Document:

Exhibit
10.2

 

SECOND
AMENDMENT TO CREDIT AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this
“Amendment”) is made and entered into as of November 30, 2006, by and
among GTSI CORP., a Delaware corporation (the
“Borrower”), the Lenders (as defined below) signatory hereto, the other
Borrower Parties (as defined below) signatory hereto, and CRYSTAL
CAPITAL FUND, L.P., in its capacity as Administrative Agent for the
Lenders (the “Administrative Agent”).

W
I  T  N  E  S  S  E  T  H:

WHEREAS,
the Borrower, certain Subsidiaries of the Borrower signatory thereto as
Guarantors (together with the Borrower, collectively, the “Borrower Parties”),
the lenders signatory thereto from time to time (the “Lenders”) and the
Administrative Agent are parties to a certain Credit Agreement, dated as of
June 2, 2006, as amended by that certain First Amendment to Credit Agreement
dated as of July 12, 2006 (as amended, restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”; capitalized terms
used herein and not otherwise defined shall have the meanings assigned to such
terms in the Credit Agreement), pursuant to which the Lenders have made certain
financial accommodations available to the Borrower; and

WHEREAS,
the Borrower has requested that the Lenders and the Administrative Agent waive
the Specified Event of Default and amend certain provisions of the Credit
Agreement, and subject to the terms and conditions hereof, the Lenders and the
Administrative Agent are willing to do so;

NOW,
THEREFORE, for good and valuable consideration, the sufficiency and receipt of
all of which are acknowledged, the Borrower, the Lenders and the Administrative
Agent agree as follows:

1.             Amendments
to Section 1.1.              Section 1.1 of the Credit
Agreement, “Definitions”, is hereby amended and modified by adding the
following definitions in the appropriate alphabetical order (in the case of any
new definition) and amending and restating in their entirety the following
definitions (in the case of any definition already included in the Credit
Agreement):

“Availability Block”
shall mean (a) at all times prior to the FCCR Election Date, $15,000,000, and
(b) at all times on or after the FCCR Election Date, $10,000,000.

“EBITDA” shall
mean, with respect to the Borrower on a consolidated basis with its
Subsidiaries for any period, the net income for such period determined in
accordance with GAAP, plus, without duplication and to the extent
reflected as charges in the statement of net income for such period, the sum of
(i) income taxes, (ii) Interest Expense, and (iii) depreciation and
amortization expense; provided, however,
that if any such calculation includes any period in 

 

which an acquisition or
sale of a Person or all or substantially all of the assets of a Person
occurred, then such calculation shall be made on a Pro Forma Basis; provided, further, that the net income (or
loss) of the Borrower and its Subsidiaries for any such period shall exclude
therefrom (to the extent otherwise included therein) (a) any extraordinary
gains, (b) any non-cash extraordinary losses, (c) with respect to any such
amount that was deducted under clause (b) of this definition as an expense in a
prior period, any cash payments of accrued expenses that were not included in
the calculation of EBITDA when the applicable accrual was made, (d) any gains
attributable to write-ups of assets or gains due to the forgiveness of debt or
trade liabilities, (e) any equity interest of the Borrower or any Subsidiary of
the Borrower in the unremitted earnings of any Person that is not a Subsidiary,
(f) any income (or loss) of any Person accrued prior to the date it becomes a
Subsidiary or is merged into or consolidated with the Borrower or any
Subsidiary on the date that such Person’s assets are acquired by the Borrower
or any Subsidiary, (g) any non-cash gains, income, loss, expense, or charge to
earnings due to change in GAAP accounting rules and (h) non-cash interest
income on lease transactions recognized by the Borrower due to the release of
any purchase option retained by the Borrower in connection with any such lease
transaction.

“FCCR Election Date”
means the earlier of (a) the date on which the Borrower elects to implement the
Fixed Charge Coverage Ratio covenant test set forth in Section 8.10,
which date shall be the last day of a fiscal quarter of Borrower, so long as
(i) no Default or Event of Default has occurred and is continuing on the
proposed FCCR Election Date, (ii) the Administrative Agent receives written
notice of such election not less than ten (10) Business Days prior to the
proposed FCCR Election Date, (iii) Borrower delivers to the Administrative
Agent pro forma financial statements demonstrating that the Borrower and its
Subsidiaries will be in compliance with the Fixed Charge Coverage Ratio
covenant set forth in Section 8.10 for a period of twelve (12) months
after the proposed FCCR Election Date, together with an officer’s certificate
certifying that such financial statements are true and correct, and (iv) the
Administrative Agent has received written confirmation from the Senior Credit
Facility Agent that the Availability Block under (and as defined in) the Senior
Credit Facility Agreement has been or will be reduced to $10,000,000 on the
proposed FCCR Election Date, and (b) September 30, 2008.

“Fixed Charge Coverage
Ratio” shall mean, with respect to the Borrower and its Subsidiaries on a
consolidated basis for any period, calculated on a Pro Forma Basis during such
period, the ratio of (a) the greater of (i) (x) EBITDA for such period minus
(y) the sum of (A) Capital Expenditures made during such period, (B) cash tax
payments made during such period and (C) to the extent included in EBITDA,
non-cash interest income from lease transactions during such period, or (ii)
zero, to (b) the sum of (i) scheduled payments of principal made with respect
to Funded Debt during such period, (ii) Interest Expense paid or payable in
cash during such period and (iii) Restricted Purchases and Restricted Payments
paid during such period.

 2
 

 

2.             Amendment to Section 2.3.  Section 2.3 of the Credit Agreement, “Interest”,
is hereby amended and modified by deleting the last sentence of subsection
(a)(i) therein in its entirety and by substituting the following in lieu
thereof:

“Except as otherwise
provided in Section 2.3(b), interest shall accrue and be payable on the Term
Loan (or any portion thereof) at the rate per annum equal to (A) at all times
prior to and including the FCCR Election Date, the greater of (i) the Base Rate
plus 5.25% or (ii) 13.25%, and (B) at all times thereafter, the greater
of (i) the Base Rate plus 5.00% or (ii) 13.00%, such interest rate to be
adjusted monthly on the first day of each calendar month.

3.             Amendment
to Section 8.9.  Section 8.9
of the Credit Agreement, “Minimum EBITDA” is hereby amended and modified by
deleting such section in its entirety and by substituting the following in lieu
thereof:

“Section 8.9           Minimum EBITDA.  Until the FCCR Election Date, the Borrower
Parties shall not permit the EBITDA of the Borrower Parties to be less than the
amounts set forth in the table below for the applicable periods set forth in
such table:

	
  Period

  	
   

  	
  Minimum EBITDA:

  	
   

  
	
  Four fiscal quarter period ending December 31, 2006

  	
   

  	
  $

  	
  2,151,000

  	
   

  
	
  Four fiscal quarter period ending March 31, 2007

  	
   

  	
  $

  	
  5,556,000

  	
   

  
	
  Four fiscal quarter period ending June 30, 2007

  	
   

  	
  $

  	
  878,000

  	
   

  
	
  Four fiscal quarter period ending September 30, 2007

  	
   

  	
  $

  	
  6,204,000

  	
   

  
	
  Four fiscal quarter period ending December 31, 2007

  	
   

  	
  $

  	
  5,632,000

  	
   

  
	
  Four fiscal quarter period ending March 31, 2008

  	
   

  	
  $

  	
  6,000,000

  	
   

  
	
  Four fiscal
  quarter period ending June 30, 2008

  	
   

  	
  $

  	
  8,000,000

  	
   

  

 

4.             Amendment
to Section 8.10.  Section 8.10
of the Credit Agreement, “Fixed Charge Coverage Ratio” is hereby amended and
modified by deleting such section in its entirety and by substituting the
following in lieu thereof:

 3
 

 

“8.10       Fixed Charge Coverage Ratio.  The Borrower Parties shall not permit as of
the FCCR Election Date, and as of the end of each fiscal quarter thereafter,
the Fixed Charge Coverage Ratio for the immediately preceding four (4) fiscal
quarter period to be less than 1.10 to 1.00.”

5.             Waiver.  As a result of the Borrower’s failure to
achieve the Minimum EBITDA requirement under Section 8.9 of the Credit
Agreement for the period ended September 30, 2006, an Event of Default
(the “Specified Event of Default”) would have occurred but for the fact
that the Borrower, Administrative Agent and the Majority Lenders entered into
that certain Waiver dated as of November 6, 2006 (the “Existing Waiver”).  The Existing Waiver will terminate and be of
no further force or effect as of the date hereof and the Borrower has requested
that the Administrative Agent and the Majority Lenders waive the Specified
Event of Default on a permanent basis as set forth herein.  Therefore, subject to the terms and
conditions set forth in this Amendment, the Administrative Agent and the
Majority Lenders hereby waive the Specified Event of Default.  In no event shall such waiver act as a waiver
of any other requirement or hinder, restrict or otherwise modify the rights and
remedies of the Lender Group following the occurrence of any other failure to
comply with Section 8.9 of the Credit Agreement, or the occurrence of any
Default or Event of Default under this Amendment, the Credit Agreement or any
other Loan Document.

6.             Conditions
to Effectiveness of this Amendment. Notwithstanding
any other provision of this Amendment, it is understood and agreed that this
Amendment shall not become effective, and the parties shall have no rights
under this Amendment, until the Administrative Agent shall have received:

                (a)
          executed counterparts to this
Amendment from the Borrower, each of the other Borrower Parties and the
Majority Lenders;

(b)           a fully executed amendment containing
corresponding amendments to those contained herein (where applicable) under the
Senior Credit Facility Documents, which shall be in form and substance
satisfactory to the Administrative Agent; and

(c)           payment of an amendment fee to each
Lender executing this Amendment in an amount equal to 0.15% of the outstanding
principal amount of such Lender’s Term Loan, which shall be fully earned when
due and non-refundable when paid.

7.             Representations
and Warranties.  To induce the
Lenders and the Administrative Agent to enter into this Amendment, each
Borrower Party hereby represents and warrants to the Lenders and the
Administrative Agent that:

(a)           The execution, delivery and
performance by such Borrower Party of this Amendment (i) are within such
Borrower Party’s power and authority; (ii) have been duly authorized by
all necessary corporate and shareholder action; (iii) are not in
contravention of any provision of such Borrower Party’s certificate of
incorporation or bylaws or other organizational documents; (iv) do not
violate any law or regulation, or any order or decree of any Governmental 

 4
 

 

Authority;
(v) do not conflict with or result in the breach or termination of,
constitute a default under or accelerate any performance required by, any
Material Contract to which such Borrower Party is a party; (vi) do not result
in the creation or imposition of any Lien upon any of the property of such
Borrower Party or any of its Subsidiaries; and (vii) do not require the
consent or approval of any Governmental Authority or any other Person;

(b)           This Amendment has been duly executed
and delivered for the benefit of or on behalf of each Borrower Party and
constitutes a legal, valid and binding obligation of each Borrower Party,
enforceable against such Borrower Party in accordance with its terms except as the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor’s rights generally or by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
and

(c)           The representations and warranties
contained in the Credit Agreement and the other Loan Documents are true and
correct in all material respects, and no Default or Event of Default has
occurred and is continuing as of the date hereof.

8.             Reaffirmations
and Acknowledgments.

(a)           Reaffirmation of Guaranty.  Each Guarantor consents to the execution and
delivery by the Borrower of this Amendment and jointly and severally ratify and
confirm the terms of the Guaranty contained in Article 3 of the Credit
Agreement with respect to the indebtedness now or hereafter outstanding under
the Credit Agreement as amended hereby and all promissory notes issued
thereunder.

(b)           Acknowledgment of Security
Interests. Each Borrower Party hereby acknowledges that, as of the date
hereof, the security interests and liens granted to the Administrative Agent
and the Lenders under the Credit Agreement and the other Loan Documents are in
full force and effect and are enforceable in accordance with the terms of the
Credit Agreement and the other Loan Documents.

9.             Effect of Amendment.  Except as set forth expressly herein,
all terms of the Credit Agreement, as amended hereby, and the other Loan
Documents shall be and remain in full force and effect.  The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
the Lenders under the Credit Agreement, nor constitute a waiver of any provision
of the Credit Agreement.  This Amendment
shall constitute a Loan Document for all purposes of the Credit Agreement.

10.           Governing
Law.   This Amendment shall be governed by, and
construed in accordance with, the internal laws of the Commonwealth of Massachusetts
and all applicable federal laws of the United States of America.

11.           No
Novation. 
This Amendment is not intended by the parties to be, and shall not be
construed to be, a novation of the Credit Agreement or an accord and
satisfaction in regard thereto.

 5
 

 

12.           Costs and Expenses. 
The Borrower agrees to pay, in accordance with the terms and conditions
contained in the Credit Agreement, all costs and expenses of the Administrative
Agent in connection with the preparation, execution and delivery of this
Amendment, including, without limitation, the reasonable fees and out-of-pocket
expenses of outside counsel for the Administrative Agent with respect thereto.

13.           Counterparts.  This Amendment may be executed by one or more
of the parties hereto in any number of separate counterparts, each of which
shall be deemed an original and all of which, taken together, shall be deemed
to constitute one and the same instrument. 
Delivery of an executed counterpart of this Amendment by facsimile
transmission or by electronic mail in pdf form shall be as effective as
delivery of a manually executed counterpart hereof.

14.           Binding
Nature.  This Amendment shall be
binding upon and inure to the benefit of the parties hereto, their respective
successors, successors-in-titles, and assigns.

15.           Entire
Understanding.  This Amendment sets
forth the entire understanding of the parties with respect to the matters set
forth herein, and shall supersede any prior negotia­tions or agreements,
whether written or oral, with respect thereto.

[Signature Pages To Follow]

 6
 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed under seal by their respective authorized officers as of the day and
year first above written.

	
  BORROWER:

  	
  GTSI CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GUARANTORS:

  	
   

  	
  GTSI FINANCIAL SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TECHNOLOGY LOGISTICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO SECOND
AMENDMENT]

 7
 

 

 

	
  ADMINISTRATIVE AGENT AND

  	
   

  	
   

  
	
  LENDERS:

  	
  CRYSTAL CAPITAL FUND, L.P., as
  the Administrative Agent and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Crystal Capital
  GP, LLC, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO SECOND
AMENDMENT]

 8
 

 

 

	
  

  	
  CRYSTAL CAPITAL FUND, LTD, as
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO SECOND
AMENDMENT]

 

 9Exhibit
10.4

PROMISSORY NOTE

October 8, 2003

FOR VALUE RECEIVED,
PALIGENT INC., a Delaware corporation having its principal executive offices at
369 Lexington Avenue, 10th Floor, New York, NY 10017 (“Borrower”),
promises to pay to the order of RICHARD J. KURTZ, an individual having an
address at 270 Sylvan Avenue, Englewood Cliffs, New Jersey 07632 (“Holder”),
or assigns, the principal sum of the aggregate unpaid principal amount of all
loans (each a “Loan” and collectively, the “Borrowings”) made by Holder to
Borrower, as set forth on Schedule A attached hereto, plus interest
thereon at the rate set forth below, at such time as specified below.  The amount of each Loan made by Holder to
Borrower hereunder and the date such Loan is made and the amount of each
payment or prepayment made on account of the principal and/or interest thereof
shall be recorded by Holder on his books and on Schedule A attached
hereto.  Such books and Schedule A
shall constitute presumptive evidence, absent manifest error, of the accuracy
of the information contained herein or therein.

1.             Terms
of Payment.

1.1.          Interest.  The Borrowings shall accrue interest from the
respective date such loan is made as specified on Schedule A hereto at a
rate equal to eight percent (8%) per annum (based on a three hundred and sixty
five (365) day year).

1.2.          Principal
and Interest Repayment.  The
principal amount of this Note and accrued interest thereon shall be due and
payable upon the earlier of (i) the first anniversary of the making of the
first loan indicated on Schedule A hereto and (ii) the first funding of debt
and/or equity capital subsequent to the transaction contemplated by the Letter
of Intent between the Borrower and Digital Products of Delaware, Inc., dated
July 1, 2003, that results in aggregate net cash proceeds to the Borrower of
not less than One Million Dollars ($1,000,000).

1.3.          Form
of Payment.  Both the principal
amount of this Note, and all interest accrued thereon, shall be paid in such
currency of the United States of America as shall be legal tender at the time
of payment, and all payments or prepayments of principal and interest and other
sums due pursuant to this Note shall be made by certified check to Holder at
its address set forth above, or in immediately available funds by wire transfer
to Holder’s account at such bank as Holder shall have previously designated to
Borrower.  When any date on which
principal and interest are due and payable falls on a Saturday, Sunday or legal
holiday, then such payment shall be due and payable on the first business day
immediately following such date and interest shall be payable at the rate set
forth herein for the period of such extension.

1.4.          Optional
Prepayment.  This Note may be prepaid
by Borrower, in whole or in part, at any time or from time to time, without
premium or penalty.  All prepayments made

 

on this Note shall be applied first to the
payment of all unpaid interest accrued on this Note, and then to the
outstanding and unpaid principal amount of this Note as of the date of the
payment.

2.             Events
of Default.

2.1.          Definition
of Event of Default.  Any one or more
of the following events shall constitute an “Event of Default”:

2.1.1.       Borrower
fails to make any payment of principal or interest on this Note on or before
the date such payment is due and such failure continues for a period of ten
(10) business days after the payment due date;

2.1.2.       Borrower
makes an assignment for the benefit of creditors; files a petition in
bankruptcy; is adjudicated insolvent or bankrupt; petitions or applies to any
tribunal for the appointment of any receiver or trustee; or commences any
proceeding under law or statutes of any jurisdiction, whether now or hereafter
in effect, relating to reorganization, arrangement, readjustment of debt, dissolution
or liquidation, or there is commenced against Borrower any such proceeding
which shall not be dismissed within a period of sixty (60) days, or Borrower
indicates its written consent to, approval of, or acquiescence in any such
proceeding or the appointment of any receiver of or any trustee for it or any
substantial part of its property, or suffers any such receivership or
trusteeship to continue undischarged for a period of sixty (60) days; or

2.1.3.       Borrower
shall default in the performance of any of its covenants or agreements
contained in this Note, and, in the case of any such default which is capable
of being cured, continues uncured for ten (10) business days following the date
notice of such default is given to Borrower.

2.2.          Rights
upon Event of Default.  Upon the
occurrence of any Event of Default, Holder, at its option, may declare the
entire principal amount of this Note then outstanding, together with accrued
and unpaid interest thereon, immediately due and payable without presentment,
demand, protest or notice or other formality of any kind.  Holder also may exercise from time to time
any rights and remedies available to it by law and under any agreement or other
instrument relating to the amounts owed under this Note.

2.3.          Collection
Costs; Attorney’s Fees.  Borrower
shall promptly pay all of the reasonable costs and expenses of Holder incurred
in the collection of this Note, including reasonable attorney’s fees and
expenses, whether or not a suit to enforce such rights is actually instituted.  All of such unpaid costs and expenses shall
be added to the principal amount of this Note.

3.             Miscellaneous.

3.1.          Unconditional
Obligation; Waivers.  The obligations
of Borrower to make the payments provided for in this Note are absolute and
unconditional and not subject to any 

 2
 

 

defense, set-off, counterclaim, rescission,
recoupment or adjustment whatsoever. 
Borrower hereby waives presentment and demand for payment, notice of
non-payment, notice of dishonor, protest, notice of protest, bringing of suit
and diligence in taking any action to collect any amount called for under this
Note, and shall be directly and primarily liable for the payment of all amounts
owing and to be owing hereon, regardless of and without any notice, diligence,
act or omission with respect to the collection of any amount called for
hereunder.  No waiver of any provision of
this Note made by agreement of Holder and any other person shall constitute a
waiver of any other terms hereof, or otherwise release or discharge the
liability of Borrower under this Note. 
No failure to exercise and no delay in exercising, on the part of
Holder, any right, power or privilege under this Note shall operate as a waiver
thereof nor shall partial exercise of any right, power or privilege.  The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies provided by law.

3.2.          Notices
and Addresses.  Any notice, demand,
request, waiver, or other communication under this Note shall be in writing and
shall be deemed to have been duly given on the date of service, if personally
served or sent by facsimile by 5 p.m., EST (if after such time it shall be
deemed given on the business day thereafter); on the business day after notice
is delivered to a courier or mailed by express mail, if sent by courier
delivery service or express mail for next day delivery; and on the third (3rd) day after mailing, if mailed
to the party to whom notice is to be given, by first class mail, registered,
return receipt requested, postage prepaid and addressed as follows:

To Holder:

RICHARD J. KURTZ

270 Sylvan Avenue

Englewood Cliffs, New Jersey 07632 

Fax:  (201) 503-2279

To Borrower:

PALIGENT INC.

369 Lexington Avenue

10th Floor

New York, New York 10017

Attention: Salvatore A. Bucci, President and Chief Executive Officer

Fax: (212) 983-2379

3.3.          Lost,
Stolen or Mutilated Note.  Upon
receipt by Borrower of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Note or any Note exchanged for it, and (in
the case of loss, theft or destruction) of unsecured indemnity satisfactory to
it, and upon reimbursement to Borrower of all reasonable expenses incidental
thereto, and upon surrender and cancellation of such Note, if mutilated,
Borrower will make and deliver in lieu of such Note a new Note of like tenor
and unpaid principal amount and dated as of the original date of the Note.

 3
 

 

3.4.          Severability;
Binding Effect.  Any provision of
this Note which is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Note or affecting the validity or unenforceability of
any of the terms and provisions of this Note in any other jurisdiction.  This Note shall be binding upon and inure to
the benefit of the parties hereto and their successors and permitted
assigns.  Neither this Note nor any rights
or obligations hereunder may be assigned by Borrower without Holder’s prior
written consent.

3.5.          Governing
Law; Forum.  This Note and any
dispute, disagreement, or issue of construction or interpretation arising
hereunder whether relating to its execution, its validity, the obligations
provided therein or performance shall be governed and interpreted according to
the internal laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof. 
Each of the parties hereto hereby irrevocably and unconditionally
submits to the exclusive jurisdiction of any court of the State of New York or
any federal court sitting in the State of New York for purposes of any suit,
action or other proceeding arising out of this Note (and agrees not to commence
any action, suit or proceedings relating hereto except in such courts).  Each of the parties hereto agrees that
service of any process, summons, notice or document by U.S. registered mail at
its address set forth herein shall be effective service of process for any
action, suit or proceeding brought against it in any such court.  Each of the parties hereto hereby irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Note, which is brought by or against it,
in the courts of the State of New York or any federal court sitting in the
State of New York and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.

3.6.          Amendments.  This Note cannot be changed orally or
terminated orally.  Any amendment of, or
supplement to or other modification of this Note must be in a written
instrument executed by both parties hereto.

3.7.          Section
Headings.  Section headings herein
have been inserted for reference only and shall not be deemed to limit or
otherwise affect, in any matter, or be deemed to interpret in whole or in part
any of the terms or provisions of this Note.

IN WITNESS WHEREOF, this
Note has been executed and delivered as of the date specified above.

	
  

  	
  PALIGENT INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SALVATORE A. BUCCI

  	
   

  
	
   

  	
  Name: Salvatore
  A. Bucci

  
	
   

  	
  Title: President
  and Chief Executive Officer

  

 

 4

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