Contract
Exhibit 10.1
THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE ACT AND THE RULES AND REGULATIONS THEREUNDER.
EACH
HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE
BOUND BY THE PROVISIONS OF THIS NOTE. THIS NOTE AND THE RIGHTS AND
OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE TO CERTAIN INDEBTEDNESS AS SET
FORTH HEREIN.
THIS NOTE
MAY NOT BE ASSIGNED, NEGOTIATED OR TRANSFERRED EXCEPT AS SET FORTH
HEREIN.
AMENDED
AND RESTATED SUBORDINATED PROMISSORY NOTE
| $2,191,123 |
March 28,
2008
|
FOR VALUE
RECEIVED, the undersigned, MTM TECHNOLOGIES, INC., a New York corporation (the
"Borrower"),
promises to pay to PEQUOT PRIVATE EQUITY FUND III, L.P. (the "Holder"), the
principal sum of two million one hundred ninety one thousand one hundred twenty
three dollars ($2,191,123) with interest on the unpaid balance from the date
hereof, at the rate of eight and one-half percent (8.5%) per annum in lawful
money of the United States of America, at c/o Pequot Capital Management, Inc.,
000 Xxxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, or at such other place as the
Holder may designate in writing.
This
Amended and Restated Promissory Note (this “Note”) amends and
restates in its entirety that certain Promissory Note, dated as of February 28,
2008 and made by the Borrower to the Holder to evidence the principal sum of
$2,191,123 (the “Existing
Note”). This Note evidences the same indebtedness evidenced by
the Existing Note and does not create or evidence any new or additional
indebtedness. This Note and the terms, covenants, agreements, rights,
obligations and conditions contained in this Note supersede, replace and control
the Existing Note and the terms, covenants, agreements, rights, obligations and
conditions contained in the Existing Note.
The
principal of and interest on this Note shall be due and payable as follows: a
$657,300 principal payment shall be due on December 28, 2008 and the remaining
principal balance and all interest accrued hereon from February 28, 2008 to the
date of payment of the principal amount hereof shall be due on March 28, 2009
(the "Maturity
Date"). Interest on this Note shall be due and payable in cash
or, at the option of the Borrower, in shares of the series of preferred stock of
the Borrower next designated by the Borrower after the date hereof, at a price
per share of $.561.
On
February 28, 2008, in addition to the issuance of the Existing Note, the
Borrower issued to another lender another note. All such notes issued by the
Borrower on February 28, 2008 were for the aggregate amount of $2,500,000. All
such notes are being
amended
and restated as of the date hereof, and are referred to herein as the “Amended 2008
Notes”.
All
computations of interest payable hereunder shall be made on the basis of the
actual number of days in the period for which such interest is payable and a
year of 365 or 366 days, as applicable. Notwithstanding any other
provision of this Note, to the extent permitted by applicable law, interest
shall be due and payable on any overdue unpaid installment of principal or
interest on this Note (including amounts due and unpaid upon any acceleration of
this Note) within five (5) days of its due date at a rate equal to the lesser of
(i) ten and one-half percent (10.5%) and (ii) the maximum rate permitted by
applicable law.
1. Payment and Prepayment of
the Note. The principal of this Note and the interest accrued
hereon may be prepaid in whole at any time.
2. Event of Default;
Remedies. (a)
Upon the occurrence and during the continuance of an Event of Default, this Note
may be accelerated upon the written consent and direction of the holders holding
a majority of the then outstanding aggregate principal balance of the Amended
2008 Notes and as provided in this Section 2 and the Holder shall have all of
the rights and remedies provided herein. An Event of Default shall
mean the occurrence or existence of one or more of the following events or
conditions (for any reason, whether voluntary, involuntary or effected or
required by law):
(i) The
Borrower shall fail to pay when due the principal of this Note or any
of the Amended 2008 Notes.
(ii) The
Borrower shall fail to pay when due the interest on this Note or any of the
Amended 2008 Notes and such failure shall have continued for a period of three
Business Days; provided, however, that for the avoidance of doubt, any accrual
of interest permitted under this Note or any of the Amended 2008 Notes (in lieu
of payment thereof) shall not constitute an Event of Default.For the purposes of
this Note a “Business
Day” shall mean any day other than a Saturday, Sunday, public holiday
under the laws of the State of New York or any other day on which banking
institutions are authorized to close in New York City
(iii) A
proceeding shall have been instituted in respect of the Borrower or any of its
material subsidiaries (each, a “Material
Party”):
(A) seeking to have an order
for relief entered in respect of such Material Party, or seeking a declaration
or entailing a finding that such Material Party is insolvent or a similar
declaration or finding, or seeking dissolution, winding-up, charter revocation
or forfeiture, liquidation, reorganization, arrangement, adjustment, composition
or other similar relief with respect to such Material Party, its assets or its
debts under any law relating to bankruptcy, insolvency, relief of
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debtors
or protection of creditors, termination of legal entities or any other similar
law now or hereafter in effect, or
(B) seeking
appointment of a receiver, trustee, liquidator, assignee, sequestrator or other
custodian for such Material Party or for all or any substantial part of its
property, and such proceeding shall result in the entry, making or grant of any
such order for relief, declaration, finding, relief or appointment, or such
proceeding shall remain undismissed and unstayed for a period of 60 consecutive
days.
(iv) Any
Material Party shall voluntarily suspend transaction of its business; shall make
a general assignment for the benefit of creditors; shall institute (or fail to
controvert in a timely and appropriate manner) a proceeding described in Section
2(a)(iii)(A) or (whether or not any such proceeding has been instituted) shall
consent to or acquiesce in any such order for relief, declaration, finding or
relief described therein; shall institute (or fail to controvert in a timely and
appropriate manner) a proceeding described in Section 2(a)(iii)(B), or (whether
or not any such proceeding has been instituted) shall consent to or acquiesce in
any such appointment or to the taking of possession by any such custodian of all
or any substantial part of its property; shall dissolve, wind-up, revoke or
forfeit its charter or liquidate itself or any substantial part of its property;
or shall take any action in furtherance of any of the foregoing.
(v) An
event or condition shall have occurred which the Holder reasonably believes
creates a Material Adverse Effect. For the purposes of this Note, a “Material Adverse
Effect” shall mean an effect which is materially adverse to the business,
assets, properties, operations, results of operations or condition (financial or
otherwise) of the Borrower individually or of the Borrower and its subsidiaries
taken as a whole (excluding general economic conditions or acts of war or
terrorism).
(b) Exercise
of Remedies.If an Event of Default has occurred and is continuing
hereunder:
(i) the
Holder may declare the entire unpaid principal and interest due on the Note,
immediately due and payable, without presentment, notice or demand, all of which
are hereby expressly waived by the Borrower;
(ii) upon
the occurrence of any Event of Default specified in Section 2(a)(iii), above,
the entire unpaid principal and interest, shall become automatically and
immediately due and payable; and
(iii) the
Holder may exercise any remedy permitted by this Note or at law or in
equity.
3. Waiver of Certain
Rights. Subject
to any applicable notice periods, all parties to this Note, including Borrower
and any sureties, endorsers, or guarantors, hereby waive protest, presentment,
notice of dishonor, and notice of acceleration of maturity and
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agree to
continue to remain bound for the payment of principal, interest and all other
sums due under this Note notwithstanding any change or changes by way of
release, surrender, exchange, modification or substitution of any security for
this Note or by way of any extension or extensions of time for the payment of
principal and interest; and all such parties waive all and every kind of notice
of such change or changes and agree that the same may be without notice or
consent of any of them. No Event of Default shall be waived by the
Holder except in a writing signed by the Holder. No waiver of any
Event of Default shall extend to any other or further Event of
Default.
4. Pro-Rata
Payment. If
the Borrower is not able to pay to the holders of the Amended 2008 Notes the
full amounts due at any time when payments under the Amended 2008 Notes become
due and payable by the Borrower, either on the Maturity Date or upon the
occurrence of an Event of Default, the holders of the Amended 2008 Notes shall
share ratably in any distribution of the Borrower pro rata in proportion to the
respective amounts of each such holder’s Amended 2008 Notes.
5. Subordination.
The right of repayment of principal of
and interest on this Note shall be subordinated to the rights and security
interest of (i) GE Commercial Distribution Finance Corporation (“CDF”) in connection
with the August 21, 2007, secured Credit Facilities Agreement (“Credit Facilities
Agreement”) with CDF, as Administrative Agent, GECC Capital Markets
Group, Inc., as Sole Lead Arranger and Sole Bookrunner, and CDF and the other
lenders listed in the Credit Facilities Agreement, and (ii) Columbia Partners,
L.L.C. Investment Management, as Investment Manager and National Electric
Benefit Fund (“NEBF”) in connection
with the November 23, 2005, secured credit agreement (the “CP/NEBF Credit
Agreement”) with Columbia Partners, L.L.C. Investment Management, as
Investment Manager, and NEBF, as Lender (CDF and NEBF collectively, the “Senior Lenders” and
the Credit Facilities Agreement and the CP/NEBF Credit Agreement collectively
the “Senior
Debt”). The issuance of this Note requires the consent of the
Senior Lenders pursuant to the Senior Debt, which consent the Borrower has
obtained. No additional consent of the Senior Lenders is required in
connection with the issuance of the Amended 2008 Notes. While any
default or event of default has occurred and is continuing with respect to any
Senior Debt, the Borrower shall not make and the Holder shall not accept any
payments or distribution in respect of this Note of any kind. The Holder agrees
that this Note shall remain unsecured at all times and the Holder shall not
accept any collateral security in respect hereof. For so long as any
Senior Debt remains outstanding or any Senior Lender shall have any obligation
to lend to the Borrower, the Holder shall not exercise any remedies or take any
enforcement action against the Borrower with respect to this Note.
6. Representations and
Warranties of the Borrower
(a) Organization and
Qualification. Each
of the Borrower and its subsidiaries is duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation or
organization and has the requisite power and authority to own, lease and operate
its assets, properties and business and to carry on its
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business
as it is now being conducted or proposed to be conducted. Each of the
Borrower and its subsidiaries is duly qualified as a foreign corporation to
transact business, and is in good standing, in each jurisdiction where it owns
or leases real property or maintains employees or where the nature of its
activities make such qualification necessary, except where such failure to
qualify would not have a Material Adverse Effect.
(b) Certificate of Incorporation
and Bylaws. The
Borrower has delivered to the Holder true, correct, and complete copies of the
Borrower’s certificate of incorporation as in effect on the date hereof (the
“Existing
Certificate”) and the Borrower’s bylaws as in effect on the date hereof
(the “Bylaws”).
(c) Corporate Power and
Authority. The
Borrower has all requisite corporate power and authority to execute and deliver
this Note. The Borrower has all requisite corporate power and
authority to carry out and perform its obligations under the terms of this
Note.
(d) Authorization. The
execution, delivery and performance by the Borrower of this Note, and the
performance of all of the obligations of the Borrower under this Note have been
authorized by the Board of Directors (or a duly authorized committee thereof),
and no other corporate action on the part of the Borrower and no other corporate
or other approval or authorization is required on the part of the Borrower, or
any person by law or otherwise in order to make this Note the valid, binding and
enforceable obligations (subject to (i) laws of general application relating to
bankruptcy, insolvency, and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief, or other equitable remedies)
of the Borrower. This Note constitutes a valid and legally binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its respective terms, subject to (i) laws of general application relating to
bankruptcy, insolvency, and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief, or other equitable
remedies.
(e) Consents. No
consent, approval, waiver or authorization, or designation, declaration,
notification, or filing with any person or entity (governmental or private), on
the part of the Borrower is required in connection with the valid execution,
delivery and performance of this Note or the consummation of any other
transaction contemplated hereby (other than such notifications or filings
required under applicable federal or state securities laws, if any), except for
such consents, approvals, waivers, authorizations, designations, declarations,
notifications, or filings that have been received prior to the date
hereof.
(f) Brokers or
Finders. The
Borrower has not incurred, directly or indirectly, as a result of any action
taken by the Borrower, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges in connection with this Note or any
transaction contemplated hereby or thereby.
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(g) Offering
Exemption. Assuming
the truth and accuracy of the representations and warranties contained in
Section 7, this issuance and delivery to the Holder of this Note is exempt from
registration under the Securities Act of 1933, as amended (the “Securities Act”), and
will be registered or qualified (or exempt from registration or qualification)
under applicable state securities and “blue sky” laws, as currently in
effect.
(h) SEC
Reports. (A) The
Borrower has filed all required forms, reports and documents with the Securities
and Exchange Commission (the “SEC”) since April 1,
2001, each of which has complied in all material respects with all applicable
requirements of the Securities and the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”), and the rules and regulations promulgated thereunder, each as in
effect on the date such forms, reports and documents were filed. (B) None of the
following contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein in
light of the circumstances under which they were made not misleading: (i) this
Note, (ii) the Borrower’s Existing Certificate, (iii) the Bylaws, or (iv) the
SEC Reports. There is no fact which, to the Knowledge of the
Borrower, has not been disclosed to the Holder, which could be expected to have
a Material Adverse Effect on the ability of the Borrower to perform its
obligations under the Existing Certificate, Bylaws or this Note. (C) The
Borrower is not aware of any correspondence (other than routine communications),
action or proposed or threatened action by the SEC or Nasdaq with regard to the
Borrower since April 1, 2006, other than such correspondence that has been
disclosed by the Company in its SEC Reports. For the purposes of this Note,
“Knowledge”
shall mean with respect to the Borrower, the knowledge, after diligent
investigation, of the directors, officers and senior management of the Borrower
and of the person or persons in such entity with responsibility for the matter
with respect to which the knowledge is applicable.
(i) Financial
Statements. Included
in the Borrower’s filings with the SEC are the audited financial statements of
the Borrower and its subsidiaries as at and for the years ended March 31, 2007,
2006 and 2005 (the “Financial
Statements”). The Financial Statements have been prepared in
accordance with GAAP and fairly present the financial condition and operating
results of the Borrower and its subsidiaries as of the date, and for the period,
indicated therein.
(j) Absence of
Conflicts. The
Borrower is not in violation of or default under any provision of its Existing
Certificate or Bylaws. The execution, delivery, and performance of, and
compliance with this Note and the consummation of the transactions contemplated
hereby, have not and will not:
(i) violate,
conflict with or result in a breach of any provision of or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default), under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien upon any of the assets,
properties or business of the Borrower and the subsidiaries under, any of the
terms, conditions or provisions of the Existing Certificate or the Bylaws, or
any material contract of the Borrower (for purposes of this Section 6(j)(i) a
material contract of the
6
Borrower
shall be only those agreements that are included as exhibits to the Borrower
filings with the SEC); or
(ii) violate
any judgment, ruling, order, writ, injunction, award, decree, or any law or
regulation of any court or federal, state, county or local government or any
other governmental, regulatory or administrative agency or authority which is
applicable to the Borrower or any subsidiary or any of their assets, properties
or business, which violation would have a Material Adverse Effect.
7. Representations and
Warranties of Holder
The Holder hereby represents and
warrants that:
(a) Organization and
Qualification. The
Holder is duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization to carry on its business as
it is now being conducted or proposed to be conducted.
(b) Power and
Authority. The
Holder has all requisite power and authority to execute and deliver this Note,
and to carry out and perform its obligations under the terms of this
Note.
(c) Authorization. The
execution, delivery and performance by the Holder of this Note, and the
performance of all of the obligations of the Holder under this Note has been
duly and validly authorized, and no other action, approval or authorization is
required on the part of the Holder or any Person by Law or otherwise in order to
make this Note the valid, binding and enforceable obligations (subject to (i)
laws of general application relating to bankruptcy, insolvency, and the relief
of debtors, and (ii) rules of law governing specific performance, injunctive
relief, or other equitable remedies) of the Holder. This Note when
executed and delivered by the Holder will constitute a valid and legally binding
obligation of the Holder, enforceable against the Holder in accordance with its
terms subject to: (i) laws of general application relating to bankruptcy,
insolvency, and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief, or other equitable remedies.
(d) Acquired Entirely for Own
Account. This
Note will be acquired for investment for the Holder’s own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof. The Holder’s principal office is 000 Xxxxx Xxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxxx 00000. The Holder is aware that the Borrower is
issuing this Note pursuant to Section 4(2) of the Securities Act and Regulation
D promulgated thereunder without complying with the registration provisions of
the Securities Act or other applicable federal or state securities
laws. The Holder is also aware that the Borrower is relying upon,
among other things, the representations and warranties of the Holder contained
in this Note for purposes of complying with Regulation D.
(e) Disclosure of
Information. The
Holder has received and carefully reviewed all the information it considers
necessary or appropriate for deciding whether to
7
enter
into this Note. The Holder further represents that the Borrower has
made available to the Holder, at a reasonable time prior to the date of this
Note, an opportunity to (a) ask questions and receive answers from the Borrower
regarding the terms and conditions of this Note and the business, properties and
financial condition of the Borrower, all of which questions (if any) have been
answered to the reasonable satisfaction of the Holder, and (b) obtain additional
information, all of which was furnished by the Borrower to the reasonable
satisfaction of the Holder. The foregoing, however, does not limit or
modify the representations and warranties of the Borrower in Section 6 of this
Note or the right of the Holder to rely thereon.
(f) Investment
Experience. The
Holder acknowledges that it is able to fend for itself, can bear the economic
risk of its investment, and has such knowledge and experience in investing in
companies similar to the Borrower and in financial or business matters such that
it is capable of evaluating the merits and risks of this Note. The
Holder has made the determination to enter into this Note based upon its own
independent evaluation and assessment of the value of the Borrower and its
present and prospective business prospects.
(g) Accredited
Investor. The
Holder is an “accredited investor”
within the meaning of SEC Rule 501 of Regulation D, as presently in
effect.
(h) Restricted Securities;
Legends. The
Holder recognizes that this Note will not be registered under the Securities Act
or other applicable federal or state securities laws. The Holder
understands that the Note is characterized as “restricted securities” under the
federal securities laws inasmuch as it is being acquired from the Borrower in a
transaction not involving a public offering. The Holder acknowledges
that it may not to sell or transfer this Note unless it is registered under the
Securities Act and under any other applicable securities laws
(i) No General
Solicitation. The
Holder acknowledges that this Note was not offered to the Holder by means of:
(a) any advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium, or broadcast over television or radio, or
(b) any other form of general solicitation or advertising.
(j) Absence of
Conflicts. The
Holder’s execution, delivery, and performance of, and compliance with this Note
and the consummation of the transactions contemplated hereby , have not and will
not:
(i) violate,
conflict with or result in a breach of any provision of or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien upon any of the assets,
properties or business of the Holder under, any of the terms, conditions or
provisions of (i) its certificate/articles of formation or organization or any
of its other formation or organizational documents, or (ii) any material
contract to which it is a party; or
8
(ii) violate
any judgment, ruling, order, writ, injunction, award, decree, or any law or
regulation of any court or federal, state, county or local government or any
other governmental, regulatory or administrative agency or authority which is
applicable to the Holder or any of its assets, properties or businesses, which
violation would have a Material Adverse Effect.
(k) Brokers or
Finders The
Holder has not incurred, nor will it incur, directly or indirectly, as a result
of any action taken by the Holder, any liability for brokerage or finders’ fees
or agents’ commissions or any similar charges in connection with this Note or
any transaction contemplated hereby. The Holder r agrees to indemnify
and hold the Borrower harmless from any liability for any commission or
compensation in the nature of a finders’ fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Holder, or
any of its respective officers, employees or representatives is
responsible.
8. Miscellaneous. The
following general provisions apply:
(a) This
Note, and the obligations and rights of the Borrower hereunder, shall be binding
upon and inure to the benefit of the Borrower, the Holder, and their respective
heirs, personal representatives, successors and assigns. The Holder
may not transfer this Note without the consent of the Borrower, which consent
shall not be unreasonably withheld.
(b) No
amendment or waiver of any provision of the Note, nor consent to any departure
by a party herefrom, shall in any event be effective unless the same shall be in
writing and signed by the holders holding a majority of the then outstanding
aggregate principal balance of the Amended 2008 Notes. Any amendment,
waiver or consent so made or effected shall be binding upon all of the holders
of the Amended 2008 Notes; provided, however, the principal amount of this Note
shall not be reduced without the prior written consent of the holders of at
least a majority of the then outstanding principal amount of the Amended 2008
Notes. Any principal so reduced shall be so reduced proportionally for all
holders of the Amended 2008 Notes.
(c) All
payments shall be made in such coin and currency of the United States of America
as at the time of payment shall be legal tender therein for the payment of
public and private debts.
All
notices and other communications required or permitted hereunder shall be in
writing. Notices shall be delivered personally, via recognized
overnight courier (such as Federal Express, DHL or Airborne Express) or via
certified or registered mail. All notices shall be effective upon
receipt. Notices may be delivered via facsimile or e-mail, provided
that by no later than two days thereafter such notice is confirmed in writing
and sent via one of the methods described in the previous
sentence. Notices shall be addressed as follows:
(i) if
to the Borrower, to MTM Technologies, Inc., 0000 Xxxx Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000, Attention: Xxxxxxx Xxxxx, with a copy
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to Xxxxxx
Xxxx Xxxxx Raysman & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: E. Xxx Xxxx, facsimile number (000) 000-0000.
(ii) if
to the Holder, to c/o Pequot Capital Management, Inc., 000 Xxxxx Xxxx Xxxx,
Xxxxxxxx, Xxxxxxxxxxx 00000, with a copy to Xxxx Xxxxxxxxxx, c/o Pequot Capital
Management, Inc., 000 Xxxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000.
(d) Whenever
possible, each provision of this Note will be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Note
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Note will be reformed, construed and enforced in such jurisdiction to
the greatest extent possible to carry out the intentions of the parties
hereto.
(e) This
Note shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the State of New York.
Signature
on the following page
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IN
WITNESS WHEREOF, the Borrower has caused this instrument to be executed in its
corporate name by a duly authorized officer, by order of its Board of Directors
as of the day and year first above written.
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By:
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/s/ Xxxxx Xxxxxxxx | |
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Name:
Xxxxx Xxxxxxxx
Title:President
and Chief Operating Officer
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Signature
Page to MTM Technologies, Inc. Subordinated Promissory Note
for
Pequot Offshore Private Equity Partners, L.P.
