AMENDMENT TO REIMBURSEMENT AGREEMENT
Exhibit
10.5
AMENDMENT
TO REIMBURSEMENT AGREEMENT
THIS
AMENDMENT TO REIMBURSEMENT AGREEMENT (this “Amendment”),
effective
as of February 20, 2008, is made and entered into by and between Smart Online,
Inc., a Delaware corporation (the “Company”),
and
Atlas Capital SA, a Swiss business organization (“Atlas”).
W
I T N E
S S E T H:
WHEREAS,
in connection with that certain Loan Agreement between the Company and Wachovia
Bank, NA (“Wachovia”)
dated
as of November 10, 2006 (the “Wachovia
Loan Agreement”),
Atlas
directed HSBC Private Bank (Suisse) SA, a Swiss business organization (the
“Letter
of Credit Provider”),
to
issue an irrevocable, direct-pay letter of credit to Wachovia (the “Wachovia
Letter of Credit”)
as
security under the Wachovia Loan Agreement; and
WHEREAS,
the Company and Atlas entered into a Reimbursement Agreement dated as of
November 10, 2006 (the “Reimbursement
Agreement”),
pursuant to which the Company agreed to reimburse Atlas in the event any amount
was drawn and paid under the Wachovia Letter of Credit; and
WHEREAS,
the Company has terminated the Wachovia Loan Agreement and indefeasibly paid
in
full all obligations thereunder, and Wachovia has released the Wachovia Letter
of Credit; and
WHEREAS,
pursuant to a Commercial Note dated as of the effective date hereof (as the
same
may be amended pursuant to its terms from time to time, the “Paragon
Loan Agreement”)
between the Company and Paragon Commercial Bank, a North Carolina bank
(“Paragon”),
Paragon will make available to the Company a revolving line of credit in a
maximum principal amount of $2,470,000.00 (the “Paragon
Revolving Line”);
and
WHEREAS,
to induce Paragon to enter into the Paragon Loan Agreement and make the Paragon
Revolving Line available to the Company, and to provide security under the
Paragon Loan Agreement for the payment of the Paragon Revolving Line, the
Company has requested that Atlas direct the Letter of Credit Provider to issue
an irrevocable, direct-pay letter of credit to Paragon substantially in the
form
of Exhibit
A
attached
hereto (as the same may be amended from time to time, the “Paragon
Letter of Credit”);
and
WHEREAS,
Atlas is willing to direct the Letter of Credit Provider to issue the Paragon
Letter of Credit, subject to the Company and Atlas amending the Reimbursement
Agreement to provide for reimbursement by the Company in the event any amount
is
drawn and paid under the Paragon Letter of Credit.
NOW,
THEREFORE, in
consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto hereby agree as follows:
Section
1. Amendments
to Reimbursement Agreement.
(a) The
first
Recital of the Reimbursement Agreement is amended and restated in its
entirety
to read
as follows:
“WHEREAS,
pursuant to a Commercial Note dated as of February 20, 2008 (as the same may
be
amended pursuant to its terms from time to time, the “Loan
Agreement”)
between the Company and Paragon Commercial Bank, a North Carolina bank (the
“Bank”),
the
Bank will make available to the Company a revolving line of credit in a maximum
principal amount of $2,470,000.00 (the “Revolving
Line”);
and”
(b) Section
2.1(a) of the Reimbursement Agreement is amended and restated in its
entirety
to read
as follows:
“(a) Atlas
shall direct the Letter of Credit Provider to issue the Letter of Credit on
February 20, 2008. The Letter of Credit shall be issued in an amount equal
to
$2,470,000.00. The term of the Letter of Credit shall end on February 18, 2010.”
(c) Section
2.3 of the Reimbursement Agreement is deleted in its entirety.
(d) Exhibit
A
to the
Reimbursement Agreement is deleted in its entirety
and
replaced with Exhibit
A to
this
Amendment.
Section
2. Reference
to and Effect on the Reimbursement Agreement.
(a) Each
reference in the Reimbursement Agreement to “this Agreement”, “hereunder”,
“hereof” or words of like import referring to the Reimbursement Agreement, and
each reference to the “Reimbursement Agreement”, “thereunder”, “thereof” or
words of like import referring to the Reimbursement Agreement as amended hereby,
shall mean and be a reference to the Reimbursement Agreement as amended
hereby.
(b) Except
as
specifically amended above, the Reimbursement Agreement shall continue to be
in
full force and effect and is hereby in all respects ratified and
confirmed.
Section
3. Controlling
Law.
This
Amendment has been executed, delivered and accepted at, and shall be deemed
to
have been made in, the State of Delaware and shall be interpreted in accordance
with the internal laws (as opposed to conflicts of laws provisions) of the
State
of Delaware, without regard to principles of conflicts of laws.
Section
4. Counterparts.
This
Amendment may be executed in several counterparts, each of which shall be an
original and all of which together shall constitute but one and the
same.
2
[Signature
Page to Amendment to Reimbursement Agreement]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first above written.
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SMART
ONLINE, INC.
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By:
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/s/
Xxxxx X. Xxxxxxx
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Name:
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Xxxxx
X. Xxxxxxx
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Title:
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President
and Chief Executive Officer
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By:
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/s/
Avy Xxxxxxx
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Avy
Xxxxxxx
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Title:
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Member
of the Management
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