[PACIFIC BUSINESS FUNDING LOGO]

20195 Stevens Creek Boulevard     Suite #220    Cupertino, California 95014

Tel. (408) 255-9300    Fax (408) 255-9313

FACTORING AGREEMENT

This Factoring Agreement (the Agreement), dated as of September 19, 2001, is entered into by and between Lexar Media, Inc. a [ corporation, partnership, sole proprietorship] (Seller) having its principal place of business and chief executive office at the address set forth below Sellers signature, and Pacific Business Funding, a division of Cupertino National Bank (Purchaser) having an office at the address identified above.

Capitalized terms used in this Agreement shall have the meanings assigned to them in Section 13, Definitions.

1.    Purchase of Accounts

1.1    Schedule of Accounts.    Seller may, at any time, request that Purchaser purchase Accounts. Any such request by Seller shall be made by delivering to Purchaser a Schedule of Accounts (the Schedule of Accounts) which describes in detail the Accounts Seller is requesting Purchaser to purchase, including, (a) the name and address of the Account Debtor of each such Account, (b) the amount owed by the Account Debtor of each such Account, and (c) the date and number of the invoice evidencing each such Account. Each Schedule of Accounts shall have attached to it an invoice for each Account described on the Schedule of Accounts, and shall be signed by an authorized representative of Seller.

1.2    Discretionary Approval of Accounts.    Purchaser may, in its sole discretion, purchase any Account included in a Schedule of Accounts, but is under no obligation to purchase any such Account. Purchaser may exercise its sole discretion in approving each Account and the credit of each Account Debtor before purchasing any Account.

1.3    Payment of Advances; Creation of a Book Reserve.    Upon approval, in Purchasers sole discretion, of any of the Accounts described on a Schedule of Accounts, Purchaser shall pay to Seller as the purchase price for any approved Account eighty percent (80%) of the face amount of such approved Account (the Advance). Purchaser may, time to time, in its discretion, upon notice to Seller, change the percentage of the Advance. Upon payment of the Advance to Seller, Purchaser shall also create a reserve on Purchasers book and records with respect to each Purchased Account in an amount equal to the face amount of the Purchased Account minus the Advance for such Purchased Account (the Reserve). Notwithstanding the foregoing, in no event shall the Reserve with respect to all Purchased Accounts outstanding at any time be less than twenty percent (20%) of the Account Balance. Purchaser, may in its discretion, upon notice to Seller, increase the percentage of the reserve at any time.

1.4    Transfer of Accounts.    At the time Purchaser pay the Advance with respect to any Account such Account shall constitute a Purchased Account, and Seller hereby absolutely sell transfers and assigns to Purchaser, all of Sellers right, title and interest in and to each Purchased Account. Seller also hereby sells, transfer and assigns to Purchaser all of the goods represented by each Purchased Account, all of Sellers rights and remedies as an unpaid seller under the California Commercial Code and other applicable law, including the rights of stoppage in transit, replevin, reclamation, and claim and delivery, and all Sellers rights in and to all security for each such Purchased Account and guaranties thereof, and all rights against third parties with respect thereto. Any goods recovered or received by Seller shall be set aside marked with Purchasers name, and held for Purchasers account as owner.

1.5    Collection of Accounts.    Each Purchased Account shall be collected directly by the Purchaser. At the request of Purchaser, Seller and Purchaser shall jointly notify each Account Debtor by letter that Purchased Accounts owed by such Account Debtor have been assigned and are payable to Purchaser. Such notification shall be in form and substance satisfactory to Purchaser. Seller shall not take or permit any action to change or revoke any notification without Purchasers prior written consent and shall not request any Account Debtor to pay any Purchased Account to Seller. Notwithstanding the foregoing, in the event Seller received any payments of any Purchased Accounts. Seller shall (A) immediately notify Purchaser of such payment, (B) hold such payment in trust and safekeeping for Purchaser, and (C) immediately turn over to Purchaser the identical checks, monies or any other forms of payment received, with any necessary endorsement or assignment. Purchaser shall have the right to endorse Sellers name on all payments received in connection with each Purchased Account and on any other proceeds of Collateral. If Purchaser receives a check or item which is payment for both a Purchased Account and a non-Purchased Account, the funds shall first be applied to the Purchased Account and, and so long as there does not then exist an Event of Default or an event that with notice or lapse of time would constitute an Event of Default, the excess shall be remitted to Seller. In the event Purchaser receives any other payments of non-Purchased Accounts, Purchaser shall remit to Seller the collections of such non-Purchased Accounts; provided, that if any Event of Default or event that with notice or lapse of time or otherwise would constitute an Event of Default then exists, Purchaser shall have no duty to remit any such collections, which collections constitute Collateral, and may apply such collections to reduce Obligations.

Home        Intelligence        Services        Subscriptions        News        About Us

Contact Us       Terms of Use       Resend Documents       Shopping Cart

Copyright © 2008 The Consus Group LLC