Document:

proginet10kex10-247312009.htm

Exhibit 10.24

 

BUSINESS FINANCING AGREEMENT

 

	
Borrower:
	
PROGINET CORPORATION
	
Lender:
	
BRIDGE BANK, National Association

	  	
200 Garden City Plaza
	  	
55 Almaden Boulevard, Suite 100

	  	
New York, NY  11530

 
	  	
San Jose, CA 95113

 

This BUSINESS FINANCING AGREEMENT, dated as of September 22, 2009, is made and entered into between BRIDGE BANK, NATIONAL ASSOCIATION (“Lender”) and Proginet Corporation, a Delaware (“Borrower”)
on the following terms and conditions:

 

	
1.
	
FINANCED RECEIVABLES.

 

	
  
	
1.1
	
Funding Requests.  Borrower may request that Lender finance Receivables by delivering to Lender a Funding Request for the Receivables for which a request for financing is made. Lender shall be entitled to rely on all the information provided by Borrower to Lender on or with the Funding Request.  The Lender may honor Funding Requests, instructions
or repayments given by the Borrower (if an individual) or by an Authorized Person.

 

	
  
	
1.2
	
Acceptance of Receivables.  Upon acceptance by Lender of any Receivable described in a Funding Request, Lender shall make an Advance to Borrower in an amount equal to the Advance Rate multiplied by the Receivable Amount of such Receivable. Upon Lender’s acceptance of the Receivable and payment to Borrower of the Advance, the Receivable shall
become a “Financed Receivable.”  It shall be a condition to each Advance that (a) all of the representations and warranties set forth in Section 5 are true and correct on the date of such Advance as though made at and as of each such date and (b) no Default has occurred and is continuing, or would result from such Advance.  Lender has no obligation to finance any Receivable and may exercise its sole discretion in determining whether any Receivable is an Eligible Receivable
before financing such Receivable.  In no event shall the Lender be obligated to make any Advance that results in an Overadvance or while any Overadvance is outstanding.

 

	
  
	
1.3
	
Rights in Respect of Financed Receivables.  Effective upon Lender’s payment of an Advance, Lender shall have the exclusive right to receive all Collections on the Financed Receivable.  Lender shall have, with respect to any goods related to the Financed Receivable, all the rights and remedies of an unpaid seller under the California
Uniform Commercial Code and other applicable law, including the rights of replevin, claim and delivery, reclamation and stoppage in transit.

 

	
  
	
1.4
	
Reserve.  The Reserve is a book balance maintained on the records of Lender and shall not be a segregated fund and is not the property of Borrower.

 

	
  
	
1.5
	
Due Diligence.  Lender may audit Borrower’s Receivables and any and all records pertaining to the Collateral, at Lender’s sole discretion and at Borrowers expense.  Lender may at any time and from time to time contact Account Debtors and other persons obligated or knowledgeable in respect of Receivables to confirm the Receivable
Amount of such Receivables, to determine whether Receivables constitute Eligible Receivables, and for any other purpose in connection with this Agreement.  If any of the Collateral or Borrower's books or records pertaining to the Collateral are in the possession of a third party, Borrower authorizes that third party to permit Lender or its agents to have access to perform inspections or audits thereof and to respond to Lender's requests for information concerning such Collateral and records.

 

	
2.
	
COLLECTIONS, CHARGES AND REMITTANCES.

 

	
  
	
2.1
	
Collections.  Subject to the Lender’s timely receipt of accurate application instructions from the Borrower with respect to the source and application of Collections, Lender shall credit to Collections with respect to Financed Receivables received by Lender to Borrower’s Account Balance within three business days of the date good funds
are received.  If no Default has occurred and is continuing, Lender agrees to credit the Refundable Reserve with the amount of Collections it receives with respect to Receivables other than Financed Receivables; provided that upon the occurrence and during the continuance of any Default, Lender may apply all Collections to the Obligations in such order and manner as Lender may determine.  Lender has no duty to do any act other
than to turnover such amounts as required above.  If an item of Collections is not honored or Lender does not receive good funds for any reason, the amount shall be included in the Account Balance as if the Collections had not been received and Finance Charges shall accrue thereon.

 

	
  
	
2.2
	
Financed Receivables Activity Report.  Within 15 days after the end of each Monthly Period, Lender shall send to Borrower a report covering the transactions for that Monthly Period, including the amount of all Financed Receivables, all Collections, Adjustments, Finance Charges, and other fees and charges.  The accounting shall be deemed correct
and conclusive unless Borrower makes written objection to Lender within 30 days after the Lender sends the accounting to Borrower.

 

  

1

  

 

	
  
	
2.3
	
Reconciliations.  Unless a Default has occurred and is continuing, Lender shall refund to Borrower after each Month End, the Refundable Reserve, if positive, calculated for such Month End, subject to Lender’s rights under Section 3.3 and Lender’s rights of offset and recoupment.  If the Refundable Reserve is negative, Borrower
shall immediately pay such amount in the same manner as set forth in Section 3.3 for Overadvances.

 

	
  
	
2.4
	
Adjustments.  In the event of a breach of Sections 5 or 6, or in the event any Adjustment or dispute is asserted by any Account Debtor, Borrower shall promptly advise Lender and shall, subject to the Lender’s approval, resolve such disputes and advise Lender of any Adjustments; provided that
in no case will the aggregate Adjustments made with respect to any Financed Receivable exceed 2% of its original Receivable Amount unless Borrower has obtained the prior written consent of Lender.  Unless the Advance for the disputed Financed Receivable is repaid in full, Lender shall have the right, at any time, to take possession of any rejected, returned, or recovered personal property. If such possession is not taken by Lender, Borrower is to resell it for Lender’s account at Borrower’s
expense with the proceeds made payable to Lender. While Borrower retains possession of any returned goods, Borrower shall segregate said goods and mark them as property of Lender.

 

	
  
	
2.5
	
Remittances; Lockbox Account Collection Services.  All proceeds of Receivables and Collateral shall be deposited into a lockbox or dominion account with Lender pursuant to an agreement acceptable to Lender (the “Blocked Account”).  Borrower shall use the Blocked Account address as the remit to and payment address for all proceeds
of Receivables and Collateral and it will be considered an immediate Event of Default if this does not occur or is not operational within 60 days of the date of this Agreement.  All proceeds of Receivables and Collateral received to the Blocked Account will be deposited to a non-interest bearing bank-control account maintained with Lender and Borrower will not have access to that account.  Borrower shall (i) immediately notify, transfer and deliver to Lender all Collections Borrower receives,
and (ii) deliver to Lender a detailed cash receipts journal on Friday of each week until the Blocked Account is operational.

 

	
3.
	
RECOURSE AND OVERADVANCES.

 

	
  
	
3.1
	
Recourse.  Advances and the other Obligations shall be with full recourse against Borrower. If any Advance is not repaid in full within 90 days from the earlier of (a) invoice date, or (b) the date on which such Advance is made, Borrower shall immediately pay the outstanding amount thereof to Lender.

 

	
  
	
3.2
	
Overadvances.  Upon any occurrence of an Overadvance, Borrower shall immediately pay down the Advances so that, after giving effect to such payments, no Overadvance exists.

 

	
  
	
3.3
	
Borrower’s Payment.  When any Overadvance or other amount owing to Lender becomes due, Lender shall inform Borrower of the manner of payment which may be any one or more of the following in Lender’s sole discretion: (a) in cash immediately upon demand therefore; (b) by delivery of substitute invoices and a Funding Request acceptable
to Lender which shall thereupon become Financed Receivables; (c) by deduction from or offset against the Refundable Reserve that would otherwise be due and payable to Borrower; (d) by deduction from or offset against the amount that otherwise would be forwarded to Borrower in respect of any further Advances that may be made by Lender; or (e) by any combination of the foregoing as Lender may from time to time choose.

 

	
4.
	
FEES AND FINANCE CHARGES.

 

	
  
	
4.1
	
Finance Charges.  Lender may, but is not required to, deduct the amount of accrued Finance Charge from Collections received by Lender.  On each Month End Borrower shall pay to Lender any accrued and unpaid Finance Charge as of such Month End.  Lender may deduct the accrued Finance Charges in calculating the Refundable Reserve.

 

	
  
	
4.2
	
Fees.

 

	
  
	
(a)
	
Termination Fee.  In the event this Agreement is terminated prior to the first anniversary of the date of this Agreement, Borrower shall pay the Termination Fee to Lender provided such Termination Fee shall be waived if this Agreement is terminated in connection with Borrower’s entry into another financing agreement
with Lender or if Borrower is acquired by a third party on terms and conditions acceptable to Lender.

 

	
  
	
(b)
	
Facility Fee.  Borrower shall pay the Facility Fee to Lender promptly upon the execution of this Agreement and annually thereafter.

 

	
  
	
(c)
	
Recovery Fee.  If Borrower fails to remit any Collections to Lender as provided in Section 2.5, Borrower shall in each case pay to Lender the Recovery Fee for such Collections.

 

	
  
	
(d)
	
Maintenance Fee.  Within ten days after each Month End, Borrower shall pay to Lender the Maintenance Fee.

 

  

2

  

 

	
  
	
(e)
	
Due Diligence Fee.  Borrower shall pay the Due Diligence Fee to Lender promptly upon the first anniversary of this Agreement and annually thereafter.

 

	
  
	
(f)
	
Fee in Lieu of Warrant.  Unless Borrower delivers a warrant in a form and substance acceptable to Lender, Borrower must pay the Fee in Lieu of Warrant to Lender promptly upon the execution of this Agreement.

 

	
5.
	
REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants:

 

	
  
	
5.1
	
With respect to each Financed Receivable:

 

	
  
	
(a)
	
It is the owner with legal right to sell, transfer and assign it;

 

	
  
	
(b)
	
The correct Receivable Amount is on the Funding Request and is not disputed;

 

	
  
	
(c)
	
Such Financed Receivable is an Eligible Receivable;

 

	
  
	
(d)
	
Lender has the right to endorse and/ or require Borrower to endorse all payments received on Financed Receivables and all proceeds of Collateral; and

 

	
  
	
(e)
	
No representation, warranty or other statement of Borrower in any certificate or written statement given to Lender contains any untrue statement of a material fact or omits to state a material fact necessary to make the statement contained in the certificates or statement not misleading.

 

	
  
	
5.2
	
Borrower is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified.

 

	
  
	
5.3
	
The execution, delivery and performance of this Agreement has been duly authorized, and does not conflict with Borrower’s organizational documents, nor constitute an Event of Default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound.

 

	
  
	
5.4
	
Borrower has good title to the Collateral and all inventory is in all material respects of good and marketable quality, free from material defects.

 

	
  
	
5.5
	
Borrower’s name, form of organization, chief executive office, and the place where the records concerning all Financed Receivables and Collateral are kept is set forth at the beginning of this Agreement, Borrower is located at its address for notices set forth in this Agreement.

 

	
  
	
5.6
	
If Borrower owns, holds or has any interest in, any copyrights (whether registered, or unregistered), patents or trademarks, and licenses of any of the foregoing, such interest has been specifically disclosed and identified to Lender in writing.

 

	
6.
	
MISCELLANEOUS PROVISIONS.  Borrower will:

 

	
  
	
6.1
	
Maintain its corporate existence and good standing in its jurisdictions of incorporation and maintain its qualification to do business in each jurisdiction necessary to Borrower’s business or operations.

 

	
  
	
6.2
	
Give Lender at least 30 days prior written notice of changes to its name, organization, chief executive office or location of records.

 

	
  
	
6.3
	
Pay all its taxes including gross payroll, withholding and sales taxes when due and will deliver satisfactory evidence of payment to Lender if requested.

 

	
  
	
6.4
	
If requested, provide to Lender a written report within 10 days, if payment of any Financed Receivable does not occur by its due date and include the reasons for the delay.

 

	
  
	
6.5
	
If applicable, give Lender copies of all Forms 10-K, 10-Q and 8-K (or equivalents) within 5 days of filing with the Securities and Exchange Commission, while any Financed Receivable is outstanding.

 

	
  
	
6.6
	
Execute any further instruments and take further action as Lender requests to perfect or continue Lender’s security interest in the Collateral or to affect the purposes of this Agreement.

 

	
  
	
6.7
	
Provide Lender with a Compliance Certificate no later than 30 days following each quarter end or as requested by Lender.

 

  

3

  

 

	
  
	
6.8
	
Immediately notify, transfer and deliver to Lender all Collections Borrower receives.

 

	
  
	
6.9
	
Not create, incur, assume, or be liable for any indebtedness, other than normal payables and accruals in the normal course of business and Permitted Indebtedness.

 

	
  
	
6.10
	
Immediately notify Lender if Borrower hereafter obtains any interest in any copyrights, patents, trademarks or licenses that are significant in value or are material to the conduct of its business or the value of any Financed Receivable.

 

	
  
	
6.11
	
At all times when any Advances are outstanding or upon request, provide to Lender no later than 30 days after the end of each month the following with respect to Borrower’s financial condition and results of operations for such month and the period then ending: balance sheet, income statement; statement of cash flows, accounts receivable and payable aging, deferred revenue report, and such other matters as
Lender may request.

 

	
  
	
6.12
	
Maintain its primary depository and operating accounts with Lender and, in the case of any deposit accounts not maintained with Lender, grant to Lender a first priority perfected security interest in and “control” (within the meaning of Section 9104 of the California Uniform Commercial Code) of such deposit account pursuant to documentation acceptable to Lender.

 

	
  
	
6.13
	
Provide to Lender within 120 days of the fiscal year end, Borrower’s consolidated annual financial statements, certified and dated by an authorized financial officer and reviewed by an independent Certified Public Accountant acceptable to Lender.

 

	
  
	
6.14
	
Provide to Lender promptly upon the execution hereof, the following documents which shall be in form satisfactory to Lender:  unless the Fee in Lieu of Warrant has been paid to Lender, a warrant to purchase a number of common shares of Borrower equal in aggregate share value to 2.5 (%) percent of the Formula Account Balance at a share price equal to the five day average trading price prior to the execution
of this Agreement.

 

	
  
	
6.15
	
Promptly provide to Lender such additional information and documents regarding the finances, properties, business or books and records of Borrower or any guarantor or any other obligor as Lender may request.

 

	
  
	
6.16
	
Maintain:

 

	
  
	
(a)
	
insurance satisfactory to Lender as to amount, nature and carrier covering property damage (including loss of use and occupancy) to any of the Borrower's properties, business interruption insurance, public liability insurance including coverage for contractual liability, product liability and workers' compensation, and any other insurance which is usual for the Borrower's business.  Each such policy shall
provide for at least thirty (30) days prior notice to Lender of any cancellation thereof and must include Lender as an additional insured.

 

	
  
	
(b)
	
all risk property damage insurance policies (including without limitation windstorm coverage, and hurricane coverage as applicable) covering the tangible property comprising the collateral.  Each insurance policy must be in an amount acceptable to Lender.  The insurance must be issued by an insurance company acceptable to Lender and
must include a lender's loss payable endorsement in favor of Lender in a form acceptable to Lender.

 

Upon the request of Lender, Borrower shall deliver to Lender a copy of each insurance policy, or, if permitted by Lender, a certificate of insurance listing all insurance in force.

 

	
7.
	
SECURITY INTEREST.  To secure the prompt payment and performance to Lender of all of the Obligations, Borrower hereby grants to Lender a continuing security interest in the Collateral.  Borrower is not authorized to sell, assign, transfer or otherwise convey any Collateral without Lender’s prior written consent, except for the sale
of finished inventory in the Borrower’s usual course of business.  Borrower agrees to sign any instruments and documents requested by Lender to evidence, perfect, or protect the interests of Lender in the Collateral.  Borrower agrees to deliver to Lender the originals of all instruments, chattel paper and documents evidencing or related to Financed Receivables and Collateral.  Borrower shall not grant or permit any lien or security in the Collateral or any interest therein
other than Permitted Liens.

 

	
8.
	
POWER OF ATTORNEY.  Borrower irrevocably appoints Lender and its successors and as true and lawful attorney in fact, and authorizes Lender (a) to, whether or not there has been an Event of Default, (i) demand, collect, receive, sue, and give releases to any Account Debtor for the monies due or which may become due upon or with respect to the Receivables
and to compromise, prosecute, or defend any action, claim, case or proceeding relating to the Receivables, including the filing of a claim or the voting of such claims in any bankruptcy case, all in Lender’s name or Borrower’s name, as Lender may choose; (ii) prepare, file and sign Borrower’s name on any notice, claim, assignment, demand, draft, or notice of or satisfaction of lien or mechanics’ lien or similar document; (iii) notify all Account Debtors with respect to the Receivables
to pay Lender directly; (iv) receive and open all mail addressed to Borrower for the purpose of collecting the Receivables; (v) endorse Borrower’s name on any checks or other forms of payment on the Receivables; (vi) execute on behalf of Borrower any and all instruments, documents, financing statements and the like to perfect Lender’s interests in the Receivables and Collateral; (vii) debit any Borrower’s deposit accounts maintained with Lender for any and all Obligations due under this Agreement;
and (viii) do all acts and things necessary or expedient, in furtherance of any such purposes, and (b) to, upon the occurrence and during the continuance of an Event of Default, sell, assign, transfer, pledge, compromise, or discharge the whole or any part of the Receivables.  Upon the occurrence and continuation of an Event of Default, all of the power of attorney rights granted by Borrower to Lender hereunder shall be applicable with respect to all Receivables and all Collateral.

 

  

4

  

 

	
9.
	
DEFAULT AND REMEDIES.

 

	
  
	
9.1
	
Events of Default.  The occurrence of any one or more of the following shall constitute an Event of Default hereunder.

 

	
  
	
(a)
	
Failure to Pay.  Borrower fails to make a payment under this Agreement after demand therefor.

 

	
  
	
(b)
	
Lien Priority.  Lender fails to have an enforceable first lien (except for any prior liens to which Lender has consented in writing) on or security interest in the Collateral.

 

	
  
	
(c)
	
False Information.  Borrower (or any guarantor) has given Lender any materially false or misleading information or representations or has failed to disclose any material fact relating to the subject matter of this Agreement.

 

	
  
	
(d)
	
(Intentionally omitted)

 

	
  
	
(e)
	
Bankruptcy.  Borrower (or any guarantor) files a bankruptcy petition, a bankruptcy petition is filed against Borrower (or any guarantor) or Borrower (or any guarantor) makes a general assignment for the benefit of creditors.

 

	
  
	
(f)
	
Receivers.  A receiver or similar official is appointed for a substantial portion of Borrower’s (or any guarantor’s) business, or the business is terminated.

 

	
  
	
(g)
	
Judgments.  Any judgments or arbitration awards are entered against Borrower (or any guarantor), or Borrower (or any guarantor) enters into any settlement agreements with respect to any litigation or arbitration and the aggregate amount of all such judgments, awards, and agreements exceeds $50,000, unless such judgment is
satisfied or subject to a stay of enforcement pending appeal within five (5) days of entry.

 

	
  
	
(h)
	
Material Adverse Change.  A material adverse change occurs, or is reasonably likely to occur, in Borrower’s (or any guarantor’s) business condition (financial or otherwise), operations, properties or prospects, or ability to repay the credit.

 

	
  
	
(i)
	
Cross-default.  Any default occurs under any agreement in connection with any credit Borrower (or any guarantor) or any of Borrower’s related entities or affiliates has obtained from anyone else or which Borrower (or any guarantor) or any of Borrower’s related entities or affiliates has guaranteed (other than
trade amounts payable incurred in the ordinary course of business and not more than 60 days past due).

 

	
  
	
(j)
	
Default under Related Documents.  Any default occurs under any guaranty, subordination agreement, security agreement, deed of trust, mortgage, or other document required by or delivered in connection with this Agreement or any such document is no longer in effect.

 

	
  
	
(k)
	
Other Agreements.  Borrower (or any guarantor) or any of Borrower’s related entities or affiliates fails to meet the conditions of, or fails to perform any obligation under any other agreement Borrower (or any guarantor) or any of Borrower’s related entities or affiliates has with Lender or any affiliate of Lender.

 

	
  
	
(l)
	
Change of Control.  The holders of the capital ownership of the Borrower as of the date hereof cease to own and control, directly and indirectly, at least 80% of the capital ownership of the Borrower.

 

	
  
	
(m)
	
Other Breach Under Agreement.  Borrower fails to meet the conditions of, or fails to perform any obligation under, any term of this Agreement not specifically referred to above, after notice thereof.

 

	
  
	
9.2
	
Remedies. Upon the occurrence of an Event of Default, (1) without implying any obligation to do so, Lender may cease making Advances or extending any other financial accommodations to Borrower; (2) all or a portion of the Obligations shall be, at the option of and upon demand by Lender, or with respect to an Event of Default described in Section 9.1(e),
automatically and without notice or demand, due and payable in full; and (3) Lender shall have and may exercise all the rights and remedies under this Agreement and under applicable law, including the rights and remedies of a secured party under the California Uniform Commercial Code, all the power of attorney rights described in Section 8 with respect to all Collateral, and the right to collect, dispose of, sell, lease, use, and realize upon all Financed Receivables and all Collateral in any commercial
reasonable manner.

 

  

5

  

 

	
10.
	
ACCRUAL OF INTEREST.  All interest and finance charges hereunder calculated at an annual rate shall be based on a year of 360 days, which results in a higher effective rate of interest than if a year of 365 or 366 days were used.  If any amount due under Section 4.2, amounts due under
Section 11, and any other Obligations not otherwise bearing interest hereunder is not paid when due, such amount shall bear interest at a per annum rate equal to the Finance Charge Percentage until the earlier of (i) payment in good funds or (ii) entry of a trial judgment thereof, at which time the principal amount of any money judgment remaining unsatisfied shall accrue interest at the highest rate allowed by applicable law.

 

	
11.
	
FEES, COSTS AND EXPENSES; INDEMNIFICATION. The Borrower will pay to Lender upon demand all fees, costs and expenses (including fees of attorneys and professionals and their costs and expenses) that Lender incurs or may from time to time impose in connection with any of the following: (a) preparing, negotiating, administering, and enforcing this Agreement
or any other agreement executed in connection herewith, including any amendments, waivers or consents in connection with any of the foregoing, (b) any litigation or dispute (whether instituted by Lender, Borrower or any other person) in any way relating to the Financed Receivables, the Collateral, this Agreement or any other agreement executed in connection herewith or therewith, (c) enforcing any rights against Borrower or any guarantor, or any Account Debtor, (d) protecting or enforcing its interest
in the Financed Receivables or the Collateral, (e) collecting the Financed Receivables and the Obligations, or (f) the representation of Lender in connection with any bankruptcy case or insolvency proceeding involving Borrower, any Financed Receivable, the Collateral, any Account Debtor, or any guarantor. Borrower shall indemnify and hold Lender harmless from and against any and all claims, actions, damages, costs, expenses, and liabilities of any nature whatsoever arising in connection with any of
the foregoing.

 

	
12.
	
INTEGRATION, SEVERABILITY WAIVER, AND CHOICE OF LAW.  This Agreement and any related security or other agreements required by this Agreement, collectively: (a) represent the sum of the understandings and agreements between Lender and Borrower concerning this credit; (b) replace any prior oral or written agreements between Lender and Borrower
concerning this credit; and (c) are intended by Lender and Borrower as the final, complete and exclusive statement of the terms agreed to by them. In the event of any conflict between this Agreement and any other agreements required by this Agreement, this Agreement will prevail. If any provision of this Agreement is deemed invalid by reason of law, this Agreement will be construed as not containing such provision and the remainder of the Agreement shall remain in full force and effect. Lender retains all
of its rights, even if it makes an Advance after a default. If Lender waives a default, it may enforce a later default. Any consent or waiver under, or amendment of, this Agreement must be in writing, and no such consent, waiver, or amendment shall imply any obligation by Lender to make any subsequent consent, waiver, or amendment.  THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.

 

	
13.
	
NOTICES; TELEPHONIC AND TELEFAX AUTHORIZATIONS.  All notices shall be given to Lender and Borrower at the addresses or faxes (or e-mail, if applicable) set forth on the signature page of this agreement and shall be deemed to have been delivered when actually received at the designated address.  Lender
may honor telephone, fax, e-mail or telefax instructions for Advances or repayments given, or purported to be given, by any one of the Authorized Persons.  Borrower will indemnify and hold Lender harmless from all liability, loss, and costs in connection with any act resulting from telephone or telefax instructions Lender reasonably believes are made by any Authorized Person.  This paragraph will survive this Agreement's termination, and will benefit Lender and its officers, employees, and
agents.

 

	
14.
	
DEFINITIONS AND CONSTRUCTION.

 

	
  
	
14.1
	
Definitions.  In this Agreement:

 

“Account Balance” means at any time the aggregate of the Receivable Amounts of all Financed Receivables at such time, as reflected on the records maintained by Lender.

 

“Account Debtor” has the meaning in the California Uniform Commercial Code and includes any person liable on any Receivable, including without limitation, any guarantor of any Receivable and any issuer of a letter of credit or banker’s
acceptance assuring payment thereof.

 

“Adjustments” means all discounts, allowances, disputes, offsets, defenses, rights of recoupment, rights of return, warranty claims, or short payments, asserted by or on behalf of any Account Debtor with respect to any Financed Receivable.

 

“Advance” means as to any Receivable, the advance made by Lender to Borrower in respect of such Receivable pursuant to Section 1.2.

 

“Advance Rate” means 80% or such greater or lesser percentage as Lender may from time to time establish in its sole discretion upon notice to Borrower.

 

  

6

  

 

“Agreement” means this Business Financing Agreement.

 

“Authorized Person” means any of Borrower (if an individual) or any one of the individuals authorized to sign on behalf of Borrower.

 

“Cash Reserve” means for any Financed Receivable which has been paid in full during a Monthly Period, the amount by which the amount(s) paid on such Financed Receivable exceeds the Advance made on such Financed Receivable.

 

“Collateral” means all of Borrower’s rights and interest in any and all personal property, whether now existing or hereafter acquired or created and wherever located, and all products and proceeds thereof and accessions thereto, including
but not limited to the following (collectively, the “Collateral”):  (a) all accounts (including health care insurance receivables), chattel paper (including tangible and electronic chattel paper), inventory (including all goods held for sale or lease or to be furnished under a contract for service, and including returns and repossessions), equipment (including all accessions and additions thereto), instruments (including promissory notes), investment property (including securities and securities
entitlements), documents (including negotiable documents), deposit accounts, letter of credit rights, money, any commercial tort claim of Borrower which is now or hereafter identified by Borrower or Lender, general intangibles (including payment intangibles and software), goods (including fixtures) and all of Borrower’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records; and (b) any and all cash proceeds and/or noncash proceeds thereof,
including without limitation, insurance proceeds, and all supporting obligations and the security therefore or for any right to payment.

 

“Collections” means all payments from or on behalf of an Account Debtor with respect to Receivables.

 

“Compliance Certificate” means a certificate in the form attached as Exhibit A to this Agreement by an Authorized Person that, among other things, the representations and warranties
set forth in this Agreement are true and correct as of the date such certificate is delivered.

 

“Credit Limit” means $800,000, which is intended to be the maximum amount of Advances at any time outstanding.

 

“Default” means any Event of Default or any event that with notice, lapse of time or otherwise would constitute an Event of Default.

 

“Due Diligence Fee” means an annual payment of $500 due upon the first anniversary of this Agreement and annually thereafter.

 

“Eligible Receivable” means a Receivable that satisfies all of the following:

 

	
  
	
(a)
	
The Receivable has been created by Borrower in the ordinary course of Borrower’s business and without any obligation on the part of Borrower to render any further performance.

 

	
  
	
(b)
	
There are no conditions which must be satisfied before Borrower is entitled to receive payment of the Receivable, and the Receivable does not arise from COD sales, consignments or guaranteed sales.

 

	
  
	
(c)
	
The Account Debtor upon the Receivable does not claim any defense to payment of the Receivable, whether well founded or otherwise.

 

	
  
	
(d)
	
The Receivable is not the obligation of an Account Debtor who has asserted or may reasonably be expected to assert any counterclaims or offsets against Borrower (including offsets for any “contra accounts” owed by Borrower to the Account Debtor for goods purchased by Borrower or for services performed for Borrower).

 

	
  
	
(e)
	
The Receivable represents a genuine obligation of the Account Debtor and to the extent any credit balances exist in favor of the Account Debtor, such credit balances shall be deducted in calculating the Receivable Amount.

 

	
  
	
(f)
	
Borrower has sent an invoice to the Account Debtor in the amount of the Receivable.

 

	
  
	
(g)
	
Borrower is not prohibited by the laws of the state where the Account Debtor is located from bringing an action in the courts of that state to enforce the Account Debtor’s obligation to pay the Receivable. Borrower has taken all appropriate actions to ensure access to the courts of the state where Account Debtor is located, including, where necessary; the filing of a Notice of Business Activities Report or
other similar filing with the applicable state agency or the qualification by Borrower as a foreign corporation authorized to transact business in such state.

 

  

7

  

 

	
  
	
(h)
	
The Receivable is owned by Borrower free of any title defects or any liens or interests of others except the security interest in favor of Lender, and Lender has a perfected, first priority security interest in such Receivable.

 

	
  
	
(i)
	
The Account Debtor on the Receivable is not any of the following:  (i) an employee, affiliate, parent or subsidiary of Borrower, or an entity which has common officers or directors with Borrower, (ii) the U.S. government or any agency or department of the U.S. government unless Lender agrees in writing to accept the Receivable, Borrower complies with the procedures in the Federal Assignment of
Claims Act of 1940 (41 U.S.C.§15) with respect to the Receivable, and the underlying contract expressly provides that neither the U.S. government nor any agency or department thereof shall have the right of set-off against Borrower; or (iii) any person or entity located in a foreign country unless (A) the Receivable is supported by an irrevocable letter of credit issued by a bank acceptable to Lender, and (B) if requested by Lender, the original of such letter of credit and/or any usance drafts
drawn under such letter of credit and accepted by the issuing or confirming bank have been delivered to Lender.

 

	
  
	
(j)
	
The Receivable is not in default (a Receivable will be considered in default if any of the following occur:  (i) the Receivable is not paid within 90 days from its invoice date; (ii) the Account Debtor obligated upon the Receivable suspends business, makes a general assignment for the benefit of creditors, or fails to pay its debts generally as they come due; or (iii) any petition is filed
by or against the Account Debtor obligated upon the Receivable under any bankruptcy law or any other law or laws for the relief of debtors).

 

	
  
	
(k)
	
The Receivable does not arise from the sale of goods which remain in Borrower’s possession or under Borrower’s control.

 

	
  
	
(l)
	
The Receivable is not evidenced by a promissory note or chattel paper, nor is the Account Debtor obligated to Borrower under any other obligation which is evidenced by a promissory note.

 

“Event of Default” has the meaning set forth in Section 9.1.

 

“Facility Fee” means a payment of an annual fee equal to 1.00 (%) percentage point of the Formula Account Balance due upon the date of this Agreement and each anniversary thereof until this Agreement is terminated pursuant to Section 17 hereof.

 

“Fee in Lieu of Warrant” means a fee equal to $25,000.

 

“Finance Charge” means for each Monthly Period an interest amount equal to the Finance Charge Percentage of the average daily Account Balance outstanding during such Monthly Period.

 

“Finance Charge Percentage” means a rate per year equal to the Prime Rate plus 0.64 (%) percentage points plus an additional 5.00 (%) percentage points during any period that an Event of Default has occurred and is continuing.

 

“Financed Receivable” means a Receivable for which Lender makes an Advance pursuant to a Funding Request.

 

“Formula Account Balance” means the dollar amount resulting from dividing the Credit Limit by the Advance Rate in effect at the time of calculation.

 

“Funding Request” means a writing signed by an authorized representative of Borrower which accurately identifies the Receivables which Lender, at its election, is being requested to finance, and includes for each such Receivable the correct
amount owed by the Account Debtor, the name and address of the Account Debtor, the invoice number, the invoice date and the account code in the form of the invoice schedule attached as Exhibit B hereto, together with copies of invoices and such other supporting documentation as the Lender may from time to time request.

 

“Lender” means Bridge Bank, National Association, and its successors and assigns.

 

"Maintenance Fee" means for any Monthly Period, the amount equal to 0.30 (%) percentage points of the average daily Account Balance for such Monthly Period, provided however effective the first business day of the month following the first month that Borrower
maintains an average daily cash balance of at least $750,000 in a demand deposit account maintained with Lender, such fee shall be equal to 0.20 (%) percentage points of the average daily Account Balance for such Monthly Period; provided further, in the event that Borrower is unable to maintain the average daily cash balance of at least $750,000 in a demand deposit account maintained with Lender for any month thereafter, the Maintenance Fee shall be increased back to 0.30 (%) percentage points and will not be
subject to further decreases.

 

“Month End” means the last calendar day of each Monthly Period.

 

  

8

  

 

“Monthly Period” means each calendar month.

 

“Obligations” means all liabilities and obligations of Borrower to Lender of any kind or nature, present or future, arising under or in connection with this Agreement or under any other document, instrument or agreement, whether or not evidenced
by any note, guarantee or other instrument, whether arising on account or by overdraft, whether direct or indirect (including those acquired by assignment) absolute or contingent, primary or secondary, due or to become due, now owing or hereafter arising, and however acquired; including, without limitation, all Advances, Finance Charges, fees, interest, expenses, professional fees and attorneys’ fees.

 

“Overadvance” means at any time an amount equal to the greater of the following amounts (if any):  (a) the amount by which the total amount of the Advances exceeds the Credit Limit and (b) the amount equal to the sum of (i) the
total outstanding amounts of all Advances made with respect to Receivables which were not, or have ceased to be, Eligible Receivables and (ii) the amount by which the total outstanding amount of all Advances (other than those under clause (i) above)) exceeds the product of (x) the Advance Rate and (y) the total outstanding Receivable Amounts of the Eligible Receivables in respect of which such Advances were made.

 

“Permitted Indebtedness” means:

 

	
  
	
(a)
	
Indebtedness under this Agreement or that is otherwise owed to the Lender.

 

	
  
	
(b)
	
Indebtedness existing on the date hereof and specifically disclosed on a schedule to this Agreement.

 

	
  
	
(c)
	
Purchase money indebtedness (including capital leases) incurred to acquire capital assets in ordinary course of business and not exceeding $25,000 in total principal amount at any time outstanding.

 

	
  
	
(d)
	
Other Indebtedness in an aggregate amount not to exceed $25,000 at any time outstanding; provided that such indebtedness is junior in priority (if secured) to the Obligations and provided that the incurrence of such Indebtedness does not otherwise cause and Event of Default hereunder.

 

	
  
	
(e)
	
Indebtedness incurred in the refinancing of any indebtedness set forth in (a) through (d) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon the Borrower.

 

	
  
	
(f)
	
Subordinated Debt.

 

“Permitted Liens” means:

 

	
  
	
(a)
	
Liens securing any of the indebtedness described in clauses (a) through (d) of the definition of Permitted Indebtedness.

 

	
  
	
(b)
	
Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no priority over any of Lender’s security interests.

 

	
  
	
(c)
	
Liens incurred in connection with the extension, renewal or refinancing of the indebtedness described in clause (e) of the definition of Permitted Indebtedness, provided that any extension, renewal or replacement lien shall be limited to the property encumbered by the existing lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase.

 

	
  
	
(d)
	
Liens securing Subordinated Debt.

 

“Prime Rate” means the greater of 4.00 (%) percentage points per year, or the variable rate of interest, per annum, most recently announced by Lender, as its “prime rate”, whether or not such announced rate is the lowest rate available from Lender.

 

“Recovery Fee” means for each item of Collections which the Borrower has failed to remit as required by the Agreement, a fee equal to the lesser of $5,000 or 5% of the amount of such item, but in no case less than $1,000.

 

“Receivable Amount” means as to any Receivable, the Receivable Amount due from the Account Debtor after deducting all discounts, credits, offsets, payments or other deductions of any nature whatsoever, whether or not claimed by the Account Debtor.

 

  

9

  

 

“Receivables” means Borrower’s rights to payment arising in the ordinary course of Borrower’s business, including accounts, chattel paper, instruments, contract rights, documents, general intangibles, letters of credit, drafts, and
bankers acceptances.

 

“Refundable Reserve” means for any Month End:

 

	
  
	
(a)
	
The sum of (i) the total of the Cash Reserves as to all Financed Receivables as of such Month End and (ii) the amount of Collections received by Lender during the Monthly Period with respect to Receivables other than Financed Receivables and not previously remitted to Borrower,

 

minus

 

	
  
	
(b)
	
The total for that Monthly Period ending on such Month End of:

 

	
  
	
(i)
	
Maintenance Fee, Facility Fee, the Fee in Lieu of Warrant (if applicable), Due Diligence Fee, and Recovery Fees;

 

(ii)           Finance Charges;

 

(iii)           Adjustments;

 

(iv)           Any outstanding Overadvance Amounts;

 

	
  
	
(v)
	
all amounts due, including professional fees and expenses, as set forth in Section 11 for which oral or written demand has been made by Lender to Borrower during that Monthly Period to the extent Lender has agreed to accept payment thereof by deduction from the Refundable Reserve; and

 

	
  
	
(vi)
	
all amounts collected by Borrower on Financed Receivables during the Monthly Period and not remitted to Lender.

 

“Reserve” means as to any Financed Receivable the amount by which the Receivable Amount of the Financed Receivable exceeds the Advance on that Financed Receivable.

 

“Reserve Percentage” means 100% less the Advance Rate.

 

“Subordinated Debt” means indebtedness of Borrower that is expressly subordinated to the indebtedness of Borrower owed to Lender pursuant to a subordination agreement satisfactory in form and substance to Lender.

 

“Termination Fee” means a payment equal to 1.00 (%) percent of the Formula Account Balance.

 

	
  
	
14.2
	
Construction:

 

	
  
	
(a)
	
In this Agreement: (i) references to the plural include the singular and to the singular include the plural; (ii) references to any gender include any other gender; (iii) the terms “include” and “including” are not limiting; (iv) the term “or” has the inclusive meaning represented by the phrase “and/or,” (v) unless otherwise specified, section
and subsection references are to this Agreement, and (vi) any reference to any statute, law, or regulation shall include all amendments thereto and revisions thereof.

 

	
  
	
(b)
	
Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved using any presumption against either Borrower or Lender, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been reviewed by each party hereto and their respective counsel.  In case of any ambiguity or uncertainty, this Agreement shall be construed and interpreted
according to the ordinary meaning of the words used to accomplish fairly the purposes and intentions of all parties hereto.

 

	
  
	
(c)
	
Titles and section headings used in this Agreement are for convenience only and shall not be used in interpreting this Agreement.

 

	
15.
	
JURY TRIAL WAIVER.  THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR
THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.

 

  

10

  

 

	
16.
	
JUDICIAL REFERENCE PROVISION.

 

	
  
	
16.1
	
In the event the Jury Trial Waiver set forth above is not enforceable, the parties elect to proceed under this Judicial Reference Provision.

 

	
  
	
16.2
	
With the exception of the items specified in clause (c), below, any controversy, dispute or claim (each, a “Claim”) between the parties arising out of or relating to this Agreement or any other document, instrument or agreement between the undersigned parties (collectively in this Section, the “Loan
Documents”), will be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to the reference proceeding. Except as otherwise provided in the Loan Documents,
venue for the reference proceeding will be in the state or federal court in the county or district where the real property involved in the action, if any, is located or in the state or federal court in the county or district where venue is otherwise appropriate under applicable law (the “Court”).

 

	
  
	
16.3
	
The matters that shall not be subject to a reference are the following: (i) nonjudicial foreclosure of any security interests in real or personal property, (ii) exercise of self-help remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv) temporary, provisional or ancillary remedies (including, without limitation, writs of attachment, writs of possession, temporary restraining
orders or preliminary injunctions). This reference provision does not limit the right of any party to exercise or oppose any of the rights and remedies described in clauses (i) and (ii) or to seek or oppose from a court of competent jurisdiction any of the items described in clauses (iii) and (iv). The exercise of, or opposition to, any of those items does not waive the right of any party to a reference pursuant to this reference provision as provided herein.

 

	
  
	
16.4
	
The referee shall be a retired judge or justice selected by mutual written agreement of the parties. If the parties do not agree within ten (10) days of a written request to do so by any party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the Court (or his or her representative). A request for appointment of a referee may be heard on an ex parte or expedited basis, and
the parties agree that irreparable harm would result if ex parte relief is not granted.  Pursuant to CCP § 170.6, each party shall have one peremptory challenge to the referee selected by the Presiding Judge of the Court (or his or her representative).

 

	
  
	
16.5
	
The parties agree that time is of the essence in conducting the reference proceedings. Accordingly, the referee shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues of law or fact within one hundred twenty
(120) days after the date of the conference and (iii) report a statement of decision within twenty (20) days after the matter has been submitted for decision.

 

	
  
	
16.6
	
The referee will have power to expand or limit the amount and duration of discovery.  The referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s failure to provide requested discovery for any reason whatsoever.  Unless otherwise ordered based upon good cause shown, no party shall be entitled to “priority” in conducting discovery, depositions
may be taken by either party upon seven (7) days written notice, and all other discovery shall be responded to within fifteen (15) days after service.  All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding.

 

	
  
	
16.7
	
Except as expressly set forth herein, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding.  All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court
reporter, except that when any party so requests, a court reporter will be used at any hearing conducted before the referee, and the referee will be provided a courtesy copy of the transcript.  The party making such a request shall have the obligation to arrange for and pay the court reporter.  Subject to the referee’s power to award costs to the prevailing party, the parties will equally share the cost of the referee and the court reporter at trial.

 

	
  
	
16.8
	
The referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California.  The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding.  The referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that will be binding on
the parties and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision at the close of the reference proceeding which disposes of all claims of the parties that are the subject of the reference.  Pursuant to CCP § 644, such decision shall be entered by the Court as a judgment or an order in the same manner as if the action had been tried by the Court and any such decision
will be final, binding and conclusive.  The parties reserve the right to appeal from the final judgment or order or from any appealable decision or order entered by the referee.  The parties reserve the right to findings of fact, conclusions of laws, a written statement of decision, and the right to move for a new trial or a different judgment, which new trial, if granted, is also to be a reference proceeding under this provision.

 

  

11

  

 

	
  
	
16.9
	
If the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by reference procedure will be resolved and determined by arbitration.  The arbitration will be conducted by a retired judge or justice, in accordance with the California Arbitration Act §1280 through §1294.2
of the CCP as amended from time to time.  The limitations with respect to discovery set forth above shall apply to any such arbitration proceeding.

 

	
  
	
16.10
	
THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.  AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY,
DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

 

	
17.
	
TERM AND TERMINATION.  Borrower and Lender each have the right to terminate the financing of Receivables under this Agreement at any time upon notice to the other: provided that no such termination shall affect Lender’s security interest in the Financed Receivables and other Collateral,
and this Agreement shall continue to be effective, and the obligations of Borrower to indemnify Lender with respect to the expenses, damages, losses, costs and liabilities described in Section 11 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Lender have run, and Lender’s rights and remedies hereunder shall survive any such termination, until all transactions entered into and Obligations incurred hereunder or in connection herewith have
been completed and satisfied in full.  Upon any such termination, Borrower shall, upon demand by Lender, immediately repay all Advances then outstanding,

 

	
18.
	
OTHER AGREEMENTS.  (i) Any security agreements, liens and/or security interests securing payment of any obligations of Borrower owing to Lender or its affiliates also secure the Obligations, and are valid and subsisting and are not adversely affected by execution of this Agreement.  An Event of Default under this Agreement constitutes
a default under other outstanding agreements between Borrower and Lender or its affiliates; (ii) Lender reserves the right to issue press releases, advertisements, and other promotional materials describing any successful outcome of services provided on Borrower’s behalf. Borrower agrees that Lender shall have the right to identify Borrower by name in those materials.

 

IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement on the day and year above written.

 

	
BORROWER:
	
LENDER:

	  	  
	
PROGINET CORPORATION

 

 

 

By                                                          
           

Name:                                                                

Title:                                                       
          
	
BRIDGE BANK, NATIONAL ASSOCIATION

 

 

 

By                                                              
       

Name:                                                                

Title:                                                                  

	  	  
	
Address for Notices:

200 Garden City Plaza

New York, NY  11530

Fax:  ______________
	
Address for Notices:

55 Almaden Blvd.

San Jose, CA 95113

Fax:  (408) 423-8510

  

12

  

Exhibit A

 

COMPLIANCE CERTIFICATE

	
TO:
	
BRIDGE BANK, NATIONAL ASSOCIATION (the “Lender”)

 

	
FROM:
	
PROGINET CORPORATION (the “Borrower”)

 

The undersigned authorized officer of Proginet Corporation hereby certifies that in accordance with the terms and conditions of the Business Financing Agreement between Borrower and Lender (the “Agreement”), (i) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted
below and (ii) all representations and warranties of Borrower stated in the Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

	
Reporting Covenant
	
Required
	
Complies

	  	  	  	  
	
Consolidated monthly financial statements
	
Within 30 days of the end of each calendar month
	
Yes
	
No

	  	  	  	  
	
A/R & A/P Agings by invoice date and Deferred Revenue Schedule
	
Within 30 days of the end of each calendar month
	
Yes
	
No

	  	  	  	  
	
Compliance Certificate
	
Within 30 days of the end of each quarter
	
Yes
	
No

	  	  	  	  
	
CPA reviewed annual financial statements
	
Within 120 days of FYE
	
Yes
	
No

	  	  	  	  
	  	  	  	  
	
Financial Covenant
	
Required
	
Actual
	
Complies

	  	  	  	  	  
	
NA
	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	
Deposits
	  	  	  	  
	
Deposits held at Bridge Bank: $________________________
	  	  	  	  
	
Deposits held outside of Bridge Bank: $__________________  
	  	  	  	  
	  
	  	  	  	  	  
	
Comments Regarding Exceptions:  See Attached.
	
 BANK USE ONLY

	  	  
	  	
 Received by:                                                                    
                                                          

	
Sincerely,
	
AUTHORIZED SIGNER

	  	  
	  	
 Date:                                                                                                                                    
       

	  	  
	                                                                                                     
           	
 Verified:                                                                                                       
                               

	
SIGNATURE
	
AUTHORIZED SIGNER

	  	  
	  	  
	                                                                                                                 	
 Date:                                                                                 

	
TITLE
	  
	  	
 Compliance Status
	
Yes
	
No

	                                                                                                                 	  
	
DATE
	  

  

13

  

Exhibit B

 

FUNDING REQUEST

(RECEIVABLES ADVANCE)

	
To:
	
Bridge Bank, National Association

	
Fax:
	
(408) 423-8514

	
Date:
	
     

	
From:
	
     

Borrower's Name

	  	  

Authorized Signature

	  	
     

Authorized Signer's Name (please print)

	  	
      

Phone Number

	
To Account #
	
      

Borrower hereby requests funding in the Gross amount of $ ______________________  representing a

Net advance in the amount of $_____________________  in accordance with the attached invoices.

Each invoice shall indicate the correct amount owed by the Account Debtor, the name and address of the Account Debtor, the invoice number, and the invoice date.

 

Borrower hereby authorizes Lender to rely on facsimile stamp signatures and treat them as authorized by Borrower for the purpose of requesting Advances.

All representations and warranties of Borrower stated in the Business Financing Agreement are true, correct and complete in all material respects as of the date of this Funding Request; provided that those representations and warranties expressly referring to another date shall
be true, correct and complete in all material respects as of such date.

Capitalized terms used herein and not otherwise defined have the meanings set forth in the Business Financing Agreement.

  

14

  

CORPORATE RESOLUTIONS TO BORROW

 

Borrower:               PROGINET CORPORATION

 

I, the undersigned Secretary or Assistant Secretary of Proginet Corporation (the “Corporation”), HEREBY CERTIFY that the Corporation is organized and existing under and by virtue of the laws of the State of Delaware.

 

I FURTHER CERTIFY that attached hereto as Attachments A and B are true and complete copies of the Articles of Incorporation, as amended, and the Bylaws of the Corporation, each of which is in full force and effect on the date hereof.

 

I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly called and held, at which a quorum was present and voting (or by other duly authorized corporate action in lieu of a meeting), the following resolutions (the “Resolutions”)
were adopted.

 

BE IT RESOLVED, that any one (1) of the following named officers, employees, or agents of this Corporation, whose actual signatures are shown below:

 

	
NAMES
	  	
POSITION
	  	
ACTUAL SIGNATURES

	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  

 

acting for and on behalf of this Corporation and as its act and deed be, and they hereby are, authorized and empowered:

 

Borrow Money. To borrow from time to time from Bridge Bank, N.A. (“Bank”), on such terms as may be agreed upon between the officers, employees, or agents of the Corporation and Bank, such
sum or sums of money as in their judgment should be borrowed, without limitation.

 

Execute Loan Documents. To execute and deliver to Bank that certain Business Financing Agreement dated as of September 22, 2009 (the “Financing Agreement”) and any other agreement entered
into between Corporation and Bank in connection with the Financing Agreement, including any amendments, all as amended or extended from time to time (collectively, with the Financing Agreement, the “Loan Documents”), and also to execute and deliver to Bank one or more renewals, extensions, modifications, refinancings, consolidations, or substitutions for the Loan Documents, or any portion thereof.

 

Grant Security. To grant a security interest to Bank in the Collateral described in the Loan Documents, which security interest shall secure all of the Corporation’s Obligations, as described in the Loan Documents.

 

Negotiate Items. To draw, endorse, and discount with Bank all drafts, trade acceptances, promissory notes, or other evidences of indebtedness payable to or belonging to the Corporation or in which the Corporation may have an interest, and either to receive cash for the same or to
cause such proceeds to be credited to the account of the Corporation with Bank, or to cause such other disposition of the proceeds derived therefrom as they may deem advisable.

 

Warrants.  If so provided in the Loan Documents, to issue Bank warrants to purchase the Corporation’s capital stock.

 

Further Acts.  In the case of lines of credit, to designate additional or alternate individuals as being authorized to request advances thereunder, and in all cases, to do and perform such other acts and things, to pay any and all fees and costs, and to execute and deliver
such other documents and agreements as they may in their discretion deem reasonably necessary or proper in order to carry into effect the provisions of these Resolutions.

 

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these resolutions and performed prior to the passage of these resolutions are hereby ratified and approved, that these Resolutions shall remain in full force and effect and Bank may rely on these Resolutions until written notice of their revocation shall have been delivered
to and received by Bank. Any such notice shall not affect any of the Corporation’s agreements or commitments in effect at the time notice is given.

 

I FURTHER CERTIFY that the officers, employees, and agents named above are duly elected, appointed, or employed by or for the Corporation, as the case may be, and occupy the positions set forth opposite their respective names; that the foregoing Resolutions now stand of record on the books of the Corporation; and that the Resolutions are
in full force and effect and have not been modified or revoked in any manner whatsoever.

 

  

15

  

 

IN WITNESS WHEREOF, I have hereunto set my hand on September 22, 2009 and attest that the signatures set opposite the names listed above are their genuine signatures.

 

	  	
CERTIFIED AND ATTESTED BY:

x                                                                                                    

	  	  

 

  

16

  

ATTACHMENT A

 

ARTICLES OF INCORPORATION

 

This page intentionally left blank.

  

17

  

ATTACHMENT B

 

BYLAWS OF THE CORPORATION

 

 

 

This page intentionally left blank.

 

18Exhibit 10.1

 

FORBEARANCE
AGREEMENT

 

This
FORBEARANCE AGREEMENT, dated as of September 25, 2009 (this “Agreement”),
is by and among FairPoint Communications, Inc., a Delaware corporation (the “Borrower”),
the subsidiaries of the Borrower party hereto (the “Subsidiary Guarantors”;
and together with the Borrower, each a “Credit Party” and collectively,
the “Credit Parties”), the Lenders party hereto and Bank of America,
N.A., in its capacity as administrative agent (in such capacity, the “Administrative
Agent”) and collateral agent (in such capacity, the “Collateral Agent”).

 

WHEREAS,
the Borrower, the Lenders and the Administrative Agent are parties to that
certain Credit Agreement, dated as of March 31, 2008 (as heretofore amended,
modified and/or supplemented, the “Credit Agreement”; capitalized terms
used and not defined herein shall have the meanings assigned to such terms in
the Credit Agreement); and

 

WHEREAS,
the Borrower has (a) informed the Administrative Agent, the Collateral Agent
and the Lenders that Events of Default may occur as a result of the potential
failure of the Borrower to (i) pay principal and interest in respect of the
Loans to the extent due and payable on September 30, 2009 (the “September Payment
Defaults”), (ii) make payments in respect of Secured Interest Rate
Agreements (as defined in the Pledge Agreement) to the extent due and payable
on September 30, 2009 or any time during the Forbearance Period (as hereinafter
defined) (the “Swap Payment Defaults”), (iii) comply with Section 7.06
of the Credit Agreement solely to the extent relating to intercompany loans and
advances between or among the Borrower and its Wholly-Owned Subsidiaries
existing prior to the date hereof (the “Intercompany Loan Defaults”), (iv)
comply with the minimum Interest Coverage Ratio covenant set forth in Section 7.11
of the Credit Agreement for any fiscal period ended prior to October 1, 2009
(the “Interest Coverage Ratio Default”) and (v) comply with the maximum
Leverage Ratio covenant set forth in Section 7.12 of the Credit Agreement for
any fiscal period ended prior to October 1, 2009 (the “Leverage Ratio
Default”; and together with the September Payment Defaults, the Swap
Payment Defaults, the Intercompany Loan Defaults and the Interest Coverage
Ratio Default, each a “Designated Event of Default” and collectively,
the “Designated Events of Default”), and (b) requested that the
Administrative Agent, the Collateral Agent and the Lenders temporarily forbear,
subject to the terms and conditions set forth herein, from exercising their
rights and remedies under the Credit Agreement and the other Credit Documents
with respect to the Designated Events of Default to the extent such events
occur.

 

NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:

 

SECTION I.  FORBEARANCE; CERTAIN RESTRICTIONS

 

1.01         Forbearance.  Subject to the terms and conditions set forth
herein, the Administrative Agent, the Collateral Agent and the Lenders party
hereto agree to forbear from exercising their rights and remedies under the
Credit Agreement and the other Credit Documents solely with respect to the
Designated Events of Default until October 30, 2009 (such date, subject to the
following proviso, the “Forbearance Termination Date”); provided,
that the Forbearance Termination Date shall be automatically accelerated to
the date of the earliest to 

 

 

 

occur of any of
the following events: (a) the occurrence after the date hereof of any Default
or Event of Default other than the Designated Events of Default, (b) the
failure of the Borrower or any of the other Credit Parties to comply with any
term, covenant or provision set forth in this Agreement, including, without
limitation, those set forth in Section 1.02 and Section IV hereof, (c) the
occurrence after the date hereof of any payment by or on behalf of the Borrower
of any interest or other amounts (whether in cash, by capitalizing such
interest or other amounts or otherwise) to the holders of (x) the Spinco Senior
Notes or (y) the 13 1/8% Senior Notes issued by the Borrower pursuant to the
Indenture, dated as of July 29, 2009, between the Borrower and U.S. Bank
National Association, as trustee, (d) the occurrence after the date hereof of
any payment by or on behalf of the Borrower of any amounts payable under or in
respect of any Secured Interest Rate Agreement and (e) the date that any of the
Credit Parties or any of their respective affiliates joins in, assists,
cooperates or participates as an adverse party or adverse witness in any suit
or other proceeding against the Administrative Agent, the Collateral Agent, the
Lenders or any affiliate of the Administrative Agent, the Collateral Agent or
any Lender relating to the Obligations or in respect of any amounts owing under
or in connection with the Credit Agreement, the other Credit Documents, this
Agreement or any documents, agreements or instruments executed in connection
therewith.  On and after the Forbearance
Termination Date, the Administrative Agent, the Collateral Agent and each of
the Lenders party hereto may proceed to enforce any and/or all of their rights
and remedies under or in respect of the Credit Agreement, the other Credit
Documents and applicable law, including, without limitation, the right to
require that the Borrower repay immediately any amounts then due and owing to
the Administrative Agent, the Collateral Agent and the Lenders without the
giving of notice or the expiration of any applicable grace period.

 

1.02         No Borrowings
or Conversions to Eurodollar Loans; Default Interest.
Notwithstanding anything to the contrary contained in the Credit Agreement or
any other Credit Document, the Credit Parties hereby acknowledge and agree
that, on an after the date hereof, (i) Loans will no longer be available to the
Borrower and may not be requested, (ii) no outstanding Loans may be converted
to a Eurodollar Loan, (iii) each Eurodollar Loan shall be converted to a Base
Rate Loan at the end of the Interest Period applicable thereto and (iv) in
accordance with Section 1.08(c) of the Credit Agreement, interest in respect of
all overdue amounts payable under the Credit Agreement (including, without
limitation, amounts overdue as a result of the September Payment Defaults)
shall accrue at a rate per annum equal to the Base Rate, plus the sum of (x) 2.0%
and (y) the Applicable Base Rate Margin (provided, that principal in respect of
Eurodollar Loans shall bear interest from the date the same becomes due until
the end of the Interest Period then applicable to such Eurodollar Loan at a
rate per annum no less than one which is equal to 2% in excess of the rate
applicable thereto on such date).

 

SECTION II.  RATIFICATION OF EXISTING AGREEMENTS

 

2.01         All
of the representations and warranties made by the Credit Parties in the Credit
Agreement and the other Credit Documents are true and correct in all material
respects on the date hereof as if made on and as of the date hereof, except (i)
for the representation and warranty made by the Credit Parties in the last
sentence of Section 5.09(b) of the Credit Agreement and (ii) to the extent that
any of such representations and warranties relate by their terms to a prior
date (in which case such representations and warranties shall have been true
and 

 

 

correct in all material respects as of such prior date) or relate
directly to the Designated Events of Default.

 

2.02         The
Credit Parties agree that their obligations to the Administrative Agent, the
Collateral Agent and each of the Lenders as evidenced by or otherwise arising
under the Credit Agreement and the other Credit Documents remain in full force
and effect and are confirmed and ratified in all respects.

 

2.03         The
Credit Parties hereby confirm that the security interests and liens granted to
the Collateral Agent pursuant to the Credit Documents continue to secure the
Obligations and that such security interests and liens remain in full force and
effect.

 

2.04         The
Credit Parties acknowledge and agree that as of September 22, 2009, (i) the
aggregate outstanding principal amount of the LCPI Loans under the Credit
Agreement is in an amount equal to $29,695,328.36; (ii) the aggregate
outstanding principal amount of the RF Loans under the Credit Agreement is in
an amount equal to $120,304,671.64; (iii) the aggregate outstanding principal
amount of the A Term Loans under the Credit Agreement is in an amount equal to
$491,575,000.00; (iv) the aggregate outstanding principal amount of the Initial
B Term Loans and the Delayed-Draw B Term Loans under the Credit Agreement is in
an amount equal to $1,323,875,000.00 and (vi) the aggregate available amount
under all Letters of Credit outstanding under the Credit Agreement is in an
amount equal to $18,192,740.00.

 

2.05         The
Credit Parties acknowledge and agree that this Agreement is a Credit Document
and that all of their obligations arising under and relating to this Agreement
constitute Obligations under the Credit Agreement.

 

SECTION III.  CONDITIONS PRECEDENT

 

The
Administrative Agent’s, Collateral Agent’s and each of the Lenders’ forbearance
obligations hereunder shall be subject to the fulfillment of the following
conditions on the date hereof:

 

3.01         All
representations and warranties contained in this Agreement or otherwise made in
writing to the Administrative Agent, the Collateral Agent and the Lenders in
connection herewith shall be true and correct on and as of the date hereof.

 

3.02         The
Administrative Agent shall have received counterparts of this Agreement duly
executed by each of the Credit Parties, the Administrative Agent, the
Collateral Agent and the Lenders constituting the Required Lenders under the
Credit Agreement.

 

3.03         No
event shall have occurred which constitutes a Default or an Event of Default
under the Credit Agreement (other than the Designated Events of Default).

 

3.04         The
Administrative Agent shall have received reasonably satisfactory evidence that
all action necessary for the valid execution and delivery by the Borrower and
each of the other Credit Parties of this Agreement and any and all other agreements
and documents contemplated by this Agreement shall have been taken.

 

 

3.05         The
Administrative Agent shall have received a fully-executed and enforceable
agreement from Wachovia Bank, National Association (“Wachovia”), in form
and substance satisfactory to the Administrative Agent and the Required
Lenders, pursuant to which Wachovia will agree that, until a date not earlier
than the Forbearance Termination Date, it will forbear from exercising any of
its rights and remedies under its Secured Interest Rate Agreement with the
Borrower in respect of the Swap Payment Default under such Secured Interest
Rate Agreement.

 

SECTION IV.  COVENANTS OF THE CREDIT PARTIES

 

The
Credit Parties covenant and agree with the Administrative Agent, the Collateral
Agent and each of the Lenders as follows:

 

4.01         Compliance
with Credit Documents.  Other than
the Designated Events of Default, the Credit Parties agree to comply and
continue to comply with all of the terms, covenants and provisions contained in
the Credit Documents, subject to applicable notice, grace and cure periods.

 

4.02         Financial
Advisor.  Notwithstanding anything to
the contrary contained in the letter agreement, dated September 1, 2009, as
amended September 10, 2009 (the “FTI Acknowledgement Letter”), between
the Borrower and FTI Consulting, Inc. (“FTI”) or otherwise, the Credit
Parties hereby (a) expressly confirm and reaffirm (i) the right of Kaye Scholer
LLP to retain and utilize the services of FTI in connection with its
representation of the Administrative Agent and Collateral Agent under the
Credit Agreement and the other Credit Documents, including, without limitation,
in connection with the Administrative Agent’s and/or Collateral Agent’s
administration and enforcement of the Credit Agreement and other Credit
Documents and (ii) the obligation of the Borrower pursuant to Section 11.01(a) of
the Credit Agreement to pay for all reasonable fees and expenses of FTI (it
being understood and agreed that, notwithstanding the provisions of this clause
(ii), the fees and expenses of FTI shall be payable by the Borrower in such
amounts and in such manner as set forth in the FTI Acknowledgement Letter) and (b)
acknowledge and agree that the Borrower will not, and shall have no right to,
terminate the FTI Acknowledgement Letter or any of its obligations
thereunder.  In addition, the Credit
Parties agree to cooperate reasonably with FTI, including, without limitation,
allowing FTI reasonable access to the Borrower’s premises, books, records and
personnel.

 

4.03         Restrictions
on Activities of Credit Parties and their Subsidiaries.  Each of the Credit Parties hereby agrees
that, during the period commencing on the date hereof and ending on the
Forbearance Termination Date (the “Forbearance Period”), it will not,
and will not permit any of its Subsidiaries to (i) create or incur any
additional Indebtedness, (ii) purchase, make or otherwise acquire any
Investments, except as expressly permitted under clauses (a), (b), (d) and (e) of
Section 7.06 of the Credit Agreement, (iii) make any Restricted Payments,
except as expressly permitted under clauses (i) and (x) of Section 7.09 of the
Credit Agreement and (iv) make, or agree to make, any capital expenditures,
except for capital expenditures made in the ordinary course of business.

 

 

SECTION V.  MISCELLANEOUS

 

5.01         Representations and Warranties. 
The Credit Parties jointly and severally represent and warrant (which
representations and warranties shall survive the execution and delivery hereof)
to the Administrative Agent, the Collateral Agent and each of the Lenders that:

 

(a)                                  Such parties have the power and authority
to execute, deliver and carry out the terms and provisions of this Agreement
and the transactions contemplated hereby and have taken or caused to be taken
all necessary action to authorize the execution, delivery and performance of
this Agreement and the transactions contemplated hereby;

 

(b)                                 No consent of any other person, and no
action of, or filing with any governmental or public body or authority is
required to authorize, or is otherwise required in connection with the
execution, delivery and performance of this Agreement by such parties;

 

(c)                                  This Agreement has been duly executed and
delivered on behalf of such parties by duly authorized officers of such parties,
and constitutes the legal, valid and binding obligation of such parties
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium and other similar laws relating to or affecting the
enforcement of creditors’ rights generally and the exercise of judicial
discretion in accordance with general principles of equity (regardless of
whether enforcement is sought in equity or at law);

 

(d)                                 The execution, delivery and performance
of this Agreement will not violate any law, statute or regulation or any order
or decree of any court or governmental instrumentality, or conflict with, or
result in the breach of, or constitute a default under any contractual
obligation of such parties; and

 

(e)                                  On and as of the date hereof and giving
effect to this Agreement, no Default or Event of Default has occurred and is
continuing, other than the Designated Events of Default (if any).

 

5.02         No Present Claims. 
The Credit Parties acknowledge and agree that, as of the date hereof: (a)
none of the Credit Parties have any claim or cause of action against any of the
Lenders, the Administrative Agent or the Collateral Agent (or any of their
respective directors, officers, employees, attorneys or agents); (b) none of
the Credit Parties have offset rights, counterclaims or defenses of any kind
against any of their obligations, indebtedness or liabilities owing to any of
the Lenders, the Administrative Agent or the Collateral Agent under the Credit
Documents; and (c) each of the Lenders, the Administrative Agent and the
Collateral Agent have heretofore properly performed and satisfied in a timely
manner all of their 

 

 

obligations to the Credit Parties and each of their respective
Subsidiaries.  The Credit Parties on
their own behalf and on behalf of each of their respective successors and
assigns, hereby waive, release and discharge the Lenders, the Administrative
Agent and the Collateral Agent and all of their respective directors, officers,
employees, attorneys and agents, from any and all claims, demands, actions or
causes of action arising out of or in any way relating to the Credit Documents
and any documents, instruments, agreements (including this Agreement), dealings
or other matters connected with the Credit Documents, including, without
limitation, all known and unknown matters, claims, transactions or things
occurring on or prior to the date of this Agreement related to the Credit
Documents.  The waivers, releases, and
discharges in this paragraph shall be effective regardless of any other event
that may occur or not occur on or after the date hereof.

 

5.03         No
Waiver.  Nothing in this Agreement
shall extend to or affect in any way any of the rights or obligations of the
Credit Parties or any of the Administrative Agent’s, the Collateral Agent’s or
the Lenders’ obligations, rights and remedies arising under the Credit
Documents, and none of the Administrative Agent, the Collateral Agent and the
Lenders shall be deemed to have waived any or all of its rights or remedies
with respect to any Default or Event of Default existing on the date hereof or
arising hereafter.

 

5.04         GOVERNING
LAW.  THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(OTHER THAN CONFLICTS OF LAWS PRINCIPLES THEREOF).

 

5.05         WAIVER
OF JURY TRIAL.  THE CREDIT PARTIES
HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE CREDIT
DOCUMENTS OR ANY OF THE CREDIT PARTIES’ OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE PERFORMANCE OF SUCH OBLIGATIONS.  TO
THE FULL EXTENT PERMITTED BY APPLICABLE LAW, THE CREDIT PARTIES SHALL NOT
ASSERT, AND HEREBY WAIVE, ANY CLAIM OR RIGHT THEY MAY HAVE TO RECOVER IN ANY
LITIGATION REFERRED TO IN THE PRECEDING SENTENCE, ON ANY THEORY OF LIABILITY,
FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES (AS OPPOSED TO
DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT
OF, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  THE CREDIT PARTIES CONFIRM THAT NONE OF THE
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, ANY OF THE LENDERS, NOR ANY OF
THEIR RESPECTIVE AGENTS, EMPLOYEES, OR REPRESENTATIVES HAS INDICATED, EITHER
ORALLY OR IN WRITING, THAT THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT OR
ANY LENDER WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVERS.

 

5.06         Counterparts;
Facsimile Signature.  This Agreement
may be executed in counterparts, each of which shall constitute an original but
all of which when taken together shall constitute but one contract, and shall
become effective when copies hereof which, when taken together, bear the
signatures of each of the parties hereto shall be delivered to the
Administrative Agent.  Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be as effective as delivery of a manually executed signature page thereto.

 

 

5.07         Headings.  Headings used herein are for convenience of
reference only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

 

5.08         Waivers;
Amendments.  Neither this Agreement
nor any provision hereof may be waived, amended or modified except pursuant to
an agreement or agreements in writing entered into by the Credit Parties, the
Administrative Agent, the Collateral Agent and the Required Lenders.

 

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