Exhibit 10.1



NEITHER
THIS SECURITY NOR ANY SECURITY INTO WHICH IT MAY BE CONVERTED HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR APPLICABLE STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY SECURITY
INTO WHICH IT MAY BE CONVERTED NOR ANY INTEREST OR PARTICIPATION HEREIN OR
THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF AT ANY TIME IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM REGISTRATION. 


NOTICE
OF SUBORDINATION


          THIS
NOTE IS SUBORDINATED TO ALL SENIOR INDEBTEDNESS (AS DEFINED HEREIN) OWING TO
WELLS FARGO FOOTHILL, LLC, AND CERTAIN OTHER LENDERS. BY ACCEPTANCE OF THIS
NOTE, THE HOLDER HEREOF AGREES TO BE BOUND BY THE SUBORDINATION PROVISIONS SET
FORTH HEREIN.


VELOCITY
INVESTMENTS, LLC

a New Jersey limited liability company


14%
SUBORDINATED NOTE


	
No. __

	
 


	
$_______

	
May __, 2008





          FOR VALUE RECEIVED, VELOCITY INVESTMENTS, LLC,
a New Jersey limited liability company (the “Company”), hereby promises to pay
to ________________, (hereinafter referred to as the “Holder”), or registered
assigns, the principal sum of _____________ Dollars ($_______), with interest
at a rate of fourteen percent (14.0%) per annum.


1.       This Note. Unless this subordinated
note (“Note”) is otherwise redeemed pursuant to Section 5 hereof, interest and
principal on this Note shall be payable at the address indicated in the
Subscription Agreement executed by the Holder in connection with the investment
in this Note or any such other address as the Holder may from time to time
designate in writing to the Company, regardless of whether payment becomes due
on the Maturity Date (as defined below) or upon the occurrence of an Event of
Default (as defined below). 


2.       Payment of Principal and Interest.
This
Note will mature on November __, 2011 (the “Maturity Date”). Interest shall be
payable quarterly in arrears beginning on the last day of the month that is
four months from the date of this Note (each, an “Interest Payment Date”).
Interest shall be computed based on the actual number of days elapsed, but on
the basis of a 360-day year of twelve 30-day months calculated on the unpaid
balance of the principal sum from the date of issue. Principal shall be due and
payable upon the Maturity Date or upon the occurrence of an Event of Default
(as defined below). Except as provided herein, all payments of principal and
interest by the Company under this Note shall be made in United States dollars
in immediately available funds to an account specified by the Holder.






3.       Security Interest


          (a)      To
secure the prompt and complete payment and performance when due (whether at
stated maturity, by acceleration or otherwise) of all of the obligations and
liabilities of the Company to the Holder under this Note (the “Obligations’),
the Company hereby assigns, pledges and grants to Holder, a continuing
subordinated security interest in and lien upon all of the Company’s property
and assets (the “Collateral”), whether real or personal, tangible or
intangible, and whether now owned or hereafter acquired, or in which it now has
or at any time in the future may acquire any right, title or interest,
including without limitation, all of the following property in which it now has
or at any time in the future may acquire any right, title or interest: all
accounts, inventory, equipment, goods, documents, instruments (including,
without limitation, promissory notes), contract rights, general intangibles (including,
without limitation, payment intangibles), chattel paper, supporting
obligations, investment property, letter-of-credit rights, trademarks,
tradestyles, patents and copyrights in which the Company now has or hereafter
may acquire any right, title or interest, all books, records, computer
programs, tapes, disks, and related data processing software that at any time
evidence or contain information relating to Collateral or are otherwise
necessary or helpful in the collection thereof or realization thereof; all
proceeds and products thereof (including, without limitation, proceeds of
insurance) and all additions, accessions and substitutions thereto or therefor.
The Company authorizes the Holder to file such financing statements and
amendments thereto and all other documents and instruments and to do such other
acts and things as are reasonably necessary to establish and maintain a valid,
enforceable, perfected security interest in the Collateral as provided herein
and the other ·rights and security contemplated hereby all in accordance with
the Uniform Commercial Code of the State of New Jersey as in effect from time
to time. The security interest granted hereby shall be prior in right to all
other security interests granted by the Maker in its assets, except that such
security interest will be junior in right to the security interest held by
Wells Fargo Foothill, LLC as set forth in Section 4 of this Note. 


4.       Subordination. The Holder hereby
irrevocably and unconditionally subordinates his, her or its right of payment
and collection under this Note to all Senior Indebtedness of the Company.
“Senior Indebtedness” shall mean all indebtedness of the Company, including,
without limitation, the Company’s obligations under that certain Loan and Security
Agreement, dated as of January 27, 2005 (as heretofore or hereafter amended,
from time to time, the “WFF Loan Agreement”), among Velocity Asset Management,
Inc., the Company and WFF, but “Senior Indebtedness” shall not include any
other indebtedness of the Company incurred following the issuance of this Note
that qualifies as long-term debt in accordance with U.S. generally accepted
accounting principles. In furtherance of the foregoing, except as expressly
permitted herein, the Company will not make, and no Holder of this Note will
accept or receive, any payment of this Note until all the Senior Indebtedness
has been indefeasibly paid in full in cash. If any Holder of this Note shall
receive any payment on account of this Note in violation of the subordination
provisions of this Note, it shall hold such payment in trust for the benefit of
the holders of the Senior Indebtedness and, promptly upon discovery or notice
of such violation, pay it over to such holders for application in payment of
the Senior Indebtedness. So long as no Default or Event of Default (as such
terms are defined in the WFF Loan Agreement) shall have occurred and be
continuing, or would result therefrom, the Company may pay to the Holder and
the Holder may accept and retain, (i) regularly scheduled payments of interest
and principal as and at the times when due and payable under this Note, as
originally executed and delivered, or, with the prior written consent of WFF,
as amended and (ii) with the prior written consent of WFF, other payments prior
to the due date thereof, including, but not limited to, those arising upon the
acceleration of the Company’s obligations hereunder pursuant to Section 9
herof. The holders of the Senior Indebtedness are intended to be third-party
beneficiaries of this Note. As such, this Note may not be modified except by an
instrument in writing signed by the holders of the Senior Indebtedness.






5.       Call of Notes by the Company. The
Company shall not, directly or indirectly, call for redemption, redeem, prepay,
repurchase, or otherwise acquire (any such event referred to herein as a
“call”) this Note or any portion thereof except as set forth in this Section 6.


          a.       Optional
Redemption Upon Call by the Company. Beginning on the date hereof, the
Company may, at its option, call this Note at a price equal to the outstanding
principal sum of, plus accrued but unpaid interest on, any late charges
associated with this Note and a call premium as follows:


	
 

	
 

	
 


	
 

	
(i)

	
From the date hereof through [________ __,] 2009 -
  104.0% of the principal amount


	
 


	
 

	
(ii)

	
From [________ __, ___] through [________ __, ___] -
  103.0% of the principal amount


	
 


	
 

	
(iii)

	
From [________ __, ___] through [________ __, ___] -
  102.0% of the principal amount


	
 


	
 

	
(iv)

	
From [________ __, ___] through [________ __, ___] -
  101.0% of the principal amount


	
 


	
 

	
(v)

	
From [________ __, ___] through [________ __, ___] -
  100.5% of the principal amount





          b.       Notice
of Call. The right of the Company to call this Note pursuant to this
Section 6 shall be conditioned upon the Company’s giving notice of such call
(the “Call Notice”, and the date the Call Notice is given being referred to as
the “Call Notice Date”), by personal delivery, overnight courier, certified
mail or by facsimile, signed by an authorized officer, to the Holder of this
Note, not less than sixty (60) days prior to the date upon which the call is to
be effective (the “Call Effective Date”). The Call Notice shall be irrevocable
and shall specify the Call Effective Date, which may not be less than 60 days
after the Call Notice Date. 






6.       Transfer. Subject to the
provisions of
the legend above, this Note is freely transferable, in whole or in part, by the
Holder, and such transferee shall have the same rights hereunder as the Holder.
The Company may not assign or delegate any of its obligations under this Note
without the prior written consent of the Holder (or its successor, transferee
or assignee). Upon surrender of this Note for transfer or exchange, a new Note
or new Notes of the same tenor, dated the date to which interest has been paid
on the surrendered Note and in an aggregate principal amount equal to the
unpaid principal amount of this Note so surrendered, will be issued to and
registered in the name of the transferee or transferees. The Company may treat
the person in whose name this Note is registered as the owner hereof for the
purpose of receiving payments and for all other purposes.




7.       Note Register. This Note is
transferable only upon the books of the Company which it shall cause to be
maintained for such purpose. The Company may treat the registered holder of
this Note as the Holder appears on the Company’s books at any time as the
Holder for all purposes.


8.       Defaults and Remedies. The entire
unpaid principal of this Note shall become and be immediately due and payable
upon written demand by the Holder, without any other notice or demand of any
kind or any presentment or protest, if any one of the following events (each,
an “Event of Default”) shall occur and be continuing at the time of such
demand, whether voluntarily or involuntarily, or, without limitation, occurring
or brought about by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
governmental body:


          a.       the
Company is delinquent in payment of any interest for a period of more than 30
days or the Company fails to pay the entire principal amount of this Note
within ten days after the Maturity Date;


          b.       the
Company defaults in any of its other financial obligations in excess of
$500,000 that are not cured within 30 days; 


          c.       the
Company, pursuant to or within the meaning of any applicable U.S. federal
and state laws relating to bankruptcy, insolvency, winding up, administration,
receivership and other similar matters for the relief of creditors (each, a
“Bankruptcy Law”):


                    i.       commences
a voluntary case;


                    ii.      consents
to the entry of an order for relief against it in an involuntary case;


                    iii.     consents
to the appointment of a custodian of it or for any substantial part of its
property;


                    iv.      makes
a general assignment for the benefit of its creditors; or


                    v.       is
unable to, or admits in writing its inability to, pay its debts as they become
due.






          d.       there
shall be commenced against the Company any case, proceeding or action of the
type referred to below or a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:


                    i.       is
for relief against the Company in an involuntary case;


                    ii.      appoints
a custodian of the Company or for any substantial part of its property; or


                    iii.     orders
the winding up or liquidation of the Company.


Upon an Event of Default, without any further notice
or demand, in addition to and not in limitation of any other rights or remedies
which the Holder may otherwise have, the Company shall pay the Holder a late
charge computed at the rate of 18% per annum of the amount not paid.
Notwithstanding the foregoing, an Event of Default under Section 9(b) hereof
shall not constitute an Event of Default without written notice from the
holders of a majority of the principal amount of the Notes then outstanding.


9.       Parity of Notes. In the event any
other
holder of notes issued contemporaneously with this Note (each, and “Offering
Note” and, collectively, the “Offering Notes”) elects to accelerate the
Offering Note held by such holder as a result of an Event of Default, the
Company shall notify the Holder of this Note of such event and all holders of
Offering Notes shall be deemed to have equal parity.


10.      Loss, Etc., of Note. Upon receipt
of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, and of indemnity reasonably satisfactory, to the
Company if lost, stolen or destroyed, and upon surrender and cancellation of
this Note if mutilated, and upon reimbursement of the Company’s reasonable
incidental expenses, the Company shall execute and deliver to the Holder a new
Note of like date, tenor and denomination.


11.      Amendment, Waiver Etc., By
Holder. The
terms of this Note may be amended or waived upon the written consent of the
Company and the Holder.


12.      Governing Law. This Note shall be
governed by and construed in accordance with the laws of the State of New
Jersey.


13.      Waiver. The Company hereby waives
presentment, demand, notice of nonpayment, protest and all other demands and
notices in connection with the delivery, acceptance, performance or enforcement
of this Note. If an action is brought for collection under this Note, the
Holder shall be entitled to receive all costs of collection, including, but not
limited to, its reasonable attorneys’ fees.