Document:

Exhibit 10.1

 

ACCOUNTS RECEIVABLE PURCHASING AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.7                                 “Clearance Days”   — (0) Days

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.27                           “Origination Fee”
—  0%

 

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

 

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

 

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

 

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

 

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

 

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

 

1.34                           “Reserve Percentage”
— 15%.

 

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

 

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

 

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

 

2.                                       Sale; Purchase Price; Billing;
Reserve.

 

2.1                                 Assignment and Sale.

 

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

 

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

 

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

 

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

 

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

 

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

 

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2.3                                 Reserve Account.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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4.5.2                        The amount of any Reserve Shortfall.

 

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

 

5.                                       Repurchase Of Accounts.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9.                                       Authorization to Purchaser.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11.                               Covenants By Seller.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11.9                        Negative Covenants.  Seller agrees that:

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

11.14.1.1                     Unaudited management prepared balance sheet,
income statement;

 

11.14.1.2                     Detailed accounts receivable aging;

 

11.14.1.3                     Detailed accounts payable aging;

 

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

 

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

 

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

 

11.14.3.2                     All federal and state payroll tax returns; and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12.4                        Nature of Accounts.  The Purchased Accounts are:

 

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

 

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

 

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

 

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

 

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

 

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

 

13.                               Default.

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

15.                               Waiver.

 

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

 

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

 

16.                               Termination; Effective Date.

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24.1.3                                      collecting any Accounts from Account
Debtors

 

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

 

18

 

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

 

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

 

27.                               Alternative Dispute Resolution.

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

35.                               Submission
to Jurisdiction.

 

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

 

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

 

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

 

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

 

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

 

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

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK]

 

22

 

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

 

	
  PURCHASER:

  	
  SELLER:

  
	
   

  	
   

  
	
  DSCH CAPITAL PARTNERS,
  LLC

  	
  Xplore Technologies
  Corporation of America

  
	
  DBA FAR WEST CAPITAL

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Brian Center

  	
   

  	
   

  	
  By:

  	
  /s/Michael J. Rapisand

  
	
  Name: 

  	
  Brian Center

  	
   

  	
   

  	
  Name:

  	
  Michael J Rapisand

  
	
  Title: 

  	
  Chief Operating Officer

  	
   

  	
  Title: 

  	
  CFO

  
	
  Address: 

  	
  715 Discovery Blvd.,
  Suite 214

  	
   

  	
  Address:

  	
  14000 Summit Drive,
  Suite 900

  
	
   

  	
  Cedar
  Park, TX 78613

  	
   

  	
   

  	
  Austin, TX 78728

  

 

 

EXHIBIT “A”

 

GENERAL
RELEASE

 

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

 

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

 

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

 

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

 

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

 

RELEASOR/SELLER:

 

	
  Xplore
  Technologies Corporation of America

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Michael
  J Rapisand

  	
   

  
	
  Title:
  

  	
  CFO

  	
   

  
	
  Address:

  	
  14000
  Summit Drive, Suite 900

  	
   

  
	
   

  	
  Austin,
  TX 78728

  	
   

  
	
   

  	
   

  	
   

  
	
  DATED:Exhibit 10.2

 

CORPORATE
GUARANTY AND SURETYSHIP

 

THIS
CORPORATE GUARANTY AND SURETYSHIP (“Guaranty”), made as of the date set forth
on the signature page hereof, is by and between  Xplore Technologies Corp., a
Delaware corporation   (the “Guarantor”) and DSCH CAPITAL PARTNERS,
LLC, a Texas limited liability company, d/b/a FAR WEST CAPITAL (“FWC”).

 

R E C I T A L
S:

 

WHEREAS, Xplore
Technologies Corporation of America (the “Company”) and FWC have entered  into an Accounts Receivable Purchasing Agreement of even
date hereof (as amended from time to time, the “Agreement”) pursuant to which
FWC will purchase certain accounts receivable billed to customers of the
Company (“Accounts Receivable”) on the basis of, and in reliance upon, the
representations, warranties and covenants of the Company contained in the
Agreement; and

 

WHEREAS, as a condition precedent to the
obligation of FWC to enter into the Agreement and to purchase Accounts
Receivable pursuant thereto, FWC requires that the Guarantor shall have entered
into this Guaranty, guaranteeing the performance by the Company of the
representations, warranties and covenants of the Company in the Agreement and
the payment and performance by the Company of its other obligations under the
Agreement.

 

NOW, THEREFORE, in order to induce FWC to enter
into the Agreement and to purchase Accounts Receivable pursuant thereto, and in
consideration thereof and for other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Guarantor, it is agreed as
follows:

 

W
I T N E S S E T H:

 

1.                                      Liabilities of Guarantor. 
The Guarantor hereby absolutely and unconditionally guarantees (a) the
accuracy and completeness of the Company’s representations and warranties in
the Agreement, and the prompt and complete performance by the Company of the
Company’s covenants and obligations in the Agreement, (b) the prompt and
complete payment and performance of all other discounts, expenses and
obligations of any nature that shall become due or owing to FWC by the Company
under the Agreement or pursuant to any modification or amendment thereof, and  (c) any  reasonable
costs or expenses incurred by FWC in enforcing any of the foregoing
(collectively, the “Obligations”).  This
Guaranty extends until all Obligations have been paid in full.  Payments to be made by the Guarantor
hereunder may be required by FWC on any number of occasions.

 

2.                                      Costs of Enforcement. 
The Guarantor shall pay to FWC forthwith upon demand, all reasonable
costs and expenses (including court costs and legal expenses) incurred or
expended by FWC in enforcing its rights under this Guaranty.

 

3.                                      Waiver of Right of Subrogation. 
Notwithstanding any payment or payments made by the Guarantor hereunder,
the Guarantor will not exercise any rights of FWC against the Company by way of
subrogation, reimbursement or indemnity, and shall have no right of 

 

1

 

recourse to any assets or property of the
Company held for the payment and performance of its Obligations, until such
time as all Obligations have been satisfied and the Agreement has been
terminated.  If there is more than one
Guarantor, each Guarantor agrees not to seek contribution from any other
Guarantor until all the Obligations shall have been paid in full and the
Agreement has been terminated.  If any
amount shall nevertheless be paid to the Guarantor, in contravention  of this Section 3, such amount shall be held in trust
for the benefit of FWC and shall forthwith be paid to FWC to be credited and
applied to the Obligations, whether matured or not matured.  The provisions of this Section shall
survive termination of this Guaranty.

 

4.                                      Waiver.  The
Guarantor hereby assents, to the extent permitted by law, to all the terms and
conditions of the Obligations and waives: (a) notice of acceptance of this
Guaranty and all notice of the creation, extension or accrual of any
Obligations; (b) presentment, demand for payment, notice of dishonor and
protest; (c) any requirement of diligence or promptness on the part of FWC
in the enforcement of its rights under the provisions of the Agreement or any
related document; (d) any requirement that FWC take any action whatsoever
against the Company or any other party or file any claim in the event of the
bankruptcy of the Company; or (e) failure of FWC to protect, preserve, or
resort to any collateral.  The waivers
set forth in this Section shall be effective notwithstanding the fact that
the Company ceases to exist by reason of its liquidation, merger, consolidation
or otherwise.

 

5.                                      Consent.  The
Guarantor hereby consents that from time to time, and without further notice to
or consent of the Guarantor, FWC may take any or all of the following actions
without affecting the liability of the Guarantor: (a) extend, renew,
modify, compromise, settle or release the Obligations; (b) release or
compromise any liability of any party or parties with respect to the
Obligations; (c) release its security interest in the collateral or
exchange, surrender or otherwise deal with the collateral as FWC may determine;
or (d) exercise or refrain from exercising any right or remedy of FWC.

 

6.                                      Obligations of Guarantor Unconditional. 
The obligations of the Guarantor under this Guaranty shall be absolute
and unconditional, irrespective of the validity, regularity or enforceability
of any Obligation or any instrument or agreement evidencing the same or
relating thereto or any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Guarantor.  The obligations of the Guarantor hereunder
shall not be discharged except by complete payment or performance of the
Obligations and the liabilities of the Guarantor hereunder.

 

7.                                      Notices.  All
notices and other communications hereunder shall be deemed given when delivered
or deposited in the mails, and sent first class, certified mail with postage
prepaid, and if to a party hereto addressed as set forth beneath its name at
the foot hereof unless a party shall give notice of a different address in the
manner provided herein.

 

8.                                      Payment Due Date. 
The Guarantor will within five (5) days from date of notice from
FWC of the Company’s failure to pay any of the Obligations when due, pay to FWC
the amount due and unpaid by the Company. 
The failure of FWC to give notice shall not in any way release the
Guarantor hereunder.

 

2

 

9.                                      Survival of Agreement. 
This Guaranty shall inure to the benefit of and be binding upon the
Guarantor and FWC and their respective heirs, successors and assigns, including
any subsequent holder or holders of any Obligations, and the term “FWC” shall
include any such holder or holders whenever the context permits.

 

10.                               Independent Obligation. 
FWC may proceed against the Guarantor under this Guaranty without first
proceeding against the Company, against any other surety or any other person or
any security held by FWC and without pursuing any other remedy.  It is expressly agreed that the liability of
the Guarantor for the payment of the Obligations secured hereby shall be
primary and not secondary.

 

11.                               Governing Law and Venue. 
THIS GUARANTY SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF TEXAS.  For purposes
of any suit relating to this Guaranty, the Guarantor and FWC submit themselves
to the jurisdiction of any court sitting in the State of Texas and further
agree that venue in any suit arising out of this Guaranty shall be fixed in
Williamson County, Texas.  Final judgment
in any suit shall be conclusive and may be enforced in any jurisdiction within
or without the United States of America, by suit on the judgment, a certified
or exemplified copy of which shall be conclusive evidence of such liability.

 

12.                               Entire Agreement. 
This Guaranty represents the entire agreement between the parties with
respect to the subject matter contained herein, and may not be amended or
modified except by written instrument executed by the Guarantor and FWC.  This Guaranty supersedes and replaces any
prior agreement among the parties, oral or written with respect to the subject
matter hereof.  No representations,
whether oral or written, are being relied upon which are not expressly set
forth in this Guaranty or in the Agreement. 
The parties recognize that any oral representations and prior written
representations are “merged” into this Guaranty and the Agreement, and no
reliance can be placed thereon.

 

13.                               No Interest Paid in Excess of Permitted
Amounts.  Should a court of competent jurisdiction rule that
any consideration paid hereunder is in fact or in law to be treated as
interest, in no event shall the Guarantor be obligated to pay that interest at
a rate in excess of the maximum amount permitted by law, and all agreements,
conditions, or stipulations contained herein, if any, which may in any event or
contingency whatsoever operate to bind, obligate, or compel the Guarantor to
pay a rate of interest exceeding the maximum rate of interest permitted by law
shall be without binding force or effect at law or in equity to the extent only
of the excess of interest over such maximum rate of interest permitted by
law.  Also in such event, FWC may “spread”
all charges characterized as interest over the entire term of all transactions
with the Guarantor or the Company and will refund to the Company or the Guarantor
the excess of any payments made over the highest lawful rate.  It is the intention of the parties hereto
that in the construction and interpretation of this Guaranty, the foregoing
sentence shall be given precedence over any other agreement, condition, or
stipulation herein contained which is in conflict with same.

 

IN WITNESS WHEREOF, this Guaranty has been
executed as of the date first above written.

 

3

 

	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  Xplore
  Technologies Corp.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/Michael
  J. Rapisand

  
	
   

  	
  Name:

  	
  Michael
  J. Rapisand

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
  Date:

  	
  December 10,
  2009

  
	
   

  	
  Address:
  

  	
  14000
  Summit Drive, Suite 900

  
	
   

  	
   

  	
  Austin, TX 78728

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FWC:

  	
   

  
	
   

  	
  DSCH
  Capital Partners, LLC, d/b/a Far West Capital

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Brian
  Center

  
	
   

  	
  Name:
  

  	
  Brian
  Center

  
	
   

  	
  Title:
  

  	
  Chief
  Operating Officer

  
	
   

  	
  Date:
  

  	
  December 10,
  2009

  
	
   

  	
  Address:
  

  	
  715
  Discovery Blvd., Suite 214

  
	
   

  	
   

  	
  Cedar
  Park, TX 78613

  

 

4

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