement.

    

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

    

    “Chattel
      Paper”
means
      a
      record or records that evidence both a monetary obligation and a security
      interest in specific goods, a security interest in specific goods and software
      used in the goods, a security interest in specific goods and license of software
      used in the goods, a lease of specific goods, or a lease of specific goods
      and
      license of software used in the goods.

    

    “Collateral”
means
      and includes all of the Sellers’ right, title and interest in and to each of the
      following, wherever located and whether now or hereafter existing or now owned
      or here-after acquired or arising: (a) all Accounts, (b) Chattel Paper, (c)
      Commercial Tort Claims, (d) Deposit Accounts, (e) Documents, (f) Equipment,
      (g)
      General Intangibles, (h) Goods (including but not limited to all files,
      correspondence, computer programs, tapes, disks and related data processing
      software which contain informa-tion identifying or pertaining to any of the
      Collateral or any Account Debtor or showing the amounts thereof or payments
      thereon or otherwise necessary or helpful in the realization thereon or the
      collection thereof, (i) Inventory, (j) Investments, (k) Investment Property,
      (l)
      Letters of Credit and Letter of Credit rights and (m) all Supporting
      Obligations.

    

    “Commercial
      Tort Claim”
means
      a
      claim arising in tort with respect to which: (A) The claimant is an
      organization; or (B) The claimant is an individual and the claim: (i) arose
      in
      the course of the claimant’s business or profession; and (ii) does not include
      damages arising out of personal injury to or the death of an
      individual.

     

    “Credit
      Approval(s) and Credit Approved”
means,
      with regard to a Purchase Account, that FGI has accepted the risk of nonpayment
      as specified under the terms and conditions of this Agreement and with regard
      to
      the specific Purchased Accounts for which written credit approval has been
      given. If
      a
      customer, after receiving and accepting the delivery of Goods or services
      (subject to all warranties herein) for which FGI has given written Credit
      Approval, fails to pay a Purchased Account when due, and such nonpayment is
      due
      solely to financial inability to pay, FGI shall bear any loss thereon, subject
      to the terms and provisions stated herein. If nonpayment is due to any reason
      besides financial inability to pay, however, FGI shall not be responsible.
      Specifically, FGI shall not be responsible for any nonpayment of a Credit
      Approved Purchased Account: (a) because of the assertion of any claim or dispute
      by a customer for any reason whatsoever, including, without limitation, dispute
      as to price, terms of sales, delivery, quantity, quality, or other, or the
      exercise of any counterclaim or offset (whether or not such claim, counterclaim
      or offset relates to the specific Purchased Account); (b) where nonpayment
      is a
      consequence of enemy attack, civil commotion, strikes, lockouts, the act or
      restraint of public authorities, acts of God or force majeure; or (c) if any
      representation or warranty made by Seller to FGI in respect of such Purchased
      Account has been breached whether intentionally or unintentionally. The
      assertion of a dispute by a customer shall have the effect of negating any
      Credit Approval on the affected Purchased Account(s) and such Purchased
      Account(s) shall be at Full Recourse until paid or otherwise cleared from FGI’s
      books.

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    “Date
      of Collection”
means
      the date a check, draft or other item representing payment on an invoice is
      received by FGI plus seven (7) business days.

     

    “Default”
means
      any of the events specified in Section 10 of this Agreement that, with the
      passage of time or giving of notice or both, would con-stitute an Event of
      Default.

    

    “Deposit
      Account”
means
      any demand, time, savings, passbook or like account maintained with a bank,
      savings and loan association, credit union or like organization, other than
      an
      account evidenced by a certificate of deposit that is an instrument under the
      UCC.

    

    “Dispute
      or Disputed Account”
means
      any
      claim, whether or not provable, bona fide, or with or without support, made
      by
      an Account Debtor as a basis for refusing to pay a Purchased Account, either
      in
      whole or in part, including, but not limited to, any contract dispute, charge
      back, credit, right to return Goods, or other matter which diminishes or may
      diminish the dollar amount or timely collection of such Account. 

    

    “Documents”
means
      a
      document of title or a receipt of the type described in UCC
      7-201(2).

    

    “Equipment”
means
      Goods other than Inventory.

    

    “Event
      of Default”
means
      any of the events specified in Section 10 of this Agreement.

    

    “Financial
      Inability to Pay”
means
      an Account Debtor’s insolvency such that the value of its assets are exceeded by
      its fixed, liquidated and non-contingent liabilities.

    

    “Financing
      Statement”
means
      each Uniform Commercial Code financing statement naming FGI as purchaser/secured
      party and the Seller as Seller/debtor, in connection with this
      Agreement.

    

    “Full
      Recourse”
means
      those Purchased Accounts for which FGI has not given Credit Approval, for which
      Credit Approval has been withdrawn or revoked or with respect to which FGI
      is
      not responsible under section 2.

    

    “GAAP”
means
      generally accepted accounting principles con-sis-tently applied and maintained
      throughout the period indicated and consistent with the prior financial practice
      of the Person referred to.

    

    “General
      Intangible”
means
      any personal property, including things in action, other than Accounts, Chattel
      Paper, Commercial Tort Claims, Deposit Accounts, Documents, Goods, Inventory,
      Investment Property, Letters of Credit rights, Letters of Credit and Money.
      Payment Intangibles and software, however, are included.

    

    “Goods”
means
      all things that are movable when a security interest attaches. The term does
      not
      include Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts,
      Documents, General Intangibles, Instruments, Investment Property, Letter of
      Credit Rights, Letters of Credit or Money.

    

    “Instrument”
means
      a
      negotiable instrument or any other writing that evidences a right to the payment
      of a monetary obligation, is not itself a security agreement or lease, and
      is of
      a type that in ordinary course of business is transferred by delivery with
      any
      necessary endorsement or assignment. The term does not include (i) Investment
      Property, (ii) Letters of Credit, or (iii) writings that evidence a right to
      payment arising out of the use of a credit or charge card or information
      contained on or for us with the card.

    

    “Inventory”
means
      Goods which are leased by Seller as lessor, are held by Seller for sale or
      lease
      or to be furnished under a contract of service or raw materials, work in
      process, or materials used or consumed in Seller’s business.

    

    “Investment
      Property”
means
      a
      security, whether certificated or uncertificated, security entitlement,
      securities account, commodity contract, or commodity account.

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    “Letter
      of Credit Right”
a
      right
      to payment or performance under a Letter of Credit, whether or not the
      beneficiary has demanded or is at the time entitled to demand payment or
      performance. The term does not include the right of a beneficiary to demand
      payment or performance under a Letter of Credit.

    

    “Lien”
means,
      as applied to the property of any Person, the filing of, or any agreement to
      give, any finan-cing statement under the UCC or its equivalent in any
      jurisdiction.

    

    "Misdirected
      Payment Fee"
      means
      fifteen percent (15%) of the amount of any payment on account of a Purchased
      Account which has been received by Seller and not delivered in kind to FGI
      on
      the next business day following the date of receipt by Seller.

    

    “Net
      Invoice Amount”
means
      the
      invoice amount of the Purchased Account, less returns (whenever made), all
      selling discounts (at FGI’s option, calculated on shortest terms), and credit or
      deductions of any kind allowed or granted to or taken by the customer at any
      time. 

    

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

     

    “Original
      Term”
      means
      the term of this Agreement as reflected in section 13 and “Term”
means
      the Original Term and any extensions thereof.

    

    “Person”
means
      an individual, corporation, partnership, assoc-iation, trust or unincorporated
      organization or a government or any agency or political subdivision
      thereof.

    

    “Purchase
      Price”
means
      the price that FGI pays Seller for each Purchased Account which price shall
      equal the Net Invoice Amount less FGI’s service commission.

    

    “Purchased
      Account(s)”
means
      an
      Account which is deemed acceptable for purchase as determined by FGI in the
      exercise of its reasonable sole credit or business judgment and for which FGI
      has made payment of the sum specified in Section 2 below constituting FGI’s
      acceptance of an Account.

    

    “Reserve
      Account”
means
      a
      bookkeeping account on the books of the FGI representing an unpaid portion
      of
      the Purchase Price, maintained by FGI to ensure Seller's performance with the
      provisions hereof.

    

    “Reserve
      Percentage”
means
      twenty five percent (20%) of the face amount of the Purchased Accounts and
      as
      such percent may change in accordance herewith. 

     

    “Reserve
      Shortfall”
means
      the amount by which the Reserve Account is less than the Required Reserve
      Amount.

     

    “Required
      Reserve Amount”
means
      the Reserve Percentage multiplied by the unpaid balance of all Purchased
      Accounts.

     

    “Schedule
      of Accounts”
-
      a
      form supplied by FGI from time to time wherein Seller lists those Accounts
      it
      requests FGI purchase under the terms of this Agreement.

     

    “Security
      Interest”
means
      the Liens of FGI on and in the Collateral affected hereby or pursuant to the
      terms hereof or thereof.

    

    “Supporting
      Obligation”
means
      a
      Letter of Credit Right or secondary obligation that supports the payment or
      performance of an Account, Chattel paper, a Document, a General Intangible,
      an
      Instrument, or Investment Property.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    “Termination
      Fee”
means
      a
      fee payable to FGI in the event Seller terminates this Agreement prior to
      maturity of the Original Term or Term of this Agreement.

    

    “UCC”
means
      the Uniform Commercial Code as in effect from time to time in the State of
      New
      York.

    

    

    
 

     

     

    
      
        
        

      

      
        16Exhibit
      10.1

    

    

    May
      15,
      2007

    

    

    Tom
      Barton

    

    

    Dear
      Tom:

    

    This
      letter sets forth the substance of the separation agreement (the “Agreement”)
      that
      Rackable Systems, Inc. (the “Company”)
      is
      offering to you in connection with your employment transition. 

    

    1. Separation.
      Your
      employment with the Company as its Chief Executive Officer (“CEO”),
      and
      in all other employment positions, was terminated by the Company effective
      April
      29, 2007 (the “Separation
      Date”).
      

    

    2. Accrued
      Salary and Vacation.
      On April
      30, 2007, the Company paid you all accrued salary, and all accrued and unused
      vacation earned and payable for your services through April 30, 2007, less
      standard payroll deductions and withholdings. The Company also will pay you
      for
      all accrued but unpaid business expenses incurred by you in accordance with
      the
      Company’s expense reimbursement policy. 

    

    3. Severance
      Payments.
      Your
      employment termination shall be deemed a termination without Cause pursuant
      to
      the terms of your Employment Agreement with the Company dated December 23,
      2002
      (the “Employment
      Agreement”),
      as
      amended by the First Amendment to the Employment Agreement dated September
      1,
      2005 (collectively with the Employment Agreement, the “Amended
      Agreement”).
      Accordingly, pursuant to Section 4(b) of the Employment Agreement, in exchange
      for you entering into and abiding by the terms of this Agreement and Sections
      6,
      7, and 8 of the Employment Agreement, the Company will pay you severance in
      the
      form of continuing payment of your last base salary, less applicable payroll
      deductions and withholdings, for a period of twelve (12) months (the “Severance
      Payments”, the twelve (12) month period referred to as the “Severance Period”).
      The Severance Payments will be paid on the Company’s regular payroll cycle
      beginning on the first regularly-scheduled payroll date after the Effective
      Date
      of this Agreement, as defined in paragraph 11 below. 

    

    4. Health
      Insurance.
      To the
      extent provided by the federal COBRA law or, if applicable, state insurance
      laws, and by the Company’s current group health insurance policies, you will be
      eligible to continue your group health insurance benefits at your own expense.
      Later, you may be able to convert to an individual policy through the provider
      of the Company’s health insurance, if you wish.  If
      you
      timely elect continued coverage under COBRA, the Company, as part of this
      Agreement and as a further severance benefit, will pay the COBRA premiums
      necessary to maintain your current level of health insurance coverage (for
      yourself and any covered dependents) in effect through the twelve (12) month
      anniversary of the Separation Date (“COBRA
      Premiums”).

    

    5. Equity.
      On
      December 23, 2002, you were granted certain stock options (collectively, the
      “Options”)
      pursuant to the terms of the Rackable Systems, Inc. 2002 Stock Option Plan
      (the
“2002
      Plan”). The
      Options shall cease vesting as of the Separation Date; provided, however, that
      in exchange for entering into this Agreement and allowing it to become effective
      by its terms, the Company will accelerate the vesting of the Options so that
      you
      become fully vested in the number of Options that would have become vested
      if
      your employment continued for twelve (12) months after the Separation Date.
      Additionally, you will have twelve (12) months after the Separation Date to
      exercise any vested shares subject to the Options. Except as expressly provided
      herein, your rights, duties and obligations with respect to the Options
      (including your right to exercise any vested shares) shall continued to be
      governed by the terms and conditions of the 2002 Plan and the stock option
      grant
      notices and stock option agreements applicable to the Options. Any stock options
      granted to you on September 1, 2006, or on January 2, 2007, which were unvested
      as of your Separation Date, terminated as of your Separation Date pursuant
      to
      the Company’s 2005 Equity Incentive Plan. A summary of your options and
      restricted stock as of April 29, 2007 is set forth on the table attached as
      Exhibit A hereto.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    6. Other
      Compensation or Benefits.
      The
      Company will reimburse you for the reasonable attorneys’ fees incurred by you in
      connection with this Agreement up to a maximum of $5,000.00. You acknowledge
      that, except as expressly provided in this Agreement, you will not receive
      any
      additional compensation, bonuses, equity interests or vesting, severance or
      other benefits from the Company or any of its affiliated entities after the
      Separation Date. 

    

    7. Other
      Obligations.
      You
      hereby acknowledge and agree to abide by your continuing obligations under
      Sections 6 (Confidential Information, Inventions and Intellectual Property
      Rights; Non-Disparagement; Confidentiality of Terms), 7 (Non-Solicitation)
      and 8
      (Enforcement) of the Employment Agreement, including (but not limited to) your
      obligations pursuant to your Invention and Non-Disclosure Agreement with the
      Company dated December 23, 2002 (the “Confidentiality
      Agreement”).
      

    

    8. Release
      of Claims.
      

    

    (a) General
      Release by You.
      Except
      for the Excluded Claims (as defined below), in consideration for the benefits
      to
      be provided to you under this Agreement to which you would not otherwise be
      entitled, you hereby generally and completely release the Company, its parent,
      subsidiary, and affiliated entities and each of their respective officers,
      directors, agents, servants, employees, attorneys, shareholders, successors,
      and
      assigns (collectively with the “Released Parties”), of and from any and all
      claims, liabilities, and obligations, both known and unknown, arising out of
      or
      in any way related to events, acts, conduct or omissions occurring at any time
      prior to or at the time you sign this Agreement (collectively, the “Released
      Claims”). 

    

    (b) Claims
      Released by You.
      The
      Released Claims include, but are not limited to: (1) all claims arising out
      of
      or in any way related to your employment with the Company or the termination
      of
      that employment; (2) all claims related to your compensation or benefits from
      the Company, including salary, bonuses, commissions, vacation pay, severance
      pay, fringe benefits, stock, stock options, or any other ownership or equity
      interests in the Company; (3) all claims for breach of contract, wrongful
      termination, and breach of the implied covenant of good faith and fair dealing
      (including claims based on or arising under the Agreement); (4) all tort
      claims, including claims for fraud, defamation, emotional distress, and
      discharge in violation of public policy; and (5) all federal, state, and local
      statutory claims, including claims for discrimination, harassment, retaliation,
      attorneys’ fees, or other claims arising under the federal Civil Rights Act of
      1964 (as amended), the federal Americans with Disabilities Act of 1990, the
      federal Age Discrimination in Employment Act (as amended) (“ADEA”), the federal
      Family and Medical Leave Act, the California Labor Code (as amended), the
      California Family Rights Act, and the California Fair Employment and Housing
      Act
      (as amended). 

    

    (c) Excluded
      Claims.
      Notwithstanding the foregoing, the following are not included in the Released
      Claims (the “Excluded Claims”): (1) rights you have under this Agreement;
      (2) any claims that may arise out of any events, acts, conduct or omissions
      occurring after this Agreement is executed, including without limitation any
      claims for breach of this Agreement; (3) any rights or claims for
      indemnification you may have pursuant to any written indemnification agreement
      to which you are a party, as well as the charter, bylaws, or operating
      agreements of any of the Released Parties, or under applicable law; (4) vested
      benefits under the terms of the Company’s 401K, life insurance, health
      insurance, or disability insurance plans, or (5) any rights which are not
      waivable as a matter of law. In addition, you understand that nothing in this
      release prevents you from filing, cooperating with, or participating in any
      proceeding before the Equal Employment Opportunity Commission, the Department
      of
      Labor, or the California Department of Fair Employment and Housing, except
      that
      you acknowledge and agree that you shall not recover any monetary benefits
      in
      connection with any such claim, charge or proceeding with regard to any claim
      released herein. You hereby represent and warrant that, other than the Excluded
      Claims, you are not aware of any claims you have or might have against any
      of
      the Released Parties that are not included in the Released Claims.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (d) Release
      by the Company. The
      Company hereby generally and completely releases you of and from any and all
      claims, liabilities, and obligations, both known and unknown, arising out of
      or
      in any way related to events, acts, conduct or omissions occurring at any time
      prior to or at the time the Company signs this Agreement; provided,
      however,
      that
      that this release shall not
      extend
      to: (1) any claims that may arise out of any events, acts, conduct or omissions
      occurring after this Agreement is executed, including without limitation any
      claims for breach of this Agreement; (2) any claims arising at any time out
      of
      your obligations to protect the Company’s proprietary information, including
      without limitation any claims arising from your obligations under your
      Confidentiality Agreement, claims arising under the California Uniform Trade
      Secrets Act, or common law claims arising from these obligations; or (3) any
      claims arising from any actions by you during your employment with the Company
      which were outside of your authority or outside of the course and scope of
      your
      employment.  

    

    9. ADEA
      Waiver and Release. You
      acknowledge that you are knowingly and voluntarily waiving and releasing any
      rights you may have under the ADEA (“ADEA
      Waiver”).
      You
      also acknowledge that the consideration given for the ADEA Waiver is in addition
      to anything of value to which you were already entitled. You further acknowledge
      that you have been advised by this writing, as required by the ADEA, that:
      (a) your ADEA Waiver does not apply to any rights or claims that arise
      after the date you sign this Agreement; (b) you should consult with an
      attorney prior to signing this Agreement; (c) you have twenty-one (21) days
      to consider this Agreement (although you may choose to voluntarily sign it
      sooner); (d) you have seven (7) days following the date you sign this
      Agreement to revoke your acceptance of it; and (e) this Agreement will not
      be effective until the date upon which the revocation period has expired
      unexercised, which will be the eighth day after you sign this Agreement
      (“Effective
      Date”).

    

    10. Section
      1542 Waiver.
      The
      parties each UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN
      AND
      UNKNOWN CLAIMS, except as otherwise stated herein. In giving the release herein,
      which includes claims which may be unknown to the Company or you at present,
      the
      parties acknowledge that they have read and understand Section 1542 of the
      California Civil Code, which reads as follows:

    

    “A
      general release does not extend to claims which the creditor does not know
      or
      suspect to exist in his or her favor at the time of executing the release,
      which
      if known by him or her must have materially affected his or her settlement
      with
      the debtor.”

    

    The
      parties each expressly waive and relinquish all rights and benefits under that
      section and any law of any other jurisdiction of similar effect with respect
      to
      the parties’ respective releases of any unknown or unsuspected claims
      herein.

    

    11. Confidential
      Arbitration.
      You and
      the Company agree that any and all disputes, claims, or causes of action, in
      law
      or equity, arising from or relating to the enforcement, breach, performance,
      interpretation, or execution of this Agreement, shall be resolved solely and
      exclusively, in accordance with the arbitration procedures set forth in Section
      25 of the Employment Agreement. Nothing herein shall prevent you or the Company
      from seeking injunctive relief in court to prevent irreparable harm pending
      completion of any arbitration proceeding.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    12. Mutual
      Nondisparagement. You
      agree
      that you will not make any disparaging remarks, or any remarks that could
      reasonably be construed as disparaging, whether orally or in writing, regarding
      the Company that is intended to be harmful to the Company or its reputation.
      The
      Company agrees that its officers and directors will not make any disparaging
      remarks, or any remarks that could reasonably be construed as disparaging,
      whether orally or in writing, regarding you that is intended to be harmful
      to
      your business or personal reputation. Nothing
      in this Section 12 is intended to prohibit you or the Company or any of its
      officers or directors from testifying or responding truthfully in response
      to
      any court order, arbitral order, subpoena or government investigation, or in
      connection with any legal proceeding brought by one party against the
      other.

    

    13. Entire
      Agreement.
      This
      Agreement, together with the Amended Agreement, your applicable Stock Option
      Agreements, the Indemnification Agreement between you and the Company, and
      the
      Confidentiality Agreement, constitutes the complete, final and exclusive
      embodiment of the entire agreement between you, the Company and other parties
      hereto with regard to the subject matter hereof. It supersedes any and all
      agreements entered into by and between you and the Company; provided, however,
      that any of your obligations set forth in the Amended Agreement that survive
      the
      termination of your employment (including without limitation Sections 6, 7,
      and
      8 of the Employment Agreement) shall remain in full force and effect and
      considered a material part hereof. This Agreement is entered into without
      reliance on any promise or representation, written or oral, other than those
      expressly contained herein. It may not be modified except in a writing signed
      by
      you and a duly authorized officer of the Company. Each party has carefully
      read
      this Agreement, has been afforded the opportunity to be advised of its meaning
      and consequences by his or its respective attorneys, and signed the same of
      his
      or its own free will.

    

    14. Applicable
      Law.
      This
      Agreement will be deemed to have been entered into and will be construed and
      enforced in accordance with the laws of the State of California as applied
      to
      contracts made and to be performed entirely within California.

    

    15. Severability.
      If a
      court of competent jurisdiction determines that any term or provision of this
      Agreement is invalid or unenforceable, in whole or in part, then the remaining
      terms and provisions hereof will be unimpaired. The court or arbitrator will
      then have the authority to modify or replace the invalid or unenforceable term
      or provision with a valid and enforceable term or provision that most accurately
      represents the parties’ intention with respect to the invalid or unenforceable
      term or provision.

    

    16. Execution.
      This
      Agreement may be executed in any number of counterparts and by different parties
      hereto in separate counterparts, each of which when so delivered shall be deemed
      an original, but all of which counterparts shall constitute but one and the
      same
      instrument. Signed counterparts transmitted by facsimile or PDF transmission
      shall be as effective as originals.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    If
      this
      Agreement is acceptable to you, please sign and date below and return the
      original to me. 

    

    We
      wish
      you the best of luck in your future endeavors.

    

    Sincerely,

    

    Rackable
      Systems, Inc.

    

    

    By: /s/  
      Charles M.
      Boesenberg                                      

    Charles
      M. Boesenberg

    Chairman
      of the Compensation Committee of the Board of Directors

    

    

    Attachment:
      Exhibit A

    

    

    Understood
      and Agreed:

    

    

    /s/
      Thomas
      Barton                                                            

    Thomas
      Barton

    

    

    Date:                           
       5-16-07                                         
       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Exhibit
      A

    

    Equity
      Summary

    

    Option
      Awards As of April 29, 2007

     

    
      	
              Grant
                Date

            	
              Number
                of Option Shares Granted

            	
              Exercise
                Price

            	
              Number
                of Option Shares Exercised

            	
              Outstanding
                Number of Option Shares

            	
              Number
                of Vested Option Shares Exercisable

            	
              Number
                of Unvested Option Shares

            	
              Number
                of Unvested Option Shares Accelerated Under
                Agreement

            
	
              12/23/2002

            	
              500,000

            	
              $0.71

            	
              316,666

            	
              183,334

            	
              116,667

            	
              66,667

            	
              66,667

            
	
              12/23/2002

            	
              204,225

            	
              $2.14

            	
              25,159

            	
              179,066

            	
              151,836

            	
              27,230

            	
              27,230

            
	
              12/23/2002

            	
              129,
                108

            	
              $2.14

            	
              0

            	
              129,108

            	
              111,893

            	
              17,215

            	
              17,215

            
	
              9/1/2006

            	
              175,000

            	
              $27.36

            	
              0

            	
              175,000

            	
              25,520

            	
              149,480

            	
              0

            
	
              1/2/07

            	
              175,000

            	
              $30.97

            	
              0

            	
              175,000

            	
              10,937

            	
              164,063

            	
              0

            
	
              Total

            	
              1,183,333

            	 	
              341,825

            	
              841,508

            	
              416,853

            	
              424,655

            	 

    

    

    Restricted
      Stock Awards as of April 29, 2007

     

    
      	
              Grant
                Date

            	
              Number
                of Shares Granted

            	
              Number
                of Shares Released/Sold

            	
              Number
                of Outstanding Restricted Shares

            	
              Number
                of Vested Restricted Shares

            	
              Number
                of Unvested Restricted Shares

            	
              Number
                of Unvested Restricted Stock Awards Accelerated Under
                Agreement

            
	
              9/1/2006

            	
              32,500

            	
              4062

            	
              28,438

            	
              4062

            	
              28,438

            	
              0

            
	
              1/2/07

            	
              32,500

            	
              2031

            	
              30,469

            	
              2031

            	
              30,469

            	
              0

            
	
              Total

            	
              65,000

            	
              6,093

            	
              58,907

            	
              6,093

            	
              58,907

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00124-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00124-of-00352.parquet"}]]