FIRST AMENDMENT TO PROMISSORY NOTE
EXHIBIT
99.2
FIRST AMENDMENT TO
PROMISSORY NOTE
THIS
FIRST AMENDMENT TO PROMISSORY NOTE (this “Amendment”), dated as of July 28,
2010, is entered into by and between VillageEDOCS, a Delaware Corporation, with
offices at 0000 X. Xxxxxx Xxx., Xxxxx 000 Xxxxx Xxx, Xxxxxxxxxx 00000-0000 (the
“Company”), and Xxxxx Xxxxx-Xxxxxxxx and Xxxxxx Xxxxx-Xxxxxxxx, tenants in
common (“Holder”).
Recitals
WHEREAS, on or about August 1, 2008,
Company, Decision Management Company, d/b/a Questys Solutions, Inc., a
California S-Corporation and Holder executed a Stock Purchase Agreement wherein
Company was to pay Shareholder $900,000 under a Promissory Note wherein the
Company would pay Holder three equal annual installments of $300,000 due on
August 1, 2009, August 1, 2010 and August 1, 2011, respectively (the “Note”).
Company also agreed to provide additional consideration under the Stock Purchase
Agreement, including payment of $115,000 on account of shareholder debt, of
which $80,000 remains unpaid (the “$80,000 Payment”).
WHEREAS, as of the date of this
Amendment, the outstanding principal balance existing under the Note is $600,000
(the “Outstanding Balance”).
WHEREAS,
Company has requested that Holder agree to an extended payment schedule with
regard to the payments due on August 1, 2010 and August, 2011, that Holder agree
to an extended payment schedule with regard to the $80,000 Payment, and that
Shareholder forbear from exercising its rights and remedies under the Stock
Purchase Agreement, Note and related documents (as amended, the “Sale
Documents”) and Shareholder has agreed to such request in accordance with the
terms of that First Amendment to Stock Purchase Agreement and Forbearance dated
July 28, 2010 and this amendment.
NOW,
THEREFORE, in consideration of the premises herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Holder hereby agree to amend the Note on the terms
and conditions set forth herein.
Agreement
1. Recitations. The
above recitations are true and correct and are incorporated herein by
reference.
2. Modification of
Note. The Note is hereby modified and amended by:
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(a)
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deleting
the payment provision contained in Section (a) and (b) of the Note, and
inserting the following provision in place
thereof:
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Payment:
The Company shall pay Holder a principal sum of $680,000 consisting of the
Outstanding Balance of the Original Promissory Note and $80,000 of shareholder
debt contained in Section 7.8 of the Stock Purchase Agreement. The
payments under this note are as follows: (a) $175,000 payment to Holder due on
or before August 1, 2010; and (b) the remaining payments to occur on the 1st of each
month beginning September 1, 2010 through August 1, 2012 to accrue at 12% annual
interest rate according the amortization schedule attached at Exhibit “A” which
is fully incorporated herein. All payments shall be made via wire
transfer to Holder’s account in accordance with the instructions set forth on
Exhibit “B”. If Company fails to make a payment in accordance with
the amortization schedule, Company shall immediately owe a penalty equal to 20%
of the respective payment due. Company’s failure to make any payment in
accordance this schedule (subject to the five (5) calendar day cure period set
forth in subsection (b) below) shall constitute an immediate and incurable
default under the Sale Documents and all obligations under this Amended Note,
together with interest thereon, and all other liabilities and obligations of
Company under the Sale Documents shall be immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived. In lieu of exercising its remedies upon
default, Holder may, in its sole discretion, exercise an option to receive any
past due installment, plus the penalty equal to 20% of the amount of the
installment, plus interest accrued on such installment and penalty. For the
avoidance of doubt, to the extent the Company makes payments in accordance with
the amortization schedule attached as Exhibit “A”, such payments shall be
without penalty.
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(b)
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deleting
Section (1) under “Event of Default” of the Original Promissory Note, and
inserting the following provision in place
thereof:
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(1)
failure to pay any installment due under this Note when such installment is due
and payable and continuance of such failure for a period of five (5) calendar
days, provided,
however, a
penalty equal to 20% of the amount of the installment due shall be payable
immediately upon Company’s failure to pay any installment when due and payable;
or
3. No Further Modification;
Reaffirmation of Company. Except as expressly modified herein,
the terms, conditions, and provisions of the Note shall remain unmodified and in
full force and effect and are hereby ratified and affirmed.
4. Counterparts. This
Amendment may be executed in counterparts, and counterparts containing
signatures of both parties hereto shall be deemed a complete original
hereof.
5. Modification. This
Amendment may not be modified or terminated orally and no modification,
termination or attempted waiver shall be valid unless in writing, signed by the
party against whom the same is sought to be enforced but shall be automatically
deemed modified by the instrument executed to effect the
transaction.
6. Governing Law. This
Amendment shall be governed by the laws of the State of California.
7. Attorneys' Fees. If
any party shall breach the terms and conditions of this Amendment, such
breaching party shall be responsible for all fees and costs incurred by any
non-breaching party.
[Signature
pages follow]
IN
WITNESS WHEREOF, this Note has been executed as of the day and year first above
written.
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The Company:
VillageEDOCS, a Delaware Corporation
/s/ K. Xxxxx
Xxxxxx
Xxxxx
Xxxxxx, in his capacity as
President
and not in his individual capacity.
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Holder:
/s/ Xxxxx
Xxxxx-Xxxxxxxx
Xxxxx
Xxxxx-Xxxxxxxx
/s/ Xxxxxx
Xxxxx-Xxxxxxxx
Xxxxxx
Xxxxx-Xxxxxxxx
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Exhibit
A
AMORTIZATION
SCHEDULE
Exhibit
B
WIRE
INSTRUCTIONS
