FACTORING AND SECURITY AGREEMENT

EXHIBIT 10.4

FACTORING AND SECURITY AGREEMENT

FACTORING AND SECURITY AGREEMENT (this “Agreement”), dated as of August , 11 2006, by and between Progressive Concepts, Inc., a Texas Corporation, as Seller and Subservicer, and THERMO CREDIT, LLC, a Colorado limited liability company, as Purchaser and Master Servicer.

WITNESSETH:

WHEREAS, the Seller desires to factor certain of its telecommunication receivables and the Purchaser is in the business of factoring certain telecommunication receivables from time to time;

WHEREAS, the Purchaser may, but shall not be required to act in the capacity of Master Servicer to perform certain servicing, administrative and collection functions in respect of the receivables purchased by the Purchaser under this Agreement (the “Purchased Receivables”);

WHEREAS, the Purchaser and the Master Servicer desire that the Subservicer be appointed to perform certain servicing, administrative and collection functions in respect of the Purchased Receivables; and

WHEREAS, the Seller has been requested, and is willing, to act as the Subservicer.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I - DEFINITIONS

Section 1.1 Certain Defined Terms . Capitalized terms used in this Agreement have the respective meanings set forth on Exhibit A , or as elsewhere provided in this Agreement. In the event of a conflict, the meaning given in Exhibit A shall prevail.

Section 1.2 Other Terms . All accounting terms not specifically defined in this Agreement shall be construed in accordance with generally accepted accounting principles. All terms used in Article 9 of the UCC, and not specifically defined in this Agreement, are used in this Agreement as defined in such Article 9.

ARTICLE II - PURCHASE AND SALE; ESTABLISHMENT OF ACCOUNTS

Section 2.1 Offer to Sell . Seller shall offer to sell, transfer, assign and set over to Purchaser those Eligible Receivables set forth on a list of such Eligible Receivables which such list shall be delivered by the Seller to the Purchaser no later than three (3) Business Days prior to each Purchase Date.

Section 2.2 Purchase of Receivables . Upon receipt of the list of Eligible Receivables pursuant to Section 2.1, the Master Servicer, in good faith and at its own discretion will confirm

which of the Eligible Receivables offered by Seller that the Purchaser will Purchase. The Purchase of such Receivables shall occur upon payment of the Advance Amount. Upon Purchase of the Receivables, Seller shall be deemed to have sold, transferred, assigned, set over and conveyed to Purchaser, without recourse except as expressly provided herein, all of Seller’s right, title and interest in and to the Purchased Receivables. The Seller shall not take any action inconsistent with such ownership and shall not claim any ownership in any Purchased Receivable. The Seller shall indicate in its Records that ownership interest in any Purchased Receivable is held by the Purchaser. In addition, the Seller shall respond to any inquiries with respect to ownership of a Purchased Receivable by stating that it is no longer the owner of such Purchased Receivable and that ownership of such Purchased Receivable is held by the Purchaser. Documents relating to the Purchased Receivables shall be held in trust by the Seller and the Subservicer, for the benefit of the Purchaser as the owner of the Purchased Receivables, and possession of any Required Information relating to the Purchased Receivables so retained is for the sole purpose of facilitating the servicing of the Purchased Receivables and carrying out the terms of this Agreement. Such retention and possession is at the will of the Purchaser and in a custodial capacity for the benefit of the Purchaser only.

Section 2.3 Purchase Price and Payment . The Purchase Price for Receivables purchased on any Purchase Date shall be an amount equal to the aggregate Net Values of such Purchased Receivables. The Advance Amount shall be the Net Value of the Purchased Receivables after deducting applicable adjustments and reserves (or an estimate thereof) and application of the Gross Liquidation Rate, reduced by (a) the Discount Fees as of such Purchase Date, (b) the amount, if any, by which the Thermo Contingency Account is less than the Specified Thermo Contingency Account Balance as of such Purchase Date, (c) any Rejected Receivable Amount not otherwise paid pursuant to Section 4.4, and (d) other amounts due the Purchaser in accordance with this Agreement. The Advance Amount shall be paid to the Seller by immediately available funds on the Purchase Date. At any time the Net Value of outstanding Purchased Receivables shall not exceed the Purchase Commitment.

Section 2.4 Establishment of Accounts; Conveyance of Interests Therein; Investments . (a) Except as may otherwise be established by Purchaser, in writing, a Lockbox Account will be established or assigned, as the case may be, for the benefit of the Purchaser into which all Collections from Payors with respect to Receivables shall be deposited. The Lockbox Account will be maintained at the expense of the Seller. The Seller agrees to deposit all Collections it receives with respect to Purchased Receivables in said Lockbox Account and will instruct all Payors, to make all payments on Purchased Receivables to said Lockbox Account. All funds in said Lockbox Account will be remitted as instructed by the Master Servicer in accordance with the terms of this Agreement.

(b) The Purchaser has established and shall maintain the Thermo Contingency Account.

(c) The Seller does hereby sell, transfer, assign, set over and convey to the Purchaser all right, title and interest of the Seller in and to all amounts deposited, from time to time, in the Lockbox Account, and Thermo Contingency Account. Any Collections relating to Receivables held by the Seller or the Subservicer pending deposit to the Lockbox Account as provided in this Agreement, shall be held in trust for the benefit of the Purchaser until such

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amounts are deposited into the Lockbox Account. All Collections in respect of Purchased Receivables received by the Seller and not deposited directly by the Payor in the Lockbox Account shall be remitted to the Lockbox Account no later than the following Business Day (or as soon as reasonably practical), and if such Collections are not remitted on a timely basis, in addition to its other remedies hereunder, the Purchaser shall be entitled to receive the Misdirected Payment Fee.

Section 2.5 Grant of Security Interest . It is the intention of the parties to this Agreement that payment of the Advance Amount by the Purchaser to the Seller for Purchased Receivables to be made under this Agreement shall constitute an absolute sale of such Purchased Receivables and not a loan. In the event, however, that a court of competent jurisdiction were to hold that the transaction evidenced by this Agreement constitutes a loan and not a purchase and sale, it is the intention of the parties that this Agreement shall constitute a security agreement under the UCC and any other applicable law, and that the Seller shall be deemed to have granted to the Purchaser a first priority perfected security interest in all of the Seller’s right, title and interest in, to and under: the Purchased Receivables; the Records; all payments of principal of or interest on such Purchased Receivables; all amounts on deposit from time to time in the Lockbox Account and the Thermo Contingency Account; and all proceeds of any of the foregoing. Notwithstanding the foregoing, nothing in this Agreement shall be construed as an assignment or sale of any of Seller’s agreements with Cingular or any other vendor or supplier.

Section 2.6 Further Action Evidencing Purchases . The Seller agrees that, from time to time, at its expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary or appropriate, or that the Purchaser may reasonably request, in order to perfect, protect or more fully evidence the transfer of ownership of and its security interest in the Purchased Receivables and other assets in which Seller grants to Purchaser a security interest in accordance with Section 8.2 below, and to enable the Purchaser to exercise or enforce any of its rights under this Agreement.

ARTICLE III - CONDITIONS OF PURCHASES

Section 3.1 Conditions Precedent to All Purchases . Each Purchase from the Seller by the Purchaser shall be subject to the conditions precedent as of each Purchase Date:

(a) No Event of Seller Default has occurred and the Seller is in compliance, in all material respects, with each of its covenants and representations set forth in Sections 4.1 and 4.2 of this Agreement;

(b) The Seller shall have delivered to the Purchaser evidence satisfactory to the Purchaser of consent to service (including both paper and electronic) for the Payors;

(c) The Termination Date shall not have occurred; and

(d) The Seller shall have taken such other action, including but not limited to delivery of an opinion of counsel substantially in the form of Exhibit D hereto, and delivered such other approvals, opinions or documents to the Purchaser, as the Purchaser may reasonably request;

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(e) To the extent the Seller markets through telemarketing, Seller shall subscribe to both state and federal, as the case may be, do not call lists and will comply with all changes and revisions to such rules. In addition, Seller shall utilize an independent third-party verification company to verify all telemarketing orders for service; and

(f) Seller shall provide Purchaser with proofs of previous, current and ongoing compliance with both Federal and State USF contributions which includes copying Purchaser on all Form 409 A’s and Q’s that are filed by Seller.

ARTICLE IV - REPRESENTATIONS, WARRANTIES

AND COVENANTS OF THE SELLER

Section 4.1 Representations, Warranties and Covenants as to the Seller . The Seller represents and warrants to the Purchaser and Master Servicer, as of the date of the initial Purchase Date and as of each Purchase Date thereafter, as follows:

(a) The Seller is duly organized, validly existing and in good standing under the laws of its state of incorporation or other formation and is duly qualified to do business and is in good standing in each jurisdiction in which it is doing business and has the power and authority to own and convey all of its properties and assets and to execute and deliver this Agreement and the Related Documents and to perform the transactions contemplated thereby; and each is the legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms;

(b) The execution, delivery and performance by the Seller of this Agreement and the Related Documents and the transactions contemplated thereby (i) have been duly authorized by all necessary corporate or other action on the part of the Seller, (ii) do not contravene or cause the Seller to be in default under (A) any contractual restriction contained in any loan or other agreement or instrument binding on or affecting the Seller or its property; or (B) any law, rule, regulation, order, writ, judgment, award, injunction, or decree applicable to, binding on or affecting the Seller or its property and (iii) do not result in or require the creation of any Adverse Claim upon or with respect to any of the property of the Seller (other than in favor of the Purchaser as contemplated hereunder), all as more fully certified by the Seller in the form of Exhibit C attached hereto;

(c) There is no court order, judgment, writ, pending or threatened action, suit or proceeding, of a material nature against or affecting the Seller, its officers, managers or directors, or the property of the Seller, in any court or tribunal, or before any arbitrator of any kind or before or by any Governmental Authority (i) asserting the invalidity of this Agreement or any of the Related Documents, (ii) seeking to prevent the sale and assignment of any Receivable or the consummation of any of the transactions contemplated thereby, (iii) seeking any determination or ruling that might materially and adversely affect the Seller, this Agreement, the Related Documents, the Receivables, the Contracts or any LOA, or (iv) asserting a claim for payment of money in excess of $100,000 individually or $250,000 in total;

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(d) The primary business of the Seller is the provision of telecommunication services and/or equipment. All license numbers issued to the Seller by any Governmental Authority are set forth on Schedule 2 and the Seller has complied in all material respects with all applicable laws, rules, regulations, orders and related Contracts, and has and maintains all permits, licenses, certifications, authorizations, registrations, approvals and consents of Governmental Authorities or any other party necessary for the business of the Seller and each of its subsidiaries;

(e) The Seller (i) has filed and paid on a timely basis all taxes and corresponding tax returns (federal, state and local ) required to be filed and has paid or made adequate provisions for the payment of all taxes, assessments, and other governmental charges due from the Seller except for those being contested in good faith; (ii) the financial statements of the Seller, copies of which have been furnished to the Purchaser, fairly present, in all material respects, the financial condition of the Seller, all in accordance with generally accepted accounting principles consistently applied; (iii) since April 30, 2006, there has been no material adverse change in any such condition, business or operations; and (iv) the Seller has delivered to the Purchaser within 45 days after the end of each subsequent three month period, and, 90 days after the fiscal year end of the Seller, the financial statements, including balance sheet, income statement and statement of cash flows prepared in accordance with generally accepted accounting principles, of the Seller as of the end of such three-month period or fiscal year, as the case may be, certified by the chief financial officer and chief executive officer of the Seller;

(f) All information furnished by or on behalf of the Seller to the Master Servicer or the Purchaser in connection with this Agreement is true and complete in all material respects and does not omit to state a material fact and the sales of Purchased Receivables under this Agreement are made by the Seller in good faith and without intent to hinder, delay or defraud present or future creditors of the Seller;

(g) The Lockbox Account is the only lockbox account to which Payors have been instructed to direct Receivable proceeds and each Payor of an Eligible Receivable has been directed upon its receipt of the notice attached hereto as Exhibit B , which such notice was mailed not less than two (2) Business Days prior to the Purchase Date, to remit all payments with respect to such Receivable for deposit in the Lockbox Account;

(h) The principal place of business and chief executive office of the Seller are located at the address of the Seller set forth under its signature below and there are not now, and during the past four months there have not been, any other locations where the Seller is located (as that term is used in the UCC) or keeps Records except as set forth in the designated space beneath its signature line in this Agreement;

(i) The exact name of the Seller as it appears in its Articles of Incorporation, Formation or Organization is as set forth at the beginning of this Agreement and, except as set forth on Schedule 3 , the Seller has not changed its legal name in the last six (6) years, and during such period, the Seller did not use, nor does the Seller now use any trade names, fictitious names, assumed names or “doing business as” names;

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(j) The federal taxpayer identification number of the Seller is as set forth under its signature below;

(k) To Seller’s knowledge, the Seller has not done anything to impede or interfere with the collection by the Purchaser of the Purchased Receivables and shall not, outside of the ordinary course of business, without Purchaser’s prior written consent, amend, waive or otherwise permit or agree to any deviation from the terms or conditions of any Purchased Receivable or Contract which (i) may create an Adverse Claim with respect to any Receivable or (ii) would materially affect the ability of the Subservicer or the Master Servicer to act in each’s capacity as such; and

(l) For federal income tax reporting and accounting purposes, the Seller will treat the sale of each Purchased Receivable pursuant to this Agreement as a sale of, or absolute assignment of its full right, title and ownership interest in such Purchased Receivable to the Purchaser, as provided herein.

Section 4.2 Representations and Warranties of the Seller as to Purchased Receivables . With respect to each Purchased Receivable sold pursuant to this Agreement the Seller represents and warrants, to the best of Seller’s knowledge, as of the date hereof and as of the date of each subsequent Purchase Date, as follows:

(a) Such Purchased Receivable (i) includes all the Required Information; (ii) is the liability of Eligible Payor and (iii) was created by the provision or sale of telecommunication services, equipment or other merchandise sold or services provided by Seller in the ordinary course of its business; (iv) except for the initial Purchase Date has a Purchase Date no later than 45 days after its Billing Date; (v) is not a Purchased Receivable as to which, as of any Determination Date, payment by the Payor of such Receivable has been received and is not duplicative of any other Receivable; and (vi) is owned by the Seller free and clear of any Adverse Claim, and the Seller has the right to sell and transfer the same and interests therein as contemplated under this Agreement without consent other than those secured and delivered to the Purchaser on or prior to the Closing Date from any Governmental Authority, the Payor, or any other Person.

(b) The Eligible Receivable Amount set forth in the applicable Required Information of such Receivable is payable in United States Dollars and shall not exceed with respect to any one individual Payor of any Payor Class the amounts or percentages (%) reflected in Schedule 1 , unless approved in writing by the Purchaser in advance, and neither the Receivable or Contract has or will be compromised, adjusted, extended, satisfied, subordinated, rescinded, set-off or modified by the Seller, or the Payor, and is not nor will be subject to compromise, adjustment, termination or modification, whether arising out of transactions concerning the Contract, or otherwise, except for the credits issued by Seller to Payors in the ordinary course of business; and

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(c) There are no procedures or investigations pending or threatened before any Governmental Authority (i) asserting the invalidity of such Receivable, or such Contract; (ii) seeking the payment of such Receivable or such other Contract; or (iii) seeking any determination or ruling that might materially and adversely affect the validity or enforceability of such Receivable or such other Contract.

Section 4.3 Negative Covenants of the Seller . The Seller shall not, without the written consent of the Purchaser and the Master Servicer which shall not be unreasonably withheld or delayed:

(a) Create, purport to create or suffer to exist any Adverse Claim or lien upon any Receivable and related Contracts, the Lockbox Account, or any other account in which any Collections of any Purchased Receivable are deposited, or assign any right to receive income in respect of any Purchased Receivable;

(b) Submit or permit to be submitted to Payors any invoice for telecommunication services or equipment rendered by or on behalf of Seller which contains a “pay to” address other than the Lockbox Account;

(c) Make any change to (i) the location of its chief executive office or the location of the office where Records are kept or (ii) its corporate name or use any tradenames, fictitious names, assumed names or “doing business as” names;

(d) Make any change to or file for a new federal taxpayer identification number; or;

Section 4.4 Repurchase Obligations . Upon discovery by any party to this Agreement of a breach of any representation or warranty in Sections 4.1 or 4.2 of this Article IV which materially and adversely affects the value of a Purchased Receivable or the interests of the Purchaser therein (herein a “Rejected Receivable”), the party discovering such breach shall give prompt written notice to the other parties to this Agreement. Thereafter, on the next Purchase Date, the Net Value of the Rejected Receivables shall be deducted from the Purchase Price of the Eligible Receivables pursuant to Section 2. To the extent the amount of that Advance Amount is insufficient, Purchaser shall make demand upon the Seller to pay any such deficiency to the Purchaser within five (5) Business Days of receipt of notice from Purchaser. Upon payment of the amount due by the Seller to the Purchaser under this Section 4.4, the subject Purchased Receivable will be reconveyed to the Seller without recourse.

Section 4.5 Commitment Fee . The Seller will pay to the Purchaser the Commitment Fee. The initial Commitment Fee will be the amount or percentage (%) reflected in Schedule 1 , and will be payable in two (2) equal installments: the first at the time of the first Purchase and the second on the first anniversary of the date of this Agreement. Any increases in the Purchase Commitment will require payment of additional Commitment Fees of the amount or percentage (%) reflected in Schedule 1 payable at the time of the increase. The Commitment Fee shall be deemed earned and payable upon execution of this Agreement and shall be deducted from the Advance Amount when due.

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Section 4.6 Discount Fees . Seller shall pay to Purchaser an initial Discount Fee of the amount or percentage (%) reflected in Schedule 1 , as adjusted from t