Exhibit 10.2
EXECUTION COPY
SECURITY AGREEMENT
T HIS
S ECURITY A GREEMENT (this “ Agreement ”) is
entered into as of this 11 th day of June, 2009 (the
“ Closing Date ”) by and among MTM
T ECHNOLOGIES , I NC . , a
New York corporation (“ MTM ”), MTM
T ECHNOLOGIES (US), I NC . , a
Delaware corporation (“ MTM-US ”), MTM
T ECHNOLOGIES (M ASSACHUSETTS ), LLC , a Delaware limited liability company (“
MTM-MA ”), and I NFO S YSTEMS , I NC . , a
Delaware corporation (“ ISI ”; MTM, MTM-US,
MTM-MA, and ISI are collectively, the “ Borrowers
” and each a “ Borrower ”); and
C OLUMBIA
P ARTNERS , L.L.C. I NVESTMENT M ANAGEMENT , as investment manager (“ Investment
Manager ”) for the benefit of itself and N
ATIONAL E LECTRICAL B ENEFIT F UND (“ NEBF ”), F
IRST M ARK III L.P. (f/k/a Pequot Private Equity Fund III, L.P.)
(“ FMIII ”), F IRST M ARK III O FFSHORE P ARTNERS , L.P. (Pequot Offshore Private Equity Partners III,
L.P.) (“ FMIIIOP ”), C
ONSTELLATION
V ENTURE C APITAL II, L.P. (“ CVCII ”), C
ONSTELLATION
V ENTURE C APITAL O FFSHORE II, L.P. (“ CVCOII ”), CVC II
P ARTNERS
, LLC (“ CVCIIP ”), and
T HE
BSC E MPLOYEE F UND VI, L.P. (“ BSC ”; NEBF, FMIII,
FMIIIOP, CVCII, CVCOII, CVCIIP, and BSC are collectively, the
“ L/C Guarantors ” and each a “ L/C
Guarantor ”).
R ECITALS
W HEREAS
, the Borrowers, the L/C Guarantors and Investment
Manager entered into that certain Letter of Credit Commitment and
Reimbursement Agreement of even date herewith as amended, modified,
supplemented or otherwise modified from time to time (the “
L/C Agreement ”).
W HEREAS
, as a condition to the L/C Guarantors and
Investment Manager entering into the L/C Agreement, the Investment
Manager and the L/C Guarantors have required that the Borrowers
enter into this Agreement.
A GREEMENT
N OW
T HEREFORE , in order to induce the L/C Guarantor and
Investment Manager to enter into the L/C Agreement, Borrowers
hereby agree in favor of Investment Manager for the benefit of
Investment Manager and the L/C Guarantors, as set forth
below.
ARTICLE I
L/C AGREEMENT
1.1 Incorporation by Reference . This Agreement is entered
into pursuant to the terms and conditions of the L/C Agreement and
each of the terms and conditions of the L/C Agreement are hereby
incorporated by reference.
1.
1.2 Definitions. Any capitalized term used herein and not
otherwise defined herein shall have the meaning given to it in the
L/C Agreement. Terms used herein which are defined in the Code and
not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Code. To the extent the definition of
any category or type of collateral is modified by any amendment,
modification or revision to the Code, such modified definition will
apply automatically under this Agreement as of the date of such
amendment, modification or revision.
ARTICLE II
GRANT OF SECURITY INTEREST
2.1 Grant. As security for the full, prompt and complete
payment and performance of each of the Obligations when due
(whether at stated maturity, by acceleration or otherwise and
whether now existing or hereafter arising), each Borrower hereby
grants to Investment Manager, as agent for the benefit of itself
and the L/C Guarantors, a continuing security interest in all of
such Borrower’s right, title and interest in and to the
personal and real property set forth in Exhibit A attached
hereto (collectively, the “ Collateral ”),
subject and subordinate only to Permitted Encumbrances.
2.2 Rights of Investment Manager and L/C Guarantors. In
addition to the rights and remedies granted to Investment Manager
and the L/C Guarantors herein and in the other Loan Documents,
Investment Manager and the L/C Guarantors (as applicable) shall
have all of the rights and remedies of a secured creditor under the
Code with respect to all of the Collateral.
ARTICLE III
R IGHTS O F I NVESTMENT M ANAGER AND L/C G UARANTORS ; C OLLECTION O F A CCOUNTS .
3.1 Contracts and Licenses . Notwithstanding anything
contained in this Agreement to the contrary, each Borrower
expressly agrees that, to the extent required by the L/C Agreement,
it shall remain liable under each of its Contractual Obligations
and each of its Licenses to observe and perform all the conditions
and obligations to be observed and performed by it thereunder and
that it shall perform all of its duties and obligations thereunder,
all in accordance with and pursuant to the terms and provisions of
each such Contractual Obligation or License. Neither Investment
Manager nor the L/C Guarantors shall have any obligation or
liability under any Contractual Obligations or License by reason of
or arising out of this Agreement or the granting to Investment
Manager of a lien therein or the receipt by Investment Manager or
the L/C Guarantors of any payment relating to any Contractual
Obligation or License pursuant hereto, nor shall Investment Manager
or the L/C Guarantors be required or obligated in any manner to
perform or fulfill any of the obligations of any Borrower under or
pursuant to any Contractual Obligation or License, or to make any
payment, or to make any inquiry as to the nature or the sufficiency
of any payment received by it or the sufficiency of any performance
by any party under any Contractual Obligation or License, or to
present or file any claim, or to take any action to collect or
enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time
or times.
2.
3.2 Collection of Accounts . Investment Manager authorizes
Borrowers to collect their Accounts, provided that such
collection is performed in a prudent and businesslike manner, and
Investment Manager may, upon the occurrence and during the
continuation of any Event of Default and without notice, limit or
terminate said authority at any time. Upon the occurrence and
during the continuance of any Event of Default, at the request of
Investment Manager and subject to the terms of the Subordination
Agreement, Borrowers shall deliver all original and other documents
evidencing and relating to the performance of labor or services or
to Licenses which created such Accounts, including, without
limitation, all original orders, invoices, related shipping
receipts, and licenses.
3.3 Notification and Verification . Investment Manager may
at any time, upon the occurrence and during the continuance of any
Event of Default, without notifying Borrowers of its intention to
do so, notify Account Debtors of Borrowers, parties to the
Contractual Obligations of Borrowers, obligors in respect of
Instruments of Borrowers and obligors in respect of Chattel Paper
of Borrowers, that the Accounts and the right, title and interest
of Borrowers in and under such Contractual Obligations, Instruments
and Chattel Paper have been assigned to Investment Manager and that
payments shall, subject to the terms of the Subordination
Agreement, be made directly to Investment Manager. Upon the
occurrence and during the continuance of an Event of Default and at
the request by Investment Manager, Borrowers shall so notify such
Account Debtors, parties to such Contractual Obligations, obligors
in respect of such Instruments and obligors in respect of such
Chattel Paper. Upon the occurrence and during the continuance of
any Event of Default, Investment Manager may, in its name or in the
name of others, communicate with such Account Debtors, parties to
such Contractual Obligations, obligors in respect of such
Instruments and obligors in respect of such Chattel Paper to verify
with such parties, to Investment Manager’s satisfaction, the
existence, amount and terms of any such Accounts, Contractual
Obligations, Instruments or Chattel Paper.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To
induce Investment Manager and the L/C Guarantors to enter into the
transactions contemplated by the L/C Agreement, Borrowers jointly
and severally represent and warrant as of the date hereof as
follows (which representations and warranties shall survive the
execution and delivery of this Agreement):
4.1 Priority of Security Interest . This Agreement creates a
legal and valid security interest on and in all of the Collateral
in which Borrowers or any of them now has rights and all filings
and other actions necessary to perfect such security interest have
been duly taken. Accordingly, Investment Manager has a fully
perfected security interest in all of the Collateral in which
Borrowers or any of them now has rights, subject only to Permitted
Encumbrances.
4.2 Other Names. No Borrower has changed its name or used
any other name or any trade name within the five (5) years
immediately preceding the date of this Agreement except as set
forth on the Perfection Certificate attached hereto as
Exhibit B (the “ Perfection Certificate
”). No Borrower shall conduct business under any other name
than that given above nor change or
3.
reorganize the type of business
entity under which it does business except upon 30 days prior
written notice to Investment Manager. If such a change of name or
business entity shall occur, Borrowers guarantee that all
documents, instruments and agreements reasonably requested by
Investment Manager to evidence that the applicable Borrower under
such new name or such new business entity is a
“Borrower” under the L/C Agreement and the other Loan
Documents shall be prepared and filed at Borrowers’ expense
no more than ten days after such change of name or business entity
is effective.
4.3 Location of Goods and Inventory . All of the Goods of
Borrowers and Inventory of Borrowers are located only at the Real
Estate or leased locations described in the Perfection Certificate,
and none of the Goods or Inventory of Borrowers is stored with, or
in the possession of, any bailee, warehouseman, subcontractor, or
other similar Person except as noted in the Perfection Certificate
and except for Goods and Inventory in transit in the ordinary
course of business.
4.4 Accuracy of Perfection Certificate . The information
contained in the Perfection Certificate, is true, accurate and
complete in all material respects.
4.5 Intellectual Property . As of the date of this
Agreement, no Borrower has any registered Intellectual Property or
applications therefor except as noted in the Perfection Certificate
or the L/C Agreement. Each Borrower owns sufficient rights to use
to all Intellectual Property necessary for the conduct of its
business as presently conducted. To the best of Borrowers’
knowledge, each of the registered Copyrights, Trademarks and
Patents of Borrowers is valid and enforceable, and no part of the
Intellectual Property has been judged invalid or unenforceable, in
whole or in part. Borrowers’ rights as licensees of
intellectual property do not give rise to more than 5% of their
consolidated gross revenues in any given month, including without
limitation revenue derived from the sale, licensing, rendering or
disposition of any product or service.
ARTICLE V
COVENANTS
Until
the monetary Obligations are repaid in full and each of the other
Obligations has been satisfied in full and discharged and in
addition to the covenants set forth in the L/C Agreement, Borrowers
jointly and severally covenant and agree as follows:
5.1 Books and Records .
5.1.1 Borrowers will keep and maintain, at their own cost
and expense, satisfactory and materially complete books and records
of and with respect to the Collateral, including, without
limitation, records of the status of any pending applications or
registrations for Intellectual Property;
5.1.2 Investment Manager shall have access to the
above-referenced books and records and any other data relating to
the Collateral at such times and upon such notice as set forth in
Section 5.1 of the L/C Agreement; and
4.
5.1.3 Subject to its duty to exercise reasonable care with
respect to the Collateral and to maintain the confidentiality of
confidential information, Investment Manager shall have a special
property interest in all books and records of Borrowers pertaining
to the Collateral and, at any time, upon the request by Investment
Manager upon the occurrence and during the continuance of an Event
of Default, Borrowers shall, at their own cost and expense and
subject to the terms of the Subordination Agreement, deliver all
such books or records to Investment Manager or its designated
representatives and shall deliver to Investment Manager or its
designated representatives all original and other documents
evidencing and relating to the Collateral.
5.2 Equipment . Borrowers shall keep all of their Equipment
at the principal places of business or at a location stated in the
Perfection Certificate and, except in the ordinary course of
business, shall not change the location of any item of the
Equipment without 30 days prior written notice to Investment
Manager.
5.3 Goods and Inventory . Borrowers shall keep, store or
regularly garage all of the Goods and Inventory of Borrowers at
Borrowers’ principal places of business or at a location
stated in the Perfection Certificate and shall not change the
location of any item of the Goods or Inventory other than in the
ordinary course of business without providing Investment Manager
with advance written notice at least thirty (30) days prior to such
relocation.
5.4 Deposit Accounts . Borrowers shall, at Investment
Manager’s request, procure control agreements in favor of
Investment Manager, for the benefit of Investment Manager and the
L/C Guarantors, from each third party in possession of a deposit
account that is included within the definition of Collateral (and
therefore subject to Investment Manager’s security interest
hereby granted).
5.5 No Transfers of Collateral . Notwithstanding that
Proceeds are included within the definition of “
Collateral ” (and therefore subject to Investment
Manager’s security interest hereby granted), no Borrower
shall sell, assign, transfer or otherwise dispose of the Collateral
or any portion thereof or any interest therein without the prior
written consent of Investment Manager, except to the extent
expressly permitted by the terms and conditions of the L/C
Agreement.
5.6 Liens, Claims and Attachments . Borrowers shall at
Borrowers’ expense, maintain the Collateral free from all
Liens (other than Permitted Encumbrances), and Borrowers shall
notify Investment Manager promptly after receipt of notice of any
Lien, attachment or judicial proceeding affecting the Collateral in
whole or in material part.
5.7 Maintenance, Repairs and Replacements . Borrowers shall
keep and maintain, or cause to be kept and maintained, all of the
tangible Collateral in good condition, subject to normal wear and
tear, and shall provide all maintenance and service and make all
repairs and replacements necessary for such purpose, subject to
Borrowers’ commercially reasonable discretion and the
economic viability of such repair or replacement. If any parts or
accessories forming part of the tangible Collateral become worn
out, lost, destroyed, damaged beyond repair or otherwise
permanently rendered unfit for use, Borrowers, at their own
expense, shall within a reasonable time replace such parts or
accessories or cause the same to be replaced by replacement parts
or accessories
5.
that have a value and utility at
least equal to the parts or accessories replaced, subject to
Borrowers’ commercially reasonable discretion and the
economic viability of such repair or replacement. All accessories,
parts and replacements for or which are added to or become attached
to any of the tangible Collateral shall immediately be deemed
incorporated in the tangible Collateral and subject to the security
interests granted by Borrowers under this Agreement.
5.8 Right to Inspect. Investment Manager shall have the
right to inspect all of the tangible Collateral; such times and
upon such notice as provided in Section 5.1 of the L/C
Agreement.
5.9 Insurance; Application of Insurance Proceeds . Borrowers
shall maintain insurance in accordance with Section 5.3 of the L/C
Agreement. The proceeds of the insurance maintained by Borrowers
and payable as a result of loss of or damage to any of the tangible
Collateral shall be applied in accordance with the L/C Agreement.
Each Borrower irrevocably appoints Investment Manager as such
Borrower’s attorney-in-fact to make claim for, receive
payment of, and execute and endorse all documents, checks or drafts
received in payment for loss or damage under any of these insurance
policies.
5.10 Financing Statements; Recording Costs; Possession of
Collateral . Borrowers shall promptly deliver to Investment
Manager all UCC Financing Statements or UCC continuation statements
or other documents reasonably required, or procure any documents
reasonably required (including UCC termination statements, as
necessary), to carry out the transactions contemplated by the Loan
Documents and to maintain Investment Manager’s perfected
security interest in all of the Collateral with the lien priority
indicated in the L/C Agreement and the Subordination Agreement.
Each Borrower further authorizes Investment Manager to file UCC-1
financing statements naming such Borrower as debtor and Investment
Manager as secured party, including, without limitation, financing
statements describing the collateral as “all assets” or
“all personal property” or words of similar import.
Borrowers shall pay all state and local stamp or documentary taxes,
recordation and transfer taxes, clerks’ fees and filing fees,
and all other costs to record such documents and to perfect and
maintain Investment Manager’s perfected security interest in
all of the Collateral with the lien priority indicated in the L/C
Agreement and the Subordination Agreement. If any material portion
of the Collateral is of a type as to which it is necessary or
desirable for Investment Manager to take possession of the
Collateral in order to perfect, or maintain the priority of,
Investment Manager’s security interest, then on or prior to
the Closing Date, Borrowers shall deliver all such Collateral to
Investment Manager, and, with respect to any such Collateral
acquired by any Borrower after the Closing Date, such Borrower
shall promptly deliver same to Investment Manager. A carbon,
photographic, photocopy or other reproduction of a security
agreement (including this
