Preview | Line of Credit Agreement |

LINE OF CREDIT AGREEMENT

THIS ACCOUNTS RECEIVABLE PURCHASE AGREEMENT (the ?Agreement?) is made as of the 21^st day of February, by and between Mosaic Financial Services, LLC, a Delaware limited liability the Company, (the ?Provider?) having a business address at 405 Lexington Ave, New York, New York and eRXSYS, Inc., a Nevada Corporation, (the ?Company?) having its principal place of business and executive offices at 18021 Sky Park Circle, Suite G2, Irvine, California 92614-6570.

W I T N E S S E T H:

WHEREAS, the Provider is in the trade or business of advancing funds for businesses for a fee;

WHEREAS, the Company desires to avail itself of the services of the Provider under the terms and conditions of this Agreement; and

WHEREAS, the Provider wishes to advance funds to the Company under the terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the mutual promises contained in this Agreement, the sufficiency and receipt of which are hereby acknowledged, the parties agree as follows:

1. Definitions. When used herein, the following terms shall have the following meanings.

1.1. ?Account Balance? shall mean, on any given day, the amount of all outstanding and unpaid Advances under the Line of Credit.

1.2. ?Account Debtor shall have the meaning set forth in Section 9-102(a)(3) of the New York UCC and shall include any person liable on any Receivable, including without limitation, any guarantor of the Receivable and any issuer of a letter of credit or banker?s acceptance.

1.3. ?Adjustments? shall mean all discounts, allowances, returns, disputes, counter claims, offsets, defenses, rights of recoupment, rights of return, warranty claims, or short payments, asserted by or on behalf of any Account Debtor with respect to any Pledged Receivable.

1.4. ?Advance? shall have the meaning set forth in Section 2.2 hereof.

1.5. ?Collateral? shall have the meaning set forth in Section 8 hereof.

1.6. ?Collections? shall mean all good funds received by the Provider from or on behalf of an Account Debtor with respect to Pledged Receivables.

1.7 ?Compliance Certificate? shall mean a certificate, in a form provided by the Provider to the Company, which contains the certification of the chief financial officer of the Company that, among other things, the representations and warranties set forth in this Agreement are true and correct as of the date such certificate is delivered.

1.8. ?Credit Problem? shall mean a customer or Account Debtor of the Company that is unable to pay its debts because a receiver or trustee for all or a substantial portion of its assets has been appointed, it has filed a general assignment for the benefit of creditors, or had filed against it an involuntary or voluntary bankruptcy proceeding.

1.9. ?Customer Dispute? shall mean a claim or disagreement by a customer or Account Debtor of the Company against the Company at any time, of any kind whatsoever, whether valid or invalid that reduces or could reduce the amount collectible from such customer or Account Debtor by the Provider.

1.10.

?Event of Default? shall have the meaning set forth in Section 9 hereof.

1.11.

?Finance Charges? shall have the meaning set forth in Section 3.2 hereof.

1.12. ?Obligations? shall mean all advances, financial accommodations, liabilities, obligations, covenants and duties owing, arising, due or payable by the Company to the Provider of any kind or nature, present or future, arising under or in connection with this Agreement or under any other document, instrument or agreement, whether or not evidenced by any note, guarantee or other instrument whether arising on account or by overdraft, whether direct or indirect (including those acquired by assignment) absolute or contingent, primary or secondary, due or to become due, now owing or hereafter arising, and however acquired; including, without limitation, all Advances, Account Balances, Finance Charges, fees, expenses, professional fees and attorney?s fees and any other sums chargeable to the Company hereunder or otherwise.

1.13. ?Pledged Receivables? shall mean all those accounts, receivables, chattel paper, instruments, contract rights, documents, general intangibles, letters of credit, drafts, bankers acceptances, and rights to payment, and all proceeds thereof (all of the foregoing being referred to as ?receivables?), arising out of the invoices and other agreements to which the Company has a right to collect from an Account Debtor for the first time on a date when there is an unpaid Advance outstanding.

1.14. ?Refund? shall have the meaning set forth in Section 3.5 hereof.

1.15. ?Reconciliation Date? shall mean the last calendar day of each calendar month.

2. Draw upon Line of Credit; transfer of Receivables.

2.1 Activation. A line of credit (the ?Line of Credit?) in the maximum amount of up to FIVE HUNDRED THOUSAND DOLLARS ($500,000) is hereby activated in favor the Company effective on the date of this Agreement. Provided that no Event of Default has occurred, or any event that with notice, lapse of time or otherwise would constitute an Event of Default, the maximum aggregate amount of the Line of Credit available to the Company shall be increased for the period beginning July 1, 2005 through the end of the Term to SEVEN HUNDRED THOUSAND DOLLARS ($700,000).

2.2. Requests for Draws upon Line of Credit. During the Term hereof, provided that there does not then exist any Event of Default or any event that with notice, lapse of time or otherwise would constitute an Event of Default, the Company may request a draw upon the line of credit (hereinafter, an ?Advance?), up to the amount by which the aggregate value of the Pledged Receivables exceeds the aggregate amount outstanding under the Line of Credit, including the amount of the Advance then requested, calculated as of the date of such request. The foregoing notwithstanding, the Company may request an initial Advance of $350,000.00 provided it has at least $200,000.00 of Pledged Receivables at the time of such Advance (the ?Initial Advance?). It shall be a condition to each Advance that (a) all of the representations and warranties set forth in Section 6 of this Agreement be true and correct on and as of the date of the Advance as though made at and as of each such date, and (b) no Event of Default or any event or condition that with notice, lapse of time or otherwise would constitute an Event of Default shall have occurred and be continuing, or would result from such Advance.

2.3. Pledge of Receivables. Each receivable of the Company which is or becomes outstanding during the time there is an unpaid Obligation due to the Provider shall be deemed a Pledged Receivable. Effective upon the Provider?s payment of an Advance, and in consideration therefore and in consideration of the covenants of this Agreement, the Company hereby absolutely sells, transfers and assigns to the Provider, all of the Company?s right, title and interest in and to each Pledged Receivable and all funds due or which may become due on or with respect to such Pledged Receivable. The Provider shall be the absolute owner of each Pledged Receivable until such time as all outstanding Obligations have been repaid to the Provider. The Provider shall have, with respect to any goods related to the Pledged Receivable, all the rights and remedies of a secured party under the New York Uniform Commercial Code and other applicable law, including the rights of replevin, claim and delivery, reclamation and stoppage in transit.

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