EXHIBIT 10.1
MTM TECHNOLOGIES, INC.
AMENDMENT NO. 2
TO
PURCHASE AGREEMENT
This Amendment No. 2 (this "Amendment No.2") to the Purchase Agreement
dated December 7, 2004, as amended by that certain Amendment No. 1 to Purchase
Agreement, dated March 11, 2005 (the "Purchase Agreement"), among MTM
Technologies, Inc., a New York corporation (the "Company"), and the purchasers
listed on Schedule I thereto, each of which is referred to as a "Purchaser",
and, collectively, as the "Purchasers", is entered into as of November 22, 2005.
Background
WHEREAS, the Company wishes to sell and issue warrants to the
Purchasers in consideration for the Purchasers agreement to purchase the Series
A-5 Preferred Stock; and
WHEREAS, the Purchasers have agreed to purchase the Series A-5
Preferred Stock and wish to purchase the Series A-5 Warrants in connection with
their purchase of the Series A-5 Preferred Stock, each in the amounts set forth
opposite their names on Schedule I attached hereto;
NOW, THEREFORE, in consideration of the mutual premises and agreements
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Amendments.
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(a) The third recital of the Purchase Agreement shall be amended to
read as follows:
After the text that reads "(the "Series A-5 Preferred Stock"
and, together with the Series A-4 Preferred Stock, the "New Series A Preferred
Stock")" and before the text that reads "and such Additional Purchaser shall
purchase such Series A-5 Notes from the Company on the terms and conditions set
forth herein" the following text shall be added:
"and detachable warrants to purchase up to 450,000 shares (as
such amount may be adjusted in accordance with the terms
thereof) of Common Stock (the "Series A-5 Warrants")."
(b) Following the ninth recital of the Purchase Agreement a new
recital shall be added and shall read as follows:
"WHEREAS, the shareholders of the Company holding in the
aggregate a majority of the outstanding shares of the (i) Old
Series A Preferred Stock, (ii) the Series A-4 Preferred Stock,
each voting on an as converted basis, and (iii) Common Stock,
voting together as a single class, shall be bound to vote in
favor of the issuance and exercise of the Series A-5 Warrants
and the issuance of any Common Stock issuable upon conversion
or exercise thereof, pursuant to a voting agreement in
substantially the form attached hereto as Exhibit C-1 (the
"Series A-5 Warrants Voting Agreement")."
(c) Section 1.1(b)(ii) of the Purchase Agreement shall be amended to
read as follows:
The text that reads "(y) the Series A-5 Purchased Shares in each case
to be issued and sold on such Subsequent Closing Date" shall be deleted in its
entirety and replaced with the following:
"(y) the Series A-5 Purchased Shares and Series A-5 Warrants,
substantially in the form attached hereto as Exhibit E-3, in
each case to be issued and sold on such Subsequent Closing
Date"
(d) Section 1.4(a) to the Purchase Agreement is hereby deleted in
its entirety and replaced with the following:
"At any time and from time to time, but in no event later than
twelve (12) months after the Initial Closing Date, each
Additional Purchaser, may, in its sole discretion, purchase
(the "Series A-5 Purchaser Option") and require the Company to
sell and issue at one or more subsequent closings (any
purchase under this Section 1.4(a) or Section 1.4(b)
collectively referred to as, the "Series A-5 Subsequent
Closing" or the "Series A-5 Subsequent Closings"), Series A-5
Purchased Shares (issued and sold at the Original Issue Price)
in an aggregate amount of not less than $2,500,000, as set
forth in the Series A-5 Notice of Exercise. At least 15 days
prior to each such Series A-5 Subsequent Closing, such
Additional Purchaser shall give to the Company a written
notice (the "Series A-5 Notice of Exercise") which sets forth
the aggregate amount Series A-5 Purchased Shares that such
Additional Purchaser desires to purchase on such Series A-5
Subsequent Closing Date. At such Series A-5 Subsequent
Closing, subject to the terms hereof, the Company shall sell
and issue and such Additional Purchasers shall purchase the
Series A-5 Purchased Shares specified in such Series A-5
Notice of Exercise. The aggregate purchase price of Series A-5
Purchased Shares issued pursuant to Sections 1.4(a) and (b) at
all of the Series A-5 Subsequent Closings shall not exceed
$15,000,000; provided, that Pequot may purchase an aggregate
amount of $10,000,000 of such Series A-5 Purchased Shares at
such Series A-5 Subsequent Closings and Constellation may
purchase an aggregate amount of $5,000,000 of such Series A-5
Purchased Shares at such Series A-5 Subsequent Closings.
Notwithstanding the foregoing and to the greatest extent
permissible by applicable securities law, the Additional
Purchasers who are parties to this Agreement as of the Initial
Closing Date may reallocate their respective purchase price
percentages with respect to the amounts of Series A-5
Purchased Shares at any such Series A-5 Subsequent Closing may
be agreed upon by such Additional Purchasers; provided, that,
prior to the applicable Subsequent Closing Date, such
Additional Purchasers have provided the Company with timely
notice of such reallocation."
(e) Section 1.4 of the Purchase Agreement shall be amended to add the
following at the end thereof:
"(b) At any time and from time to time, but in no event later
than February 10, 2006, and provided that the Company has
entered into a loan agreement with Columbia Partners, L.L.C.
Investment Management, in its capacity as agent and authorized
representative of the National Electrical Benefit Fund in the
amount of $25,000,000, the Company may request that the
Additional Purchasers purchase from the Company at a Series
A-5 Subsequent Closing, (i) Series A-5 Purchased Shares
(issued and sold at the Original Issue Price) for an aggregate
purchase price of $10,000,000 and (ii) 450,000 Series A-5
Warrants. At least five (5) days prior to such Series A-5
Subsequent Closing, the Company shall give to the Additional
Purchasers a written notice (the "Series A-5 Notice of
Purchase") which sets forth such Series A-5 Subsequent Closing
Date. At such Series A-5 Subsequent Closing, subject to the
terms hereof, the Company shall sell and issue and such
Additional Purchasers shall purchase the Series A-5 Purchased
Shares and Series A-5 Warrants in the amounts set forth
opposite their names on Schedule I attached hereto.
Notwithstanding the foregoing and to the greatest extent
permissible by applicable securities law, the Additional
Purchasers who are parties to this Agreement as of the date of
this Amendment No.2 may reallocate their respective purchase
price percentages with respect to the amounts of Series A-5
Purchased Shares and Series A-5 Warrants at any such Series
A-5 Subsequent Closing may be agreed upon by such Additional
Purchasers; provided, that, prior to the applicable Subsequent
Closing Date, such Additional Purchasers have provided the
Company with timely notice of such reallocation. The
obligations of each Additional Purchaser under this Section
1.4(b) shall be independent and not joint and several."
(f) Section 1.5 of the Purchase Agreement shall be amended to read as
follows:
The text that reads "(y) the Series A-5 Notes or Series A-5
Purchased Shares, then the other Additional Purchaser may purchase the Purchased
Securities set forth in such notice on the terms and conditions set forth in
this Agreement prior to the expiration of such applicable Purchase Option."
shall be deleted in its entirety and replaced with the following:
"(y) the Series A-5 Purchased Shares and Series A-5 Warrants,
then the other Additional Purchaser may purchase the Purchased
Securities set forth in such notice on the terms and
conditions set forth in this Agreement prior to the expiration
of such applicable Purchase Option."
(g) Section 1.6 of the Purchase Agreement shall be deleted in its
entirety and replaced with the following:
"The Company agrees to use the net proceeds from the sale and
issuance of the Series A-3 Purchased Shares, Notes, Purchased
Shares, the Series A-4 Warrants and the Series A-5 Warrants
(together, the "Purchased Securities") pursuant to this
Agreement for working capital, acquisition of assets or equity
interests in other entities and other general corporate
purposes."
(h) Section 1.8 shall be amended to read as follows:
The text that reads "(iii) whether or not Shareholder Approval
has been obtained, at any Series A-4 Subsequent Closing Date, Additional
Warrants for the number of shares of Common Stock equal to 20% of the number of
shares of Common Stock issued or issuable on conversion of Series A-4 Preferred
Stock issued or issuable on conversion of such Additional Purchaser's Series A-4
Second Tranche Notes purchased on such Subsequent Closing Date" shall be deleted
in its entirety and replaced with the following:
"(iii) whether or not Shareholder Approval has been obtained,
(a) at any Series A-4 Subsequent Closing Date, Additional
Warrants for the number of shares of Common Stock equal to 20%
of the number of shares of Common Stock issued or issuable on
conversion of Series A-4 Preferred Stock issued or issuable on
conversion of such Additional Purchaser's Series A-4 Second
Tranche Notes purchased on such Subsequent Closing Date or (b)
at any Series A-5 Subsequent Closing Date, such number of
Series A-5 Warrants to be issued pursuant to Section 1.4(b)."
(i) Section 3.3 shall be shall be deleted in its entirety and
replaced with the following:
"Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute and deliver
the Transaction Documents and this Amendment No.2 to which it
is a party. The Company and each Subsidiary Guarantor has all
requisite corporate power and authority to carry out and
perform its obligations under the terms of the Transaction
Documents and this Amendment No.2 to which it is a party. The
Company has all requisite corporate power and authority to
sell and issue the Series A-4 Preferred Stock and Series A-5
Preferred Stock and the Common Stock issuable upon conversion
of such Series A-4 Preferred Stock or Series A-5 Preferred
Stock and the exercise of the Warrants, the Additional
Warrants and Series A-5 Warrants (such Series A-4 Preferred
Stock, Series A-5 Preferred Stock and Common Stock are,
together, the "Conversion Shares"). The Conversion Shares have
been duly reserved for issuance and when issued will be duly
and validly issued, fully paid and nonassessable."
(j) Section 5.1(a) of the Purchase Agreement shall be shall be
deleted in its entirety and replaced with the following:
"Representations and Warranties. The representations and
warranties of the Company contained in Section 3 shall be true
and correct on and as of such Closing with the same force and
effect as though such representations and warranties had been
made on and as of the date of such Closing except as a result
of events and changes thereto that do not result in a Material
Adverse Effect (except where such representation is made as of
a specific date, it shall be true and correct as of such date
except as a result of events and changes thereto that do not
result in a Material Adverse Effect).
(k) Section 5.3(c) of the Purchase Agreement shall be shall be
deleted in its entirety and replaced with the following:
"Additional Warrants and Series A-5 Warrants. With respect to
any Series A-4 Subsequent Closing in accordance with Section
1.3(b), the Company shall deliver to each Additional Purchaser
its respective Additional Warrants, and with respect to any
Series A-5 Subsequent Closing in accordance with Section
1.4(b), the Company shall deliver to each Additional Purchaser
its respective Series A-5 Warrants."
(l) Section 5.4(a) of the Purchase Agreement shall be shall be
deleted in its entirety and replaced with the following:
"Representations and Warranties. The representations and
warranties of the Additional Purchasers contained in Section 4
shall be true and correct in all material respects on and as
of such Closing (except where another date or period of time
is specifically stated herein for a representation or warranty
and in such case such representation or warranty shall be true
and correct in all material respects on and as of such date)
with the same force and effect as though such representations
and warranties had been made on and as of the date of such
Closing; provided, however, that representations and
warranties that contain a materiality qualification shall be
true and correct in all respects."
(m) The following definitions shall be added to Section 10 of the
Purchase Agreement:
(i) ""Series A-5 Notice of Purchase" shall have the meaning
ascribed to it in Section 1.4(b)." This definition shall be
inserted after the definition of "Series A-5 Notice of
Exercise."
(ii) ""Series A-5 Warrants Voting Agreement" shall have the
meaning ascribed to it in the recitals." This definition shall
be inserted after the definition of "Series A-5 Purchased
Shares."
(iii) ""Series A-5 Warrants" shall have the meaning ascribed
to it in the recitals." This definition shall be inserted
before the definition of "Series A-5 Warrants Voting
Agreement."
(n) The following Section 11.5 shall be added after Section 11.4 of
the Purchase Agreement:
"11.5 Additional Shareholder Approval. At or before the next
regular annual meeting for the election of directors the
Company shall use its best efforts to hold a meeting of the
Company's shareholders in compliance with the rules of the SEC
regarding proxies, consents and authorizations of shareholders
in Section 14 of the Exchange Act, and the rules and
regulations promulgated thereunder and shall make all
appropriate filings related thereto (including, without
limitation, the filing of any effective proxy statement) with
the SEC to give effect thereto, to approve the issuance and
exercise of the Series A-5 Warrants and the issuance of the
Common Stock issuable upon conversion or exercise thereof. The
Company shall use its reasonable commercial efforts to deliver
to the Purchasers a copy of such proxy statement and any
amendments and supplements thereto at least five days prior to
the filing thereof with the SEC."
(o) Section 12.6(c) of the Purchase Agreement shall be shall be
deleted in its entirety and replaced with the following:
"if to the Company, to MTM Technologies, Inc., 0000 Xxxxxxxxx
Xxxx, Xxxxxxxx, XX 00000, Attention: General Counsel,
facsimile number (000) 000-0000, or at such other address or
facsimile number as the Company shall have furnished in
writing to the Purchasers, with a copy to Xxxxxx Xxxx & Priest
LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: E.
Xxx Xxxx, facsimile number (000) 000.0000.
2. Waiver of Preemptive Rights. The Purchasers hereby waive all preemptive
rights of such Purchaser under (i) the Company's Restated Certificate of
Incorporation, as amended and (ii) all warrants of the Company owned by such
Purchaser in each case, in connection with the issuance of the Series A-5
Preferred Stock, the Series A-5 Warrants and the issuance of warrants of the
Company pursuant to the Credit Agreement to be executed and delivered by the
Company, certain of its subsidiaries and Columbia Partners, L.L.C. Investment
Management and National Electrical Benefit Fund.
3. Entire Agreement. This Amendment No.2 and the Purchase Agreement are to
be read together as one instrument. The Purchase Agreement shall remain in full
force and effect, except as modified hereby.
4. Governing Law. This Amendment No.2 is made pursuant to, and shall be
governed by and construed in accordance with, the laws of the State of New York,
other than provisions thereof relating to conflicts of law.
5. Counterparts. This Amendment No.2 may be executed in any number of
counterparts, each of which shall be considered an original and which shall
together constitute one instrument.
7. Headings. The titles and subtitles used in this Amendment No.2 are used
for convenience only and are not to be considered in construing or interpreting
this Amendment No.2.
[Remainder of this page intentionally blank]
IN WITNESS WHEREOF, the parties have executed this Amendment No.2 as of
the date first above written.
The Company:
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MTM TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
Signature Page to Amendment No. 2 to Purchase Agreement
The Purchasers:
PEQUOT PRIVATE EQUITY FUND III, L.P.
By: Pequot Capital Management,
Inc., its Investment Manager
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: General Counsel
PEQUOT OFFSHORE PRIVATE EQUITY
PARTNERS III, L.P.
By: Pequot Capital Management,
Inc., its Investment Manager
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: General Counsel
CONSTELLATION VENTURE CAPITAL II,
L.P.
By: Constellation Ventures
Management II, LLC
Its General Partner
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
CONSTELLATION VENTURE CAPITAL
OFFSHORE II, L.P.
By: Constellation Ventures
Management II, LLC
Its General Partner
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
Signature Page to Amendment No. 2 to Purchase Agreement
THE BSC EMPLOYEE FUND VI, L.P.
By: Constellation Ventures
Management II, LLC
Its General Partner
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
CVC II PARTNERS, LLC
By: The Bear Xxxxxxx Companies
Inc.
Its Managing Member
By: /s/ Xxxxxx Xxxxxxxxx
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Name: Xxxxxx Xxxxxxxxx
Title: Vice President
Signature Page to Amendment No. 2 to Purchase Agreement
SCHEDULE I
SCHEDULE OF PURCHASERS
==========================================================================================================
NAME OF PURCHASER SERIES A-5 NUMBER OF WARRANT
PREFERRED STOCK SHARES(1)
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Pequot Private Equity Fund III, L.P. 2,292,252 335,242
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Pequot Offshore Private Equity Partners III, L.P. 323,133 47,258
----------------------------------------------------------------------------------------------------------
Constellation Venture Capital II, L.P. 230,416 33,698
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Constellation Venture Capital Offshore II, L.P. 122,617 17,933
----------------------------------------------------------------------------------------------------------
The BSC Employee Fund VI, L.P. 102,751 15,027
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CVC Partners II, LLC 5,754 842
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Totals 3,076,923 450,000
==========================================================================================================
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(1) Subject to adjustments in accordance with the terms of the Warrants.
