ex101.htm


    Exhibit 10.1 – Accounts Receivable Credit
Facility with Greystone Commercial Services L.P.

    


    FACTORING
AGREEMENT

     

    THIS
FACTORING AGREEMENT (this "Agreement") dated as of November 30, 2009, is entered
into by and between ANCHOR FUNDING
SERVICES, LLC, a North Carolina limited liability company ("Seller")
and GREYSTONE
COMMERCIAL SERVICES LP, a Delaware limited partnership ("Greystone").
In consideration of the mutual covenants and agreements contained herein, Seller
and Greystone hereby agree as follows:

     

    1.
SALE OF ACCOUNTS.

     

    (a)           Sale of
Accounts. Seller hereby sells, assigns and transfers to Greystone, and
Greystone hereby purchases as absolute owner, all of Seller's present and future
accounts purchased by Seller under a Client Factoring Agreement (as defined
below) or created by or arising out of the sale of goods or services rendered by
Seller, including all accounts arising from sales made and services rendered
under any of Seller's trade names or through any of its divisions (each
individually an "Account"
and collectively the "Accounts").
Concurrently with each Account sold to Greystone hereunder, Seller hereby also
sells, transfers, assigns and otherwise conveys to Greystone all right, title
and interest of Seller in and to all related rights (but not obligations) of
Seller with respect to such Account, including all Client Factoring Documents
(as defined below), contract rights, guarantees, letters of credit, liens in
favor of Seller, insurance and other agreements and arrangements of whatever
character from time to time supporting or securing payment of such Account and
all right, title and interest of Seller in any related goods, including Seller's
rights and remedies under the Uniform Commercial Code (the "UCC"), under other
applicable law and under equity (including all reclamation rights). No sale,
transfer, assignment and conveyance of an Account or its related rights
hereunder shall constitute or result in an assumption by Greystone of any
obligation of Seller or any other person in connection with such Account or
related rights or under any agreement or instrument relating thereto. Upon the
sale of any Accounts to Greystone, Seller will promptly make proper entries on
its books and records disclosing the absolute sale of all such Accounts to
Greystone.

     

    (b)           Assignments.
Seller agrees to execute and deliver to Greystone a written assignment ofthe
Accounts purchased hereunder, together with a copy of all invoices relating to
such Accounts, and evidence of delivery of the related goods or performance of
the related services (and, if requested, the original purchase orders) as
Greystone may request to further evidence the sale and assignment of such
Accounts and related rights to Greystone hereunder, all in a form and substance
satisfactory to Greystone. Seller may deliver such information by providing
Greystone access to such information on Seller's servers and computer system.
Each officer, representative or agent of Seller executing any such assignments
on behalf of Seller shall be deemed to have the power and authority from Seller
to execute such assignments.

     

    (c)           Risk of Non-Payment.
Notwithstanding any other provision contained herein, Greystone shall not be
deemed to have assumed any risk of non-payment with respect to any Accounts
purchased hereunder, it being understood and agreed by Seller that all Accounts
purchased hereunder shall be at Seller's sole and exclusive risk and with full
recourse back to Seller if payment is not made on any such Account for any
reason whatsoever.

     

    (d)           Invoicing.

     

    (i) Each of
Seller's invoices for all Accounts purchased or pledged hereunder (including all
Accounts purchased by Seller under any Client Factoring Agreement) shall bear a
notice (in form and content approved by Greystone) that such Account represented
thereby has been sold, assigned and transferred to Seller, and is owned by and
payable only to Seller at
either P.O. Box 602151, Charlotte, NC 28260-2151 or P.O. Box 79707, City of
Industry, CA 91716-9707 (the "Remittance
Address") (or, upon notice from Greystone, another post office box of
Greystone) and, in the case of payments to be effected by wire transfer or other
electronic means, the related invoice must set forth, as the sole bank account
for such payment, a bank account of Greystone (or a third party designated by
Greystone) designated by Greystone from time to time. Greystone shall have the
exclusive and unrestricted access to the Remittance Address. All invoices shall
be mailed by Seller to its account debtors at Seller's expense (unless otherwise
consented to in writing by Greystone).

     

    (ii) Except as
otherwise may be agreed to in writing by Greystone from time to time, Greystone
will not purchase any Account whose terms are greater than NET 30 DAYS. After an
Account has been purchased by Greystone, Seller shall not have the right to vary
the terms of sale set forth in the invoice relating to such Account, or any
other aspect of
the Account, except in Seller's capacity as servicing agent for Greystone for
purposes of the collection of such Accounts as set forth in Section 8
hereof.

     

    
      
        
        

      

      
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    (iii)
Seller shall electronically transmit to Greystone all information reasonably
requested by Greystone on each Account purchased hereunder via Greystone's
on-line Internet based communication and account management system (the "Greystone On-Line
System"), by either (1)
directly keying or (2) uploading such information.

     

    (e)           Purchase Price.
Greystone shall purchase each Account for the Face Amount of such Account, less
the applicable Discounts (as defined below), if any, relating thereto (the "Purchase Price").
The "Face
Amount" of an Account shall mean the gross face amount of Seller's
invoice.

     

    (f)           Payment of Purchase
Price. The Purchase Price for an Account purchased hereunder shall be
paid to Seller by Greystone in immediately available funds on the day Greystone
receives the proceeds of collection for such Account, subject to the Reserve
Balance (as defined below) requirements set forth herein; provided, however, no
checks, drafts or other instruments received by Greystone shall constitute final
payment of an Account unless and until such instruments have actually been
collected.

     

    (g)           Discounts. The
Purchase Price for the Accounts originally owing to Eligible Clients (as defined
below) that are purchased hereunder and with respect to which Accounts (i)
Seller shall have requested that Greystone make an Advance against and (ii) that
Greystone shall have actually made an Advance against ("Eligible Client
Accounts") will be reduced by the amount of the discount (the "Discount") paid to
Greystone, such Discount to be deducted from any sums otherwise due Seller. The
base Discount for each Eligible Client Account purchased hereunder shall be
equal to one-half percent (.50%) of the face amount of the invoice for such
Account; provided,
however, an additional 1.0% of the face amount of the subject invoice
shall be added to the base Discount for any Eligible Client Account for which
Seller does not comply with Section 1(d) (iii) of this Agreement. Beginning with
the 31st day from date Greystone purchases the invoice evidencing an Eligible
Client Account, the Purchase Price of such Account will be subject to an
additional Discount of 0.016% for each one (1) day period or part thereof such
Account remains unpaid to Greystone (provided such Account has not become a
Chargedback Account, as defined below). The aggregate minimum Discounts
collected by Greystone for Eligible Client Accounts purchased hereunder shall be
$15,000 per calendar month or a pro-rata portion thereof for any partial months
(the "Minimum Monthly
Discounts").
If the aggregate amount of Discounts collected by Greystone during any
month is less than the Minimum Monthly Discounts, the amount of such deficiency
shall be due and payable by Seller on the first day of the month immediately
following each month in which the total Discounts collected were less than the
Minimum Monthly Discounts. For avoidance of doubt, no Discount shall be deducted
from or payable by Seller with respect to any Account which is not an Eligible
Client Account. Seller must obtain Greystone's prior written consent for any
Account with an invoice issued on terms greater than "Net 30 days". As of the
date hereof, the Accounts with respect to which Greystone has consented to
invoices being issued on terms in excess of 30 days are identified on Exhibit A
attached hereto.

     

    2.
ADVANCES.

     

    (a)    Advances. At Seller's
request, Greystone may, in Greystone's sole discretion, make advances (each an
"Advance") to
Seller prior to the collection of Eligible Accounts (as defined below) purchased
hereunder of up to ninety percent (90)% (the "Advance Rate") of
the Face Amount of such Eligible Account (but not to exceed the amount advanced
on such Eligible Account to be made by Seller to the subject Eligible Client (as
defined below); provided, however,
notwithstanding the foregoing, the aggregate outstanding amount of Funds
Employed (as defined below) shall not exceed the Maximum Funds Employed at any
time. As used herein, the term (the "Maximum Funds Employed")
shall mean $7,000,000; provided, however,
Seller may request that Greystone increase the Maximum Funds Employed in
increments of $1,000,000 up to an amount not to exceed $9,000,000 as long as (i)
no Event of Default has occurred and be continuing at such time, (ii) Seller
pays to Greystone the facility fee for such increase as set forth in Subsection
9(b) below, (iii) such request is delivered in writing to Greystone at least two
(2) Business days prior to the effective date of any such increase, and (iv)
Seller shall have established the new Minimum Equity Advance (as defined below)
applicable to the increase in Net Funds Employed. Seller understands and agrees
that Greystone, at its option, may decrease the Advance Rate for Accounts of any
Eligible Client by one percentage point for each percentage point that such
Client's Dilution Percentage exceeds three percent (3%) during any two (2)
consecutive month period (which are subject to change from time to time by
Greystone in its business judgment) during any two consecutive month period. As
used herein, the term "Dilution Percentage"
with respect to each Eligible Client during any period of measurement, the
quotient
(expressed as a percentage) obtained by dividing (i) the aggregate amount by
which the Accounts of such Client are reduced for a reason other than the
collection of the proceeds of the Accounts during such period, k
(ii) the average amount of gross sales of such Client during such period.
The Dilution Percentage shall be determined by Greystone based on its reviews of
(1) the periodic financial and collateral reports submitted by the Seller to
Greystone, (2) the periodic field examinations of the Seller conducted by
Greystone from time to time, and (3) such other information as Greystone
exercising reasonable business judgment ("Business
Judgment")deems applicable. Seller agrees to maintain at all times an
Equity Advance (as defined below) of at least $1,000,000 (the "Minimum Equity
Advance"); provided, however, the Minimum Equity Advance if the Net Funds
Employed increases to $8,000,000 or $9,000,000 will be $1,250,000 and
$1,500,000, respectively. If at any time Seller fails to maintain the Minimum
Equity Advance and has not provided Greystone within one (I) Business Day thereafter with
evidence satisfactory to Greystone that Seller has cured such failure and now
meets the Minimum Equity Advance, Greystone, at its option, may decrease the
Advance Rate for Accounts of all Eligible Clients by an amount determined by
Greystone in its sole discretion. As used herein, the term "Equity Advance" is
determined at any time by subtracting (i) the aggregate amount advanced by
Greystone hereunder at any time, from (ii) the aggregate amount advanced by
Seller to its Clients at such time.

     

    
      
        
        

      

      
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    (b)   Eligible Accounts. As
used herein, the term, "Eligible Accounts"
shall mean the Accounts purchased hereunder that (i) comply with all
representations, warranties, and covenants contained in Section 5(b) of this
Agreement, (ii) are within the approved credit limits established by Greystone
from time to time for the subject account debtor, (iii) remain outstanding not
more than ninety (90) days from the date of the original invoice for such
Account, (iv) are due from an account debtor whose aggregate amount of accounts
originally owing to an Eligible Client which remain outstanding more than ninety
(90) days from the date of the original invoice date for such accounts does not
exceed twenty-five percent (25%) of the aggregate amount of all Accounts
originally owing by such account debtor to such Eligible Client (except as
otherwise permitted in writing by Greystone in its discretion), (v) are
purchased by Seller from an Eligible Client pursuant to an Eligible Client
Factoring Agreement, (vi) are subject to a perfected, first, priority lien by
Seller on the subject Client, and (vii) are not otherwise deemed ineligible by
Greystone in its Business Judgment.

     

    (c)   Additional
Definitions. The following terms shall have the following meanings
throughout this Agreement:

     

    (i)   "Client" means an
individual or entity that has entered into a Client Factoring Agreement with
Seller.

     

    (ii)   "Client Factoring
Agreement" means a written agreement between Seller and a Client
providing for the purchase of such Client's Accounts by Seller from time to time
and such agreement is not materially different than the form factoring agreement
attached hereto as Exhibit "B" (the "Factoring Agreement
Form")..

     

    (iii)   "Eligible Client"
means a Client (1) whose principal place of business or chief executive offices
are located in the United States of America, (2) who has entered into an
Eligible Client Factoring Agreement with Seller, and (3) who is acceptable to
Greystone in its sole discretion from time to time. The approval of a Client by
Greystone shall not preclude the subsequent withdrawal of such approval if
Greystone deems such withdrawal appropriate in its sole discretion.

     

    (iv)   "Eligible Client Factoring
Agreement" means a Client Factoring Agreement that (1) has not expired or
been terminated, (2) has not been breached by the subject Client, (3)
constitutes a legal, valid and binding obligation of the parties thereto, (4)
does not violate any applicable laws (including, without limitation, any usury
laws), and (5) is not materially different than the Factoring Agreement
Form.

     

    (v)   "Business Day" means
any day that is not a Saturday, Sunday, or other day on which national banks are
authorized or required to close.

     

    (d)   Credit Limits.
Greystone reserves the right to approve the credit of any account debtor prior
to the purchase of any Account owing by such account debtor. Greystone may, but
shall not be obligated to, establish maximum limits upon the balance of Accounts
due from any account debtor which shall be deemed as Eligible Accounts
hereunder. Greystone may withdraw any credit approval for an account debtor at
any time for any Accounts not yet purchased by Greystone hereunder.

     

    (e)   Seller's Right to
Purchase. Notwithstanding Greystone's right (i) to approve Eligible
Clients, Eligible Accounts and credit limits for account debtors or (ii) to make
Advances only against Eligible Accounts,
nothing contained in this Agreement shall limit or affect the right of Seller to
purchase any Account of any of its Clients in accordance with Seller's factoring
agreements with its Clients, in its sole discretion.

     

    
      
        
        

      

      
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    3.
FUNDS EMPLOYED.

     

    (a)           Funds Employed. The
term "Funds
Employed", as used herein, shall mean the aggregate amount of all outstanding Advances,
Discounts, interest, fees, expenses and other indebtedness, liabilities and
obligations owing by Seller to Greystone from time to time under this Agreement.
All Funds Employed owing from time to time shall be due and payable by Seller on
demand by Greystone.

     

    (b)           Interest. The daily
outstanding balance of the Funds Employed shall bear interest at a fluctuating
rate per annum equal to the lesser of (i) an amount equal to the Prime Rate (as
defined below), plus two percent (2.0%) (the "Contract Rate"), or
(ii) the Maximum Rate (as defined below), each change in the interest rate to
become effective without notice to Seller on the effective date of the change in
Prime Rate or the Maximum Rate, as the case may be; provided, however, in
no event shall the Contract Rate be less than five and one-quarter percent
(5.25%). Interest shall be calculated on the basis of actual days elapsed but
computed as if each year consists of 360 days. As used herein, the term "Prime Rate" shall
mean the prime rate as quoted by The Wall Street Journal (Western
Edition). If
such prime rate as so quoted by The Wall Street Journal (Western
Edition) is split between two or more different interest rates, then the
Prime Rate shall be the highest of such interest rates. As used herein, the term
"Maximum Rate"
shall mean, at the time of determination, the maximum rate of interest which,
under applicable law, may then be charged hereunder.

     

    (c)           Proceeds of Accounts.
Checks and all other proceeds received by Greystone in payment of any Account
sold or pledged hereunder shall decrease the amount of the Funds Employed by the
amount of such proceeds as soon as deposited in Seller's lockbox account. No
checks, drafts or other instruments received by Greystone shall constitute final
payment of an Account unless and until such instruments have actually been
collected. If more than one Account purchased hereunder is originally owed to a
Client by an account debtor and the check or other proceeds received from such
account debtor by Greystone are not designated by such account debtor for the
payment of a particular Account or Accounts, Greystone may apply such proceeds
to the Account or Accounts which have the earliest invoice date(s) with respect
to such Client.

     

    4.
RESERVE BALANCE.

     

    (a)          Minimum Reserve
Balance. Seller shall maintain a reserve balance (the "Reserve Balance")
equal to at least the sum of the following (the "Minimum Reserve
Balance"): (i) the greater of (1) ten percent (10%) of the Face Amount of
each such outstanding Eligible Client Account and (2) that portion of the Face
Amount of such Eligible Client Account for which Greystone does not make an
Advance hereunder, and (ii) 100% of the Face Amount of the outstanding Accounts
which are not Eligible Client Accounts (other than Chargedback
Accounts).

     

    (b)          Charges to Reserve
Balance. The following shall be charged to the Reserve Balance and
disclosed on monthly statements: (i) all Advances, Discounts, interest, fees,
expenses and other indebtedness, liabilities and obligations owing by Seller to
Greystone from time to time under this Agreement, and (ii) the amount of all
Chargedback Accounts.

     

    (c)          Chargedback Accounts.
As used herein, the term "Chargedback
Accounts" shall mean the following Accounts purchased by Greystone
hereunder: (i) any Account purchased by Greystone hereunder that remains unpaid
for any reason ninety (90) days after date of the invoice for such Account (or
earlier if in Greystone's sole discretion such Account is determined to be
uncollectible) or that is a Disputed Account (as defined below), (ii) all
Accounts purchased by Greystone hereunder owing by a single account debtor if
more than 25% of the aggregate amount owing under such Accounts remains unpaid
for any reason ninety (90) days after date of the invoice for such Accounts (or
earlier if in Greystone's sole discretion such Accounts are determined to be
uncollectible) or are Disputed Accounts, and (iii) any Account with respect to
which Greystone determines that there has been a breach of any representation or
warranty made herein by Seller with respect to such Account. Any chargeback of a
Chargedback Account does not constitute a reassignment of such Account by
Greystone to Seller. As used herein, the term "Disputed Account"
shall mean any Account subject to any deduction, defense, offset or claim
asserted by the subject account debtor, regardless of whether Seller agrees with
such assertion.

     

    
      
        
        

      

      
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    (d)           Deficiency in Reserve
Balance. In the event the Reserve Balance is ever less than the Minimum
Reserve Balance, Seller shall be obligated to pay Greystone an amount equal to
such deficiency (the "Reserve Deficiency")
within three (3) Business Days after written demand thereof by Greystone (a
"Reserve Deficiency
Demand").

     

    (e)           Statements. All
monthly statements of transactions between Greystone and Seller provided by
Greystone to Seller via the Greystone On-Line System (including, without
limitation, such statements with respect to the Accounts purchased and
outstanding, Advances made and outstanding, the Reserve Balance, and the
interest, fees, Discounts and expenses charged to Seller), absent a manifest
error, shall be deemed final, binding and conclusive unless Greystone is
notified by Seller in writing to the contrary within thirty (30) calendar days
of such statement's availability to Seller, which notice shall be deemed an
objection only to items specifically identified therein.

     

    5. REPRESENTATIONS AND WARRANTIES.


     

    Seller
represents and warrants to Greystone the following:

     

    (a)           Seller. Seller
represents and warrants to Greystone that (i) Seller is duly organized, validly
existing and in good standing under the laws of the state of its organization
and is qualified and authorized to do business and is in good standing in all
states in which failure to so qualify would result in a material adverse effect,
(ii) the execution, delivery and performance of this Agreement by Seller have
been duly authorized and this Agreement constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally), (iii) Seller is conducting its
business in material compliance with applicable laws, (iv) Seller is not a
debtor in any bankruptcy proceedings, insolvent, undergoing composition or
adjustment of debts or unable to make payment of its obligations when due and no
petition in bankruptcy has been filed by or against Seller or any of its
affiliates, (v) Seller's principal place of business, chief executive office,
the location where all records concerning its books of account and contract
rights are kept, and the sole location of any property subject to the security
interest granted herein is its address set forth on the signature page hereon,
and (vi) Seller does business under no trade or assumed names other than TruckerFunds.com.

     

    (b)           Accounts. Seller
hereby represents and warrants to Greystone with respect to each Account sold by
Seller to Greystone hereunder that (i) Seller is the sole owner of and obligee
under such Account and has full power and is duly authorized to sell, assign and
transfer such Account to Greystone hereunder, (ii) such Account is free and
clear of any liens, claims or encumbrances whatsoever created by Seller or, to
the best of Seller's knowledge, any other party, and upon each purchase by
Greystone of such Account, Greystone will own such Account free and clear of any
liens, claims or encumbrances whatsoever created by Seller or, to the best of
Seller's knowledge, any other party, and to the best of Seller's knowledge the
consideration received by Seller from Greystone for such Account is fair and
adequate, (iii) to the best of Seller's knowledge, such Account arises out of a
bona fide sale of conforming goods or the bona fide rendition of services by the
subject Client, all underlying goods have been delivered to the account debtor
or all underlying services have been rendered by such Client, in complete
fulfillment of all of the terms and conditions of such Client's agreement with
the account debtor (except as otherwise agreed in writing by Greystone), and the
account debtor has accepted the goods or services to which such Account relates,
(iv) to the best of Seller's knowledge such Account (or the goods related
thereto) is not subject to or affected by any of the following types of
agreement: consignment, sale on approval, conditional sale, guaranteed sale,
sell or return, bill and hold or similar type of agreement, (v) such Account is
denominated and payable only in United States dollars and constitutes the legal,
valid and binding payment obligation of the account debtor, enforceable in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally), (vi) to the best
of Seller's knowledge, such Account is current and not past due as of the date
of purchase by Greystone, has not been paid by or on behalf of the account
debtor in whole or in part, and is not and to the best of Seller's knowledge,
will not be, subject to any dispute, rescission, set-off, recoupment, defense or
counterclaim by the account debtor, other than returns and allowances provided
in Subsection
8(a) hereof, (vii) to the best of Seller's knowledge as of the date of
purchase by Greystone of such Account, the account debtor with respect to such
Account is located (within the meaning of Section 9-307 of the applicable UCC)
and has its principal executive offices within the United States, (viii) if the
account debtor of such Account is the United States of America, any state or any
department, agency or instrumentality of any of them, the applicable Client has
assigned its right to payment of such Account to Seller pursuant to the
Assignment of Claims Act of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq.
and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances, (ix) such Account is not owing by any owner,
subsidiary or other affiliate of Seller, (x) such Account was purchased by
Seller from the subject Client through a Client Factoring Agreement, and (xi)
with respect to any Client that is in the transportation industry, (1) each invoices for all
Accounts originally owing to such Client shall clearly
state the pro number, date of shipment and delivery, points of origin and
destination, container number, shipper number, accurate assessed rate, weight,
volume or measurement of property transported and description of articles and
number of packages, total charges to be collected including charges for special
services, any advances or other deductions which reduce the amount collectable,
the route of movement indicating the complete name of all carriers
participating, and if the subject Account is an import Account due from a
steamship company, the vessel name and voyage number, and (2) each such Accounts
shall be supported by lawful, effective and complete bills of lading or other
contract of carriage, together with a bona fide, genuine, valid and signed
delivery receipts.

     

    
      
        
        

      

      
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    (c)           Taxes. Seller hereby
represents and warrants to Greystone that (i) Seller has timely filed all
federal, state and local tax reports and returns (including, without limitation,
those with respect to withholding and sales taxes) required by any law or
regulation to be filed by Seller and, except as disclosed by Seller to Greystone
in writing, has paid when due all taxes, assessments, duties and charges levied
or assessed against Seller or any of its assets (including without limitation,
real and personal property taxes, assessments and charges and all franchise,
income, employment, social security benefits, withholding, and sales taxes), and
(ii) except as disclosed by Seller to Greystone in writing, to the best of
Seller's knowledge there is no tax lien notice against Seller presently on file,
judgment entered against Seller or levy on or attachment of its property
outstanding or reasonably anticipated.

     

    (d)           Financial Statements.
Seller represents and warrants to Greystone that each statement of income and
statement of cash flows now or hereafter furnished to Greystone fairly presents,
in all material respects, the results of operations and cash flows of Seller for
the period set forth therein, and that each balance sheet now or hereafter
furnished to Greystone fairly presents, in all material respects, the financial
condition of Seller as of the date set forth therein, all in accordance with
generally accepted accounting principles.

     

    (e)           Clients. Seller
represents and warrants to Greystone that to the best of Seller's knowledge, (i)
each Client is duly organized, validly existing and in good standing under the
laws of the state of its organization and is qualified and authorized to do
business and is in good standing in all states in which such qualification and
good standing are necessary, (ii) the execution, delivery and performance of the
Client Factoring Agreement by each Client have been duly authorized and such
agreement constitutes the legal, valid and binding obligation of such Client,
enforceable against such Client in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally), (iii) each Client is conducting its business in
material compliance with applicable laws, and (iv) no Client is a debtor in any
bankruptcy proceedings, insolvent, undergoing composition or adjustment of debts
or unable to make payment of its obligations when due and no petition in
bankruptcy has been filed by or against any Client or any of its
affiliates.

     

    Each
representation and warranty of Seller contained in this Agreement shall be
deemed to be made at and as of the date hereof and at and as of the date of each
sale of Accounts to Greystone hereunder.

     

    6. COVENANTS. So long as this Agreement
shall be in effect or any of the Obligations shall be outstanding, Seller
agrees and covenants that, unless Greystone shall otherwise consent in
writing:

     

    (a)          Books and Records.
Seller will maintain its books and records in accordance with generally accepted
accounting principles, applied on a consistent basis, at its chief executive
office set forth on the signature page hereof.

     

    (b)          No Other Liens.
Seller will not execute any security agreement or financing statement covering
any of the Accounts purchased hereunder or any of the Collateral, other than (i)
liens and security interests securing indebtedness owing to Greystone, (ii)
liens on any item of equipment acquired by the Seller prior to or after the date
of this Agreement, provided that (1) each such lien
shall attach only to the equipment acquired, and (2) the indebtedness secured by
such lien is only the cost of acquiring such equipment by Seller, (iii) liens
and security interest existing as of the date hereof which have been disclosed
to and approved by Greystone in writing, (iv) liens which are subordinated to
Greystone pursuant to a subordination agreement containing subordination and
standstill provisions satisfactory to Greystone using its Business Judgment, and
(v) security agreements and UCC financing statements granting and perfecting
Seller's interest in Accounts it purchases from its Clients.

     

    (c)          Notice of Significant
Events. Seller agrees to notify Greystone in writing within one (1)
Business Day after any officer or employee of Seller becomes aware of the
occurrence of any of the following: (i) any claim or assertion by the account
debtor with respect to any Account sold to Greystone hereunder which would cause
such Account to be a Disputed
Account; (ii) the filing of any federal or state tax lien or the issuance of a
notice of material levy, assessment, injunction or attachment against any
Accounts or other material assets of Client; (iii) the cessation of the business
of any Client or the calling of a meeting of the creditors of any Client; (iv)
the sale, pledge or other disposition of any of the ownership interests in any
Client by any of its owners; (v) any change in the senior management of any
Client; (vi) the commencement of any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal or state
law by or against any Client or any account debtor with respect to any Account
sold to Greystone hereunder; (vii) the termination or notice of termination of
financing by Seller or any Client under any Client Factoring Agreement; or
(viii) any written notice of default or acceleration by Seller to any
Client.

     

    
      
        
        

      

      
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    (d)           Field Examinations.
Seller agrees to permit Greystone to visit Seller's business locations and to
examine, assess and make and take away copies of Seller's books and records at
all reasonable times after at least three Business Days prior notice to Seller
(no such prior notice being required after and during the occurrence of an Event
of Default). Seller also agrees to pay all costs associated with up to two (2)
of such field examinations each calendar year (such costs currently being $750
per day, per person, plus out-of-pocket expenses); provided, however,
(i) each such field exam shall be completed in no more than two (2) days, and
(ii) if an Event of Default has occurred hereunder, Seller will be obligated to
pay all of the costs associated with all field examinations conducted by
Greystone until such Event of Default has been waived in writing by
Greystone.

     

    (e)           Notice of Changes.
Seller shall notify Greystone in writing 10 days prior to any of the following
changes with respect to Seller and within 10 days after any officer or employee
of Seller becomes aware of any of the following with respect to a Client: (i)
the name of Seller or any Client or any of the names under which either is
conducting business; (ii) the address of Seller's chief executive office or
principal place of business as described on the signature page hereof or
Client's executive office or principal place of business as described on the
Client Factoring Agreement;

     

    (iii) the
jurisdiction of organization of Seller or any Client or the type of entity
through which either conducts business;

    (iv) any
proposed change in the location of the books and records of Seller or any
Client; or (v) any other material change in the business or affairs of Seller or
any Client. Seller shall also notify Greystone in writing 30 days prior to
Seller engaging any consultants or other independent contractors who will have
significant input on the business strategy of Seller or who will manage the
day-to-day business of Seller.

     

    (1)   Taxes. Seller shall
pay and discharge when due all assessments, taxes, governmental charges and
levies, of every kind and nature, imposed upon Seller or its properties, income
or profits (including without limitation, real and personal property taxes,
assessments and charges and all franchise, income, employment, social security
benefits, withholding, and sales taxes), prior to the date penalties would
attach, and all lawful claims that, if unpaid, might become a lien or charge
upon any of Seller's property, income or profits. Seller agrees to immediately
notify Greystone, and provide Greystone copies, of the filing of or notice of
intent to file any federal, state or local tax lien, or if any agreement is made
by Seller with a taxing authority with respect to the payment of past due taxes,
Seller shall promptly deliver to Greystone a copy of such agreement. Seller
agrees to provide Greystone with copies of its payroll and sales tax returns or
reports quarterly after requested by Greystone, together with evidence of the
payment of the related taxes.

     

    (g)          Liquidations;
Mergers. Seller shall not merge or consolidate with or into any other
entity or liquidate, dissolve or otherwise cease conducting business; provided,
however, Seller shall be permitted to merger or consolidate with any other
entity as long as (i) Seller is the surviving entity, (ii) Greystone's receives
at least 15 days written notice prior to any such merger or consolidation, (ii)
immediately prior to and after any such merger or consolidation no Event of
Default exists, (iii) Seller delivers to Greystone all documents and financial
information regarding the perspective transaction as is reasonably requested by
Greystone, and (iv) Greystone consents in writing to such merger or
consolidation using its Business Judgment.. Seller shall not consent to any
Client merging or consolidating with or into any other entity.

     

    (h)          Sale of Assets.
Seller shall not sell, transfer or otherwise dispose of all or any material
portion of its assets, other than the sale of inventory or equipment in the
ordinary course of its business and replacement of obsolete equipment. Seller
shall not consent to the sale, transfer or other disposition by any Client of
all or any material portion of such Client's assets, other than the sale of
inventory or equipment in the ordinary course of its business.

     

    (i)   Aging Reports. Upon
Greystone's demand from time to time, Seller agrees to deliver to Greystone
within ten (10) days after each month, a detailed Accounts aging report and a
detailed accounts payable aging report, each stated as of the last Business Day
of the preceding month and in form and detail satisfactory to
Greystone.

     

    
      
        
        

      

      
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    (j)           Financial Statements.
Seller agrees to furnish to Greystone (i) within ninety (90) days after the last
day of each fiscal year of Seller a consolidated statement of income and a
consolidated statement of cash flows of Seller for such fiscal year, and a
consolidated balance sheet of Seller as of the last day of such fiscal year, in
each case prepared by the Seller, (ii) within twenty (20) days after the last
day of each calendar month, a consolidated statement of income and a
consolidated statement of cash flows of Seller for such month, and a
consolidated balance sheet of Seller as of the last day of such month, in each
case prepared by the Seller, (iii) within ninety (90) days after the last day of
each fiscal year of Anchor Funding Services, Inc. (the "Parent") a
consolidated and consolidating statement of income and a consolidated statement
of cash flows of Parent for such fiscal year, and a consolidated and
consolidating balance sheet of Parent as of the last day of such fiscal year, in
each audited by an independent certified public accounting firm acceptable to
Greystone, together with the notes to each such financial statement and a copy
of any report or letter to management delivered to Seller by such accounting
firm in connection therewith, and (iv) within twenty (20) days after the last
day of each calendar month, a consolidated and consolidating statement of income
and a consolidated and consolidating statement of cash flows of Parent for such
month, and a consolidated and consolidating balance sheet of Parent as of the
last day of such month, in each case prepared by the Parent. Seller also agrees
to promptly furnish to Greystone, such additional financial and business
non-confidential information concerning Seller, Parent and any Client as
Greystone may reasonably request from time to time.

     

    (k)   Prior Consent. Seller
agrees not to do any of the following without Greystone's prior written consent:
(i) amend in any material respect any Eligible Client Factoring Documents; (ii)
release any collateral or any guarantors supporting any Eligible Client
Factoring Agreement; or (iii) permit any Eligible Client to subordinate any debt
or liens to any other party.

     

    (I)    Other Notices. Seller
agrees to notify Greystone in writing within one (1) Business Day after any
officer or employee of Seller becomes aware of the occurrence of (i) the
termination or receipt of notice of termination by Client of any Client
Factoring Agreement, (ii) any material default under any Client Factoring
Agreement, (iii) the bankruptcy or cessation of business of any Client, and (iv)
any of the following with respect to any non-Eligible Client: (1) any material
amendment of any Client Factoring Agreement or any other material Client
Factoring Documents; (2) release any collateral or any guarantors supporting any
Client Factoring Agreement; or (iii) permit any such Client to subordinate any
debt or liens to any other party.

     

    (m) Seller Reporting.
Seller agrees to provide Greystone at all times with (i) "Full Read" access to
Seller's FactorSoft system, and (b) access to Seller's server to view all
invoices and related back-up documents. Seller agrees to provide Greystone with
a copy of any field examination of any Eligible Client conducted by Seller
promptly after the completion thereof.

     

    7. RIGHTS OF
GREYSTONE.

     

    (a)          Notification of Account
Debtors. Greystone shall have the right at any time, either before or
after the occurrence of an Event of Default and without notice to Seller, to
notify any or all account debtors of the sale or pledge of the Accounts to
Greystone and to verify the amounts owing on such Accounts, to direct such
account debtors to make payment of all amounts due or to become due to Seller
directly to Greystone, to enforce collection of any Accounts purchased or
pledged hereunder and to adjust, settle or compromise the amount or payment
thereof.

     

    (b)          Collections. All
payments and collections received by Greystone on Accounts purchased hereunder
shall belong to Greystone as owner of the Accounts. Seller authorizes Greystone
to collect, sue for and give releases for and in the name of Seller or Greystone
in Greystone's sole discretion, with respect to all amounts due on Accounts sold
or pledged to Greystone hereunder. Seller specifically authorizes Greystone to
endorse, in the name of Seller, all checks, drafts, trade acceptances or other
forms of payment tendered by Account Debtors in payment of Accounts sold or
pledged to Greystone hereunder and made payable to Seller. Greystone shall have
no liability to Seller for any mistake in the application of any payment
received with respect to any Account, IT BEING THE SPECIFIC INTENT OF THE
PARTIES HERETO THAT GREYSTONE SHALL HAVE NO LIABILITY HEREUNDER FOR ITS OWN
NEGLIGENCE, except for its own gross negligence and willful misconduct.
Seller hereby waives notice of nonpayment of any Account sold to Greystone
hereunder as well as any and all other notices with respect to such Accounts,
demands or presentations for payment and agrees that Greystone may, without
notice to or the consent of Seller, extend, renew or modify from time to time
the payment of, or vary or reduce the amount payable under or compromise any of
the terms of, any Account purchased by Greystone hereunder. Seller further
authorizes Greystone (or its designee) to open and remove
the contents of any post office box of Seller or Greystone (or its designee)
which Greystone believes contains mail relating to Accounts, and in connection
therewith or otherwise, to receive, open and dispose of mail addressed to Seller
which Greystone believes may relate to Accounts, and in order to further assure
receipt by Greystone (or its designee) of mail relating to such Accounts, to
notify other parties including customers and postal authorities to change the
address for delivery of such mail addressed to Seller to such address as
Greystone may designate. Greystone agrees to deliver the contents of any such
mail which does not relate to the Accounts to Seller (or, at the election of
Greystone, to notify Seller of the address where Seller may take possession of
such contents; provided, if Seller does not take possession of such contents
within thirty (30) days after notice from Greystone to take possession thereof,
Greystone may dispose of such contents without any liability to
Seller).

     

    
      
        
        

      

      
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    (c)           Right to Perform. If
Seller fails to perform any agreement or obligation provided herein (including
without limitation, the payment and discharge of any taxes, liens or
encumbrances affecting the Collateral), Greystone may itself perform, or cause
performance of such agreement or obligation, and the expenses of Greystone
incurred in connection therewith shall be a part of the Obligations, secured by
the Collateral and payable by Seller on demand.

     

    (d)           Right of Setoff.
Greystone shall have the right at any and all times and in any and all
proceedings and instances (including, but not limited to, bankruptcy,
reorganization, receivership or insolvency of Seller), without prior notice to
Seller, to setoff any amounts which Greystone may owe Seller against the
outstanding Obligations.

     

    (e)           Power of Attorney.
Upon and during the continuance of an Event of Default, Seller hereby
irrevocably appoints Greystone (and any employee, agent or other person
designated by Greystone, any of whom may act without joinder of the others) as
Seller's attorneys-in-fact in Seller's name, place and stead, to take all
actions, execute and deliver all notices, negotiate such instruments and other
documents, as may be necessary or advisable to permit Greystone (or its
designee) to take any and all of the actions described in this Agreement or to
carry out the purpose and intent thereof, as fully and for all intents and
purposes as Seller could itself do, and hereby ratifies and confirms all that
said attorneys-in­fact may do or cause to be done by virtue hereof,
including, without limitation (i) to demand, collect, sue for, recover, receive
and give acquittance and receipts for moneys due and to become due under the
accounts purchased or pledged hereunder or the other Collateral, and (ii) to
file any claims or take any action or institute any proceedings which Greystone
may deem necessary or appropriate for the collection and/or preservation of the
Accounts purchased hereunder and the Collateral or otherwise to enforce the
rights of Greystone with respect to the Accounts purchased hereunder and the
Collateral. This power of attorney is irrevocable and deemed coupled with an
interest.

     

    8.
SERVICING AND COLLECTION OF ACCOUNTS.

     

    (a)          Appointment of Servicing
Agent. Greystone hereby appoints Seller as servicing agent for Greystone
for the purpose of expediting the collection of Accounts purchased by Greystone
hereunder. Seller, as servicing agent, agrees to maintain an active, on-going
and regular dialogue with each delinquent account debtor. Seller further agrees,
as servicing agent, to utilize all powers, influences, rights and to take every
action within its control in accordance with its customary practices and
applicable law to expedite the collection of the Accounts purchased by Greystone
hereunder and direct such payments exclusively to Greystone. Seller, as
servicing agent, agrees to (i) promptly forward to Greystone a copy of all
credit memoranda or otherwise notify Greystone in writing upon Seller's
knowledge of an adjustment an Account upon the subject Client accepting returns
or granting allowances in the ordinary course of business, (ii) to promptly send
duplicate copies thereof to Greystone, and (iii) settle any Disputed Account in
the ordinary course of business as long as (I) the amount of such settlement
does not exceed the lesser of $2,500 or five percent (5%) of the Face Amount of
such Disputed Account without first obtaining Greystone's written consent to
such settlement, and (2) such settlement occurs after notifying Greystone in
writing of such settlement. After the occurrence of an Event of
Default, Greystone reserves the right to terminate Seller as Greystone's
servicing agent at any time with or without notice to Seller.

     

    (b)          Protection of Greystone's
Rights. Seller, as servicer, shall take no action which, nor omit to take
any action the omission of which, would substantially impair the rights of
Greystone in any Accounts purchased hereunder by Greystone.

     

    (c)          Proceeds or Returned Goods
Received by Seller. With respect to all accounts purchased by or pledged
to Greystone from Seller hereunder, Seller shall direct all account debtors for
such accounts to remit all payments pertaining to such accounts directly to the
Authorized Remittance Address. All amounts and proceeds (including instruments
and writings) received by Seller at any time in respect of any Accounts
purchased hereafter shall be received in trust for the benefit
of Greystone hereunder, shall be segregated from other funds of Seller and shall
within three (3) Business Days after receipt by Seller (i) be paid over to
Greystone in the same form as so received (with any necessary endorsement) to be
applied in the same manner as payments received directly by Greystone, or (ii)
be deposited at the Remittance Address. If any goods relating to an Account
purchased by Greystone hereunder shall be returned to or repossessed by Seller
or a Client, Seller shall give prompt notice thereof to Greystone after any
officer or employees of Seller becomes aware thereof; and Seller or Client (as
the case may be) shall hold such goods in trust for Greystone, separate and
apart from their own property, and such goods shall be owned solely by Greystone
and be subject to Greystone's direction and control. Seller or the applicable
Client shall properly store and protect such goods and cooperate fully with
Greystone in any subsequent disposition thereof for the benefit of Greystone.
The provisions of this Subsection shall survive the termination of this
Agreement.

     

    
      
        
        

      

      
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    9.
FEES.

     

    (a)           Facility Fee. Seller
agrees to pay Greystone a facility fee equal to .50% of the Maximum Funds
Employed concurrently with the execution hereof. As long as no Event of Default
has occurred and is continuing, Seller agrees to consider Seller's requests for
increases in the Maximum Funds Employed in increments of $1,000,000, up to an
amount not to exceed $9,000,000. Seller agrees to pay Greystone a facility fee
equal to .50% of any increase in the Maximum Funds Employed, payable
concurrently with any such increase.

     

    (b)           Processing Fees.
Seller agrees to pay Greystone the following processing fees: (i) $1.25 handling
fee for each Account/invoice mailed by Greystone; (ii) Greystone's cost for UCC,
tax lien and other public record searches (after first determining that any
searches made available by Seller are unacceptable to Greystone in its Business
Judgment; (iii) Greystone's cost for overnight or other expedited delivery
service; (iv) $25 per wire transfer (ACH transfer is free); and (v) $10 per
check.

     

    (c)           Early Termination
Fee. In connection with any Early Termination (as defined below), Seller
agrees to pay Greystone a fee ("Early Termination
Fee") equal to the greater of (i) the Minimum Monthly Discounts
multiplied by the number of calendar months (or part thereof) remaining from the
termination date until the next Anniversary Date (as defined below), or (ii) the
average monthly total Discounts and interest due to Greystone during the six (6)
calendar months (or part thereof if less than six (6) calendar months has
elapsed from the effective date of this Agreement through the termination date)
immediately preceding the termination date, multiplied by the number of calendar
months (or part thereof) remaining from the termination date until the next
Anniversary Date.

     

    (d)           Same Day Funding Fee.
In the event Greystone, in its sole discretion, complies with a request from
Seller to make an Advance on the same day that Greystone receives Seller's
written request for an Advance, Seller agrees to pay Greystone a fee equal to
one percent (1%) of the face amount of the Eligible Accounts related to such
Advance.

     

    (e)           Reserve Deficiency
Fee. Unless a Reserve Deficiency was created with the prior written
consent of Greystone, in the event Seller fails to pay the Reserve Deficiency
within three Business Days after a Reserve Deficiency Demand, Seller shall be
obligated to pay Greystone a fee equal to the greater of $100 or ten percent
(10%) of such Reserve Deficiency.

     

    10.
COSTS, EXPENSES AND TAXES.

     

    (a)           Attorneys' Fees.
Seller agrees to pay or reimburse Greystone upon demand for all reasonable
attorneys' fees, court costs and all other costs and expenses incurred by
Greystone after an Event of Default has occurred and is continuing (whether or
not litigation is commenced or judgment issued, and if litigation is commenced
whether at trial or any appellate level) in connection with the enforcement of
this Agreement, protecting or enforcing Greystone's ownership interest in the
Accounts or its security interest in the Collateral, in collecting the Accounts
or in the representation of Greystone in connection with any bankruptcy case or
insolvency proceeding involving Seller, the Collateral or any account debtor of
an Account. Such sums shall be a part of the Obligations, secured by the
Collateral and payable by Seller to Greystone on demand.

     

    (b)           Taxes. All taxes and
governmental charges of any kind imposed with respect to the sale of goods or
rendering of services relating to the Accounts shall remain for the account of,
and be paid by, the subject Client.

     

    (c)          UCC Filing Costs. All
costs with respect to the filing of UCC financing statements, as well as all
amendments, continuations and terminations related to any UCC financing
statements, concerning Seller, any Client and their respective
assets.

     

    11.
COLLATERAL.

     

    (a)           Grant of Security
Interest. In order to secure the payment of all Obligations, Seller
hereby grants to Greystone a security interest in and lien upon all of Seller's
right, title and interest in and to (i) all present and future accounts,
contracts, contract rights, chattel paper, documents, instruments, drafts,
acceptances, deposit accounts and general intangibles of Seller (including,
without limitation, the Reserve Balance), all money and other funds of Seller
which may now or hereafter come into the possession, custody or control of
Greystone and in any case where an account arises from the sale of goods, all of
Seller's and the subject Client's right, interest and interest in such goods
(including, without limitation, all returned or repossessed goods and all of
Seller's and the subject Client's rights of stoppage in transit, replevin and
reclamation as an unpaid vendor), and all Client Factoring Documents and all of
Seller's rights thereunder (including, without limitation, all reserve balances
of the Clients); (ii) all inventory now or hereafter owned by Seller, and all
accessions thereto and products thereof and documents therefore (iii) all
equipment now or hereafter owned by Seller, (iv) all investment property now or
hereafter owned by Seller, (v) all books and records pertaining to the
foregoing, including but not limited to computer programs, data, certificates,
records, circulation lists, subscriber lists, advertiser lists, supplier lists,
customer lists, customer and supplier contracts, sales orders, and purchasing
records, and (vi) all proceeds of the foregoing, including without limitation,
all insurance payable by reason of loss or damage to the foregoing
(collectively, the "Collateral"). As
used herein, the term "Obligations" means
all Advances, Discounts, interest, fees, expenses and other indebtedness,
liabilities and obligations owing now or hereafter by Seller to (1) Greystone,
whether under this Agreement or otherwise (including any indebtedness for goods
and services purchased by Seller from any party whose accounts are factored or
otherwise financed by Greystone) , or (2) any other person or entity owned or
controlled by, or which owns or controls or is under common control or is
otherwise affiliated with Greystone.

     

    
      
        
        

      

      
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    (b)           UCC Filings. Seller
hereby authorizes Greystone to file in any jurisdiction Greystone may deem
appropriate, with or without the signature of Seller, one or more financing
statements, and all amendments and continuations with respect thereto, relating
to the Collateral and hereby ratifies, confirms and consents to any such filings
made by Greystone prior to the date hereof. Seller agrees to execute such other
documents as Greystone may reasonably require to effectuate Seller's grant of a
perfected lien in the Collateral to Greystone.

     

    (c)           Client Factoring
Documentation. Seller agrees to provide Greystone promptly after
Greystone's demand true and correct copies of all Client Factoring Agreements
and all related agreements and instruments (including, without limitation, all
guaranties, security documents, UCC financing statements, and all amendments
thereto) (collectively, the "Client Factoring
Documents").

     

    12. TERMINATION.

     

    (a)          Termination. Seller
may terminate this Agreement for any reason whatsoever, but only as of an
Anniversary Date (as defined below) and then only by giving Greystone at least
sixty (60) days prior written notice of the effective date of such termination;
provided,
however, Seller may terminate this Agreement at any time with five (5)
days prior written notice to Greystone (an "Early Termination"),
subject to the payment of the Early Termination Fee. If Seller does not submit
for sale any Accounts to Greystone for a continuous thirty (30) day period,
Greystone may deem such action as notice of an Early Termination by Seller. In
connection with any termination of this Agreement by Seller, Greystone may
require Seller to execute a general release of any liability for the benefit of
Greystone and any of its owners, directors, officers, employees and agents, in a
form satisfactory to Greystone. Greystone may, at Greystone's election,
terminate this Agreement (i) for any reason whatsoever at any time by giving
Seller written notice stating a termination date not less than thirty (30) days
from the date such notice is given, or (ii) immediately at any time without
prior notice to Seller upon and after the occurrence of an Event of Default (as
defined below). This Agreement shall continue uninterrupted unless terminated as
herein provided. As used herein, the term "Anniversary Date"
shall mean the last day of the month occurring twelve (12) months from the date
hereof or the same date in any year thereafter.

     

    (b)          Effect of
Termination. Unless sooner demanded, all Obligations (direct and
contingent) shall become due and payable upon termination of this Agreement;
provided,
however, Greystone may withhold any balances owing to Seller unless
Greystone is supplied with an indemnity satisfactory to Greystone to cover the
following with respect to proceeds received by Greystone through the date of
termination: (i) all returned checks; and (ii) all preference claims for which
Seller or Greystone received written notice of prior to the date of termination,
Termination of this Agreement shall not affect the rights and obligations of the
parties hereunder with respect to transactions occurring on or prior to the date
of such termination, and this Agreement shall continue to govern the rights and
obligations of the parties hereto with respect to Accounts purchased by
Greystone from Seller on or prior to the date of such termination. All security
interests granted or contemplated by this Agreement shall survive the
termination of this Agreement until all Obligations have been paid to Greystone
and Seller has performed all its obligations to Greystone under Section 12(a)
above.

     

    13.
EVENTS OF DEFAULT AND REMEDIES.

     

    (a)           Events of Default. An
"Event of
Default" shall be deemed to have occurred under this Agreement upon: (i)
Seller's failure to pay any Obligation when due, (ii) any representation or
warranty made by Seller hereunder shall be false or misleading in any respect
when made or deemed made and, with respect to the representations contained in
Section 5(b), Seller (1) shall not have notified Greystone of such
misrepresentation within one (1) Business Day after any employee or officer of
Seller becomes aware of such misrepresentation, and (2) shall not have cured any
Reserve Deficiency or any deficiency in the Minimum Equity Advance caused by
such misrepresentation within three (3) Business Days after any employee or
officer of Seller becomes aware of such misrepresentation, (iii) Seller's breach
of any covenant contained in Sections 6(c), 6(e) or 6(1), which are not cured
within five (5) Business Days of its occurrence , (iv) Seller's breach of any
covenant in Sections 6(i) or 6(j) which are not cured within five (5) Business
Days after Seller's receipt of written notice from Greystone, (v) Seller's
breach of any covenant contained in Sections 5(a)(iii) which are not cured
within five (5) Business Days after any employee or officer of Seller becomes
aware of such breach, (vi) Seller's breach of any covenant or agreement
contained herein (other than those set forth in clause (iii), (iv) and (v)
above), (vii) the filing of any federal or state tax lien or the issuance of a
notice of levy, assessment, injunction or attachment against any assets of
Seller which is not cured to Greystone's satisfaction within thirty (30) days
after any such filing or issuance (Seller acknowledging that Greystone, at its
option, may cease Advances during such cure period), (viii) the cessation of the
business of Seller or the calling of a meeting of the creditors of Seller; (ix)
Parent fails to own at least 80% of the ownership interests of Seller or the
pledge of any of the ownership interests of Seller; (x) Brad Bernstein ceases to
be the President and Managing Member of Seller and a replacement officer with
equivalent responsibility is not hired within 30 Business Days who is acceptable
to Greystone using its Business Judgment; (xi) the commencement by or against
Seller of any bankruptcy, insolvency, arrangement, reorganization, receivership
or similar proceedings under any federal or state law; or (xii) a material
adverse change shall have occurred in the financial condition or operations of
Seller.

     

    
      
        
        

      

      
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    (b)           Remedies. Upon and
after the occurrence of an Event of Default and after the acceleration of the
Obligations (whether by Greystone or by operation of law), this Agreement may be
terminated by Greystone immediately at any time, without notice to Seller, and
all Obligations shall, at Greystone's option and without notice or demand of any
kind (all of which Seller hereby expressly waives), become due and payable
immediately. Further, Greystone may remove, from any premises where the same may
be located, any and all documents, instruments, books, records and files (and
any receptacles or cabinets containing the same) pertaining to the Accounts,
Client Factoring Documents, or other Collateral and/or Greystone may use (at
Seller's expense) such of Seller's personnel, supplies and space at Seller's
place of business or elsewhere, as may be necessary to properly administer and
enforce Greystone rights in the Accounts and any other Collateral hereunder, and
to facilitate the collection thereof and realization thereon. Greystone may also
exercise al rights and remedies under the Client Factoring Agreements. Greystone
may sell, assign or otherwise dispose of the Accounts and any returned,
reclaimed or repossessed inventory, goods or other property relating thereto,
whether held by Seller or by Greystone, at public or private sale, for cash, on
credit or otherwise, at such price and on such terms as Greystone in its sole
option and discretion may determine, and Greystone may bid or become purchasers
at any such sale, or acquire an interest in or dispose of said property. With
respect to any other Collateral, Greystone shall have all of the rights and
remedies of a secured party under Article 9 of the Uniform Commercial Code. If
notice of intended disposition of any Collateral is required by law, it is
agreed that ten (10) days notice shall constitute reasonable notice. The net
cash proceeds resulting from the exercise of any of the foregoing rights, after
deducting all charges, costs and expenses (including reasonable attorneys' fees)
shall be applied by Greystone to the payment or satisfaction of the Obligations,
whether due or to become due, in such order as Greystone may elect, and Seller
shall remain liable to Greystone for any deficiencies. Upon and after the
occurrence of an Event of Default and after the acceleration of the Obligations
(whether by Greystone or by operation of law), (i) Greystone is hereby
authorized by Seller to notify postal authorities at any time to change the
address for delivery of mail to Seller to such address as Greystone may
designate, and to receive and open mail addressed to Seller to enable Greystone
to carry out its rights under this Agreement, (ii) Greystone is authorized (at
Greystone's option) to date and deliver the letter attached hereto as Exhibit
"C" to the account debtors of Seller's Clients, and (iii) Greystone is
authorized to exercise all rights and assume all obligations of Seller under all
Client Factoring Documents.

     

    If
Greystone terminates this Agreement as a result of an Early Termination Default
(as defined below) pursuant to Section 13(b) of this Agreement, Greystone may
deem such action as an Early Termination by Seller which will require the Seller
to pay Greystone the Early Termination Fee. As used herein, the term "Early Termination Default"
shall mean (i) Seller's breach of any covenant or agreement
contained in Subsections 6(b), 6(d), 6(g) with respect to Seller, 6(h) with
respect to Seller, 8(b) and 8(c).

     

    (c)    Default Rate. Upon
the occurrence and during the continuation of an Event of Default, the Contract
Rate in effect at such time shall be increased by 5.0% per annum (the "Default
Rate").

     

    


    
      
        
        

      

      
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    14.
MISCELLANEOUS.

     

    (a)           Cumulative Rights.
All rights, remedies and powers granted to Greystone in this Agreement, or in
any other instrument or agreement given by Seller to Greystone or otherwise
available to Greystone in equity or at law, are cumulative and may be exercised
singularly or concurrently with such other rights as Greystone may have.
Greystone shall not be deemed to have waived any of its rights or remedies
unless the waiver is in writing and signed by Greystone. A waiver by Greystone
of a right or remedy under this Agreement on one occasion is not a waiver of the
right or remedy on any subsequent occasion.

     

    (b)           Notices. Any notice
or communication with respect to this Agreement shall be in writing sent by (i)
personal delivery; (ii) expedited delivery service with proof of delivery; (iii)
United States mail, postage prepaid, registered or certified mail, or (iv)
telecopy (with receipt thereof confirmed by telecopier), addressed to each party
thereto at its address set forth below their signature hereon or to such other
address or to the attention of such other person as hereafter shall be
designated in writing by the applicable party sent in accordance herewith. Any
such notice or communication shall be deemed to have been given either at the
time of personal delivery or, in the case of delivery service or mail, as of the
date of first attempted delivery at the address and in the manner provided
herein, or in the case of telecopy, upon receipt.

     

    (c)           Tombstone. Seller
hereby agrees that Greystone may publicize the transaction contemplated by this
Agreement in newspapers, trade and similar publications including without
limitation, the publication of a "tombstone", all in a manner reasonably
acceptable to Seller.

     

    (d)           Severability. Each
and every provision, condition, covenant and representation contained in this
Agreement is, and shall be construed, to be a separate and independent covenant
and agreement. If any term or provision of this Agreement shall to any extent be
invalid or unenforceable, the remainder of the Agreement shall not be affected
thereby.

     

    (e)           Indemnity. Seller
hereby indemnifies and agrees to hold Greystone and its officers, directors,
owners, employees, attorneys, representatives, agents, affiliates and successors
and assigns (collectively, the "Indemnified Persons") harmless
against (i) any breach by Seller of any representation, warranty, covenant or
agreement of Seller contained in this Agreement, (ii) any claim resulting from,
in connection with or in any way relating to or arising out of the purchase of
any Account hereunder, (iii) any claims or damages arising out of the
manufacture, sale, possession or use of, or otherwise relating to, goods, or the
performance of services, associated with or relating to accounts or related
rights purchased (or with respect to which a security interest is granted)
hereunder and (iv) any claim from any Client (collectively, the "Indemnified
Claims"). THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH
INDEMNIFIED CLAIMS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART,
UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN
PART, 13Y ANY NEGLIGENT ACT OR OMISSION OF ANY INDEMNIFIED PERSON, but shall
exclude any of the foregoing resulting from such Indemnified Person's gross
negligence or willful misconduct. If Seller or any third party ever alleges any
gross negligence or willful misconduct by any Indemnified Person, the
indemnification provided for in this Section shall nonetheless be paid upon
demand, subject to later adjustment or reimbursement, until such time as a court
of competent jurisdiction enters a final judgment as to the existence, extent
and affect of the alleged gross negligence or willful misconduct. Upon
notification and demand, Seller agrees to provide a defense to any Indemnified
Claim and to pay all costs and expenses of counsel selected by any Indemnified
Person in respect thereof. Any Indemnified
Person against whom any Indemnified Claim may be asserted reserves the right to
settle or compromise any such Indemnified Claim as such Indemnified Person may
determine in its sole discretion, and the obligations of such Indemnified
Person, if any, pursuant to any such settlement or compromise shall be deemed
included within the Indemnified Claims. The provisions of this Section shall
survive the termination of this Agreement.

     

    
      
        
        

      

      
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    (1)    Non-Solicitation;
Confidentiality. Greystone agrees that, without Seller's prior written
consent, Greystone will not, for a period of two (2) years after the Termination
Date (i) solicit the employment of any employee of Seller, or (i) solicit,
directly or indirectly, through Greystone or any of its affiliates, the purchase
of any Account of any then- existing Client. As used in this paragraph,
"solicit" shall not be deemed to include general advertising or general
solicitations that are not targeted or directed specifically to employees of
Seller. Notwithstanding the foregoing, the following shall not be deemed to be a
violation of the provisions of this subsection: (i) if a Client reviews any
marketing materials not specifically designed for or sent to such Client; (ii)
if a Client reviews Greystone's website; or (iii) if the initial contact between
Client and Greystone was initiated by (1) the Client or an agent representing
such Client, or (2) one of Greystone's referral sources (as long as such
referral source has not received the name of such Client from Greystone), as
long as Greystone does not enter into a financing agreement with such Client
during the two(2) year restrictive period. In connection with this Agreement,
Seller may furnish to Greystone information, documents and materials pertaining
to the operations, financial condition and projections of the Seller, its
Clients and other aspects of the business of the Seller (the "Confidential
Information"), Greystone acknowledges and agrees that the Confidential
Information is confidential and proprietary in nature and that the Seller
desires and requires that the Confidential Information remain confidential and
proprietary. Greystone agrees to maintain the confidentiality of the
Confidential Information and agrees to the terms and conditions set forth in the
Agreement, as follows:

     

    
      	
              1.  

            	
              The
      Confidential Information will be kept confidential and shall not be
      disclosed by Greystone in any manner whatsoever, in whole or in part,
      except (i) as required by law (including, without limitation, pursuant to
      interrogatory requests, subpoena or other process of law), (ii) as may be
      required to be disclosed to any state or federal regulatory agency
      responsible for the supervision and/or regulation of Greystone, or (iii)
      to Greystone's lender or possible participants as long as any such party
      agrees in writing not to disclose the Confidential Information pursuant to
      the same terms hereof and the possible participant or Greystone's lender
      is not a competitor of Seller, and (iv) with the prior written consent of
      Seller. Moreover, Greystone agrees that the Confidential Information will
      only be used for the purposes related to this
  Agreement.

            


    

     

    
      	
              2.  

            	
              Paragraph
      1 above shall not apply to any Confidential Information which (i) is or
      becomes generally available to the public other than as a result of a
      disclosure by Greystone, or (ii) has or becomes available to Greystone on
      a non-confidential basis from a source which is not prohibited from
      disclosing such information to Greystone by a legal, contractual or
      fiduciary obligation.

            


    

     

    (g)          Benefits; Assignment.
All grants, covenants and agreements contained in this Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided,
however, Seller may not delegate or assign any of its duties or
obligations under this Agreement without the prior written consent of Greystone
and any assignment without such consent shall be void. Greystone reserves the
right to pledge, sell or assign its rights and obligations under this Agreement
(including, without limitation, any Accounts purchased hereunder) in whole or in
part to any person or entity. Without limiting the generality of the foregoing,
Greystone may from time to time grant participations in all or any part of the
Obligations to any person or entity on such terms and conditions as may be
determined by Greystone in its sole and absolute discretion (subject to Section
14(f) above), provided that the grant of such participation shall not relieve
Greystone of its obligations hereunder nor create any additional obligations of
Seller. Seller consents to Greystone disclosing any financial and any other
information available to Greystone concerning Seller to any prospective or
actual participant, pledgee or assignee (subject to Section 14(f)
above).

     

    (h)          Captions. The
captions in this Agreement are for convenience only and shall not define or
limit the provisions hereof.

     

    (i)          Governing Law; Venue;
Submission to Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF, EXCEPT TO THE
EXTENT
PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY
INTEREST GRANTED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS. THIS
AGREEMENT IS PERFORMABLE BY THE PARTIES IN DALLAS COUNTY, TEXAS. SELLER AND
GREYSTONE EACH AGREE THAT DALLAS COUNTY, TEXAS SHALL BE THE EXCLUSIVE VENUE FOR
LITIGATION OF ANY DISPUTE OR CLAIM ARISING UNDER OR RELATING TO THIS AGREEMENT,
AND THAT SUCH COUNTY IS A CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE
OR CLAIM. SELLER AND GREYSTONE EACH CONSENT TO THE PERSONAL JURISDICTION OF THE
STATE AND FEDERAL COURTS LOCATED IN DALLAS COUNTY, TEXAS FOR THE LITIGATION OF
ANY SUCH DISPUTE OR CLAIM. SELLER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

     

    
      
        
        

      

      
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    (j)      WAIVER OF
JURY TRIAL. SELLER AND GREYSTONE EACH HEREBY IRREVOCABLY WAIVES, TO THE
MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY OR ASSOCIATED HEREWITH.

     

    (k)           Amendments.
No modification or amendment of or supplement to this Agreement shall be valid
or effective unless the same is in writing and signed by the parties
hereto.

     

    (1)    Effectiveness
of Agreement; Counterparts. This Agreement shall become effective only
upon acceptance by Greystone at its offices in Dallas, Dallas County, Texas as
evidenced by Greystone's signature hereon. This Agreement may be separately
executed in any number of counterparts, each of which shall be an original, but
all of which, taken together, shall be deemed to constitute one and the same
instrument. Delivery of an executed counterpart of this Agreement by telecopy
shall be equally as effective as delivery of a manually executed counterpart of
this Agreement. Any party delivering an executed counterpart of this Agreement
by telecopy also shall deliver a manually executed counterpart of this Agreement
but the failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement.

     

    (m)           Joint and
Several. If there is more than one entity or person that has executed
this Agreement as the "Seller", each Seller acknowledges that it is jointly and
severally liable for all of the Obligations under this Agreement. Each Seller
expressly understands, agrees and acknowledges that (i) each Seller is an
affiliated entity by common ownership of each other Seller, (ii) each Seller
desires to have the availability of one common financing facility instead of
separate financing facilities, (iii) each Seller has requested that Greystone
extend such a common financing facility on the terms herein provided, (iv)
Greystone will be financing against, and relying on a lien upon, all of Seller
assets even though the proceeds of any particular financing made hereunder may
not be advanced directly to a particular Seller, (v) Seller will nonetheless
benefit by the making of all such financing by Greystone and the availability of
a single financing facility of a size greater than each could independently
warrant, and (vi) all of the representations, warranties, covenants,
obligations, conditions, agreements and other terms contained in this Agreement
shall be applicable to and shall be binding upon each Seller.

     

    (n)        Usury
Savings. It is the intention of the parties hereto to comply strictly
with applicable usury laws; accordingly, notwithstanding any provision to the
contrary in this Agreement, in no event whatsoever shall this Agreement require
the payment or permit the payment, taking, reserving, receiving, collection or
charging of any sums constituting interest under applicable laws which exceed
the Maximum Rate. If any such excess interest is called for, contracted for,
charged, taken, reserved, or received in connection with this Agreement, or in
any communication by Greystone or any other person to Seller or any other
person, or in the event all or part of the principal or interest shall be
prepaid or accelerated, so that under any of such circumstances or under any
other circumstance whatsoever the amount of interest contracted for, charged,
taken, reserved, or received on the amount of principal actually outstanding
from time to time under this Agreement shall exceed the Maximum Rate, then in
any such event it is agreed as follows: (i) the provisions of this Subsection
shall govern and control; (ii) neither Seller nor any other person or entity now
or hereafter liable for payments under this Agreement shall be obligated to pay
the amount of such interest to the extent such interest is in
excess of the Maximum Rate; (iii) any such excess which is or has been received
notwithstanding this subsection shall be credited against the then unpaid
principal balance of the Obligations under this Agreement or, if this Agreement
has been or would be paid in full by such credit, refunded to Seller, and (iv)
the provisions of this Agreement, and any communication to Seller, shall
immediately be deemed reformed and such excess interest reduced, without the
necessity of executing any other document, to the maximum lawful rate allowed
under applicable laws as now or hereafter construed by courts having
jurisdiction hereof or thereof. Without limiting the foregoing, all calculations
of the rate of interest contracted for, charged, taken, reserved, or received in
connection herewith which are made for the purpose of determining whether such
rate exceeds the Maximum Rate shall be made to the extent permitted by
applicable law by amortizing, prorating, allocating and spreading during the
period of the full term of this Agreement (including all prior and subsequent
renewals and extensions), all interest at any time contracted for, charged,
taken, reserved, or received. Seller and Greystone agree that Chapter 346 of the
Texas Finance Code (which regulates certain revolving loan accounts and
revolving tri-party accounts) shall not apply to any revolving loan accounts
created under this Agreement or maintained in connection therewith. To the
extent that Section 303 of the Texas Finance Code, as amended, is applicable to
this Agreement, the applicable interest rate ceiling is the indicated "weekly"
ceiling determined in accordance with such Section; provided that, if any
applicable law permits greater interest, the law permitting the greatest
interest shall apply.

     

    (o)           True Sales. Seller
and Greystone acknowledge and agree that the sale of Accounts contemplated and
covered hereby are fully intended by the parties hereto as true sales governed
by the provisions Section 306.103 of the Texas Finance Code and Section 9.109(e)
of the Texas Business and Commerce Code, as each may be amended from time to
time, and, accordingly, any discount in or charged to purchase Accounts is not
interest and the legal and equitable title in all of Seller's Accounts sold to
and purchased by Greystone from time to time hereunder will pass to
Greystone.

     

    (p)           ENTIRE AGREEMENT.
THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS
AGREEMENT ALSO AMENDS AND SUPERSEDES ANY OF THE TERMS OF ANY PRIOR WRITTEN
AGREEMENTS WITH RESPECT TO THE MATTERS SET FORTH IN THIS AGREEMENT.

     

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    THE
UNDERSIGNED have entered into this Agreement effective as of the date first
written above.

     

    
      
        	GREYSTONE
      COMMERCIAL SERVICES LP	 	 	ANCHOR
      FUNDING SERVICES, LLC	 
	 	 	 	 	 
	
                /s/
      Jeffrey P. Kassing

              	 	 	
                /s/
      Brad
      Bernstein

              	 
	
                Jeffrey
      P. Kassing

              	 	 	
                

                  Brad
      Bernstein

                

              	 
	
                President

              	 	 	
                

                  President
      of Anchor Funding Services, LLC

                  and
      President of Anchor Funding Services, Inc., the Sole Member of Anchor
      Funding Services, LLC

                

              	 
	 	 	 	 	 
	
                Address:

                
                  8144 Walnut Hill Lane

                  Suite 900

                  Dallas, Texas 75231

                    Attn:
      

                      Legal Department

                      Telecopy No. (214) 987-7381

                    

                  

                

              	 	 	
                Address:

                10801 Johnston Road

                Suite 210

                Charlotte, NC 28226

                Attn:

                Brad Bernstein

                Telecopy No. (704) 542-4724 

              	 


      

    

    
    


    


    


    


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