Exhibit 10.93(a)
October 17, 2002
Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Re: CANCELLATION OF PRIOR LOAN/REVISED LOAN/ PUT AND CALL AGREEMENT
Dear Xxxxxx,
This letter agreement (the "Agreement") is intended to cancel several
transactions between you, Xxxxxx Xxxxxx ("Xxxxxx"), and Vertical Computer
Systems, Inc. ("Vertical") that took place in October and November of 2001 and
substitute revised agreements. The parties acknowledge and agree that Paradigm
Sales, Inc. ("Paradigm") acquired from Silicon Valley Bank (the "Bank"), through
foreclosure sale, certain assets of Adhesive Software (the "Assets") and Xxxxxx
loaned $200,000 to Vertical, in connection with two written Promissory Notes
issued by Vertical to Xxxxxx' favor, dated October 31, 2001 and November 7,
2001, respectively (the "Xxxxxx Notes"). Of those sums loaned by Xxxxxx to
Vertical, $100,000 was paid by Xxxxxx directly to Paradigm as the cash portion
of the purchase price of the Assets on Vertical's behalf.
The parties therefore agree as follows:
1. The "Prior Loan Documents" shall mean to include the following: (a) the two
(2) Xxxxxx Notes for $100,000 each issued by Vertical Computer Systems to Xxxxxx
Xxxxxx dated, October 31, 2001 and November 7, 2001, respectively, (b) the term
sheet, dated October 31, 2001, (c) the Stock Pledge Agreement, dated October 31,
2001, (d) the Xxxx Pledge Agreement, dated October 31, 2001, and any amendments
to any of the foregoing agreements.
2. The "Revised Loan Documents" shall mean to include:(a) a $181,583.70
promissory note issued by Vertical Computer Systems to Xxxxxx Xxxxxx of even
date herewith, (b) this Agreement, and (c) the Stock Pledge Agreement, dated
October 17, 2002.
Xxxxxx Xxxxxx
December 20, 2001
Page 2
3. Xxxxxx shall cancel the Xxxxxx Notes and the Prior Loan Documents and
Vertical shall execute the Revised Loan Documents, which shall include:
(a) a $181,583.70 promissory note (the "Note") issue to Xxxxxx, bearing
12% interest, payable as follows: (i) an initial installment of
$10,000 payable upon execution of the letter agreement of even date
herewith (ii) six (6) monthly payments of $5,000 per month beginning
November 5, 2002 and (iii) $10,000 payments per month beginning May
15, 2003 until the principal, and all interest, fees, charges, and
other amounts owing hereunder have been paid in full.
(b) a Stock Pledge Agreement, of even date herewith between Mountain
Reservoir Corporation ("MRC") and Xxxxxx, whereby MRC will pledge
10,450,000 shares of Vertical common stock (the "Stock") held by MRC
to Xxxxxx in the event of default.
Both parties agree that the cancellation of the Prior Loan Documents (and any
underlying documents including amendments) shall not be effective until Vertical
has executed the Revised Documents.
4. (a) Vertical and Paradigm will execute a Put and Call Agreement with
respect to shares of Vertical's Class C Preferred Stock that are converted into
shares of Vertical Common Stock. The parties acknowledge that each share of
Class C Preferred Stock may be converted into 400 shares of Vertical Common
stock. Paradigm shall have the right to sell to Vertical and Vertical agrees to
redeem the common stock represented by the 12,500 shares of Vertical's Class C
Preferred Stock, held by Paradigm, pursuant to that certain Asset Purchase
Agreement, dated November 14, 2001 by and between Vertical and Paradigm
("Paradigm's Preferred Stock"), at a price of $0.04 per share ("Put"). Such Put
shall be exercisable, upon ten (10) days prior written notice delivered
personally to Vertical, on March 17, 2003, Vertical shall have the option of
paying the put price within ten (10) business days or issuing an additional 2500
shares of its Class C Preferred Stock, which shall have the same conversion
rights.
(b) Vertical shall have the option of redeeming, at anytime prior to March
17, 2003, Paradigm's holdings of Vertical Common Stock represented by the
Vertical Preferred Stock at a price of $0.06 per share ("Call"). Paradigm
expressly acknowledges that its rights as set forth in subparagraph (a) are
expressly conditioned upon this subparagraph (b).
5. In addition, by executing this Agreement, the parties expressly acknowledge
(a) Xxxxxx loaned Vertical $200,000, (b) Xxxxxx paid and Paradigm actually
received from Vertical $100,000 and (c) Vertical delivered to Paradigm 50,000
shares of Vertical's Series "C" 4% Cumulative Preferred Stock. Each party
further agrees to execute any documents the other party may reasonably required
to assure its continued protection and rights.
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Xxxxxx Xxxxxx
December 20, 2001
Page 3
This agreement will be governed by California and subject to the jurisdiction
and venue of the state and federal courts of Los Angeles, California.
Yours truly,
VERTICAL COMPUTER SYSTEMS, INC.
By:
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Xxxxxxx Xxxx, President
Mountain Reservoir Corp.
By:
--------------------------------
Xxxxx Xxxxx, President
ACCEPTED AND AGREED:
BY:
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Xxxxxx Xxxxxx, an individual
Dated:
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BY:
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Xxxxxx Xxxxxx, on behalf of Paradigm
Dated:
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