Exhibit 10.91
AMENDMENT NUMBER TWO TO
DEPOSIT ACCOUNT PLEDGE AGREEMENT
THIS AMENDMENT NUMBER TWO TO DEPOSIT ACCOUNT PLEDGE AGREEMENT, dated as
of October __, 2002 (this "Amendment"), amends that certain Deposit Account
Pledge Agreement, dated as of February 28, 2001 (as amended from time to time,
the "Pledge Agreement"), by and between VERTICAL COMPUTER SYSTEMS, INC., a
Delaware corporation ("Pledgor"), on the one hand, and COAST BUSINESS CREDIT, a
division of Southern Pacific Bank, a California corporation ("Coast"), on the
other hand. All initially capitalized terms used in this Amendment shall have
the meanings ascribed thereto in the Pledge Agreement unless specifically
defined herein.
R E C I T A L S
WHEREAS, Now Solutions, L.L.C., a Delaware limited liability company
("Borrower"), and Coast are entering into that certain Amendment Number Two to
Loan and Security Agreement, dated of even date herewith ("LSA Amendment");
WHEREAS, Borrower has made all the principal payments under the
Promissory Note through and including September 30, 2002;
WHEREAS, Pledgor and Coast wish to amend the Pledge Agreement pursuant
to the terms and provisions set forth in this Amendment; and
NOW, THEREFORE, the parties hereto agree as follows:
A M E N D M E N T
Section 1. AMENDMENT TO SECTION 2. Section 2 of the Pledge Agreement is
hereby amended by deleting such Section in its entirety and replacing it with
the following:
"SECTION 2. REDUCTION AND RELEASE OF PLEDGE.
"At such time as all principal and interest payments due under the
Promissory Note have been paid in full, and Pledgor is no longer obligated to
Coast under the Loan Documents, then Coast agrees to release the Deposit Account
from this pledge. Until Coast releases its pledge in the Deposit Account,
Pledgor shall not withdraw any amounts from such Deposit Account; PROVIDED,
HOWEVER, if all principal payments required to be paid under the Promissory
Note, commencing March 31, 2001, and continuing to and including September 30,
2002, have been paid in full when due, Coast will, within three business days of
Coast's receipt of such funds, submit to Southern Pacific Bank a Consent to
Withdrawal (in substantially the same form as EXHIBIT A attached hereto) under
the Deposit Account in the amount of Three Hundred Forty Eight Thousand Three
Hundred Thirty Three and 34/100 Dollars ($348,333.34) (such amount does NOT
include that certain partial payment of Thirty Five Thousand Dollars ($35,000)
which the Pledgor acknowledges the receipt of during the first week of October
2002), and Pledgor shall thereafter have the right to withdraw Three Hundred
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Forty Eight Thousand Three Hundred Thirty Three and 34/100 Dollars ($348,333.34)
from the Deposit Account. If the principal payment required to be paid under the
Promissory Note for the immediately preceding calendar month has been paid in
full when due and no Default or Event of Default has occurred and is in
continuance under the Loan Agreement, Coast shall, within three business days of
Coast's receipt of such funds, submit a Consent to Withdrawal to Southern
Pacific Bank under the Deposit Accounts commencing October 31, 2002, and
continuing each month thereafter, in the amount of Ninety One Thousand Six
Hundred Sixty Six and 67/100 Dollars ($91,666.67) per month, and Pledgor shall
have the right to withdraw such sums from the Deposit Account equal to the
aggregate amounts stated in the Consents to Withdrawal submitted by Coast to
Southern Pacific Bank. With each Consent to Withdrawal issued, Coast's right,
title and interest in the Deposit Account shall be reduced commensurately.
Section 2. AMENDMENT TO SECTION 5. Section 5 of the Pledge Agreement is
hereby amended by deleting such Section in its entirety and replacing it with
the following:
"SECTION 5. EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an
"Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any Loan or any interest
thereon or any other monetary Obligation; or
(b) Borrower shall fail to comply with the financial covenants set
forth in the Schedule to the Loan Agreement; or
(c) Borrower shall fail to provide Coast with the reports set
forth in Section 8 of the Schedule to the Loan Agreement which is not cured
within fifteen (15) days after notice to Pledgor of the occurrence of the same;
or
(d) except as permitted under Section 8.5(a) of the Loan
Agreement, Borrower shall suffer or experience any Change of Control without
Coast's prior written consent, which consent shall be in the discretion of Coast
in the exercise of its reasonable business judgment; or
(e) dissolution, termination of existence, insolvency or business
failure of Borrower or any guarantor of any of the Obligations; or appointment
of a receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by Borrower or any guarantor of any of the Obligations under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or
(f) the commencement of any proceeding against Borrower or any
guarantor of any of the Obligations under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, which is (i) not
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timely controverted, or (ii) not cured by the dismissal thereof within thirty
(30) days after the date commenced; or
(g) any default determined by Coast in the exercise of its
reasonable business judgment to have a Material Adverse Effect on the Collateral
which is not cured by delivery of additional Collateral of at least equal value
within fifteen (15) days after notice to Pledgor; or
(h) Any levy, assessment, attachment, seizure, lien or encumbrance
(other than a Permitted Lien) is made on all or any part of the Collateral which
is not replaced with Collateral of at least equal value, bonded or otherwise
cured within fifteen (15) days after notice to Pledgor."
Section 3. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
expressly conditioned upon the receipt by Coast of (i) an executed copy of this
Amendment executed by Pledgor, and (ii) an executed copy of the LSA Amendment
executed by Borrower.
Section 4. ENTIRE AGREEMENT. The Pledge Agreement, as amended hereby,
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the subject
matter hereof. Pledgor represents, warrants and agrees that in entering into the
Pledge Agreement and consenting to this Amendment, it has not relied on any
representation, promise, understanding or agreement, oral or written, of, by or
with, Coast or any of its agents, employees, or counsel, except the
representations, promises, understandings and agreements specifically contained
in or referred to in the Pledge Agreement, as amended hereby.
Section 5. CONFLICTING TERMS. In the event of a conflict between the
terms and provisions of this Amendment and the terms and provisions of the
Pledge Agreement, the terms of this Amendment shall govern. In all other
respects, the Pledge Agreement, as amended and supplemented hereby, shall remain
in full force and effect.
Section 6. MISCELLANEOUS. This Amendment shall be governed by and
construed in accordance with the laws of the State of California. This Amendment
may be executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any party hereto may execute this Amendment by
signing such counterpart.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
date first above written.
VERTICAL COMPUTER SYSTEMS, INC.,
a Delaware corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank,
a California corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
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CONSENT OF
SOUTHERN PACIFIC BANK
TO
AMENDMENT NUMBER TWO TO
DEPOSIT ACCOUNT PLEDGE AGREEMENT, BETWEEN
VERTICAL COMPUTER SYSTEMS, INC., AND
COAST BUSINESS CREDIT
DATED: OCTOBER ___, 2002
SOUTHERN PACIFIC BANK, a California corporation, hereby consents to the
Amendment Number Two to Deposit Account Pledge Agreement to which this Consent
is attached.
SOUTHERN PACIFIC BANK,
a California corporation
By:__________________________________
Name:________________________________
Title:_______________________________
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EXHIBIT A
---------
CONSENT TO WITHDRAWAL
---------------------
-----------------------------
Dated
SOUTHERN PACIFIC BANK
__________________________
__________________________
ATTN:_____________________
Ladies and Gentlemen:
The undersigned is the Pledgee of that certain Deposit Account, Number
206650001, at your banking institution pursuant to that certain Deposit Account
Pledge Agreement, dated February 28, 2001, as amended from time to time, between
Pledgee and Vertical Computer Systems, Inc., a Delaware corporation ("Pledgor"),
and hereby certifies to you that the following representations are true and
correct on the date hereof:
a. As of the date hereof, Pledgee's interest in the stated amount
of the Deposit Account (prior to the reduction requested in paragraph (b) below)
equals $__________________.
CHOOSE ONE OF THE FOLLOWING PARAGRAPHS
[b. Now Solutions, L.L.C., a Delaware limited liability company
("Borrower"), has made each principal payment required by the provisions of the
Secured Term Promissory Note (Term Loan), dated February 28, 2001, executed by
Borrower in favor of the undersigned for the months of March 31, 2001 through
and including October 31, 2001 in the amount of One Million Eight Hundred Thirty
Three Thousand Three Hundred Thirty Three and 40/100 Dollars ($1,833,333.40).
Therefore, the undersigned hereby consents to a reduction in Pledgee's interest
in the stated amount of the Deposit Account by Three Hundred Forty Eight
Thousand Three Hundred Thirty Three and 34/100 Dollars ($348,333.34), and
consents to Pledgor's right to withdraw Three Hundred Forty Eight Thousand Three
Hundred Thirty Three and 34/100 Dollars ($348,333.34).
[b. Now Solutions, L.L.C., a Delaware limited liability company
("Borrower"), has made the principal payment for the month of ____________,
200[_] in the amount of Ninety One Thousand Six Hundred Sixty Six and 67/100
Dollars ($91,666.67), in accordance with the provisions of that certain Secured
Term Promissory Note (Term Loan), dated February 28, 2001, executed by Borrower
in favor of the undersigned. Therefore, the undersigned hereby consents to a
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reduction in Pledgee's interest in the stated amount of the Deposit Account by
Ninety One Thousand Six Hundred Sixty Six and 67/100 Dollars ($91,666.67), and
thereby consents to Pledgor's right to withdraw such amount.
c. Pledgee's interest in the stated amount of the Deposit Account
(after the reduction to the Stated Amount requested in the foregoing paragraph
(b)) shall equal $_______________.
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank,
a California corporation
By:__________________________________
Name:________________________________
Title:_______________________________
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