ex101.htm


    Exhibit 10.1


    


     

    FIRST
AMENDMENT

    TO
LOAN AND SECURITY AGREEMENT

     

    This
First Amendment to Loan and Security Agreement (this “Amendment”)
is dated as of May 19, 2009 and is between Anchor Funding Services, LLC (“Borrower”),
Textron Financial Corporation (acting in the capacity as lender as described in
the Loan Agreement defined below (in such capacity, “Lender”)) and Textron Financial
Corporation (acting in the capacity as administrative agent as described in the
Loan Agreement defined below (in such capacity, “Agent”)).

     

    Borrower,
Lender and Agent are party to that certain Loan and Security Agreement, dated as
of November 21, 2008 (as amended, restated, supplemented, or otherwise modified
from time to time, the “Loan
Agreement”);

     

    Borrower
has requested that Agent and Lender amend the Loan Agreement.

     

    Agent and
Lender are willing to provide the amendments subject to and upon the terms and
conditions set forth herein.

     

    In
consideration of the premises and the mutual covenants set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto covenant and agree as
follows:

     

    1.  DEFINITIONS

     

    .  Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them in the Loan Agreement, as amended hereby.

     

    2.  AMENDMENTS TO LOAN
AGREEMENT

    .

     

    (a) The
“Definitions” section of the Loan Agreement is hereby amended by inserting the
following new definition in appropriate alphabetical order:

     

    “Funded Debt” of any
Person means, without duplication, the following: (a) all obligations for Money
Borrowed, (b) all obligations (including, during the non-cancellable term of any
lease in the nature of a title retention agreement, all future payment
obligations under such lease discounted to their present value in accordance
with GAAP) secured by any Lien to which any property or asset owned or held by
such Person is subject, whether or not the obligation secured thereby shall have
been assumed by such Person, (c) all obligations of other Persons which such
Person has guaranteed, including, but not limited to, all obligations of such
Person consisting of recourse liability with respect to accounts receivable sold
or otherwise disposed of by such Person and (d) in the case of Borrower (without
duplication) all Obligations under the Loan Documents.

     

     

    
      
        
        

      

      
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    (b) The
“Definitions” section of the Loan Agreement is hereby amended by amending and
restating the definition of “Adjusted Tangible Net Worth” as
follows:

     

    “Adjusted Tangible Net
Worth” means, with respect to Borrower, on a consolidated basis (a)
stockholder’s equity determined in accordance with GAAP, plus (b) the outstanding
principal balance of Subordinated Indebtedness, plus (c) the amount of the
non-cash preferred stock dividend accrual, minus (d) Intangible Assets
including but not limited to all unamortized debt discount and expense,
unamortized research and development expense, unamortized deferred charges,
goodwill, intellectual property, unamortized excess of investments in
subsidiaries over equity  at dates of acquisition, deferred taxes,
deferred financing costs and all similar items which should properly be treated
as intangibles in accordance with GAAP, minus (e) all loans or
advances to Affiliates of Borrower.

     

    (c) The
“Definitions” section of the Loan Agreement is hereby amended by amending and
restating the definition of “Initial Term” as follows:

     

    “Initial Term” means
the period commencing on the Agreement Date and ending on December 31,
2009.

     

    (d) The
“Definitions” section of the Loan Agreement is hereby amended by amending and
restating the definition of “Leverage Ratio” as follows:

     

    “Leverage Ratio”
means, as of the last day of each calendar month, the ratio of (a)(i) Funded
Debt of Parent and its Subsidiaries as of such day on a consolidated basis,
minus (ii) Subordinated
Indebtedness, if any, of Borrower as of such day to (b)(i) Adjusted Tangible Net
Worth of Parent and its Subsidiaries as of such day on a consolidated basis,
plus (ii) Subordinated
Indebtedness of Borrower as of such day.

     

    (e) The
“Definitions” section of the Loan Agreement is hereby amended by amending and
restating the definition of “Maximum Credit” as follows:

     

    “Maximum Credit” means
the amount of $5,000,000.

     

    (f) The
“Definitions” section of the Loan Agreement is hereby amended by deleting the
definition of “Maximum Credit Increase Conditions” and the definition of
“Maximum Credit Increase Notice.”

     

    (g) The
“Definitions” section of the Loan Agreement is hereby amended by amending and
restating the definition of “Termination Date” as follows:

     

    “Termination Date”
means the earliest to occur of: (a) the end of the Initial Term, (b) such date
as the Obligations shall have been accelerated pursuant to the provisions of
Section 10.2 or
(c) such date as all Obligations shall have been indefeasibly paid in full and
the Revolving Credit Facility shall have been terminated.

     

    (h) Section
1.1(c) of the Loan Agreement is hereby amended by amending and restating it in
its entirety as follows:

     

     

     

    
      
        
        

      

      
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    [INTENTIONALLY
OMITTED].

     

    (i) Section
2.1 of the Loan Agreement is hereby amended by amending and restating it in its
entirety as follows:

     

    Closing Date and Post
Termination Date Fees. On the Closing Date, Borrower shall pay to Agent a
fee (the “Closing
Fee”) equal to $50,000, which fee shall be non-refundable in any
circumstance and shall be fully earned by Agent on the Closing Date.
Additionally, if all Obligations have not been indefeasibly paid in full on or
before the end of the Initial Term, then on January 1, 2010 Borrower shall pay
to Agent a fee equal to $50,000, which fee shall be non-refundable in any
circumstance and shall be fully earned by Agent at the end of the Initial
Term.

     

    (j) Section
2.2 of the Loan Agreement is hereby amended by amending and restating it in its
entirety as follows:

     

    Unused Line
Fee.  Commencing January 31, 2009 and on the last Business Day
of each calendar month thereafter Borrower shall pay to Agent, for the benefit
of Lenders, the Unused Line Fee due in respect of such calendar month then
ending, which Unused Line Fee shall accrue from and include January 1, 2009,
until but not including, the Termination Date.

     

    (k) Section
8.6 of the Loan Agreement is hereby amended by amending and restating it in its
entirety as follows:

     

    (a)           Borrower
shall not permit the Leverage Ratio to be greater than (i) .5 to 1.0 as of the
last day of its 2008 Fiscal Year and (ii) 2.35 to 1.0 as of the last day of each
Fiscal Quarter thereafter.

     

    (b)           Borrower
shall not permit Adjusted Tangible Net Worth to be less than $2,500,000 as of
the last day of its 2008 Fiscal Year and as of the last day of each Fiscal
Quarter thereafter.

     

    (c)           Borrower
shall not permit EBITDA to be less than a negative $300,000 as of the last day
of each Fiscal Quarter.

     

    (d)           Borrower
shall not permit Availability at any time to be less than five percent (5%) of
the amount indicated on the most recent Borrowing Base Certificate (inclusive of
all fees, charges, expenses and all Liabilities and other payables are current
within ordinary payment terms).

     

    All
amounts referenced in this Section 8.6 shall be determined in accordance with
GAAP.

     

    3.  LENDER
CONSENT TO PORTFOLIO PURCHASES.Notwithstanding anything to the contrary
in Section 8.9 of the Loan Agreement, Lender hereby consents to Borrower
purchasing all or any substantial part of the assets of any Person if such
assets consist solely of Purchased Accounts.

     

     

     

    
      
        
        

      

      
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    4.  REPRESENTATIONS AND
WARRANTIES

     

    .  Borrower hereby
represents and warrants to Lender and Agent as follows:

     

    (a) Borrower
has the requisite power and authority to execute and deliver this Amendment and
the authority to perform its obligations hereunder and under the Loan Documents
to which it is a party.  The execution, delivery, and performance of
this Amendment and the performance by Borrower of each Loan Document to which it
is a party (i) have been duly approved by all necessary action and no other
proceedings are necessary to consummate such transactions; and (ii) are not in
contravention of (A) any law, rule, or regulation, or any order, judgment,
decree, writ, injunction, or award of any arbitrator, court or governmental
authority binding on it, (B) the terms of its organizational documents, or (C)
any provision of any material contract or undertaking to which it is a party or
by which any of its properties may be bound or affected;

     

    (b) This
Amendment has been duly executed and delivered by Borrower.  This
Amendment, upon its effectiveness in accordance with the terms hereof, and each
Loan Document to which Borrower is a party is the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms, and is in full force and effect except as such validity and
enforceability is limited by the laws of insolvency and bankruptcy, laws
affecting creditors’ rights and principles of equity applicable
hereto;

     

    (c) No
injunction, writ, restraining order, or other order of any nature prohibiting,
directly or indirectly, the consummation of the transactions contemplated herein
has been issued and remains in force by any Governmental Authority against
Borrower;

     

    (d) Borrower
does not have any actual or potential claim or cause of action against Lender or
Agent or both for any actions or events occurring on or before the date hereof,
and Borrower hereby waives and releases any right to assert same;

     

    (e) No
Default or Event of Default has occurred and is continuing on the date hereof or
as of the date of the effectiveness of this Amendment after giving effect to
this Amendment; and

     

    (f) The
representations and warranties in the Loan Agreement and the other Loan
Documents are true and correct in all material respects on and as of the date
hereof, as though made on such date (except to the extent that such
representations and warranties relate solely to an earlier date).

     

    5.  RELEASE OF
CLAIMS

     

    . To induce Agent and Lender
to enter into this Agreement, Borrower hereby waives, remises, acquits, releases
and forever discharges Agent and Lender and their respective predecessors,
successors, assigns, affiliates, shareholders, directors, officers, directors,
accountants, attorneys, employees, agents and representatives of, from and
against any and all claims, actions, causes of action, suits, proceedings,
contracts, judgments, damages, accounts, reckonings, executions, and liabilities
whatsoever of every name and nature, whether known or unknown, whether or not
well founded in fact or in law, and whether in law, at equity or otherwise,
which Borrower ever had or now has for or by reason of any matter, cause or
anything whatsoever to this date relating to or arising out of any of the Loan
Documents or otherwise, including, without limitation, any actual or alleged act
or omission of or on behalf of Agent or Lender with respect to the Loan
Documents and any security interest, liens or collateral in connection
therewith, or the enforcement of any of Agent’s or any Lender’s rights or
remedies thereunder.  Borrower represents and warrants to Agent and
Lender that Borrower has not transferred or assigned to any Person any claim
that Borrower ever had or claimed to have against Agent or
Lender.  The terms of this Section shall survive the termination of
the Loan Documents.

     

     

    
      
        
        

      

      
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    6.      CONDITIONS PRECEDENT TO THIS
AMENDMENT

     

    .  Upon the
satisfaction of each of the following conditions precedent to the effectiveness
of this Amendment and each and every provision hereof, this Amendment will be
effective as of March 31, 2009:

     

    (a) Agent
shall have received this Amendment, duly executed by Borrower and acknowledged
by Guarantors, and the same shall be in full force and effect;

     

    (b) The
representations and warranties in the Loan Agreement and the other Loan
Documents shall be true and correct in all material respects on and as of the
date hereof, as though made on such date (except to the extent that such
representations and warranties relate solely to an earlier date);

     

    (c) No
Default or Event of Default shall have occurred and be continuing as of the date
of the effectiveness of this Amendment after giving effect to this Amendment;
and

     

    (d) No
injunction, writ, restraining order, or other order of any nature prohibiting,
directly or indirectly, the consummation of the transactions contemplated herein
shall have been issued and remain in force by any Governmental Authority against
Borrower.

     

    7.

     

    6.  CONSTRUCTION

     

    .  THIS AMENDMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
RHODE ISLAND, WITHOUT REFERENCE TO APPLICABLE CONFLICT OF LAWS
PRINCIPLES.

     

    8.  ENTIRE AMENDMENT; EFFECT OF
AMENDMENT

     

    .  This Amendment,
and terms and provisions hereof, constitute the entire agreement among the
parties pertaining to the subject matter hereof and supersedes any and all prior
or contemporaneous amendments relating to the subject matter hereof. Except for
the amendments expressly set forth in Section 2
hereof, the Loan Agreement and other Loan Documents shall remain unchanged and
in full force and effect. Except as expressly set forth herein, the execution,
delivery, and performance of this Amendment shall not operate as a waiver of or
as an amendment of any right, power, or remedy of the Agent or Lender or both as
in effect prior to the date hereof.  The amendments set forth herein
are limited to the specifics hereof, shall not apply with respect to any facts
or occurrences other than those on which the same are based, shall not excuse
future non-compliance with the Loan Agreement, and shall not operate as a
consent to any further amendment or other matter, under the Loan
Documents.  To the extent any terms or provisions of this Amendment
conflict with those of the Loan Agreement or other Loan Documents, the terms and
provisions of this Amendment shall control.  This Amendment is a Loan
Document.

     

     

    
      
        
        

      

      
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    9.  COUNTERPARTS; TELEFACSIMILE
EXECUTION

     

    .  This Amendment
may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties hereto may execute
this Amendment by signing any such counterpart.  Delivery of an
executed counterpart of this Amendment by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this
Amendment.  Any party delivering an executed counterpart of this
Amendment by telefacsimile also shall deliver an original executed counterpart
of this Amendment, but the failure to deliver an original executed counterpart
shall not affect the validity, enforceability, and binding effect of this
Amendment.

     

    10.    NO
NOVATION.  This Amendment is
not intended to be, nor shall it be construed to create, a novation or accord or
satisfaction, and the Loan Agreement as herein modified shall continue in full
force and effect.

     

    11.    WAIVER OF
JURY TRIAL.  THE PARTIES
HERETO HEREBY WAIVE THEIR RIGHT TO TRIAL BY JURY OF ANY MATTER ARISING OUT OF OR
RELATING TO THIS AMENDMENT OR THE SUBJECT MATTER HEREOF.

     

    12.  MISCELLANEOUS

     

    .

     

    (a) Upon the
effectiveness of this Amendment, each reference in the Loan Agreement to “this
Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to
the Loan Agreement shall mean and refer to the Loan Agreement as amended by this
Amendment.

     

    (b) Upon the
effectiveness of this Amendment, each reference in the Loan Documents to the
“Loan Agreement”, “thereunder”, “therein”, “thereof” or words of like import
referring to the Loan Agreement shall mean and refer to the Loan Agreement as
amended by this Amendment.

     

    IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed and
delivered as of the date first written above.

     

    
      	
              BORROWER:

            	
              ANCHOR
      FUNDING SERVICES, LLC

               

               

            
	 
      	 
      
	 
      	
              By:

            	
              ___________________________

            
	 
      	
              Print
      Name:

            	
              ___________________________

            
	 
      	
              Title:

            	
              ___________________________

            


    

    


    
      
        	
                LENDER:

              	
                TEXTRON
      FINANCIAL CORPORATION

                 

                 

              
	 
      	 
      
	 
      	
                By:

              	
                ___________________________

              
	 
      	
                Print
      Name:

              	
                ___________________________

              
	 	Title:	___________________________
	 
      	
                                       
      

              


      

    

    


     

     

    
      
        
        

      

      
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    ACKNOWLEDGEMENT
OF GUARANTORS

    


               The
undersigned guarantors acknowledge that Agent and Lender have no obligation to
provide them with notice of, or to obtain their consent to, the terms of the
foregoing.  The undersigned guarantors nevertheless
(i) acknowledge and agree to the terms and conditions of this Amendment;
(ii) acknowledge that their guarantees remain fully valid, binding, and
enforceable; and (iii) waive any and all defenses, claims, counterclaims,
and offsets which they may have against Agent or Lender or both through the date
of this Amendment.

    
       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          	
                                                  AGREED
      AND ACKNOWLEDGED:

                                                	 
      	 
      
	 
      	 
      	 
      
	
                                                  By:

                                                	 
      	
                                                  Witness:

                                                
	
                                                  Print
      Name: Morry Rubin 

                                                	 
      	
                                                  Print
      Name:

                                                
	 
      	 
      	 
      
	
                                                  By:  

                                                	 
      	
                                                  Witness:

                                                
	
                                                  Print
      Name: Brad Bernstein

                                                	 
      	
                                                  Print
      Name:

                                                
	 
      	 
      	 
      
	 	 	 
	ANCHOR FUNDING SERVICES,
      INC.	 	 
	 	 	 
	By:  	 	Witness:
	Print
      Name:  	 	Print
      Name:
	Print
      Title:	 	 


                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

       

      


       



    


                                                          

                                                                                                   

    


    


                                                        

                                                                                                    

    


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