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.
SUBORDINATED PROMISSORY NOTE
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$876,449.00
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January 29, 2009
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FOR VALUE RECEIVED, the undersigned, MTM
TECHNOLOGIES, INC., a New York corporation (the " Borrower
"), promises to pay to FIRSTMARK III L.P. (the " Holder "),
the principal sum of eight hundred seventy six thousand four
hundred forty nine dollars ($876,449.00) with interest on the
unpaid balance from the date hereof, at the rate of fifteen percent
(15%) per annum in lawful money of the United States of America, at
c/o FirstMark Capital, L.L.C.. 1221 Avenue of the Americas, 26
th Floor, New York, New York 10020, or at such other
place as the Holder may designate in writing.
The principal of and interest on this Note shall
be due and payable in full on the later of (a) February 13, 2009,
or (b) the date that the Borrower has obtained all necessary
consents from its Senior Lenders (as hereinafter defined) to such
payment (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 $0.638.
In
addition to the issuance of this Note and the Subordinated
Promissory Note issued to FirstMark III Offshore Partners, L.P. on
the date hereof, in 2008 the Borrower, issued to this lender and to
Pequot Private Equity Fund (n/ka FirstMark III, L.P.), Pequot
Offshore Private Equity Partners III, L.P. (n/k/a FirstMark III
Offshore Partners, L.P.), Constellation Venture Capital II, L.P.,
Constellation Venture Capital Offshore II, L.P., The BSC Employee
Fund VI, L.P., and CVC II Partners, LLC., other notes in the
aggregate amount of $6,000,000. All such notes issued by the
Borrower in 2008 and on this date are referred to herein as the
“ 7,000,000 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
7,000,000 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
7,000,000 Notes.
(ii) The Borrower
shall fail to pay when due the interest on this Note or any of the
$7,000,000 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 7,000,000 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 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,
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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).
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(b)
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If an Event of Default has
occurred and is continuing hereunder:
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(i) the Holder may
declare the entire unpaid principal and interest due on this 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 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
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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 7,000,000 Notes the full amounts due at any time when payments
under the 7,000,000 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 7,000,000 Notes shall share ratably in
any distribution of the Borrower pro rata in proportion to the
respective amounts of each such holder’s 7,000,000
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. The Borrower is
seeking or has obtained such consent. 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 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 qualifica
