Exhibit 10.19
 
EMPLOYMENT AGREEMENT
 
This Employment Agreement (this “Agreement”) is made and entered as of December
4, 2009, by and between Brookridge Funding Services, LLC, a North Carolina
limited liability company (hereinafter “Employer”), and Michael P. Hilton, a
resident of the State of Connecticut (hereinafter “Employee”), and is joined in
by Anchor Funding Services, Inc., a Delaware corporation.
 
WHEREAS, the parties’ execution and delivery of this Agreement is a closing
condition under the Asset Purchase Agreement, dated as of November 30, by and
among Employer, Brookridge Funding, LLC (“Seller”), Parent, Employee and the
other parties thereto (the “Purchase Agreement”); and
 
WHEREAS, Employer desires to hire Employee, and Employee desires to accept
employment with Employer; and
 
WHEREAS, the parties wish to set out certain terms of employment in this
Agreement;
 
NOW, THEREFORE, for the mutual considerations herein described, the parties
agree as follows:
 
1. Definitions.  For the purposes of this Agreement, in addition to any terms
defined elsewhere in this Agreement, the following terms shall have the meanings
set forth below.  Capitalized terms used but not defined herein are defined in
the Purchase Agreement.
 
“Affiliate” means, with respect to a specified Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, the specified Person.  The term “control” means (a) the possession,
directly or indirectly, of the power to vote 10% or more of the securities or
other equity interests of a Person having ordinary voting power, (b) the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, by contract or otherwise or
(c) being a director, officer, executor, trustee or fiduciary (or their
equivalents) of a Person or a Person that controls such Person.
 
“Business” means (a) invoice or accounts receivable factoring; (b) inventory
financing, purchase order financing or services related to the sale and
assignment of purchase orders; and (c) the business(es) in which Employer is or
was engaged at the time of, or during the 12 month period prior to, the
termination of Employee’s employment with Employer for any reason.
 
“Business Location” means Employer’s business premises located at 26 Mill Plain
Road, Suite 3A, Danbury, Connecticut.
 
“Cause” means any one of the following: (a) conviction of Employee for
committing a felony or crime or other crime involving moral turpitude; (b)
Employee having committed acts or omissions constituting willful or wanton
misconduct with respect to Employer or any Affiliate; (c) Employee having
committed any act of fraud or embezzlement involving Employer or any Affiliate;
(d) Employee having committed acts or omissions constituting a material breach
of this Agreement that continues for more than 15 days after notice from
Employer specifically identifying such breach; (e)  Employer’s failure to
achieve Net Operating Income of at least $250,000 for any four consecutive
fiscal quarter period; (f) Employee’s failure to cause Employer to operate in
material compliance with applicable laws and regulations which has a material
adverse affect on Employer after Employee has had a 15 day period to cure any
such adverse affect; and (g) Employee’s material breach of any provision
contained in Employer’s operating agreement that is not cured within any
applicable cure period.
 
 
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“Customer” means (a) any person or entity specifically assigned to and/or called
on by Employee in the course of Employee’s employment with Employer, regardless
of location; (b) any person or entity who is or was a customer or client of
Employer at the time of, or during the 12 month period prior to, the termination
of Employee’s employment with Employer for any reason; or (c) any person or
entity who is or was a customer or client of Employer at the time of, or during
the 12 month period prior to, the termination of Employee’s employment with
Employer for any reason and with whom Employee had dealings in the course of his
employment with Employer or about whom Employee learned in the course of
Employee’s employment with Employer.
 
“Net Operating Income” means, the net operating income (or net operating loss)
of Employer for the period in question after giving effect to deduction of or
provision for all operating expenses, all taxes (excluding federal, state and
local income taxes) and reserves (including reserves for deferred taxes) and all
other proper deductions, all determined in accordance with GAAP; provided, that
there shall be excluded: (a) any net gains or losses on the sale or other
disposition, not in the ordinary course of business, of investments and other
capital assets, (b) any net gain arising from the collection of the proceeds of
any insurance policy, (c) any write-up of any asset and (d) any other
extraordinary item (as determined by GAAP); provided, further, that in
determining Net Operating Income, (1) any costs for services or benefits
provided to Employer by Parent or any Affiliate thereof shall be deducted as
expenses and be allocated to Employer in reasonable proportion to the percentage
of the benefit to Employer as compared to the benefit to Parent’s Affiliates
generally, provided that in no event will such allocations exceed $5,000 in a
fiscal quarter; (2) if any amount owing from a client of Employer shall fail for
any reason to be collected within 150 days, such amount shall be treated as a
deduction from Net Operating Income at that time whether or not such amount is
required to be written off under GAAP (provided that any such deduction shall be
reversed if later collected) and; (3) to the extent any Purchase Order or
Receivable (as such terms are defined in the Purchase Agreement) fails to be
collected and results in a payment to Employer pursuant to Section 1.5(c) of the
Purchase Agreement, any income or loss associated with such Purchase Order or
Receivable shall be included in computing Net Operating Income.
 
“Parent” means Anchor Funding Services, Inc., a Delaware corporation.
 
“Person” means any individual, corporation, limited liability company,
partnership, company, sole proprietorship, joint venture, trust, estate,
association, organization, labor union, governmental body or other entity.
 
“Restricted Period” means the period commencing on the date of termination of
Employee’s employment with Employer for any reason  and ending on the later of
(a) the second annual anniversary of such date and (b) the end of the period, if
any, for which Employer is required to pay compensation to Employee pursuant to
this Agreement; provided, however, that this period shall be tolled and shall
not run during any time Employee is in violation of any provision of Section 9
of this Agreement, it being the intent of the parties that Employer is entitled
to 24 months free of Employee’s violation of confidences, competition or
solicitation within the Territory, as described herein, and that the Restricted
Period shall be extended for any period of time in which Employee is in
violation of Section 9 of this Agreement.
 
“Services” means (a) invoice or accounts receivable factoring; (b) inventory
financing or purchase order financing; and (c) the products and/or services
offered by Employer at the time of, or during the 12 month period prior to, the
termination of Employee’s employment with Employer for any reason.
 
 
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“Territory” means: (a) the State of North Carolina; (b) the State of
Connecticut; (c) the State of Florida (d) any other State to which the Employee
directed or in which Employee performed work or employment-related activities on
behalf of the Employer at the time of, or during the 12 month period prior to,
the termination of the Employee’s employment with the Employer for any reason;
(e) any other State in which company or its Affiliates does or did business at
the time of, or during the 12 month period prior to, the termination of
Employee’s employment with Employer for any reason; and (f) the United States of
America.
 
2. Employment.  Employer hereby employs Employee and Employee hereby accepts
such employment, upon the terms and conditions hereinafter set
forth.  Employee’s place of employment shall be at the Business Location and
Employer agrees to maintain the Business Location as Employer’s primary business
location for the duration of the Term, as the same may be extended.
 
3. Term; Position; Personal Guaranties.  Commencing on the date hereof, and for
a term ending December 4, 2014 (the “Term”), Employer shall employ Employee as
Co-President of Employer, with duties and responsibilities consistent with such
position.  The Employer’s operating agreement shall provide that Employee shall
be a manager of the Employer with day to day responsibility for managing the
Employer’s operations provided Employer’s approval shall be required for certain
actions as set forth in such operating agreement.  Employee agrees that during
the Term he will provide a personal guaranty of the Credit Agreement (as such
term is defined in the Purchase Agreement) on terms satisfactory to the lenders
(the “Personal Guaranties”) provided the total amount of such guaranty shall be
equal to $300,000.
 
4. Termination. Employee’s employment is subject to termination prior to
expiration of the Term as follows:
 
a. Termination for Cause.  Employee’s employment with Employer may be terminated
by Employer for Cause.  Provided Cause actually exists, the date of termination
for Cause shall be the date Employer sends Employee a written notice to such
effect specifying the reason(s) for the termination for Cause.  In the event of
any termination under this Section 4.a, Employer shall pay all amounts of Base
Salary then due to Employee under Section 5 up to the payroll period worked but
for which payment had not yet been made up to the date of termination (but
expressly excluding any bonuses or other incentive compensation).  Except as
required by applicable employment law, from and after termination Employer shall
have no further obligations to Employee under this Agreement (including no
obligation with respect to bonuses or other incentive compensation).
 
b. Termination for Disability.  Employee’s employment with Employer may be
terminated by Employer in the event of Employee’s Disability.  The date of
termination for Disability shall be the date Employer sends Employee a written
notice to such effect.  For purposes of this Agreement, “Disability” shall mean
the inability of Employee, in the reasonable judgment of a physician appointed
by Employer, to perform his duties of employment because of any physical or
mental disability or incapacity, where such disability shall exist for an
aggregate period of more than 150 days in any 365-day period or for any period
of 90 consecutive days.  In the event of any termination under this Section 4.b,
Employer shall pay by the next payroll period all amounts then due to Employee
under Section 5 up to the payroll period worked but for which payment had not
yet been made up to the date of termination.  For avoidance of doubt, Employee’s
termination for Disability under this Agreement will not impact Seller’s right
to receive Contingent Purchase Price Consideration (as such term is defined in
the Purchase Agreement) pursuant to the Purchase Agreement provided the
condition to receiving such Contingent Purchase Price Consideration contained in
Section 1.6(e) of the Purchase Agreement is satisfied.
 
 
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c. Termination upon Death.  Employee’s employment with Employer automatically
terminates on Employee’s death.  In the event of Employee’s death (i) Employer
will pay Employee’s heirs or beneficiaries his Base Salary earned through the
date of termination (on regular payroll dates).  In addition, in the event of
Employee’s death, Employer shall (i) pay by the next payroll period all amounts
then due to Employee under Section 5 up to the payroll period worked but for
which payment had not yet been made up to the date of termination.  For
avoidance of doubt, Employee’s termination upon death under this Agreement will
not impact Seller’s right to receive Contingent Purchase Price Consideration (as
such term is defined in the Purchase Agreement) pursuant to the Purchase
Agreement provided the condition to receiving such Contingent Purchase Price
Consideration contained in Section 1.6(e) of the Purchase Agreement is
satisfied.
 
d. Release of Personal Guaranties.  If Employer’s employment is terminated
without Cause or under sub-paragraphs (b) or (c) of this Section 4, or upon this
Agreement expiring at the end of the Term, as the same may be extended or
amended, Employer and Parent shall take action to obtain releases of the
Personal Guaranties.  In such an instance, moreover, Employer and Parent hereby
agree to indemnify and hold harmless Employee from any liability under the
Personal Guaranties from and after the date of Employee’s termination of
employment.  If Employee is terminated for Cause or voluntarily resigns from
Employer prior to the expiration of the Term, as the same may be extended or
amended, Employer and Parent shall be obligated to relieve Employee of or
indemnify Employee from any liability resulting from the Personal Guaranties as
follows.  Following the determination of the amount of losses incurred with
respect to purchase order advances and purchased invoices on the books of
Employer at the time of Employee’s termination of employment from Employer (the
“Adjusted Guaranty Amount”), Employer and Parent shall take action to obtain
releases of the Personal Guaranties to the extent required so that Employee’s
total liability with respect thereto does not exceed the Adjusted Guaranty
Amount. In such an instance, moreover, Employer and Parent hereby agree to
indemnify and hold harmless Employee from any liability under the Personal
Guaranties from and after the date of Employee’s termination of employment so
that Employee’s total liability with respect thereto does not exceed the
Adjusted Guaranty Amount.
 
e. Voluntary Resignation.  Employee’s employment with Employer may be terminated
by Employee.  In the event of any termination under this Section 4.e, Employer
shall pay all amounts of Base Salary then due to Employee under Section 5 up to
the payroll period worked but for which payment had not yet been made up to the
date of termination (but expressly excluding any bonuses or other incentive
compensation).  Employer shall have no further obligations to Employee under
this Agreement.
 
5. Compensation; Benefits.
 
a.           Base Salary.  Employer shall pay Employee a fixed base salary
(“Base Salary”) of $120,000 per year.
 
b.           Options.  In consideration for Employee providing the $300,000
Personal Guaranties, Employee shall receive an option grant covering 112,500
shares of Parent’s common stock exercisable at the price of $1.00 per share.
 
 
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c.           Benefits.  Employee shall be entitled to participate in those
employee benefit plans and programs of Employer, to the extent Employee
qualifies, pursuant to and in accordance with the terms of such plans and
programs.  Employee expressly understands and agrees that Employer may from time
to time modify, add, or terminate plans or programs made available to or offered
for the benefit of Employee and other employees of Employer. Specific benefit
plans shall be adopted by Employer in a manner consistent with the  plans of
Employer’s predecessor in business (but not including a profit sharing plan).
 
6. Full-Time Employment.  Employee is employed on a full time basis by Employer,
and Employee agrees that while Employee is employed by Employer, Employee shall
not directly or indirectly in any capacity engage in any business other than
Employer’s business without Employer’s prior written consent.  Under no
circumstances shall Employee render any services to or for any other person,
firm, corporation or other entity engaged in the Business (as defined below)
while employed by Employer.
 
7. Obligations to Others.
 
a. Employee understands that Employer prohibits its employees from utilizing any
confidential information or trade secrets of any prior employer of Employee or
any third party during the term or course of employment by Employer.  Employee
expressly covenants and represents that Employee has not retained any materials
containing any confidential or trade secret information of any prior employer;
and Employee agrees not to utilize any confidential or trade secret information
of any prior employer, or of any other third party, at any time while employed
by Employer.
 
b. Employee represents and warrants that Employee is not now, and will not be on
the date Employee starts working at Employer, a party to any agreement, contract
or understanding, whether of employment, agency, or otherwise, that would in any
way conflict with, restrict or prohibit Employee from undertaking and performing
Employee’s job responsibilities with Employer, and that Employee has the full
right, power and authority to enter into this Agreement.
 
8. Confidential Information; Intellectual Property.  Employer will give
Employee, and Employee will become familiar with Confidential Information, as
defined below, while employed by Employer.  Employee also may be exposed to
Intellectual Property, as defined below, or may develop or assist in the
development of Intellectual Property during employment hereunder.  Employee
understands, acknowledges, and agrees to the following terms and conditions
regarding Confidential Information and Intellectual Property.
 
a. “Confidential Information” means any information concerning Employer or any
business of Employer which has not been disclosed by Employer to the general
public.  Confidential Information includes, but is not limited to, all
financial, technical and marketing information; cost data; pricing information;
business plans; software developed by or for Employer; customer lists and any
information relating to Employer’s Customers (as hereafter defined); information
related to potential customers whether received from the potential customers or
third parties; patent, trademark, service mark, and copyright applications;
information relating to inventions, discoveries, software and any other research
and development information; blueprints; information regarding purchases or
sales of Employer; and any other trade secrets of Employer.  Confidential
Information includes information communicated in oral, written, graphic,
electronic, or any other form.
 
 
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b. Employee acknowledges that the Confidential Information is owned or licensed
by Employer; is unique, valuable, proprietary and confidential; derives
independent actual or potential commercial value from not being generally known
or available to the public; and is subject to reasonable efforts to maintain its
confidentiality.  Employee hereby relinquishes, and agrees that he will not at
any time claim, any right, title or interest of any kind in or to any
Confidential Information.
 
c. Employee agrees that Employee will maintain the confidentiality of the
Confidential Information at all times during and after Employee’s employment
with Employer and will not, at any time, directly or indirectly, use any
Confidential Information for his own benefit or for the benefit of any other
person or entity, reveal or disclose any Confidential Information to any person
or entity other than authorized representatives of Employer, or remove or aid in
the removal from Employer’s premises of any Confidential Information, except (1)
in the performance of Employee’s duties in the furtherance of the business of
Employer or (2) with the prior written consent of an authorized officer of
Employer.  The covenants in this Section 8.c will not apply to information that
(i) is or becomes available to the general public through no breach of this
Agreement by Employee or breach by any other person of a duty of confidentiality
to Employer or (ii) Employee is required to disclose by applicable law or court
order; provided, however, that Employee will notify Employer in writing of such
required disclosure as much in advance as practicable in the circumstances and
cooperate with Employer to limit the scope of such disclosure.
 
d. Employee will immediately and fully disclose in writing to Employer all
inventions, discoveries, ideas, technologies, trade secrets, know-how, formulae,
designs, patterns, marks, names, improvements, industrial designs, mask works,
works of authorship and other intellectual property conceived or developed in
whole or in part by Employee, or in which Employee may have aided in its
conception or development, while employed by Employer (collectively,
“Intellectual Property”) whether or not such Intellectual Property is
patentable, copyrightable, or otherwise protectable.
 
e. Employee does hereby, and will from time to time immediately upon the
conception or development of any Intellectual Property, assign to Employer all
of Employee’s right, title and interest in and to all such Intellectual Property
(whether or not patentable, registrable, recordable or protectable by copyright
and regardless of whether Employer pursues any of the foregoing).  If any
Intellectual Property falls within the definition of “work made for hire”, as
such term is defined in 17 U.S.C. § 101, such Intellectual Property will be
considered “work made for hire” and the copyright of such Intellectual Property
will be owned solely and exclusively by Employer.  If any Intellectual Property
does not fall within such definition of “work made for hire”, then Employee’s
right, title and interest in and to such Intellectual Property will be assigned
to Employer pursuant to the first sentence of this Section 8.e.  Employee will
execute and deliver any assignment instruments and do all other things
reasonably requested by Employer (both during and after Employee’s employment
with Employer ) in order to more fully vest in Employer sole and exclusive
right, title and interest in and to all Intellectual Property.
 
f. Upon request by Employer or immediately upon termination from employment with
Employer for any reason, whichever is sooner, Employee shall immediately deliver
to Employer any and all information and property of Employer in whatever form it
exists including but not limited to all Confidential Information and
Intellectual Property.
 
g. Employee acknowledges that in the event that Employee breaches any portion of
this Section 8 of this Agreement, Employer shall be immediately, permanently and
irreparably damaged and shall be entitled, in addition to any and all other
legal and equitable remedies and damages, to a temporary restraining order ex
parte, to a preliminary injunction, and to a permanent injunction, to restrain
Employee’s actions or the actions of others acting on Employee’s behalf.
 
 
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h. The covenants and agreements of this Section 8 of this Agreement shall
survive, and shall remain in full force and effect after the termination of
Employee’s employment with Employer.
 
9. Non-competition/Non-solicitation.  Employee acknowledges and agrees that in
consideration for the restrictive covenants in this Section 9, he has and will
continue to receive substantial, valuable consideration from Employer,
including, but not limited to, interaction with customers of
Employer,  compensation, and other benefits.  Employee acknowledges and agrees
that as an Employee and representative of Employer, Employee will be responsible
for building and maintaining business relationships and goodwill with current
and future customers, clients, and prospects on a personal level.  Employee
further acknowledges and agrees that Employer’s business necessarily involves
the creation and development of goodwill with Employer’s customers and
clients.  Employee agrees that Employer is entitled to protect its business
interests and investments and to prevent Employee from using or taking advantage
of the foregoing economic benefits to Employer’s detriment.
 
a. Restrictions.  Employee agrees not to engage in any activities competitive
with Employer at any time during Employee’s employment with Employer, including
any activities similar to those described in the subsections of this paragraph
(a) of Section 9  except in furtherance of Employer’s business.  Furthermore,
Employee agrees that, following termination of Employee’s employment with
Employer for any reason, except as otherwise approved in writing by Employer,
during the Restricted Period, Employee will not, directly or indirectly, alone
or in conjunction with any other party:
 
i. encourage, induce or attempt to induce any employee of Employer to terminate
his or her employment with Employer or to violate any agreements between
Employer and such employee; or
 
ii. call upon, contact, solicit, divert, encourage or appropriate or attempt to
call upon, contact, solicit, divert, encourage or appropriate any Customer for
purposes of engaging in the Business or aiding any other person in doing so; or
 
iii. divert away or attempt to divert away any business from Employer to another
person or entity; or
 
iv. interfere with the business relationship between a Customer and Employer.
 
In addition, Employee agrees that, following termination of Employee’s
employment with Employer for Cause, except as otherwise approved in writing by
Employer, during the Restricted Period, Employee will not, directly or
indirectly, alone or in conjunction with any other party engage in the Business
in the Territory.
 
b. Reasonableness of Restrictions.  Employee agrees that the covenants in this
Section 9 are reasonable given the real and potential competition encountered
(and reasonably expected to be encountered) by Employer and the substantial
knowledge and goodwill Employee will acquire with respect to the business of
Employer as a result of his employment with Employer.  Notwithstanding the
foregoing, in the event that any provision of this Section 9 is determined by a
court to be invalid or unenforceable, such court may, and is hereby authorized
to, reduce or limit the terms of such provision to allow it to be enforced to
the maximum extent possible.
 
 
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c. Injunctive Relief; Expenses.  Employee acknowledges that Employer will suffer
irreparable harm in the event that Employee breaches any of Employee’s
obligations under this Section 9 and that monetary damages will be inadequate to
compensate Employer for such breach.  Accordingly, Employee agrees that, in the
event of a breach by Employee of any of Employee’s obligations under this
Section 9, Employer will be entitled to obtain from any court of competent
jurisdiction preliminary and permanent injunctive relief, and expedited
discovery for the purpose of seeking relief, in order to prevent or to restrain
any such breach (and Employee agrees to waive any requirement for the securing
or posting of any bond in connection with such remedies).
 
d. Accounting for Profits.  If Employee violates any of Employee’s obligations
under this Section 9, Employer will be entitled to an accounting and repayment
of all profits, compensation, commissions, remunerations or benefits that
Employee directly or indirectly has realized or may realize as a result of,
growing out of or in connection with any such violation.
 
e. Restrictions subject to Compliance By Employer; Termination Payments Subject
to Compliance by Employee.  The restrictive covenants and other restrictions of
Employee contained herein are subject to Employer and Parent complying with all
material obligations to Employee as contained herein or as contained in and
contemplated by the Purchase Agreement; provided, Employee acknowledges and
agrees that Employer’s termination of Employee’s employment for any reason shall
not be deemed non-compliance with respect to Employer’s obligations to Employee
and therefore shall not diminish such restrictive covenants and other
restrictions.  The obligations of Employer and Parent to make payments to
Employee contained herein are subject to Employee’s complying with all material
obligations to Employer as contained herein.
 
f. Remedies Cumulative.  The rights and remedies of the parties under this
Agreement are cumulative (not alternative) and in addition to all other rights
and remedies available to such parties at law, in equity, by contract or
otherwise.
 
g. Survival.  The terms of Section 9 of this Agreement shall survive, and shall
remain in full force and effect after, Employee’s termination from employment
with Employer.
 
 
 
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10. Entire Agreement.  This Agreement represents the entire agreement and
understanding of the parties regarding the employment of Employee.  Employee
expressly covenants and represents that Employee has not relied upon any
promises, assurances, or other representations of Employer that are not
contained herein.
 
11. Non-waiver; Amendment.  No waiver by either party of any breach by the other
party of any provision hereof shall be deemed delivered to be a waiver of any
later or other breach thereof or as a waiver of any such or other provision of
the Agreement.  Except as expressly permitted herein, this Agreement may not be
modified or amended except in writing signed by all parties hereto.
 
12. Governing law.  This Agreement and all other issues regarding the employment
of Employee shall be governed by the laws of the State of Connecticut to the
fullest extent permitted by law.
 
13. Severability.  In the event it is determined by a court of competent
jurisdiction that any provision or portion of a provision of this Agreement is
not enforceable under the law governing this Agreement, the remainder of this
Agreement shall be valid and fully enforceable, in all respects, as if the
provision or portion of a provision deemed unenforceable had never been a part
of the Agreement.
 
14. Attorneys’ Fees.  In the event any party hereto has to enforce its or his
rights under this Agreement due to a breach by another party, the prevailing
party in any such enforcement action shall be entitled to recover from the other
party, all costs it or he incurs in connection with enforcing its or his rights
hereunder including but not limited to, all attorneys’ fees, court costs and
cots and fees of appeal.
 

 
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IN WITNESS WHEREOF, Employer and Employee have executed this Agreement on the
date first above written.

EMPLOYER:                                                                                     EMPLOYEE:

BROOKRIDGE FUNDING SERVICES, LLC

By:____________________________                                                                                     _______________________________
Name:_________________________                                                                                     Michael
P. Hilton
Title:   Manager__________________

JOINDER

In order to acknowledge its duties and responsibilities contained herein, Parent
hereby executes this Agreement and agrees to be bound by the terms and
conditions contained hereinabove which by their terms specifically apply Parent.

PARENT:

ANCHOR FUNDING SERVICES, INC.

By:____________________________________                                                                
Name:__________________________________
Title: ___________________________________
 
 
 
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