EXHIBIT 10.117A
AMENDMENT NUMBER FIVE TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NUMBER FIVE TO LOAN AND SECURITY AGREEMENT (the "Amendment
No. 5") is entered into as of June 15, 2004 and further amends that certain Loan
and Security Agreement, dated as of February 28, 2001 (as further amended,
revised or amended and restated from time to time, the "Loan Agreement"), by and
between Now Solutions, LLC, a Delaware limited liability company ("Borrower")
and Coast Business Credit, a division of Southern Pacific Bank, a California
corporation ("Coast"). All initially capitalized terms used in this Amendment
No. 5 shall have the meanings ascribed thereto in the Loan Agreement unless
specifically defined herein.
WHEREAS, WAMCO 31, LTD., a Texas limited partnership ("WAMCO 31"),
purchased from Coast in May of 2003, all of its rights and obligations under the
Loan Agreement, the Secured Term Promissory Note (the "Note") and related Loan
Documents;
WHEREAS, in January of 2004, WAMCO 31 transferred all of its rights and
obligations under the Loan Agreement, the Note and related Loan Documents to
WAMCO 32, LTD, a Texas limited partnership ("WAMCO 32");
WHEREAS, on March 15, 2004, Borrower filed a Certificate of Conversion and
an Agreement and Plan of Conversion with the Delaware Secretary of State,
converting Borrower from NOW Solutions, LLC, into NOW Solutions, Inc., a
corporation organized under the laws of the State of Delaware;
WHEREAS, Borrower has requested, among other things, that the Loan
Agreement and Note be amended to facilitate Borrower's buyout of a minority
party's ownership interest in the Borrower; and
WHEREAS, Borrower and WAMCO 32 now wish to amend the Loan Agreement
pursuant to the terms and provisions set forth in this Amendment No. 5;
ACCORDINGLY, for adequate and sufficient consideration, the parties agree
as follows:
1. DEFINITIONS. Unless stated otherwise, (a) each term defined in the Loan
Agreement has the same meaning when used in this Amendment No. 5 and (b) all
references to "Sections" and "Schedules" are references to the Loan Agreement's
sections and schedules.
2. AMENDMENTS. NOW, THEREFORE, in consideration of these premises and other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree, as follows:
(a) All references in the Loan Agreement and all amendments and
modifications thereto, to Coast Business Credit, are hereby deleted in their
entirety and replaced with WAMCO 32, LTD.
(b) All references in the Loan Agreement and all amendments and
modifications thereto, to NOW Solutions, LLC, are hereby deleted and replaced
with NOW Solutions, Inc.
(c) Section 1 of the Loan Agreement is hereby amended by deleting
the definition of "Code" contained therein and inserting the following
definition as follows:
"Code" means the Uniform Commercial Code as adopted and in
effect in the State of Texas from time to time.
(d) Section 1 of the Loan Agreement is hereby amended by adding the
following definitions, in alphabetical order as appropriate:
"Revenue" means the total dollar payment for goods and
services that are credited to an income statement during a fiscal year.
"VCS" means Vertical Computer Systems, Inc., the sole
shareholder of Borrower.
(e) Section 9.1 of the Schedule to the Loan Agreement shall be
amended as follows:
"Maturity Date" shall mean April 28, 2006, at which time all unpaid
principal and interest will be due and payable, subject to the early termination
provisions of Section 9.2 of the Loan Agreement.
(f) Section 3.1 of the Schedule to the Loan Agreement shall be
amended and restated as follows:
"Interest Rate" as of June 30, 2004, is a rate equal nine percent
(9%) per annum, calculated on the basis of a 360-day year for the actual number
of days elapsed.
(g) Section 3.2 of the Schedule to the Loan Agreement shall be
amended and restated as follows:
"Loan Fee" a loan modification fee in the amount of $25,583.65
has been capitalized into the outstanding principal amount of the Loan, and
constitutes a portion of the outstanding principal balance of the Note.
(h) Section 5.13 of the Schedule to the Loan Agreement shall be
amended to add the following documents and Agreements as Loan Documents:
1. Amended and Restated Term Loan Promissory Note
($1,304,766.25) 2. Revenue Interest Agreement by and
between Borrower and WAMCO
32
3. Subordination Agreement by and between WAMCO 32
and Xxxxxx Xxxxxx 4. Warrant and Registration Rights
Agreements by and between WAMCO 32 and VCS
(i) Section 11.15 is hereby deleted in its entirely and replaced as
follows:
Governing Law: Jurisdiction; Venue. This Loan Agreement has been
prepared, is being executed and delivered, and is intended to be performed in
the State of Texas and the substantive laws of such state and the applicable
federal laws of the United States of America shall govern the validity,
construction, enforcement, and interpretation of this Loan Agreement and all of
the other Loan Documents. Any suit, action, or proceeding against Borrower with
respect to this Loan Agreement, the Note, or other Loan Documents, or any
judgment entered by any court in respect thereof, may be brought in the courts
of the State of Texas, County of Dallas, or in the United States courts located
in the State of Texas as Lender in its sole discretion may elect and Borrower
hereby irrevocably submits to the nonexclusive jurisdiction of such courts for
the purpose of any such suit, action, or proceeding. Borrower hereby irrevocably
consents to the service of process in any suit, action, or proceeding in said
court by the mailing thereof by Lender, via overnight delivery service, to
Assignor's address shown opposite its name on the signature pages hereof, and to
Xxxxx Xxxxxx, at Xxxxxx, Xxxxxx & Xxxx, L.L.P., 000 Xxxxx Xxxxxx, Xxx Xxxx, XX
00000. Nothing herein or in any of the other Loan Documents shall affect the
right of WAMCO 32 to serve process in any other manner permitted by law or shall
limit the right of WAMCO 32 to bring any action or proceeding against Borrower
or with respect to any of its property in courts in other jurisdiction. Borrower
hereby irrevocably waives any objections which it may now or hereafter have to
the laying of venue of any suit, action, or proceeding arising out of or
relating to this Loan Agreement, the Note, or any other Loan Documents brought
in the courts located in the State of Texas, County of Dallas, and hereby
further irrevocably waives any claim that any such suit, action, or proceeding
brought in any such court has been brought in any inconvenient forum. Any action
or proceeding by Borrower against WAMCO 32 shall be brought only in a court
located in Dallas County, Texas.
(j) A new Section 11.17 shall be added as follows:
Maximum Interest Rate. Regardless of any provision
contained in any of the Loan Documents, WAMCO 32 shall never
be entitled to receive, collect, or apply as interest (whether
termed interest herein or deemed to be interest by operation
of law or judicial determination) on the Note any amount in
excess of interest calculated at the Maximum Rate, and, in the
event that any WAMCO 32 ever receives, collects, or applies as
interest any such excess, then the amount which would be
excessive interest shall be deemed to be a partial prepayment
of principal and treated hereunder as such; and, if the
principal amount of the Obligation is paid in full, then any
remaining excess shall forthwith be paid to Borrower. In
determining whether or not the interest paid or payable under
any specific contingency exceeds interest calculated at the
Maximum Rate, Borrower and WAMCO 32 shall, to the maximum
extent permitted under applicable law: (a) characterize any
non-principal payment as an expense, fee, or premium rather
than as interest; (b) exclude voluntary prepayments and the
effects thereof; and (c) amortize, prorate, allocate, and
spread, in equal parts, the total amount of interest
throughout the entire contemplated term of the Note; provided
that, if the Note is paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds
interest calculated at the Maximum Rate, then WAMCO 32 shall
refund to Borrower the amount of such excess or credit the
amount of such excess against the principal amount of the Note
and, in such event, WAMCO 32 shall not be subject to any
penalties provided by any laws for contracting for, charging,
taking, reserving, or receiving interest in excess of interest
calculated at the Maximum Rate.
3. CONDITIONS PRECEDENT. The effectiveness of this Amendment No. 5 is
expressly conditioned upon the receipt by WAMCO 32 of duly executed copies of
(i) this Amendment No. 5, (ii) the Amended and Restated Secured Term Promissory
Note, (iii) the Revenue Participation Agreement, (iv) the Subordination
Agreement, (v) the Warrant and Registration Rights Agreement, (vi) certified
articles of incorporation, by-laws and good standing certificates of Borrower
and VCS (vii) resolutions and secretary's certificates from Borrower and VCS,
(viii) legal opinion from counsel to Borrower and VCS, (ix) payment of all fees
and other amounts due and payable by Borrower on or prior to the date hereof,
including the reasonable fees of and disbursements of counsel to WAMCO 32; and
(x) all other documents required by WAMCO 32, and acceptable in form and
substance in their sole and absolute discretion.
4. RATIFICATIONS. As a material inducement to WAMCO 32 to execute and
deliver this Amendment No. 5, Borrower (a) ratifies and confirms all provisions
of the Loan Documents as amended by this Amendment No. 5, (b) ratifies and
confirms that all guaranties, assurances, and security interests granted,
conveyed, or assigned to WAMCO 32 under the Loan Documents, as they may have
been renewed, extended, and amended, are not released, reduced, or otherwise
adversely affected by this Amendment No. 5 and continue to guarantee, assure,
and secure full payment and performance of the present and future Obligations,
and (c) agrees to perform such acts and duly authorize, execute, acknowledge,
deliver, file, and record such additional documents, and certificates as WAMCO
32 may request in order to create, perfect, preserve, and protect those
guaranties, assurances, and security interests.
5. REPRESENTATIONS. Borrower represents and warrants to WAMCO 32 that as
of the date of this Amendment No. 5 (a) all representations and warranties
applicable to such party, as amended hereby, in the Loan Documents are true and
correct in all material respects except to the extent that any of them speak to
a different specific date, (b) no Material Adverse Effect or Event of Default
(or circumstance that, with notice, time lapse, or both, would become an Event
of Default) exists, (c) this Amendment No. 5, and the Loan Documents, are within
Borrower's powers, have been duly and validly authorized, are enforceable in
accordance with their terms; and (d) do not violate or conflict with any of
organizational documents of Borrower, or any law or any material agreement or
instrument which is binding upon Borrower or its property.
6. CONFLICTING TERMS. In the event of a conflict between the terms and
provisions of this Amendment No. 5; and the terms and provisions of the Loan
Agreement, the terms of this Amendment No. 5 shall govern. In all other
respects, the Loan Agreement, as amended and supplemented hereby, shall remain
in full force and effect.
7. MISCELLANEOUS. This Amendment No. 5, when signed by WAMCO 32 and
Borrower, as provided herein below (a) shall be deemed effective prospectively
as of the date hereof, (b) contains the entire agreement among the parties and
may not be amended or modified except in writing signed by all parties, (c)
shall be governed and construed according to the laws of the State of Texas, (d)
may be executed in any number of counterparts, each of which shall be valid as
an original and all of which shall be one and the same agreement, and (e) shall
constitute a Loan Document. A telecopy or other electronic transmission of any
executed counterpart shall be deemed valid as an original. This Amendment No. 5
binds and inures to each of the undersigned and their respective successors and
permitted assigns.
8. OTHER AGREEMENTS. THIS AMENDMENT NO. 5, THE AMENDED AND RESTATED NOTE,
THE REVENUE PARTICIPATION AGREEMENT, THE SUBORDINATION AGREEMENT, THE WARRANT
AND REGISTRATION RIGHTS AGREEMENT, AND THE OTHER LOAN DOCUMENTS REFERRED TO
HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE
ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. THE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH BORROWER IS A PARTY MAY BE AMENDED OR WAIVED ONLY BY AN
INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO.
9. WAMCO 32 AND BORROWER HEREBY EACH WAIVE THE RIGHT TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO:
(i) THIS AMENDMENT NO. 5; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR
AGREEMENT BETWEEN WAMCO 32 AND BORROWER; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS
OF WAMCO 32 OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH WAMCO 32 OR BORROWER
10. PERMITTED PARTIES. This Amendment No. 5 binds and inures to Borrower,
WAMCO 32, and their respective successors and assigns.
[Remainder of page intentionally blank; signature page follows]
EXECUTED as of the date first stated above.
NOW SOLUTIONS, INC., WAMCO 32, LTD.,
a Delaware Corporation a Texas limited partnership
By: WAMCO 32 of Texas, Inc.,
its General Partner
By: By:
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Xxxxxxx Xxxx Xxxx Xxxxxx
Chairman Senior Vice President
