--------------------------------------------------------------------------------
PROCEEDS PLEDGE AND ESCROW AGREEMENT
by and between
IAT MULTIMEDIA, INC.
and
THE BANK OF NEW YORK
--------------------------------------------------------------------------------
-1-
PROCEEDS PLEDGE AND ESCROW AGREEMENT
THIS PROCEEDS PLEDGE AND ESCROW AGREEMENT (this "Agreement"), dated
as of February __, 1998, is by and between IAT MULTIMEDIA, INC. (the
"Company") and The Bank of New York, as trustee under the Indenture referred
to below (the "Trustee").
RECITALS
A. The Notes. Pursuant to that certain Indenture (the "Indenture"),
dated as of February __, 1998, by and between the Company and the Trustee, the
Company will issue 10,000,000 in aggregate principal amount of 10% Convertible
Subordinated Notes due 2003 (collectively, the "First Notes"). The Company has
granted to Royce Investment Group, Inc. (the "Underwriter") an option (the
"Over-allotment Option") to purchase all or any part of an additional
aggregate of $1,500,000 principal amount of Notes (the "Option Notes" and
together with the First Notes, the "Notes") pursuant to the Underwriting
Agreement between the Company and the Underwriter dated January __, 1998 (the
"Underwriting Agreement"). Immediately after receipt of payment for the First
Notes (the "Deposit Time"), the Company will deposit from the net proceeds
from the sale of the First Notes $_______________ (the "Interest Reserve
Funds") into a segregated cash collateral/trust account with the Trustee at
its office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in the
name of The Bank of New York, as Trustee, "Interest Reserve and Collateral
Account for IAT Multimedia, Inc." (such account is herein referred to as the
"Escrow Account"). In the event the Underwriter exercises the Over-allotment
Option, the Company shall deposit from the net proceeds from the sale of the
Option Notes an amount as set forth in Article 5(c) of this Agreement into the
Escrow Account. The Escrow Account and all balances and investments from time
to time therein shall be under the sole control and dominion of the Trustee,
for the benefit of the Trustee and the ratable benefit of the Holders of the
Notes.
B. Purpose. The parties hereto desire to set forth their agreement
with regard to the administration of the Escrow Account, the creation of a
security interest in the Collateral (as defined herein) and the conditions
upon which funds will be released from the Escrow Account.
C. Definitions. Capitalized terms used but not defined herein shall
have the meanings assigned to them in the Indenture.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby the parties hereto agree as follows:
1. Security Interest.
(a) Pledge and Assignment of Collateral. The Company hereby
irrevocably pledges, assigns and sets over to the Trustee, and grants to the
Trustee, for the benefit of the Trustee and the ratable benefit of the Holders
of the Notes, a first priority continuing security
-1-
interest in all of the Company's right, title and interest in and to all of
the following, whether now owned or existing or hereafter acquired or created
(collectively, the "Collateral"):
(i) the Escrow Account;
(ii) all funds from time to time held in the Escrow Account,
including, without limitation, the Interest Reserve Funds and all
certificates and instruments, if any, from time to time representing
or evidencing the Escrow Account or the Interest Reserve Funds;
(iii) all investments of funds in the Escrow Account,
whether the same shall constitute Government Securities (as defined
herein), certificated securities, uncertificated securities, security
entitlements, investment property, instruments, general intangibles
or otherwise and whether held by or registered in the name of the
Trustee or otherwise and all certificates and instruments, if any,
from time to time representing or evidencing such investments;
(iv) all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Trustee, for or on behalf of the
Company, in substitution for or in addition to any or all of the then
existing Collateral;
(v) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Collateral; and
(vi) all proceeds of any of the foregoing, including,
without limitation, cash proceeds.
(b) Secured Obligations. This Agreement secures the due and
punctual payment and performance of all obligations and indebtedness of the
Company, whether now or hereafter existing, under the Notes and the Indenture
including, without limitation, interest and premium, if any, accrued on the
Notes after the commencement of a bankruptcy, reorganization or similar
proceeding involving the Company to the extent permitted by applicable law
(collectively, the "Secured Obligations").
(c) Delivery of Collateral. All certificates and
instruments, if any, representing or evidencing the Collateral shall be held
by or on behalf of the Trustee pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignments in blank, all in form and substance reasonably
satisfactory to the Trustee. All securities in uncertificated or book-entry
form and all security entitlements, if any, in each case representing or
evidencing the Collateral shall be registered in the name of the Trustee (or
any of its nominees) as the registered owner thereof by book-entry or as
otherwise appropriate so as to properly identify the interest of the Trustee
therein. In addition,
-2-
the Trustee shall have the right, at any time following the occurrence of an
Event of Default, to transfer to or to register in the name of the Trustee or
any of its nominees any or all other Collateral. Except as otherwise provided
herein, all Collateral shall be deposited and held in the Escrow Account. The
Trustee shall have the right at any time to exchange certificates or
instruments representing or evidencing all or any portion of the Collateral
for certificates or instruments of smaller or larger denominations in the same
aggregate amount.
(d) Further Assurances. Prior to, contemporaneously
herewith, and at any time and from time to time hereafter, the Company will,
at the Company's expense, execute and deliver to the Trustee such other
instruments and documents, and take all further action as it deems necessary
or advisable or as the Trustee may reasonably request including an Opinion of
Counsel, upon which the Trustee may conclusively rely, to confirm or perfect
the security interest of the Trustee granted or purported to be granted hereby
or to enable the Trustee to exercise and enforce its rights and remedies
hereunder with respect to any Collateral and the Company will take all
necessary action to preserve and protect the security interest created hereby
as a first priority, perfected Lien and encumbrance upon the Collateral. The
Company will pay all costs incurred in connection with any of the foregoing.
(e) Establishing and Maintaining Accounts. So long as this
Agreement is in full force and effect:
(i) the Company shall establish and maintain the Escrow
Account with the Trustee in New York, New York. The Collateral shall
at all times be subject to the sole dominion and control of the
Trustee, which shall hold the Collateral and administer the Escrow
Account subject to the terms and conditions of this Agreement. The
Company shall have no right of withdrawal from the Escrow Account nor
any other right or power with respect to the Collateral, except as
expressly provided herein; and,
(ii) it shall be a term and condition of the Escrow Account,
notwithstanding any term or condition to the contrary in any other
agreement relating to the Escrow Account and except as otherwise
provided by the provisions of Articles 3 and 4 of this Agreement,
that no amount in the Escrow Account (including, without limitation,
interest on or other proceeds of the Escrow Account or on investments
held therein) shall be paid or released to or for the account of, or
withdrawn by or for the account of, the Company or any other person
or entity other than the Trustee or its designated agent.
(f) Transfers and Other Liens. Until termination of this
Agreement pursuant to Section 9, the Company agrees that it will not (i) sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant
any option with respect to, any of the Collateral or (ii) create or permit to
exist any Lien upon or with respect to any of the Collateral, except for the
security interest under this Agreement.
(g) Trustee Appointed Attorney-in-Fact. In addition to all
of the powers granted to the Trustee pursuant to Article Five of the
Indenture, the Company hereby irrevocably
-3-
appoints the Trustee as the Company's attorney-in-fact, coupled with an
interest, with full authority in the place and stead of the Company and in the
name of the Company or otherwise, from time to time in the Trustee's
discretion to take any action and to execute any instrument which the Trustee
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to the Company representing any interest payment, dividend or
other distribution in respect of the Collateral or any part thereof and to
give full discharge for the same, and the expenses of the Trustee incurred in
connection therewith shall be payable by the Company.
(h) Trustee May Perform. Without limiting the authority
granted under Section 1(g) and except with respect to the failure of the
Company to deliver investment instructions, which shall be governed by Section
2(c) hereof, if the Company fails to perform any agreement contained herein,
the Trustee may, but shall not be obligated to, itself perform, or cause
performance of, such agreement, and the expenses of the Trustee incurred in
connection therewith shall be payable by the Company. In the event that the
Trustee performs pursuant to this Section 1(h), the Company shall indemnify
the Trustee in the manner provided in Section 607 of the Indenture.
2. Investment and Liquidation of Funds in Escrow Account. Funds
deposited in the Escrow Account shall be invested and reinvested by the
Trustee on the following terms and conditions:
(a) Permitted Investments. The Company shall immediately
deposit the Interest Reserve Funds into the Escrow Account. Funds deposited in
the Escrow Account may, subject to the provisions of Articles 2, 3 and 4 of
this Agreement, be invested and reinvested by the Trustee, at the written
direction of the Company, in direct obligations of, or obligations guaranteed
by, the United States of America for the payment of which guarantee or
obligations the full faith and credit of the United States of America is
pledged ("Government Securities"); provided, however, that the maturity dates
of the Government Securities in which the Interest Reserve Funds are invested
and reinvested shall be structured so as to ensure sufficient funds are
available to make the payments of interest on the Notes which the Interest
Reserve Funds and related Government Securities have been pledged to secure.
For the avoidance of doubt, all Government Securities in which the Interest
Reserve Funds are invested and reinvested shall be held by the Trustee in the
Escrow Account as part of the Collateral hereunder.
(b) Investment Instructions. If the Company fails to give
written investment instructions to the Trustee by 12:00 noon (New York time)
on any Business Day on which there is uninvested cash and/or maturing
Government Securities in the Escrow Account, the Trustee is hereby
unconditionally instructed and authorized and directed to invest any such cash
or the proceeds of any maturing Government Securities in the Escrow Account in
Government Securities maturing on the next Business Day. The Company's failure
to give such investment instructions shall not constitute a default or an
event of default hereunder.
-4-
(c) Interest. All interest earned on funds invested in
accordance with the foregoing shall be held in the Escrow Account and
reinvested in accordance with the terms hereof and will be subject to the
security interest granted hereunder to the Trustee.
(d) Limitation of Trustee's Liability. In no event shall the
Trustee have any liability to the Company or any other Person for investing
the funds from time to time in the Escrow Account in accordance with the
provisions of this Article 2, regardless of whether greater income or a higher
yield could have been obtained had the Trustee invested such funds in
different Government Securities or for any loss (including breakage costs or
loss of principal) associated with the sale or liquidation of Government
Securities in accordance with the terms of this Agreement, in each case other
than with respect to gross negligence or willful misconduct of the Trustee.
(e) Liquidation of Funds. In liquidating any Government
Securities in accordance with Articles 3 and 4 of this Agreement, the Company
shall direct the Trustee as to which Government Securities shall be
liquidated.
3. Interest Payments. Pursuant to the Notes, the Company is obligated
to make payments of interest on the Notes on the dates and at the rates
specified in the Notes. Payment of the first four (4) scheduled interest
payments due on the Notes (other than the Excess Interest Amount) may be made
(i) from amounts held in the Escrow Account in accordance with the procedures
set forth in subsection (a) below or (ii) from other sources of funds
available to the Company, as anticipated in subsection (b) below, or from any
combination of (i) and (ii) above; provided that nothing herein shall be
construed as limiting the Company's obligation to make all interest payments
due on the Notes at the times and in the amounts required by the Notes, which
obligation shall be absolute and unconditional.
(a) Payment of Interest. Not later than five (5) Business
Days prior to the date of any of the first four (4) scheduled interest
payments due on the Notes, the Company shall, pursuant to a duly completed and
executed Certificate of Release in the form of Exhibit A hereto, direct the
Trustee to transfer from the Escrow Account to the Paying Agent funds
necessary to provide for payment in full (or, if the Company intends to make a
portion of such interest payment with funds in the Escrow Account and the
remainder of such interest payment with funds other than those in the Escrow
Account, such portion) of the next scheduled interest payment on the Notes
(other than the Excess Interest Amount). If the Company does not intend to
utilize the funds in the Escrow Account to make any such interest payment in
full, then the Company shall comply with Section 3(b) below. Upon receipt of
such Certificate of Release, the Trustee will transfer to the Paying Agent for
payment to the Holders of Notes the amount set forth in the applicable
Certificate of Release
(b) Release of Funds to the Company Due to Direct Payment of
Interest by the Company. If the Company makes any of the first four (4)
scheduled interest payments on the Notes set forth herein or a portion of any
such scheduled interest payment on the Notes from a source of funds other than
the Escrow Account ("Company Funds"), the Company may, after
-5-
payment in full of such scheduled interest payment, direct the Trustee,
pursuant to a duly completed and executed Certificate of Release in the form
of Exhibit B hereto, to release to the Company or at the direction of the
Company an amount of funds from the Escrow Account less than or equal to the
amount of Company Funds so expended. Upon receipt of such Certificate of
Release, the Trustee shall pay over to the Company the requested amount.
(c) Release of Funds to Company Due to Overfunding. If at
any time the amount of Collateral in the Escrow Account exceeds 125% of the
amount sufficient, in the written opinion of a nationally recognized firm of
independent public accountants selected by the Company and furnished to the
Trustee, to provide for payment in full of the first four (4) scheduled
interest payments due on the Notes (other than the Excess Interest Amount)
(or, in the event an interest payment or payments have been made in full, an
amount sufficient to provide for payment in full of any then remaining
interest payments, up to and including the fourth scheduled interest payment),
the Company may, pursuant to a duly completed and executed Certificate of
Release in the form of Exhibit B hereto, direct the Trustee to release any
such overfunding to it.
(d) No Duplicate Payments. With respect to the conditions
permitting the release to the Company of any funds in the Escrow Account
pursuant to Sections 3(b) or 3(c) above, the Company shall not request, and
the Trustee shall not make, any full or partial duplicate payment thereunder.
(e) Termination of Security Interest. Upon payment in full
of the first four (4) scheduled interest payments on the Notes (other than the
Excess Interest Amount), the security interest evidenced by this Agreement in
any Collateral remaining in the Escrow Account will terminate and be of no
further force and effect. Furthermore, upon the release of any Collateral from
the Escrow Account in accordance with the terms of this Agreement, whether
upon release of such Collateral to Holders as payment of interest on the
Notes, to the Company pursuant to Sections 3(b) or 3(c) or otherwise, the
security interest evidenced by this Agreement in such Collateral so released
will terminate and be of no further force and effect.
4. Representations and Warranties. The Company hereby represents and
warrants to the Trustee and the Holders of the Notes that:
(a) The execution, delivery and performance by the Company
of this Agreement are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or
of the certificate of incorporation of the Company or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Company or result in the creation or imposition of any Lien on any assets of
the Company, except for the security interests granted under this Agreement.
(b) The Company is the record and beneficial owner of the
Collateral, free and clear of any Lien or claims of any person or entity
(except for the security interests granted
-6-
under this Agreement). No financing statement covering the Collateral is on
file in any public office other than the financing statements filed pursuant
to this Agreement.
(c) This Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or general principles of equity and commercial
reasonableness.
(d) The pledge of the Collateral pursuant to this Agreement
creates a valid and perfected first priority security interest in and to the
Collateral, securing the payment of the Secured Obligations for the benefit of
the Trustee and the ratable benefit of the Holders of Notes, enforceable as
such against all creditors of the Company and any persons purporting to
purchase any of the Collateral from the Company other than as permitted by the
Indenture.
(e) Except as set forth in Section 4(d) above, no consent of
any other Person and no consent, authorization, approval, or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required either (1) for the pledge by the Company of the Collateral
pursuant to this Agreement or for the execution, delivery or performance of
this Agreement by the Company or (2) for the exercise by the Trustee of the
rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement.
(f) No litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the knowledge of
the Company, threatened by or against the Company with respect to this
Agreement or any of the transactions contemplated hereby.
(g) The pledge of the Collateral pursuant to this Agreement
is not prohibited by any applicable law or governmental regulation, release,
interpretation or opinion of the Board of Governors of the Federal Reserve
System or other regulatory agency (including, without limitation, Regulations
G, T, U and X of the Board of Governors of the Federal Reserve System).
5. Covenants. The Company covenants and agrees with the Trustee and
the Holders of Notes from and after the date of this Agreement until the
Termination Date as follows:
(a) The Company (i) will not (A) sell or otherwise dispose
of, or grant any option or warrant with respect to, any of the Collateral or
(B) create or permit to exist any Lien upon or with respect to any of the
Collateral (except for the Lien created pursuant to this Agreement) and (ii)
except as otherwise provided in this Agreement, at all times will be the sole
beneficial owner of the Collateral.
-7-
(b) The Company will not (a) enter into any agreement or
understanding that purports to or may restrict or inhibit the Trustee's rights
or remedies hereunder, including, without limitation, the Trustee's right to
sell or otherwise dispose of the Collateral in accordance with the terms of
this Agreement or (b) fail to pay or discharge any tax, assessment or levy of
any nature not later than five days prior to the date of any proposed sale
under any judgment, writ or warrant of attachment with regard to the
Collateral.
(c) In the event the Underwriter exercises the
Over-allotment Option, the Company shall deposit from the net proceeds from
the sale of the Option Notes, an amount set forth on a schedule prepared by
the Company's independent accountants sufficient to make the first four (4)
scheduled interest payments due on the Option Notes as set forth in Article 3
of this Agreement.
6. Remedies upon Default. If any Event of Default shall have occurred
and be continuing:
(a) The Trustee may, without notice to the Company except as
required by law and at any time or from time to time, liquidate all Government
Securities and transfer all funds in the Escrow Account to the Paying Agent to
apply such funds in accordance with Section 1105 of the Indenture.
(b) The Trustee may also exercise in respect of the
Collateral, in addition to the other rights and remedies provided for herein
or in the Indenture or otherwise available to it, all the rights and remedies
of a secured party after a default under the Uniform Commercial Code in effect
at that time in the State of New York (the "Code") (whether or not the Code
applies to the affected Collateral), and may also, without notice except as
specified below, sell the Collateral or part thereof in one or more parcels at
public or private sale, at any of the Trustee's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Trustee may deem commercially reasonable. The Company agrees that, to the
extent notice of sale shall be required by law, at least ten days' notice to
the Company of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. The
Trustee shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Trustee may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(c) Any cash held by the Trustee as Collateral and all net
cash proceeds received by the Trustee in respect of any sale or liquidation
of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Trustee, be held by the Trustee as
collateral for, and/or then or at any time thereafter be applied (after
payment of any costs and expenses incurred in connection with any sale,
liquidation or disposition of or realization upon the Collateral and the
payment of any amounts payable to the Trustee) in whole or in part by the
Trustee for the ratable benefit of the Holders of the Notes against all or any
part of the Secured Obligations in such order as the Trustee shall elect. Any
surplus of such cash or
-8-
cash proceeds held by the Trustee and remaining after payment in full of all
the Secured Obligations and the costs and expenses incurred by and amounts
payable to the Trustee hereunder or under the Indenture shall be paid over to
the Company or to whomsoever shall be lawfully entitled to receive such
surplus.
For the avoidance of doubt, if any Event of Default shall
have occurred and be continuing, the Trustee shall not release any Collateral
to, or at the direction of, the Company.
7. Indemnity and Authority of the Trustee.
The Company shall indemnify the Trustee against any and all loses,
liabilities or expenses incurred by it arising out of or in connection with
the acceptance of administration of its duties under this Agreement, including
the costs and expenses of enforcing this Agreement against the Company
(including this Section 7) and defending itself against any claim (whether
asserted by the Company or any Holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its gross negligence or bad faith. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee so to notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which
consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7 shall survive the
satisfaction and discharge of this Agreement.
To secure the Company's payment obligations under this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Agreement.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 501 (5) or (6) of the Indenture occurs, the
expenses and compensation for the services (including the fees and expenses of
its agent and counsel) are intended to constitute expenses of administration
under ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code or any similar law for the relief of
debtors.
The Trustee may conclusively rely upon any Officer's Certificate or
Opinion of Counsel it receives pursuant to Section 603 of the Indenture.
8. Termination.
(a) This Agreement shall create a continuing security
interest in and to the Collateral and such security interest shall, unless
otherwise provided in the Indenture or in this
-9-
Agreement, remain in full force and effect until the earlier of (A) the date
on which all funds in the Escrow Account have been distributed in accordance
with the terms of this Agreement or (B) the date of payment in full in cash of
all Secured Obligations (such earlier date, the "Termination Date"). This
Agreement shall be binding upon the Company, its successors and assigns, and
shall inure, together with the rights and remedies of the Trustee hereunder,
to the benefit of the Trustee, the Holders of Notes and their respective
successors, transferees and assigns.
(b) Subject to the provisions of Section 9(c) hereof, this
Agreement shall terminate upon the Termination Date. At such time, the Trustee
shall, at the written request of the Company, reassign and redeliver to the
Company all of the Collateral hereunder that has not been sold, disposed of,
retained or applied by the Trustee in accordance with the terms of this
Agreement and the Indenture. Such reassignment and redelivery shall be without
warranty (either express or implied) by or recourse to the Trustee, except as
to the absence of any prior assignments by or encumbrances created by the
Trustee on its interest in the Collateral, and shall be at the expense of the
Company.
9. Miscellaneous.
(a) Waiver. Either party hereto may specifically waive any
breach of this Agreement by any other party, but no such waiver shall be
deemed to have been given unless such waiver is in writing, signed by the
waiving party, and specifically designates the breach waived, nor shall any
such waiver constitute a continuing waiver of similar or other breaches.
(b) Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
(c) Survival of Provisions. All representations, warranties
and covenants of the Company contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the termination of
this Agreement; provided, however that the Company's obligations pursuant to
Section 7 hereof shall survive the termination of this Agreement (including
any termination under applicable bankruptcy laws) or the resignation or
removal of the Trustee.
(d) Assignment. This Agreement shall inure to and be binding
upon the parties and their respective successors and permitted assigns;
provided, however, that the Company may not assign its rights or obligations
hereunder without the express prior written consent of the Trustee, acting at
the direction of the Holders as provided in the Indenture.
(e) Entire Agreement; Amendments. This Agreement and the
Indenture contain the entire agreement among the parties with respect to the
subject matter hereof and supersede any and all prior agreements,
understandings and commitments with respect thereto, whether oral or written;
provided, however, that this Agreement is executed and accepted by the Trustee
subject to all terms and conditions of its acceptance of the trust under the
Indenture, as fully as if said terms and conditions were set forth at length
herein. This Agreement may be amended only by a writing signed by duly
authorized representatives of both parties. The Trustee may execute an
amendment to this Agreement only if the requisite consent of the
-10-
Holders of the Notes required by Section 902 of the Indenture has been
obtained, unless no such consent is required by such Section 902, of the
Indenture.
(f) Notices. Any notice or communication by the Company or
the Trustee to the others is duly given if in writing and delivered in person
or mailed by first class mail (registered or certified return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address:
If to the Company:
IAT Multimedia, Inc.
Geschaftshaus Wasserschloss
▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
Facsimile number: 011-41-56-223-5023
Telephone number: ▇▇▇-▇▇-▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Facsimile number: (212) ___________
Telephone number: (212) ___________
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery
to the courier for overnight delivery, if sent by overnight air courier
guaranteeing next day delivery.
-11-
(g) Expenses. The Company shall pay to the Trustee from time
to time such compensation for its acceptance of this Agreement and services
hereunder as the Company and the Trustee have separately agreed. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of
an express trust. The Company shall reimburse the Trustee promptly upon
request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its service. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
(h) Security Interest Absolute. All rights of the Trustee
and the Holders of Notes and security interests hereunder and all obligations
of the Company hereunder, shall be absolute and unconditional irrespective of
(a) any lack of validity or enforceability of the Indenture or any other
agreement or instrument relating thereto; (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Secured
Obligations, or any other amendment or waiver of or any consent to any
departure from the Indenture; (c) any exchange, surrender, release or
non-perfection of any Liens on any other collateral for all or any of the
Secured Obligations; or (d) to the extent permitted by applicable law, any
other circumstance which might otherwise constitute a defense available to, or
a discharge of, the Company in respect of the Secured Obligations or of this
Agreement.
(i) Counterpart Originals. The parties may sign any number
of copies of this Agreement. Each signed copy shall be an original, but all of
them represent the same agreement.
(j) Limitation by Law. All rights, remedies and powers
provided herein may be exercised only to the extent that they will not render
this Agreement not entitled to be recorded, registered or filed under
provisions of any applicable law.
(k) Rights of Holders of Notes. No Holder of Notes shall
have any independent rights hereunder other than those rights granted to
individual Holders of Notes pursuant to Section 507 of the Indenture; provided
that nothing in this subsection shall limit any rights granted to the Trustee
under the Notes or the Indenture.
(l) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED BETWEEN THE COMPANY, THE TRUSTEE AND THE HOLDERS OF NOTES
IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND
DECISIONS OF THE STATE OF NEW YORK.
(ii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS
CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF
NOTES, HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE
-12-
LAW, TO PROCEED AGAINST THE COMPANY OR ITS PROPERTY IN A COURT IN ANY
LOCATION REASONABLY SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN
REM JURISDICTION OVER THE COMPANY OR ITS PROPERTY, AS THE CASE MAY
BE) TO ENABLE THE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE
COMPANY AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS, SETOFFS OR
CROSS- CLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON
SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR
OF THE TRUSTEE, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSS
CLAIMS WHICH, IF NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT
OTHERWISE BE BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE TRUSTEE
HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE COMPANY AND THE TRUSTEE EACH WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED
TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN
COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NEITHER THE TRUSTEE NOR ANY
HOLDER OF NOTES SHALL HAVE ANY LIABILITY TO THE COMPANY (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO,
THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY
THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE
JUDGMENT OF A COURT THAT IS BINDING ON THE TRUSTEE OR SUCH HOLDER OF
NOTES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS
OR OMISSIONS ON THE PART OF THE TRUSTEE OR SUCH HOLDER OF NOTES, AS
THE CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY WAIVES ALL RIGHTS
OF NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE
TRUSTEE OR ANY HOLDER OF NOTES OF ITS RIGHTS DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL
PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER
SECURITY FOR THE SECURED
-13-
OBLIGATIONS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY
WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR
ANY HOLDER OF NOTES IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS, TO ENFORCE
ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE OR
ANY HOLDER OF NOTES, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION, THIS
AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE COMPANY ON
THE ONE HAND AND THE TRUSTEE AND/OR THE HOLDERS OF NOTES ON THE OTHER
HAND.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Proceed Pledge and Escrow Agreement as of the day first written above.
COMPANY: IAT MULTIMEDIA, INC.
By:
---------------------------------
Name:
Title:
TRUSTEE: THE BANK OF NEW YORK
By:
---------------------------------
Name:
Title:
-14-
EXHIBIT A
[Form of]
Certificate of Release of Funds in Escrow Account to Paying Agent
IAT MULTIMEDIA, INC.
Date:_____________
The undersigned officer of IAT Multimedia, Inc., a Delaware
corporation (the "Company"), hereby certifies, pursuant to Section 3(a) of the
Proceeds Pledge and Escrow Agreement, dated as of February__, 1998 (the
"Escrow Agreement"), by and between the Company and The Bank of New York, as
trustee (the "Trustee"), under the Indenture dated as of February__, 1998 (the
"Indenture"), between the Company and the Trustee, that:
1. This request for release of funds has been duly authorized
by all necessary corporate action and does not contravene,
or constitute a default under, any provision of applicable
law or regulation or the certificate of incorporation of the
Company or of the Escrow Agreement, the Indenture or any
other agreement, judgment, injunction, order, decree or
other instrument binding upon the Company or result in the
creation or imposition of any Lien on any assets of the
Company; and
2. The funds released pursuant hereto shall be applied by the
Paying Agent toward payment of interest due on the Notes on
, and for no other purpose.
The Company hereby requests the Trustee to liquidate $
__________worth of Government Securities in the Escrow Account by not later
than 12:00 noon (New York time) on ____, and to transfer $_______ in
immediately available funds to the Paying Agent.
Capitalized terms used herein without definition shall have
the meanings set forth in the Indenture.
IAT MULTIMEDIA, INC.
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
-15-
EXHIBIT B
[Form of]
Certificate of Release of Funds in Escrow Account to Company
IAT MULTIMEDIA, INC.
Date:_______________
The undersigned officer of IAT Multimedia, Inc., a Delaware
corporation (the "Company"), hereby certifies, pursuant to Section
[3(b)][3(c)] of the Proceeds Pledge and Escrow Agreement, dated as of February
__, 1998 (the "Escrow Agreement"), by and between the Company and The Bank of
New York, as trustee (the "Trustee"), under the Indenture dated as of
February__, 1998 (the "Indenture"), between the Company and the Trustee, that:
1. This request for release of funds has been duly authorized
by all necessary corporate action and does not contravene,
or constitute a default under, any provision of applicable
law or regulation or the certificate of incorporation of the
Company or of the Escrow Agreement, the Indenture or any
other agreement, judgment, injunction, order, decree or
other instrument binding upon the Company or result in the
creation or imposition of any Lien on any assets of the
Company; and
2. The amount of funds requested to be released pursuant hereto
is no greater than the amount of funds previously used by
the Company from sources other than the Escrow Account to
make the payment of interest due on the Notes on (and not
previously released to the Company from the Escrow Account),
which interest payment has been paid in full.] [After giving
effect to the release of funds from the Escrow Account as
provided below, the amount of funds and Government
Securities remaining in the Escrow Account will be at least
125% of the amount sufficient to pay in full the remainder
of the first four (4) scheduled interest payments on the
Notes (other than the Excess Interest Amount) not already
paid in full, as confirmed in the attached written opinion
of ____________, a nationally recognized firm of independent
public accountants.
The Company hereby requests the Trustee to liquidate
$_______ worth of Government Securities in the Escrow Account by not later
than 12:00 noon (New York time) on ____________, and to transfer $________ in
immediately available funds to the Company.
Capitalized terms used herein without definition shall have
the meanings set forth in the Indenture.
IAT MULTIMEDIA, INC.
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
-16-