AGREEMENT
THIS AGREEMENT made as of the 13th day of February, 2006, by and
among Xxxx Financial Services, Inc., a California corporation, ("Lender"), NOW
Solutions, Inc., a Delaware corporation, ( "Borrower"), Vertical Computer
Systems, Inc., a Delaware corporation, ("Vertical"), Xxxxxx Xxxxxx, an
individual, ("Xxxxxx"), and Xxxxxx Xxxxxxxxxx, an individual, ("Mokhtarian").
W I T N E S S E T H:
WHEREAS, Xxxxxx has the following loans currently outstanding to Borrower
and to Vertical:
1. Promissory Note in the original principal amount of $84,000 dated
June 1, 2001, from Enfacet, Inc., a Texas corporation, as debtor, to
Xxxxxx Xxxxxx, as lender, bearing interest at 8% per annum. This note was
originally unsecured. The note was amended by the parties on March 27,
2003 and again on February 13, 2004. The note is now secured by a Security
Agreement dated February 13, 2004, pledging a security interest in all
assets of Borrower. The current balance of this note is $137,841.28.
2. Promissory Note in the original principal amount of $280,000
dated October 31, 2001, from Vertical, as Promissor, to Xxxxxx Xxxxxx, as
Promissee, bearing interest at the rate of 4% per annum, as amended by the
parties on March 27, 2003 and again on February 13, 2004. This note is
secured by an Asset Pledge Agreement dated October 31, 2001, from Vertical
to Xxxxxx Xxxxxx, pledging a security interest in that certain technology
developed by Adhesive Software and commonly known as "siteflash" (herein
the "Siteflash Technology"). The current balance of this note is
$438,795.31;
3. Promissory Note in the original principal amount of $181,583
dated October 17, 2002, from Vertical Computer Systems, Inc., as
Promissor, to Xxxxxx Xxxxxx, as Promissee, bearing interest at 12% per
annum. This note was amended on February 13, 2004. This note is secured by
a pledge by Mountain Reservoir Corporation of 10,450,000 shares of
Vertical common stock. The current balance of this note is $181,905.58.
4. Promissory Note in the original principal amount of $500,000
dated February 13, 2004, from NOW Solutions, L.L.C. (now Borrower), as
Promissor, to Xxxxxx Xxxxxx, as Promissee, bearing interest at the rate of
10% per annum. This note is secured by the assets of Borrower. This note
is also secured by a 5% royalty on sales by Borrower; 5-year warrants to
purchase 5,000,000 shares of Vertical common stock at $0.01 per share;
5-year warrants to purchase 5,000,000 shares of Vertical common stock at
$0.02 per share; 5-year warrants to purchase 5,000,000 shares of Vertical
common stock at $0.03 per share; and 5,000,000 shares of Vertical common
stock. The current balance of this note is $359,559.90.
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02-13-06
The foregoing loans are collectively referred to as the "Xxxxxx Loans."
WHEREAS, Mokhtarian has the following loans currently outstanding to
Vertical and to Enfacet:
1. Promissory Note in the original principal amount of $350,000
dated August 15, 2001, from Enfacet, Inc., a Texas corporation, as debtor,
to Xxxxxx Xxxxxxxxxx, as Lender, bearing interest at 8% per annum. This
note was originally unsecured. The note was amended by the parties on
February 13, 2004. The note is now secured by a Security Agreement dated
February 13, 2004 pledging a security interest in all assets of Borrower.
The current balance of this note is $519,693.28.
2. Promissory Note in the original principal amount of $90,000 dated
June 26, 2003, from Vertical, as Promissor, to Xxxxxx Xxxxxxxxxx, as
Promissee, bearing interest at 10% per annum. This note was originally
unsecured. The note was amended by the parties on February 13, 2004. The
note is now secured by a Security Agreement dated February 13, 2004
pledging a security interest in all assets of Borrower. The current
balance of this note is $115,663.16.
The foregoing loans are collectively called the "Mokhtarian Loans"; the
Xxxxxx Loans and the Mokhtarian Loans are collectively, called the "Old Debt."
The foregoing security interests pledged to Xxxxxx and Mokhtarian are
collectively called the "Old Security."
WHEREAS, the Borrower has requested that Xxxxxx and Mokhtarian cancel the
Old Debt and related Old Security agreements and replace them with the following
notes between Borrower and Lender:
1. A Secured Term Promissory Note in the original principal amount
of $359,559.90 from Borrower to Lender dated February 13, 2006, bearing
interest at 12% per annum. This loan will be secured by a Security
Agreement from Borrower to Lender pledging a security interest in all
assets of Borrower.
2. A Secured Term Promissory Note in the original principal amount
of $438,795.31 from Vertical to Lender dated February 13, 2006, bearing
interest at 12% per annum. This loan will be secured by an Asset Pledge
Agreement from Vertical to Lender pledging a security interest in the
Siteflash Technology.
3. A Secured Term Promissory Note in the original principal amount
of $955,103.30 from Borrower to Lender dated February 13, 2006, bearing
interest at 12% per annum. This loan will be secured by a Security
Agreement from Borrower to Lender pledging a security interest in all
assets of Borrower.
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02-13-06
The foregoing notes are collectively referred to as the "New Notes" and
"New Security.".
WHEREAS, Xxxxxx and Mokhtarian have agreed to cancel the Old Debt and
Lender agrees to replace the Old Debt with the New Notes, subject to the terms
and conditions hereof.
WHEREAS, Xxxxxx and Mokhtarian have agreed to cancel the Old Security and
Lender agrees to replace the Old Security with the New Security, subject to the
terms and conditions hereof.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, it is mutually covenanted and agreed as follows:
AGREEMENT:
1. Recitals. Each of the Recitals above is agreed and acknowledged to be
true and correct and is fully incorporated herein as though fully set out
herein.
2. Cancellation of Old Debt. Xxxxxx and Mokhtarian agree to cancel the Old
Debt currently outstanding as described above.
3. Release of Security. Xxxxxx and Mokhtarian agree to release the Old
Security pledged as collateral and corresponding liens for the Old Debt.
4. Execution of New Notes. Borrower and Vertical agree to execute the
foregoing New Notes payable to Lender pursuant to the terms as stated therein.
5. Execution of New Security Agreements. Borrower and Vertical agree to
execute the New Security Agreements as set forth above as collateral for the New
Notes.
6. Time. Time is of the essence in the performance of the covenants
contained herein.
7. Headings. The section headings hereof are inserted for convenience of
reference only and shall in no way alter, amend, define or be used in the
construction or interpretation of the text of such section.
8. Further assurances. Each of the Parties shall from time to time execute
such documents and perform such acts and things as the other Parties may
reasonably require to cancel the Old Debt and related security and perfect
Lender's security interest as collateral for the New Notes, in accordance with
the provisions of this Agreement, and to give any Party the full benefit of this
Agreement.
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02-13-06
9. Binding Effect. All of the terms, covenants and conditions herein
contained shall inure to the benefit of and be binding upon the parties hereto,
their successors and assigns.
10. Notices. All notices, demands, requests and other communications
pursuant to this Agreement shall be deemed to have been properly given, when
made in writing, and delivered personally, or three (3) business days after
receipt, when sent either through the United States Postal Service postpaid,
registered or certified mail with return receipt requested, or overnight courier
delivery (such as Federal Express at the expense of the Participant) addressed
to the Participant to receive such notice at the following address, or at such
other address as may hereafter be specified by written notice given as set forth
in this Section 10:
If to Lender: Xxxx Financial Services, Inc., a California corporation
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
818.209.5591
If to Borrower: NOW Solutions, Inc., a Delaware corporation
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Phone: 000.000.0000
If to Vertical: Vertical Computer Systems, Inc., a Delaware corporation
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Phone: 000.000.0000
If to Enfacet: Enfacet, Inc., a Texas corporation
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Phone: 000.000.0000
If to Xxxxxx: Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
818.500.0800
If to Mokhtarian: Xxxxxx Xxxxxxxxxx
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
818.500.0800
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02-13-06
11. Applicable Law. This Agreement shall be governed by the Laws of the
State of California.
12. Multiple Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
Agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
13. Construction. Whenever the context hereof so requires, reference to
the singular shall include the plural and likewise, the plural shall include the
singular; words denoting gender shall be construed to mean the masculine,
feminine or neuter, as appropriate; and specific enumeration shall not exclude
the general, but shall be construed as cumulative of the general recitation.
14. Severability. If any clause or provision of this Agreement is or
should ever be held to be illegal, invalid or unenforceable under any present or
future law applicable to the terms hereof, then and in that event, it is the
intention of the parties hereto that the remainder of this Agreement shall not
be affected thereby, and that in lieu of each such clause or provision of this
Agreement that is illegal, invalid or unenforceable, such clause or provision
shall be judicially construed and interpreted to be as similar in substance and
content to such illegal, invalid or unenforceable clause or provision, as the
context thereof would reasonably suggest, so as to thereafter be legal, valid
and enforceable.
15. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER DOCUMENTS, IF ANY,
HEREIN REQUIRED TO BE EXECUTED REPRESENT THE FINAL AGREEMENT OR AGREEMENTS
BETWEEN THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND THEREOF, AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. THIS INSTRUMENT MAY BE AMENDED ONLY BY AN INSTRUMENT IN WRITING
EXECUTED BY THE PARTIES HERETO.
[Signatures follow on next pages.]
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02-13-06
IN WITNESS WHEREOF, each of the undersigned, being duly authorized, has
executed this Agreement on behalf of the respective Parties as of the day and
year first above written.
LENDER: Xxxx Financial Services, Inc.,
a California corporation
By: _________________________
Xxxxxx Xxxxxxxxxx
President
BORROWER: NOW Solutions, Inc.
a Delaware corporation
By: ______________________
Xxxxxxx Xxxx,
Chairman
VERTICAL: Vertical Computer Systems, Inc.
a Delaware corporation
By: ______________________
Xxxxxxx Xxxx,
President
ENFACET: Enfacet, Inc.
a Texas corporation
By: _____________________
Xxxx X. Xxxxxxxxx,
President
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02-13-06
XXXXXX:
------------------------
Xxxxxx Xxxxxx
MOKHTARIAN:
-------------------------
Xxxxxx Xxxxxxxxxx
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02-13-06
