Item 1.01 Entry into a Material Definitive Agreement
On December 2, 2008, the Company entered into a new factoring agreement with Allied Capital Partners, LP, pursuant to which we may receive cash advances of up to $1,500,000 on our customer accounts receivable, subject to the approval of Allied of the customer and the type of product or service that is invoiced. The agreement allows for up to an 85.88% advance rate and initial factoring charges are .875% of the total accounts receivable balance. Advances made by Allied are collateralized by our accounts receivable, chattel paper, general intangibles, supporting obligations, inventory and proceeds thereof. The term of the current agreement is for a period of two years with an automatic twelve-month renewal thereafter, unless either party provides a termination notice to the other party at least 30 days prior to the expiration of the then current term.
The Company's obligations under the factoring agreement are guaranteed by Messrs. Derek Downs and Greg Royal. Mr. Downs is our current Chief Executive Officer, interim Chief Financial Officer and a Director, and Mr. Royal is our Executive Vice President, Chief Technology Officer and a Director. Item 9.01 Financial Statements and Exhibits
(d) Exhibits
10.1 Factoring Agreement dated as of November 19, 2008, by and between Allied Capital Partners, LP and Cistera Networks, Inc.

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