LOAN AND SECURITY AGREEMENT
LENDER/SECURED PARTY:
RESELLER/DEBTOR/COMPANY:
MTM Technologies, Inc. ("Parent")
MTM Technologies (California), Inc.
MTM Technologies (Texas), Inc.
Textron Financial Corporation
MTM Technologies (US), Inc.
1180 Welsh Road, Suite 280
Info Systems, Inc.
North Wales, PA 19454
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Exact Legal Name
850 Canal Street
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Street Address
Stamford, Connecticut 06902
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City, State, Zip Code
Gentlemen:
1. We, MTM TECHNOLOGIES, INC., a New York corporation; MTM
TECHNOLOGIES
(CALIFORNIA), INC., a Delaware corporation;
MTM TECHNOLOGIES (TEXAS), INC., a
Delaware corporation; MTM TECHNOLOGIES
(US), INC., a Delaware corporation; INFO
SYSTEMS, INC., a Delaware corporation, are
each an authorized reseller of goods
manufactured and/or distributed by various
manufacturers and distributors
(hereinafter called "Manufacturer"). As
such, each of us from time to time buys
goods from Manufacturer to be held by us as
our inventory for sale by us in the
normal course of our business. Each of us
may, as more fully set forth herein,
from time to time obtain loans from you,
Textron Financial Corporation, a
Delaware Corporation, in order to finance
the purchase of certain of such goods,
including parts and accessories therefor,
from Manufacturer, and each of us
desires by this Agreement to set forth in
writing our understanding of our loan
arrangements with you and to secure
repayment of such loans and other related
debts and liabilities we may have to you,
whether now existing or hereafter
arising. Each of us agrees and acknowledges
that each of MTM TECHNOLOGIES, INC.,
MTM TECHNOLOGIES (CALIFORNIA), INC., MTM
TECHNOLOGIES (TEXAS), INC., MTM
TECHNOLOGIES (US), INC. and INFO SYSTEMS,
INC. shall be jointly and severally
liable hereunder for our own obligations
and for the obligations of the other
Resellers. Each of us agrees and
acknowledges that each of MTM TECHNOLOGIES,
INC., MTM TECHNOLOGIES (CALIFORNIA), INC.,
MTM TECHNOLOGIES (TEXAS), INC., MTM
TECHNOLOGIES (US), INC. and INFO SYSTEMS,
INC. will grant security interests in
and to our respective Collateral (as
defined below) in favor of you as security
for our own obligations hereunder and the
obligations of the other Resellers
hereunder. Each of us agrees and
acknowledges that each reference to "we" or
"us" in this Agreement shall mean each of
MTM TECHNOLOGIES, INC., MTM
TECHNOLOGIES (CALIFORNIA), INC., MTM
TECHNOLOGIES (TEXAS), INC., MTM
TECHNOLOGIES (US), INC., and INFO SYSTEMS,
INC. on a joint and several basis.
1A. Each of us agrees
and acknowledges that MTM TECHNOLOGIES, INC.,
MTM TECHNOLOGIES (CALIFORNIA), INC., MTM
TECHNOLOGIES (TEXAS), INC., MTM
TECHNOLOGIES (US), INC., INFO SYSTEMS,
INC., PTI CORPORATION, a Delaware
corporation, DATA.COM RESULTS, INC., a New
York corporation, and MTM ADVANCED
TECHNOLOGY, INC., a New York corporation,
and you were parties to that certain
Amended and Restated Loan and Security
Agreement dated May 21, 2004 (as amended,
the "Existing LSA").
Each of us agrees and acknowledges that PTI CORPORATION,
DATA.COM
RESULTS, INC., and MTM ADVANCED TECHNOLOGY,
INC. have, with your consent, merged
into MTM TECHNOLOGIES,INC., with MTM
TECHNOLOGIES, INC. being the surviving
entity and assuming all of their respective
obligations and undertakings under
the Existing LSA.
Each of us desires to amend and restate in its entirety the
Existing LSA as set forth in this
Agreement. Such amendment and restatement will
reflect and confirm, and this Agreement
does hereby so amend and restate the
Existing LSA to reflect and confirm, that
(i) all of the Revolving Credit Loans
(as defined in the Existing LSA) including
all of the Receivable Loans and all
of the Inventory Loans (as such terms are
defined in the Existing LSA) are
contemporaneously with the execution and
delivery of this Agreement being paid
in full (together with all accrued and
unpaid interest thereon) and the
Revolving Credit Line (as defined in the
Existing LSA) is hereby terminated,
(ii) the outstanding Floorplan Loans (as
defined in the Existing LSA) under the
Existing LSA are contemporaneously with the
execution and delivery of this
Agreement hereby deemed outstanding
hereunder as loans hereunder (with each
Floorplan Loan outstanding under the
Existing LSA being converted into a loan
under this Agreement with such converted
loan continuing to relate to the same
Inventory (as defined below) as under the
Existing LSA and having the same
maturity and bearing the same rate or rates
of interest and subject to the same
fees) and the Floorplan Credit Line (as
defined in the Existing LSA) is
contemporaneously with the execution and
delivery of this Agreement hereby
terminated; it being the intent of each of
us and you that all principal of the
Floorplan Loans outstanding under the
Existing LSA as of the date hereof and all
outstanding accrued and unpaid interest and
fees and expenses in respect thereof
under the Existing LSA as of the date
hereof shall continue to be outstanding
hereunder and shall be payable in
accordance with the terms and conditions
hereof and (iii) all future loans to us
will be under this Agreement. Each of us
agrees that the aggregate outstanding
principal amount of Floorplan Loans under
the Existing LSA as of the date hereof is
$9,897,561.32 and the aggregate
accrued and unpaid interest as of the date
hereof in respect thereof is
$14,420.19.
Each of us warrants and confirms to you that the liens and
security interest granted by any one or
more of us in favor of you in and to the
Collateral under and as defined in the
Existing LSA are perfected and are
subject to no other liens and security
interests except Permitted Encumbrances
(as defined below) and, immediately after
our entering into this Agreement, the
<PAGE>
liens and security interest in favor of you
in and to the Collateral (as defined
below) under this Agreement are perfected
and are subject to no other liens and
security interests except Permitted
Encumbrances.
Each of us agrees to cooperate with you to amend and/or modify
and restate the Existing LSA as provided
for herein.
The foregoing statements of facts, background and undertakings
are hereby made a part of this Agreement
and each of us shall be bound by them
and you shall be entitled to rely upon them
and each of us acknowledges and
agrees that you are relying on the same in
entering into this Agreement and
performing hereunder.
2. Upon our
request from time to time, you may, at your sole
discretion and without any obligation to do
so, make loans to us, under such
terms and with such conditions as you shall
specify, to enable us to acquire
rights in Inventory from a Manufacturer
pre-approved by you for financing
programs. We understand that each such loan
will be solely at your discretion,
and we expressly disclaim any right to
expect otherwise, either from the course
of our dealing, our need therefor, your
dealings with others, your arrangements
with any Manufacturer, or otherwise. Loans
hereunder shall be subject to the
limitations set forth in Section 3(a) of
the Addendum attached hereto.
Conversely, nothing herein will prevent us
from obtaining financing from other
sources consistent with and in compliance
with the terms of this Agreement.
Anything contained herein to the contrary
notwithstanding, the financing
obtained by the Companies under the CIT
Financing Agreement (as defined below)
and the CIT Financing Agreement are hereby
approved. We understand and agree
that upon the termination of the CIT
Financing Agreement and the payment in full
of all indebtedness thereunder you may
require, in your sole discretion, the
simultaneous termination of this Agreement
and payment in full (on an
accelerated basis or otherwise) of all
Obligations hereunder and an early
termination fee in respect hereof as
calculated as provided for in the CIT
Financing Agreement.
We understand that certain terms and conditions applicable to
loans
obtained by us from you will be set forth
in materials to be made available from
time to time to us and other Resellers, the
terms of which, as revised from time
to time, being deemed incorporated herein
by reference (including, without
limitation that certain terms
acknowledgment letter dated May 11, 2005). We
understand that these materials are subject
to change by you at any time and
from time to time, and expressly assume the
responsibility of confirming
directly with you, upon our request for
each loan, the exact terms and
conditions then being stated by you,
including without limitation rate of
interest, fees and terms of repayment. In
no event will we view such materials
as a commitment or other offer on your part
to lend, and we will have no right
to any loan under any particular terms
until actually made and under the terms
so made. We understand and agree that the
full amount of each loan will be paid
to you on its due date without deduction
for any sums due from any Manufacturer
or any Credit Memo (as defined below) that
may have been issued to you, unless
you have previously notified us that you
have received and applied the amount of
the Credit Memo issued by the applicable
Manufacturer.
We understand that you may, from time to time, issue advices to
us.
Such advices may include, but need not be
limited to, periodic or monthly
statements of our account, periodic letter
advices in the nature of statements
of account, issued from time to time, and
letter forms or other forms of notices
of due dates of finance plan payments and
of the specific terms of loans which
we have with you. Unless we, within ten
(10) days from the date of any such
advice, give you written and itemized
objection to the contents of such advice,
we shall be fully bound thereby and
acknowledge that the content of such advice
is true, correct, and complete, and
accurately reflects our obligations to you
as of the date thereof.
In connection with each loan requested, we will deliver to you
such
other writings as you shall require, which
may include notes or other
appropriate evidence of debt, subordination
agreements, intercreditor
agreements, and control and lockbox
agreements. Such notes or other evidence of
debt, subordination agreements, stock
pledge agreements, intercreditor
agreements, control and lockbox agreements,
Manufacturer invoices, and other
like materials as may be revised from time
to time ("Collateral Documents"),
together with this Agreement, contain our
entire understanding, and we
acknowledge that we will not be relying
upon any prior oral or written promises
or undertakings or future oral promises
between us. No modification hereof or of
the Collateral Documents will be binding
upon you unless in a writing duly
executed on your behalf by an officer
holding the rank of Vice President or
higher.
We hereby authorize you to disburse the proceeds of each loan
directly
to any Manufacturer on our behalf. Further,
we shall and hereby authorize each
Manufacturer to deliver its invoice for
Inventory, together with all
certificates of origin, directly to you.
You may assume that all such invoices
so submitted are authentic and accurate and
that they have been submitted on our
behalf and with our permission. Receipt by
you from us or any Manufacturer of an
invoice for Inventory shall be your
authority to make a loan to us under terms
and conditions then being stated by you. In
addition we shall and hereby
authorize the Manufacturer to issue all
Credit Memos directly to you and in your
favor.
We acknowledge that the term "Prime Rate", as used in the
Collateral
Documents in reference to the rate of
interest applicable to loans to us, will
mean the average of the Prime Rates (the
base rate for corporate loans at large
U.S. money center commercial banks) quoted
in the Wall Street Journal under the
caption "Money Rates", and agree that the
interest rate applicable to our loans
from you will automatically change from
time to time effective upon each change
in the published Prime Rate. We further
agree that interest on our loans from
you will be calculated on the basis of a
360 day year but will be chargeable for
the actual days that principal is
outstanding in the then current year.
3. We
acknowledge that our financial arrangements with you are
completely independent of our arrangements
with any Manufacturer, and that
neither you nor Manufacturer are an agent
for or acting on behalf of the other.
We are not relying, in our understanding
with you, on any statements, promises
or representations, oral or written, made
by any Manufacturer, whether or not
purportedly on your behalf, relating to the
subject matter hereof and of our
loans with you. Although we may receive
official literature, brochures and other
written materials disseminated by you
through a Manufacturer, we expressly
assume the risk that the materials so
received are the most current, up to date
materials then authorized by you to be
disseminated. None of our obligations to
you will be affected or impaired, or be
subject to any defense, set-off,
counterclaim, crossclaim or recoupment, by
reason of any claim which we now or
hereafter have against any Manufacturer or
its agents, including without
limitation any claim for breach of express
or implied warranty of title, or
otherwise related to the condition of the
Collateral or our dealings with such
Manufacturer.
4. As used
herein, the following terms shall have the following
meaning:
a. "Accounts"
means any and all of each Company's present and
future: (i) accounts (as defined in the UCC); (ii)
instruments, documents, chattel paper (including electronic
chattel paper) (all as defined in the UCC); (iii) unpaid
seller's or lessor's rights (including rescission, replevin,
reclamation, repossession and stoppage in transit) relating
to the foregoing or arising therefrom; (iv) rights to any
goods represented by any of the foregoing, including rights
to returned, reclaimed or repossessed goods; (v) reserves
and credit balances arising in connection with or pursuant
to this Agreement or the CIT Financing Agreement; (vi)
<PAGE>
guaranties, other supporting obligations, payment
intangibles and letter of credit rights (all as defined in
the UCC); (vii) insurance policies or rights relating to any
of
the foregoing; (viii) general intangibles pertaining to
any of the foregoing (including rights to payment, including
those arising in connection with bank and non-bank credit
cards), and all books and records and any electronic media
and software relating thereto; (ix) notes, deposits or other
property of such Company's account debtors securing the
obligations owed by such account debtors to such Company;
and (x) all Proceeds of any of the foregoing.
b. "Capital
Expenditures" means, for any period, the aggregate
expenditures of the Companies during such period on account
of
property, plant, equipment or similar fixed assets that,
in conformity with GAAP, are required to be reflected on the
consolidated balance sheet of the Parent.
c. "Capital
Lease" means the lease by any Company of property
(whether real, personal or mixed) which, in conformity with
GAAP, is accounted for as a capital lease or a Capital
Expenditure on the consolidated balance sheet of the Parent.
d. "Casualty
Proceeds" means (i) payments or other proceeds
from an insurance carrier with respect to any loss, casualty
or damage to Collateral, and (ii) payments received on
account of any condemnation or other governmental taking of
any of the Collateral.
e. "CIT
Financing Agreement" means that certain Financing
Agreement among The CIT Group/Business Credit, Inc. ("CIT"),
as agent and lender, the Companies and the other lenders
signatory thereto, as in effect on the Closing Date.
f. "Change of
Control" means the occurrence of any of the
following events: (i) the acquisition by any person or group
(as such term is used in Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended), other than one
or more of the Investors that own voting stock of the Parent
on the Closing Date, of beneficial ownership of 50% or more
of the voting power of the total issued and outstanding
shares of voting stock of the Parent; or (ii) the Parent
shall cease to own directly, or indirectly through one or
more of the other Companies, 100% of the total issued and
outstanding capital stock of each of the other Companies;
provided, however, that, nothing herein shall be construed
as a waiver of the Parent's or any other Company's
obligations under Section 10 in connection with the transfer
of the capital stock of any Company to another Company or
any other corporate restructuring.
g. "Closing
Date" means June 8, 2005.
h. "Code" means
the Uniform Commercial Code as the same may be
amended and in effect from time to time in the State of
Rhode Island.
i. "Collateral"
means, collectively, all present and future
assets and properties of the Companies, including, without
limitation, all present and future Accounts, Equipment,
Inventory and other Goods, Documents of Title, General
Intangibles, Investment Property, and Other Collateral, but
shall not include any Excluded Collateral.
j. "Company" as
defined in the heading of this Agreement.
k. "Confidential
Information" as defined in Section 26 of this
Agreement.
l. "Consolidated
Balance Sheet" means a consolidated balance
sheet for the Parent and its consolidated Subsidiaries,
eliminating all inter company transactions and prepared in
accordance with GAAP.
m. "Consolidated
EBITDA" means, for any period, with respect to
the Parent and its consolidated Subsidiaries, other than the
Excluded Subsidiaries, all earnings before all interest, tax
obligations and depreciation and amortization expense for
such period, all determined in conformity with GAAP on a
basis consistent with the latest audited financial
statements of the Parent, but excluding the effect of
extraordinary and/or nonrecurring gains or losses for such
period.
n. "Consolidated
Fixed Charges" means, for any period, with
respect to the Parent and its consolidated Subsidiaries,
other than the Excluded Subsidiaries, the sum of (i) all
cash interest obligations (including, without limitation,
cash interest obligations in respect of any Investor
Obligations, loans under the CIT Financing Agreement and/or
Subordinated Debt) paid or due during such period, (ii) the
amount of all scheduled fees paid to CIT and the lenders
under the CIT Financing Agreement during such period, (iii)
the amount of principal repaid in cash or scheduled to be
repaid but not paid on Indebtedness (other than the loans
under the CIT Financing Agreement and any loans made
hereunder) during such period (including, without
limitation, principal repayments in respect of any Investor
Obligations and/or Subordinated Debt, but not including
principal repayments in respect of any Indebtedness that is,
by its terms, payable only in stock) provided, that, cash
payments made in respect of Indebtedness incurred in
connection with any Permitted Acquisition (as such term is
defined in
the CIT Financing Agreement) will be excluded
from Consolidated Fixed Charges to the extent that they were
made with the proceeds of capital contributions (either in
the form of equity or Subordinated Debt) and not with the
proceeds of "Revolving Loans" under, and as defined in, the
CIT Financing Agreement or other working capital, (iv)
unfinanced Capital Expenditures incurred during such period,
(v) all federal, state and local income tax expenses due and
payable during such period, (vi) all cash payments made or
due in respect of any earnout or similar contingent
obligations during such period, provided, that, such cash
payments will be excluded from Consolidated Fixed Charges to
the extent that they were made with the proceeds of capital
contributions (either in the form of equity or Subordinated
Debt) and not with the proceeds of loans under the CIT
Financing Agreement or other working capital and (vii) all
payments made or due in respect of Capital Leases during
such period.
o. "Consolidated
Fixed Charge Coverage Ratio" mean, for any
period, the quotient (expressed as a ratio) obtained by
dividing (I) Consolidated EBITDA for such period by (II)
Consolidated Fixed Charges for such period.
<PAGE>
p. "Consolidated
Senior Leverage" means, as of any date, the
quotient (expressed as a ratio) obtained by dividing (i) the
sum of the aggregate principal amount of the Obligations
plus the aggregate principal amount of the obligations under
the CIT Financing Agreement, as of such date, by (ii)
Consolidated EBITDA for the applicable period ending on such
date.
q.
"Consolidating Balance Sheet" shall mean a Consolidated
Balance Sheet plus individual balance sheets for the Parent
and each of its consolidated Subsidiaries, showing all
eliminations of inter company transactions and prepared in
accordance with GAAP.
r. "Copyrights"
means all present and hereafter acquired
copyrights, copyright registrations, recordings,
applications, designs, styles, licenses, marks, prints and
labels bearing any of the foregoing, all reissues and
renewals thereof, all licenses thereof, all other general
intangible, intellectual property and other rights
pertaining to any of the foregoing, together with the
goodwill associated therewith, and all income, royalties and
other Proceeds of any of the foregoing.
s. "Credit
Memos" means credit memoranda for return merchandise
authorizations issued by a manufacturer or vendor of
Inventory.
t. "Debtor" as
defined in the heading of this Agreement.
u. "Depository
Account" means each bank account (and the
related lockbox, if any) subject to your or your agent's
control that is established by you or your agent or any
Company hereunder pursuant to Schedule 4-Depository Accounts
or pursuant to the CIT Financing Agreement.
v. "Default"
means any event specified in Section 14 hereof,
regardless of whether any requirement for the giving of
notice, the lapse of time, or both, or any other condition,
event or act, has occurred or been satisfied.
w. "Default
Rate" means a rate of interest equal to the lower
of (i) four percent (4%) per annum in excess of the interest
rate otherwise accruing on the Obligations and (ii) the
highest legally permissible rate.
x. "Documents of
Title" means all of each Company's present and
future documents (as defined in the UCC), and any and all
warehouse receipts, bills of lading, shipping documents,
chattel paper, instruments and similar documents, all
whether negotiable or non-negotiable, together with all
Inventory and other Goods relating thereto, and all Proceeds
of any of the foregoing.
y. "Equipment"
means all of each Company's present and
hereafter acquired equipment (as defined in the UCC)
including, without limitation, all machinery, equipment,
rolling stock, furnishings and fixtures, and all additions,
substitutions and replacements thereof, wherever located,
together with all attachments, components, parts, equipment
and accessories installed thereon or affixed thereto and all
Proceeds of any of the foregoing.
z. "ERISA" means
the Employee Retirement Income Security Act or
1974, as amended from time to time, and the rules and
regulations promulgated thereunder from time to time.
aa. "Event(s) of
Default" has the meaning given to such term in
Section 14 of this Agreement.
bb. "Excluded
Collateral" means (i) the assets and properties of
each Excluded Subsidiary, if any, and (ii) such capital
stock of, or other equity interest in, any Excluded
Subsidiary owned by any Company or any Guarantor (as defined
in the CIT Financing Agreement) as you, in your sole
discretion, shall have agreed in writing shall constitute
Excluded Collateral. As of the Closing Date there shall be
no Excluded Collateral. For so long the indebtedness under
the CIT Financing Agreement shall have not been paid in full
and the CIT Financing Agreement shall have not been
terminated, "Excluded Collateral" hereunder shall have the
same meaning as provided for in the CIT Financing Agreement.
If the indebtedness under the CIT Financing Agreement shall
have been paid in full and the CIT Financing Agreement shall
have been terminated and in the event that you agree, in
your sole discretion, that any assets or properties in which
you have a security interest should constitute Excluded
Collateral, you willl deliver to the applicable Companies
such documents (including UCC partial releases) as are
necessary to release such security interest.
cc. "Excluded
Subsidiary" means each Subsidiary of the Parent
formed or acquired after the Closing Date, if any, as to
which the Parent, you and the Agent under the CIT Financing
Agreement, in your or such Agent's sole discretion, shall
have agreed in writing shall constitute an Excluded
Subsidiary. As of the Closing Date there shall be no
Excluded Subsidiaries. For so long the Indebtedness under
the CIT Financing Agreement shall have not been paid in full
and the
CIT Financing Agreement shall have not been
terminated, "Excluded Subsidiary" hereunder shall have the
same meaning as provided for in the CIT Financing Agreement.
dd. "Existing LSA" as
defined in Section 1A of this Agreement.
ee. "GAAP" means
generally accepted accounting principles in the
United States of America as in effect from time to time and
for the period as to which such accounting principles are to
apply.
ff. "General
Intangibles" means all of each Company's present
and hereafter acquired general intangibles (as defined in
the UCC), and shall include, without limitation, all present
and future right, title and interest in and to: (i) all
Trademarks, (ii) Patents, utility models, industrial models,
and designs, (iii) Copyrights, (iv) trade secrets, (v)
licenses, permits and franchises, (vi) any other forms of
intellectual property, (vii) all customer lists,
distribution agreements, supply agreements, blueprints,
indemnification rights and tax refunds, (viii) all monies
and claims for monies now or hereafter due and payable in
<PAGE>
connection with the foregoing, including, without
limitation, payments for infringement and royalties arising
from any licensing agreement between any Company and any
licensee of any of such Company's General Intangibles, and
(ix) all Proceeds of any of the foregoing.
gg. "Goods" means all
of each Company's present and hereafter
acquired "Goods", as defined in the UCC, and all Proceeds
thereof.
hh. "Indebtedness"
means, without duplication, all liabilities,
contingent or otherwise, which are either (i) obligations in
respect of borrowed money or for the deferred purchase price
of property, services or assets, other than Inventory, or
(ii) obligations with respect to Capital Leases.
ii. "Indemnified
Party" as defined in Section 25 of this
Agreement.
jj. "Ingram Micro
Documents" means, collectively: (a) all
purchase orders submitted by one or more of the Companies to
Ingram Micro and (b) that certain Security Agreement,
effective as of June 8, 2005, made by the Borrowers in favor
of Ingram Micro.
kk. "Ingram Micro
Obligations" means all obligations,
liabilities and indebtedness arising under the Ingram Micro
Documents and owing by each Company that is a party thereto
or a guarantor of the repayment thereof.
ll. "Inventory" means
all of each Company's present and
hereafter acquired inventory (as defined in the UCC)
including, without limitation, all merchandise and inventory
in all stages of production (from raw materials through
work-in-process to finished goods), and all additions,
substitutions and replacements thereof, wherever located,
together with all goods and materials used or usable in
manufacturing, processing, packaging or shipping of the
foregoing, and all Proceeds of any of the foregoing.
mm. "Investment
Property" means all of each Company's present
and
hereafter acquired "Investment Property", as defined in
the UCC, together with all stock and other equity interests
issued by (x) each Company, other than the Parent, and all
Proceeds thereof and (y) each Subsidiary of each Company,
and all Proceeds thereof.
nn. "Investor(s)"
means, individually, any Purchaser, and
collectively, all of the Purchasers, as such terms are
defined in the Investor Purchase Agreement and shall include
the successors and assigns of any such Purchaser.
oo. "Investor Agent"
means Pequot Private Equity Fund III, L.P.
(or, in its discretion, its investment advisor) as
collateral agent under the Investor Loan Documents.
pp. "Investor Loan
Documents" means the Loan Documents, as such
term is defined in the Investor Purchase Agreement.
qq. "Investor Notes" means any and all
notes issued pursuant to
the Investor Purchase Agreement.
rr. "Investor
Obligations" means: (i) all loans, advances and
other extensions of credit made by the Investors pursuant to
the Investor Purchase Agreement; and (ii) any and all other
indebtedness, obligations and liabilities which may be owed
by any Company to the Investor Agent or any Investor and
arising out of, or incurred in connection with, the Investor
Notes or any of the other Investor Loan Documents, whether
(1) now in existence or incurred by such Company from time
to time hereafter, (2) secured by pledge, lien upon or
security interest in any of such Company's assets or
property or the assets or property of any other person,
firm, entity or corporation, (3) such indebtedness is
absolute or contingent, joint or several, matured or
unmatured, direct or indirect, or (4) such Company is liable
to the Investor Agent or any Investor for such indebtedness
as principal, surety, endorser, guarantor or otherwise.
ss. "Investor Purchase
Agreement" means the Purchase Agreement
dated December 7, 2004, as amended, among the Parent and the
Investors.
tt. "Intercreditor
Agreement" means the Intercreditor Agreement
between you and CIT, dated on or about the Closing Date, as
the same may be amended, modified, supplemented or restated
from time to time. You
agree to comply with your
undertakings and obligations under the Intercreditor
Agreement.
uu. "Lender" as
defined in the heading of this Agreement.
vv. "Manufacturer" as
defined in Section 1 of this Agreement.
ww. "Material Adverse
Effect " means a material adverse effect
on either (i) the business, condition (financial or
otherwise), operations, performance, properties or prospects
of the Parent and the other Companies, taken as a whole,
(ii) the ability of any Company to perform its obligations
under this Agreement or any of the other documents related
thereto, or to enforce its rights against account debtors of
such Company, (iii) the value of the Collateral or (iv) your
ability to enforce the Obligations or your rights and
remedies under this Agreement or any of the other documents
related thereto.
xx. "Obligations"
means: (i) all loans, advances and other
extensions of credit made by you to each Company or to
others for such
Company's account (including, without
limitation, all loans the proceeds of which are advanced to
a Manufacturer); (ii) any and all other indebtedness,
obligations and liabilities which may be owed by any Company
to you and arising out of, or incurred in connection with,
this Agreement (including all Out of Pocket Expenses),
whether (A) now in existence or incurred by such Company
from time to time hereafter, (B) secured by pledge, lien
upon or security interest in any of such Company's assets or
property or the assets or property of any other person,
firm, entity or corporation, (C) such indebtedness is
absolute or contingent, joint or several, matured or
<PAGE>
unmatured, direct or indirect, or (D) such Company is liable
to you for such indebtedness as principal, surety, endorser,
guarantor or otherwise; (iii) without duplication, each
Company's liabilities to you under any instrument of
guaranty or indemnity, or arising under any guaranty,
endorsement or undertaking which you may make or issue to
others for such Company's account; and (iv) any and all
indebtedness, obligations and liabilities incurred by, or
imposed on, you as a result of environmental claims relating
to any Company's obligations, waste disposal practices or
disposal sites.
yy. "Other Collateral"
means: (i) all of each Company's present
and hereafter established lockbox, blocked account and other
deposit accounts maintained with any bank or financial
institution into which the proceeds of Collateral are or may
be deposited (including the Depository Accounts); (ii) all
of each Company's cash and other monies and property in the
possession or control of you or any agent on your behalf;
(iii) all of each Company's books, records, ledger cards,
disks and related data processing software at any time
evidencing or containing information relating to any of the
Collateral described herein or otherwise necessary or
helpful in the collection thereof or realization thereon;
(iv) any collateral granted to the agent under the CIT
Financing Agreement or any other loan documents related
thereto and iv) all Proceeds of any of the foregoing.
zz. "Out of Pocket
Expenses" mean all of your present and future
costs, fees and expenses incurred in connection with this
Agreement, including, without limitation, (i) the cost of
lien searches (including tax lien and judgment lien
searches), pending litigation searches and similar items,
(ii) fees and taxes imposed in connection with the filing of
any financing statements or other personal property security
documents; (iii) all costs and expenses incurred by you in
opening and maintaining any depository accounts and any
related lockboxes, depositing checks, and receiving and
transferring funds; (iv) any amounts paid by, incurred by or
charged to you by an issuing bank under any letter of
credit, the account party in respect of which is a Company,
or the reimbursement agreement relating thereto, any
application for any letter of credit or other like document
which pertains either directly or indirectly to any such
letter of credit, and your standard fees relating to any
such letter of credit and any drafts thereunder; (v) title
insurance premiums, real estate survey costs, note taxes,
intangible taxes and mortgage or recording taxes and fees;
(vi) all appraisal fees and expenses payable by any Company
hereunder, and all costs, fees and expenses incurred by you
in connection with any action taken under Sections 8 and 12
hereof, including reasonable travel, meal and lodging
expenses of your personnel; (vii) all costs that you may
incur to maintain the Required Inventory Insurance, and all
reasonable costs, fees and expenses incurred by you in
connection with the collection of Casualty Proceeds and the
monitoring of any repair or restoration of any Real Estate;
(viii) all reasonable costs, fees, expenses and
disbursements of outside counsel hired by you to consummate
the transactions contemplated by this Agreement (including
the documentation and negotiation this Agreement and all
amendments, supplements and restatements thereto or
thereof), and to advise you as to matters relating to the
transactions contemplated hereby; (ix) all costs, fees and
expenses
incurred by you in connection with any action taken
under Section 15 hereof; and (x) without duplication, all
costs, fees and expenses incurred by you in connection with
the collection, liquidation, enforcement, protection and
defense of the Obligations, the Collateral and your rights
under this Agreement, including, without limitation, all
reasonable fees and disbursements of your in-house and
outside counsel incurred as a result of a workout,
restructuring, reorganization, liquidation, insolvency
proceeding and in any appeals arising therefrom, whether
incurred before, during or after the termination of this
Agreement or the commencement of any case with respect to
any Company or any subsidiary of any Company (as the case
may be) under the United States Bankruptcy Code or any
similar statute.
aaa. "Parent" as defined in the heading of this Agreement.
bbb. "Patents" mean all present and hereafter acquired patents,
patent applications, registrations, all reissues and
renewals thereof, all licenses thereof, all inventions and
improvements claimed thereunder, all general intangible,
intellectual property and other rights of each Company with
respect thereto, and all income, royalties and other
Proceeds of the foregoing.
ccc. "Permitted Distributions" mean (i) dividends declared and
paid in cash by any subsidiary of the Parent to the Parent,
and by any subsidiary of a Company (other then the Parent)
to such Company; and (ii) dividends payable solely in stock
or other equity interests of any Company.
ddd. "Permitted
Encumbrances" means: (i) all liens existing on
the Closing Date on specific items of Equipment and Real
Estate and described on Schedule 1.1(a) attached to the CIT
Financing Agreement; (ii) Purchase Money Liens; (iii)
statutory liens of landlords and liens of carriers,
warehousemen, bailees, mechanics, materialmen and other like
liens imposed by law, created in the ordinary course of
business and securing amounts not yet due (or which are
being contested in good faith, by appropriate proceedings or
other appropriate actions which are sufficient to prevent
imminent
foreclosure of such liens), and with respect to
which adequate reserves or other appropriate provisions are
being maintained by the applicable Company in accordance
with GAAP; (iv) deposits made (and the liens thereon) in the
ordinary course of business of the applicable Company
(including, without limitation, security deposits for
leases, indemnity bonds, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment
insurance and other types of social security benefits or to
secure the performance of tenders, bids, contracts (other
than for the repayment or guarantee of borrowed money or
purchase money obligations), statutory obligations and other
similar obligations arising as a result of progress payments
under government contracts; (v) liens granted to CIT, as
agent, for the benefit of the lenders under the CIT
Financing Agreement, by each Company and liens granted to
you hereunder; (vi) liens of judgment creditors, provided
that such liens do not exceed $100,000 in the aggregate at
any time (other than liens bonded or insured to your
reasonable satisfaction); (vii) Permitted Tax Liens; (viii)
easements (including, without limitation, reciprocal
easement agreements and utility agreements), encroachments,
minor defects or irregularities in title, variation and
other restrictions, charges or encumbrances (whether or not
recorded) affecting the Real Estate, if applicable, and
which in the aggregate (i) do not materially interfere with
the occupation, use or enjoyment by the Company of its
business or property so encumbered and (ii) in your
reasonable business judgment, do not materially and
adversely affect the value of such Real Estate; (ix) liens
granted by one or more of the Companies on personal property
to secure the payment and performance of the Investor
Obligations and the obligations secured under this
Agreement; and (x) liens granted by one or more of the
Companies on personal property to secure the payment and
performance of the Ingram Micro Obligations.
eee. "Permitted Indebtedness" means: (i) current Indebtedness
maturing in less than one year and incurred in the ordinary
course of business for raw materials, supplies, equipment,
services, Taxes or labor; (ii) Indebtedness secured by
Purchase Money Liens; (iii) Indebtedness arising under this
<PAGE>
Agreement; (iv) deferred Taxes and other expenses incurred
in the ordinary course of business; (v) Subordinated Debt;
(vi) the Investor Obligations; (vii) Indebtedness under the
CIT Financing Agreement up to a principal amount not to
exceed $40,000,000 and (vii) other Indebtedness existing on
the Closing Date and listed on Schedule 1.1(b) attached to
the CIT Financing
Agreement; (viii) guarantees of Capital
Leases.; (ix) unsecured guarantees by the Parent of any
Indebtedness or other obligation of any Company permitted
hereunder; and (x) unsecured guarantees by any Company of
any Indebtedness or other obligation of any other Company
permitted hereunder
fff. "Permitted Tax Liens" means liens for Taxes not due and
payable and liens for Taxes that the applicable Company is
contesting in good faith, by appropriate proceedings which
are sufficient to prevent imminent foreclosure of such
liens, and with respect to which adequate reserves are being
maintained by such Company in accordance with GAAP; provided
that in either case, such liens (i) are not filed of record
in any public office, (ii) other than with respect to Real
Estate, are not senior in priority to the liens granted by
such Company to you, or (iii) do not secure taxes owed to
the United States of America (or any department or agency
thereof) or any State or State authority, if applicable
State law provides for the priority of tax liens in a manner
similar to the laws of the United States of America.
ggg. "Proceeds" has the meaning given to such term in the UCC,
including, without limitation, all Casualty Proceeds.
hhh. "Purchase Money Liens" mean s (i) liens on any item of
Equipment acquired by the applicable Company after the date
of this Agreement, provided that (a) each such lien shall
attach only to the Equipment acquired, (b) a description of
the Equipment so acquired is furnished by such Company to
you, and (ii) liens on any item of Equipment acquired by the
applicable Company after the date of this Agreement arising
in connection with a Capital Lease of such Equipment,
provided, that each such lien shall attach only to the
Equipment leased.
iii. "Real Estate" means all of each Company's present and
future
fee and leasehold interests in real property.
jjj. "Required Inventory Insurance" as defined in Section 8 of
this Agreement.
kkk. "Reseller" as defined in the heading of this Agreement.
lll. "Secured Party" as defined in the heading of this
Agreement.
mmm. "Subordinated Debt" means all indebtedness of any Company
(and the note(s) evidencing such indebtedness) that is
subordinated in right of payment to the prior payment and
satisfaction of the Obligations pursuant to a Subordination
Agreement.
nnn. "Subordination Agreement" means (i) an agreement (in form
and substance satisfactory to you) among a Company obligated
on Subordinated Debt, the subordinating creditor to which
such Subordinated Debt is owed and you pursuant to which
such Subordinated Debt is subordinated to the prior payment
and satisfaction of the Obligations, and (II) any note,
indenture, note purchase agreement or similar instrument or
agreement, pursuant to which the indebtedness evidenced
thereby or issued thereunder is subordinated to the
Obligations by the express terms of such note, indenture,
note purchase agreement or similar instrument or agreement.
ooo. "Subsidiary" means any entity, all of whose equity
interests
having ordinary voting power (other than equity interests
having such power only by reason of the happening of a
contingency) to elect a majority of the directors (or other
persons performing similar functions) of such entity, are
owned, directly or indirectly, by another entity.
ppp. "Taxes" means all federal, state, municipal and other
governmental taxes, levies, charges, claims and assessments
which are or may be owed or collected by each Company with
respect to its business, operations, Collateral or
otherwise.
qqq. "Trademarks" means all present and hereafter acquired
trademarks, trademark registrations, recordings,
applications, tradenames, trade styles, corporate names,
business names, service marks, logos and any other designs
