EXHIBIT 10.114(a)
February 13, 2004
Xx. Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
RE: XXXXXX LOAN TO NOW SOLUTIONS- AGREEMENT
Dear Xx. Xxxxxx,
The following letter will confirm the terms of the loan to be made by you,
Xxxxxx Xxxxxx ("Xxxxxx"), to Now Solutions, LLC. ("Now Solutions"). Xxxxxx and
we hereby confirm the following terms:
1. Xxxxxx shall loan Now Solutions $500,000 in cash (the "Loan") immediately
upon execution of the agreement.
2. Now Solutions shall issue a promissory note (the "$500,000 Note"),
bearing interest at ten percent (10%) per annum of even date herewith. The note
shall be secured pursuant to the Security Agreement of even date herewith. In
the event that Now Solutions receives any monies due to a capital infusion or
upfront licensing fees from a reseller that is outside its normal scope of
business (i.e, not part of software sales in the regular course of business),
Now Solutions shall pay fifty percent (50%) of the cash proceeds to Xxxxxx to be
applied to the outstanding balance under the $500,000 Note.
3. Vertical Computer Systems, Inc. ("Vertical"), shall pledge a thirty percent
(30%) ownership interest in Now Solutions to Xxxxxx, pursuant to the thirty
percent (30%) Interest Ownership Pledge, between Vertical and Xxxxxx, attached
hereto and incorporated by this reference. Until Now Solutions has satisfied its
obligations under the $500,000 Note, Xxxxxx will be made a permanent Member of
Now Solutions' executive committee.
4. In consideration of the $500,000 loan to Now Solutions, Xxxxxx shall receive
a five percent (5%) royalty of sales/revenues by Now Solutions of its software
that exceed $8,000,000 per year (the "Royalty"), payable sixty (60) days after
the end of the year in which sales accrued up to $500,000. Upon receipt of
$500,000 in royalties from Now Solutions, Xxxxxx' rights to receive the five (5)
percent royalty shall terminate. In the event that Now Solutions makes a sale of
the of the Hospital/Health care component to and Now Solutions does not maintain
the revenue stream for such a sale, then the royalty base shall be decreased to
$8,000,000 less the pro-rata amount of such sale.
5. In consideration of the loan, Now Solutions' parent company, Vertical
Computer Systems, Inc. ("Vertical"), shall issue the following to Xxxxxx (a)
five (5) year warrants to purchase 5,000,000 shares of Vertical common stock at
a $0.01 per share; (b) five (5) year warrants to purchase 5,000,000 shares of
Vertical common stock at a $0.02 per share; (c) five (5) year warrants to
purchase 5,000,000 shares of Vertical common stock at a $0.03 per share, and (d)
5,000,000 shares of Vertical common stock subject to Rule 144 Regulation. In the
event that $250,000 has not been paid toward the note on or before March 15,
2004, then Vertical shall immediately issue an additional 5,000,0000 shares of
Vertical common stock subject to Rule 144 Regulation. These warrants and the
common shares of stock shall have so-called "piggy-back" registration rights.
If the foregoing meets with your approval, please sign in the space provided
below.
Sincerely,
------------------------------------------------
Xxxxxxx Xxxx
Chairman, Now Solutions, LLC
President/CEO of Vertical Computer Systems, Inc.
ACCEPTED AND AGREED:
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Xxxxxx Xxxxxx
