EXHIBIT T3E.5
EXCHANGE AGREEMENT
Ampex Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
January ___, 2002
To: Each of the Holders Who Executes
a Noteholder Signature Page hereto
Re: 12% Senior Notes due 2003
-------------------------
Ladies and Gentlemen:
(a) Reference is made to the captioned Notes (the "Old Notes")
issued by Ampex Corporation, a Delaware corporation (the "Corporation") under an
indenture, dated as of January 28, 1998, as amended (the "Old Indenture"),
between the Corporation and The Bank of New York, as successor to IBJ ▇▇▇▇▇▇▇▇
Bank & Trust Company, as trustee ("Bank of NY"), in the aggregate principal
amount of $44,000,000. The Corporation has offered, subject to the terms and
conditions hereof, to exchange ("Exchange") the Old Notes for new 12% Senior
Secured Notes due 2008 (the "New Notes") of the Corporation in the aggregate
principal amount hereinafter specified. The Corporation and each of the holders
of Old Notes who executes a counterpart of the noteholder signature page hereto
(each a "Holder" and collectively, the "Holders"), are entering into this
Agreement in order to set forth the terms and conditions of the Exchange. Each
Holder agrees that its execution and delivery of this Agreement shall be deemed
such Holder's irrevocable consent and agreement ("Consent") to the execution and
delivery by the Corporation and Bank of NY of the Supplemental Indenture
referred to in Section 2.1(iv) below, subject only to satisfaction or waiver of
the conditions to closing set forth in Section 2.1 below.
(b) In order to comply with requirements of The Depository Trust
Company (the "DTC") applicable to exchanges of securities held in book entry
form, the Corporation will effectuate the Exchange by means of an exchange offer
(the "Exchange Offer"), on the terms contemplated hereby and in the Exchange
Offer Documents, through the facilities of the DTC. Each Holder who executes
this Agreement agrees to tender Old Notes for Exchange (defined immediately
below) in accordance with the procedures specified in the letter of transmittal
which will accompany the Exchange Offer. The term "Exchange" as used herein
shall include the transactions contemplated by this Agreement and the Exchange
Offer.
(c) Capitalized terms used but not defined elsewhere in this
Agreement have the meanings assigned to them in Section 5.1 below.
NOW THEREFORE, the parties hereto, for good and valid
consideration, intending to be legally bound hereby, have agreed as follows:
THE EXCHANGE
------------
SECTION 1.1. Exchange of Notes. (a) At the Closing (as
hereinafter defined), subject to the terms and conditions set forth herein and
in the Exchange Offer Documents, the Corporation shall deliver, or cause to be
delivered, to each Holder, and each Holder irrevocably agrees to accept from the
Corporation, in exchange for the Old Notes held by each Holder (including
principal, accrued interest and any other amounts) New Notes in a principal
amount equal to 100% of the principal amount of the Old Notes being exchanged
plus any and all interest accrued at 12% per annum (plus interest on defaulted
interest at the rate of 13% per annum) on such Holder's Old Notes to the Closing
Date (subject to rounding as provided in Section 1.2 below);
(b) Each Holder, in reliance upon the representations and
warranties of the Corporation contained herein and subject to the terms and
conditions set forth herein and in the Exchange Offer Documents, agrees to
tender, or cause to be tendered, to the Corporation or an exchange agent
designated by the Corporation, as the case may be, in accordance with the
Exchange Offer for cancellation all Old Notes beneficially held or owned by such
Holder. Such tender shall be irrevocable and unconditional, subject only to (i)
the issuance and delivery of the New Notes, (ii) completion of the Exchange and
(iii) the satisfaction or waiver of the closing conditions set forth in Section
2.1 below.
SECTION 1.2. The Closing. The closing of the Exchange (the
"Closing") shall take place, subject to satisfaction of the conditions set forth
in Sections 2.1 and 2.2 below and of the conditions to acceptance of Old Notes
specified in the Exchange Offer, at the offices of Paul, Hastings, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, counsel to the Corporation, as promptly as practicable after an
expiration date of the Exchange Offer (as such expiration date is set forth in
the Exchange Offer Documents), but in no event later than February 28, 2002 (the
"Closing Date"). At the Closing, the Corporation will deliver, or cause to be
delivered, to each Holder the New Notes (registered in the name of such Holder
or the nominee of such Holder as such Holder may request in writing at least one
full Business Day before the Closing Date) against delivery of the Old Notes
held by each Holder; provided, however, that the principal amount of any New
Note that would not otherwise be an integral multiple of $1,000 shall be rounded
up to the nearest $1,000. Unless otherwise specified by a Holder, any and all
certificates representing New Notes issued at the Closing shall be registered in
the name of Cede & Co. as nominee of the DTC pursuant to an agreement to be
entered into among the Corporation, the Trustee and the DTC. Upon (i) delivery
of the New Notes to the Holders, and (ii) the satisfaction or waiver of the
closing conditions set forth in Sections 2.1 and 2.2, the Corporation shall be
2
deemed, without further action on the part of the Holders or the Corporation, to
have accepted each of the Holders' tenders of the Old Notes.
CLOSING CONDITIONS
------------------
SECTION 2.1. Conditions Precedent to Obligations of Holders to
Close. The obligation of each Holder to accept the New Notes pursuant to this
Agreement in exchange for the Old Notes shall be subject to the satisfaction or
waiver of the following conditions, at or prior to Closing:
(i) The representations and warranties of the Corporation set
forth in this Agreement shall be true and correct on and as of the Closing Date;
and the Corporation shall have complied with and performed all covenants and
agreements hereunder required to be complied with or performed by it at or prior
to the Closing; and the Corporation shall have furnished to each Holder a
certificate of an authorized officer, dated the Closing Date, (A) to the
foregoing effect, and (B) to the further effect that the conditions specified in
this Section 2.1 have been satisfied at and as of the Closing;
(ii) The Corporation and a bank or trust company ("Trustee") that
satisfies the requirements of Section 310(a)(i) of the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), shall have executed and delivered
an indenture for the New Notes in substantially the form attached hereto as
Exhibit A (the "Indenture"); the Indenture shall have been duly qualified under
the Trust Indenture Act (or exempt from such qualification); and the New Notes
shall have been duly executed and delivered by the Corporation and authenticated
by the Trustee under and pursuant to the Indenture;
(iii) The Corporation and the Trustee shall have executed and
delivered a security agreement in substantially the form attached hereto as
Exhibit B (the "Security Agreement"); and a Form UCC-1 financing statements
shall have been filed in all requisite public offices in the State of Delaware
in order to perfect a security interest in the Collateral (as defined in the
Security Agreement) under the UCC as collateral security for the New Notes,
subject only to the security interest securing the outstanding Senior Discount
Notes (as defined below);
(iv) The Corporation and Bank of NY shall have executed and
delivered a supplement to the Old Indenture in substantially the form attached
hereto as Exhibit C (the "Supplemental Indenture"); the Supplemental Indenture
shall have been duly qualified under the Trust Indenture Act (or exempt from
such qualification); and the Holders of at least a majority of the outstanding
Old Notes shall have consented to the execution and delivery by the Corporation
and Bank of NY of the Supplemental Indenture;
(v) The Holders of at least 95% of the outstanding Old Notes
shall have concurrently exchanged the Old Notes held by such Holders for the New
Notes pursuant to the Exchange;
3
(vi) Such Holder's exchange of the Old Notes for the New Notes
shall not at the Closing be prohibited by or contrary to any applicable laws or
regulations of any Governmental Authority applicable to such Holder, and shall
not be enjoined (temporarily or permanently) under, prohibited by or contrary
to, any injunction, order or decree applicable to such Holder;
(vii) The holders of the outstanding Senior Discount Notes due
March 31, 2002 (the "Senior Discount Notes") issued by Ampex Data Systems
Corporation, a Delaware corporation and a Subsidiary of the Corporation ("Data
Systems") pursuant to a note purchase agreement, dated November 6, 2000, as
amended to date (the "Note Purchase Agreement") and guaranteed by the
Corporation, shall have executed and delivered an amendment to the Senior
Discount Notes and the terms of the Note Purchase Agreement in order to permit
the consummation of the Exchange, including without limitation, the issuance of
the New Notes pursuant to this Agreement, the grant of a security interest in
the Collateral for the benefit of the New Notes pursuant to the Security
Agreement and the other transactions contemplated by this Agreement; and such
amendment shall have become effective prior to, or concurrently with, the
Closing hereunder;
(viii) The offer, sale and issuance of the New Notes hereunder
shall be exempt from registration under the Securities Act (as defined below) by
virtue of the exemption contained in Section 3a(9) thereof, and shall be exempt
from registration or qualification under applicable state securities or blue sky
laws (or, if required, shall have been duly registered or qualified under such
laws); and
(ix) Each Holder shall have received the favorable opinion of
Paul, Hastings, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, counsel to the Corporation, dated the
Closing Date, with respect to such legal matters incident to the Exchange as the
Holder may reasonably request.
SECTION 2.2. Conditions Precedent to Obligation of the
Corporation to Close. The obligation of the Corporation to issue the New Notes
in exchange for the Old Notes pursuant to this Agreement is subject to the
satisfaction, at or prior to the Closing, of the following conditions:
(i) The representations and warranties of each of the Holders
(severally and not jointly) set forth in Section 4.1 hereof shall be true and
correct on and as of the Closing Date; and each of the Holders shall have
complied with and performed all covenants and agreements hereunder required to
be complied with or performed by it at or prior to the Closing;
(ii) The Corporation's exchange of the New Notes for the Old
Notes hereunder shall not be prohibited by or contrary to any law or regulation
of any Governmental Authority applicable to the Corporation and shall not be
enjoined
4
(temporarily or permanently) or prohibited by or contrary to any injunction,
order or decree applicable to the Corporation; and
(iii) The offer, sale and issuance of the New Notes hereunder
shall be exempt from registration under the Securities Act (as defined below) by
virtue of the exemption contained in Section 3(a)(9) thereof, and shall be
exempt from registration or qualification under applicable state securities or
blue sky laws (or, if required, shall have been duly registered or qualified
under such laws).
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
-------------------------------------------------
The Corporation hereby represents and warrants that:
SECTION 3.1. Organization and Authorization. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has the requisite corporate power and authority to
own its properties and carry on its business as presently conducted and to enter
into and perform its obligations under this Agreement, the New Notes, the
Indenture, the Supplemental Indenture and the Security Agreement.
SECTION 3.2. Validity and Binding Effects; No Conflicts. (a) The
execution, delivery and performance by the Corporation of this Agreement, the
New Notes, the Indenture, the Supplemental Indenture and the Security Agreement,
and the consummation of the Exchange, have been duly authorized by all necessary
corporate action on the part of the Corporation. This Agreement has been duly
executed and delivered by the Corporation, and is, and each of the New Notes,
the Indenture, the Supplemental Indenture and the Security Agreement, when duly
executed and delivered pursuant to this Agreement (and in the case of the New
Notes, when duly authenticated by the Trustee in the manner provided in the
Indenture) will be, a valid and binding agreement of the Corporation,
enforceable against the Corporation in accordance with its terms, except: (i)
that such enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally; (ii) that such enforceability may be
subject to general equitable principles, including, without limitation, the
principle that the availability of equitable remedies, such as specific
enforcement, injunctive relief or reformation, is subject to the discretion of
the court before which any proceeding might be brought; and (iii) as rights to
indemnity referred to or provided in any such agreement may be limited by
federal or state laws or public policy underlying such laws.
(b) The execution and delivery by the Corporation of this
Agreement, the New Notes, the Indenture, the Supplemental Indenture and the
Security Agreement, and the consummation of the transactions contemplated
thereby, do not conflict with or constitute a default under or violation of (i)
the charter or by-laws of the Corporation, (ii) any agreement, indenture,
mortgage, loan agreement or other instrument to which the Corporation or any of
its Subsidiaries is a party, or (iii) any judgment, injunction, order,
5
decree or permit of any Governmental Authority binding upon the Corporation or
any of its Subsidiaries or any of their respective properties, except, in each
case, such as would not reasonably be expected to have a Material Adverse Effect
on the Corporation.
SECTION 3.3. Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
permit of any Governmental Authority is necessary or required for the
performance by the Company of its obligations hereunder or the consummation of
the transactions contemplated by this Agreement, except such as have been
obtained or made under the Trust Indenture Act or under state securities laws.
SECTION 3.4. Outstanding Debt. Except as set forth in the
Financial Statements, at and as of the Closing Date and after giving effect to
the consummation of the Exchange, neither the Corporation nor any of its
Restricted Subsidiaries will have outstanding any indebtedness for borrowed
money, or evidenced by bonds, debentures, notes or other similar instruments or
under capital leases, other than (i) the New Notes, (ii) the Old Notes, (iii)
the Senior Discount Notes, (iv) Contribution Notes issued to Hillside Capital
Incorporated, pursuant to the Hillside-Ampex/Sherborne Agreement, dated December
1, 1994, as amended (the "Hillside Notes"), (v) indebtedness of Ampex Finance
Corporation ("AFC") incurred under the Loan and Security Agreement, dated as of
May 5, 1994, as amended, between AFC and Congress Financial Corporation
(Western), (vi) indebtedness of Ampex Data Systems Corporation ("ADSC")
evidenced by a Secured Promissory Note issued pursuant to the Loan Agreement,
dated October 29, 2001, between ADSC and Sherborne & Company Incorporated (the
"SCI Note"), and (vii) intercompany indebtedness of a Subsidiary issued to and
held by the Corporation or of the Corporation issued to and held by a
Subsidiary. Except for pending payment Defaults on the Old Notes and the Senior
Discount Notes, the Corporation is not in Default under any such outstanding
indebtedness.
SECTION 3.5. No Commissions, etc. No commission or other
remuneration has been or will be paid or given, directly or indirectly, for
soliciting the exchange contemplated hereby. The Corporation further represents
that neither the Corporation nor any Person acting on its behalf has taken or
will take any action which would subject the issuance of the New Notes being
issued hereunder to registration with the Commission pursuant to the provisions
of Section 5 of the Securities Act. Except pursuant to an effective registration
statement filed with the Commission under the Securities Act, no securities of
the same class as the New Notes (or any similar securities) have been offered or
sold by the Corporation within the six-month period immediately prior to the
date of this Agreement.
SECTION 3.6. No Registration Required. Under the circumstances
contemplated by this Agreement, it is not necessary in connection with the
issuance of the New Notes in exchange for the Old Notes in the manner
contemplated by this Agreement to register the New Notes under the Securities
Act, and immediately after
6
giving effect to the Exchange, the New Notes may be transferred by the Holders
who are not Affiliates of the Corporation without registration under the
Securities Act to the same extent as the Old Notes held by such Holders.
SECTION 3.7. Perfection of Security Interest. The execution and
delivery of the Security Agreement, together with the filing of UCC financing
statements in proper form in the requisite offices of the State of Delaware,
will, upon consummation of the Exchange pursuant to this Agreement, create a
valid, perfected and first priority security interest in the Collateral (to the
extent a security interest in the Collateral can be perfected by filing of a
financing statement under the UCC and to the extent the Corporation has rights
in the Collateral), subject to no other Liens except for first priority Liens
securing the outstanding Senior Discount Notes, Liens securing the SCI Notes and
the Hillside Notes and Permitted Liens.
SECTION 3.8. Broker's or Finder's Commissions. The Corporation
agrees that it will indemnify and hold harmless each Holder from and against any
and all claims, demands or liabilities for broker's, finder's, placement agent's
or other similar fees or commissions incurred or alleged to have been incurred
by the Corporation or any Person acting on its behalf in connection with the
issuance of the New Notes, or any other transaction contemplated by this
Agreement.
SECTION 3.9. SEC Documents. The Corporation has duly and timely
filed with the Commission all the periodic and other reports ("SEC Documents")
required to be filed by the Corporation pursuant to Section 13 of the Exchange
Act during the preceding 12 months; all such SEC Documents comply as to form
with the applicable rules and regulations of the Commission in all material
respects; and none of such SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Except as disclosed in the SEC Documents,
there is no material fact known to the Company which the Company has not
disclosed to the Holders or Holders' counsel in writing which has or, insofar as
the Company can reasonably foresee, may have or will have a Material Adverse
Effect on the Company or on the ability of the Company to perform its
obligations under this Agreement or any document contemplated hereby.
REPRESENTATIONS AND WARRANTIES OF THE HOLDERS
---------------------------------------------
SECTION 4.1. Representations and Warranties of Holders. Each of
the Holders, severally and not jointly, represents and warrants that:
(a) Each Holder represents that, by reason of its business and
financial experience, it has such knowledge, sophistication and experience in
business and financial matters as to be capable of evaluating the merits and
risk of the prospective Exchange and of acquiring the New Notes in exchange for
the Old Notes. Each Holder
7
has consulted with its legal, financial and tax advisors concerning the terms
and conditions of the Exchange and of the New Notes.
(b) The Holder has full power and authority to execute, deliver
and perform this Agreement, to consent to the Supplemental Indenture, and to
carry out the transactions contemplated by this Agreement and the Exchange Offer
Documents; the execution, delivery and performance of this Agreement have been
duly authorized by all requisite corporate (or similar) action on the part of
the Holder; and this Agreement has been duly executed and delivered by the
Holder and this Agreement is the legal, valid and binding obligation of the
Holder enforceable in accordance with its terms, except: (i) that such
enforceability may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally; and (ii) that such enforceability may be subject to
general equitable principles, including, without limitation, the principle that
the availability of equitable remedies, such as specific enforcement, injunctive
relief or reformation, is subject to the discretion of the court before which
any proceeding might be brought.
(c) Each Holder acknowledges that the New Notes being acquired by
it have not been registered under the Securities Act, and are being issued in
reliance upon the exemption from registration contained in Section 3(a)(9) of
the Securities Act. The Holder is not an Affiliate of the Corporation and has
not been an Affiliate thereof for at least three months prior to the date of
this Agreement.
(d) The Holder has full power and authority to tender, sell,
assign and transfer the Old Notes held by such Holder, and upon acceptance of
the Old Notes by the Corporation at the Closing, the Corporation will acquire
good, marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances, and none of such Old Notes will be
subject to any adverse claim. The Holder will, upon request, execute and deliver
(i) all additional documents and instruments of transfer deemed by the
Corporation to be reasonably necessary or desirable to complete the sale,
assignment and transfer of the Old Notes to the Corporation.
DEFINITIONS
-----------
SECTION 5.1. Definitions. As used in this Agreement, the
following terms have the meanings indicated:
"Affiliate" means, with respect to any Person, any Person (other
than Persons affiliated with any Holder that, directly or indirectly,
controls, is controlled by or is under common control with such Person.
For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or
8
cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified from time to time in accordance with the terms
hereof then in effect.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in the City of New York, New York are
authorized or obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission or any
successor agency then having jurisdiction to enforce the Securities Act.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder, in each case as amended
from time to time.
"Exchange Offer Documents" means, collectively, an Offering
Circular, a Letter of Transmittal and any other documents and
instruments delivered, or caused to be delivered, by the Corporation in
connection with the Exchange Offer.
"Financial Statements" means the consolidated financial
statements of the Corporation and its Subsidiaries contained in the most
recently filed Form 10-Q or Form 10-K filed by the Corporation with the
Commission under the Exchange Act.
"Governmental Authority" means any governmental or
quasi-governmental authority, including, without limitation, any
federal, state, territorial, county, municipal or other governmental or
quasi-governmental agency, board, branch, bureau, commission, court,
department or other instrumentality or political unit or subdivision,
whether domestic or foreign.
"Lien" means any mortgage, pledge, lien, encumbrance, easement,
restriction, covenant, right-of-way, charge or adverse claim affecting
title or resulting in an encumbrance against real or personal property,
or a security interest of any kind (including any conditional sale or
other title retention agreement or any lease in the nature thereof), any
option, right of first refusal or other similar agreement to sell
securing indebtedness of the Corporation and any filing of or agreement
to give any financing statement under the UCC (or equivalent statute or
statutes) of any jurisdiction).
9
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), assets, business or results of
operations of the Corporation and its Subsidiaries on a consolidated
basis.
"Permitted Liens" means any Lien arising by reason of: (i) any
judgment, decree or order of any court securing the payment of money, so
long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment, decree or order will not have been finally terminated or the
period within which such proceedings may be initiated will not have
expired; (ii) taxes, assessments or governmental charges or claims not
yet delinquent or which are being contested in good faith; (iii)
security for payment of workmen's compensation or other insurance or
types of social security; (iv) good faith deposits in connection with
tenders, contracts (other than contracts for the payment of money) or
leases; (v) deposits to secure public or statutory obligation, or in
lieu of surety or appeal bonds; (vi) surveys, exemptions, tile defects,
encumbrances, easements, reservations of, or rights of others for,
rights of way, sewers, electric lines, telegraph and telephone lines and
other similar purposes or zoning or other restrictions as the use of
real property not interfering with the ordinary conduct of the business
of the Company or any of its Subsidiaries; (vii) operation of law in
favor of carriers, warehousemen, mechanics, materialmen, laborers,
employees or suppliers, incurred in the ordinary course of business for
sums which are not yet delinquent or are being contested in good faith
by negotiations or by appropriate proceedings which suspend the
collection thereof; (viii) any interest or title of a lessor or lessee
under any lease of property (including any Lien granted by such lessor
or lessee); and (ix) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in
connection with the importation of goods.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or a political subdivision, agency or
instrumentality thereof or other entity or organization of any kind.
"Restricted Subsidiary" has the meaning assigned to it in the
Indenture.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations promulgated thereunder.
"Subsidiary" has the meaning assigned to it in the Indenture.
"Transaction Documents" means, collectively, this Agreement, the
New Notes, the Indenture, the Supplemental Indenture, the Security
Agreement and all other documents, instruments and agreements executed
and delivered by the Corporation in connection with the Exchange.
10
"UCC" means the Uniform Commercial Code of the State of New York
as from time to time amended and in effect.
MISCELLANEOUS
-------------
SECTION 6.1. Survival of Representations, Warranties and
Covenants.
(a) The Corporation agrees that each representation, warranty,
covenant and agreement made by it to the Holders in this Agreement or in
any certificate, instrument or other document delivered pursuant to this
Agreement or in connection with the transactions contemplated hereby
shall remain operative and in full force and effect regardless of (i)
any investigation made by or on behalf of any Holder, or (ii) acceptance
of any of the New Notes by any Holder. The provisions of Section 6.5
shall survive any termination of this Agreement. All such
representations, warranties, covenants and agreements shall be binding
upon any successors and assigns of the Corporation. In addition, whether
or not any express agreement has been made, except as otherwise provided
in this Section 6.1, all Holders shall be entitled to the benefit of all
covenants and agreements of the Corporation to be performed or observed
by them hereunder.
(b) Subject to subsection 6.1(a) above, this Agreement shall be
binding upon the Corporation and its successors and assigns, and shall
inure to the benefit of the Holders and their successors and assigns,
provided that the Corporation may not assign any of its rights under
this Agreement.
(c) All provisions of this Agreement purporting to give rights to
any Holders are for the express benefit of such Holders, and, without
limitation to the foregoing, the Corporation hereby acknowledges and
agrees that each Holder shall be entitled to enforce such rights and the
corresponding obligations of the Corporation under this Agreement.
(d) All provisions of this Agreement purporting to give rights to
any Holder shall extend to and include those Persons who on the Closing
Date received the beneficial interests of the New Notes acquired by such
Holder at the Closing.
SECTION 6.2. Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by any Holder (but only as to itself) if any of the
conditions specified in Section 2.1 of this Agreement has not been
satisfied or waived by such Holder by February 28, 2002 (other than by
reason of the default of such Holder); or
11
(b) by the Corporation if any of the conditions specified in
Section 2.2 of this Agreement has not been satisfied or waived by the
Corporation by February 28, 2002 (other than by reason of the default of
the Corporation).
Notwithstanding the foregoing, this Agreement shall terminate
(other than the provisions in Section 6.5) without further liability to any of
the parties at such time as all of the obligations of the Corporation under the
New Notes have been fully satisfied and discharged.
SECTION 6.3. No Waivers; Amendments. No failure or delay on the
part of the Corporation or any Holder in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Corporation or any Holder at law or in
equity or otherwise. This Agreement may be amended by the Corporation with the
prior written consent of the holders of at least a majority of the New Notes
outstanding at the time such action is taken by the Corporation.
SECTION 6.4. Communications and Notices. Except as otherwise
provided in this Agreement, all communications and notices provided for in this
Agreement shall be in writing and, if to the Corporation, mailed or delivered to
it at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Chief Financial
Officer, or at any other office that the Corporation may hereafter designate by
written notice to the Holders, and, if to the Holders, mailed or delivered to
their respective addresses specified on an execution page of this Agreement, or
to such other address and for such attention as any Holder may from time to time
designate to the Corporation in writing. Each such notice, request or other
communication shall be effective (i) if given by telex or telecopy, when such
telex or telecopy is transmitted to the telex or telecopy number specified in or
pursuant to this Section 6.4 and (in the case of telex) the appropriate
answer-back, or (in the case of a telecopy) telephonic confirmation of receipt,
is received, (ii) if given by mail, four (4) days after such communication is
deposited in the U.S. mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered at the address
specified in or pursuant to this Section 6.4.
SECTION 6.5. Costs, Expenses and Taxes. The Corporation agrees
(for the benefit of each Holder and whether or not the transactions contemplated
hereby are consummated), to pay, and to hold each Holder harmless against
liability for the payment of, all reasonable costs and expenses in connection
with the negotiation, preparation, execution and delivery of this Agreement, the
New Notes and all Transaction Documents and any and all other documents
furnished pursuant hereto or thereto or in connection herewith or therewith,
including, without limitation, the reasonable fees and disbursements of counsel
to the Holders (provided that the Corporation shall have approved the retention
of such counsel). In addition, the Corporation agrees (for the
12
benefit of each Holder), to pay any and all stamp, transfer and other similar
taxes (together in each case with interest and penalties, if any) payable or
determined to be payable in connection with the execution and delivery of this
Agreement and the other Transaction Documents and the issuance of the New Notes
and to hold each Holder harmless from and against any and all liabilities with
respect to or resulting from any delay in paying, or omission to pay, such
taxes. In the event that the Exchange is not consummated and the issuance of the
New Notes does not occur, the Corporation agrees to pay the aforesaid costs and
expenses to be paid by the Corporation pursuant to this Section 6.5. The
obligations of the Corporation in this Section 6.5 shall survive the payment or
transfer of any of the New Notes.
SECTION 6.6. Lost, Etc. Securities. Notwithstanding any provision
to the contrary in the by-laws of the Corporation, if any New Note of which any
Holder (or nominee thereof) is the owner is mutilated, destroyed, lost or
stolen, then the affidavit of such Holder's treasurer or assistant treasurer (or
other responsible official), setting forth the circumstances with respect to
such mutilation, destruction, loss or theft, shall be accepted as satisfactory
evidence thereof, and an indemnity, security or payment of charges or expenses
may be required as a condition to the execution and delivery by the Corporation
of certificates evidencing a like number of New Notes issued hereunder, in
substitution therefor. The Corporation may charge such Holder for its reasonable
expenses in replacing such New Notes.
SECTION 6.7. Transfers of New Notes by Non-Affiliates. At the
request of the Trustee in connection with any proposed transfer of New Notes by
a non-Affiliate Holder, the Corporation will use reasonable efforts to furnish
to the Trustee an Opinion of Counsel (as defined in the Indenture) to the effect
that the Trustee may properly authenticate New Notes to be issued to the
proposed transferee without registration of such New Notes under the Securities
Act or the imprinting thereon of a legend restricting further transfers absent
registration under the Securities Act. In rendering such Opinion, counsel shall
be entitled to rely upon such factual assumptions and representations of the
transferor and the transferee as counsel deems proper. In no event shall the
Corporation be required to file a registration statement to register any
proposed transfer of New Notes under the Securities Act.
SECTION 6.8. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate signature pages each of which counterparts when so executed and
delivered shall be deemed an original and all of which counterparts taken
together shall constitute but one and the same Agreement.
SECTION 6.9. Governing Law. This Agreement shall be deemed to be
a contract made under the laws of the State of New York and for all purposes
shall be governed by and construed in accordance with such laws without regard
to principles of conflicts of laws thereof.
13
SECTION 6.10. Entire Agreement. This Agreement and any other
agreement or instrument furnished pursuant hereto or in connection herewith
embody the entire agreement and understanding between the Holders and the
Corporation, and supersede all prior agreements and understandings relating to
the subject matter hereof.
SECTION 6.11. Severability. In the event that any one or more of
the provisions of this Agreement, or the application thereof in specific
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions contained herein shall not be in
any way impaired thereby, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent permitted
by law.
SECTION 6.12. Headings. The Section headings used or contained in
this Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.
SECTION 6.13. Obligations Several and Not Joint; Limitation of
Liability and Representations and Warranties. Anything herein to the contrary
notwithstanding, the representations, warranties, covenants, agreements and
obligations of the Holders set forth herein are several and not joint. The
Corporation acknowledges and agrees that the liability of each Holder is limited
to the extent set forth on the signature page to this Agreement executed by such
Holder. The Corporation further acknowledges and agrees that the representations
and warranties made by each Holder hereunder are limited as and to the extent
expressly described on the signature page to this Agreement executed by such
Holder.
SECTION 6.14. Extension of Interest Deferral Agreements. Each
Holder agrees that the "Deferred Interest Payment Date" referred to in the
Second Interest Deferral Agreement, dated as of November 14, 2001, between the
Corporation and the Holders, shall be and is hereby extended from January 31,
2002 to the earlier of (a) the date of the consummation of the Exchange or (b)
February 28, 2002.
[Remainder of Page Intentionally Left Blank]
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
AMPEX CORPORATION
By:
---------------------
Print Name:
Title:
15
NOTEHOLDER SIGNATURE PAGE
TO
EXCHANGE AGREEMENT
HOLDER:
--------------------------------
By:
------------------------------------
Name:
Title:
---------------------------------------
Addressee
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇▇▇▇▇ Zip
---------------------------------------
Attention
---------------------------------------
Telecopier
Aggregate Principal Amount
of Old Notes held:
$
-----------------------------
Nominee (Name in which New Notes
and New Shares should be registered
if different from name of Holder):
---------------------------------------
Tax I.D. #
-----------------------------
---------------------------------------
Signature Guarantee
16
EXHIBIT A
---------
FORM OF INDENTURE
17
EXHIBIT A
---------
AMPEX CORPORATION
Issuer
12% Senior Secured Notes
Due 2008
--------------------
INDENTURE
Dated as of [February ___], 2002
--------------------
STATE STREET BANK & TRUST COMPANY
Trustee
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- -------
310(a)(1) ........................................... 8.10
(a)(2) ........................................... 8.10
(a)(3) ........................................... N.A.
(a)(4) ........................................... N.A.
(b) ........................................... 8.08; 8.10; 13.03
(c) ........................................... N.A.
311(a) ........................................... 8.11
(b) ........................................... 8.11
(c) ........................................... N.A.
312(a) ........................................... 2.05
(b) ........................................... 12.04
(c) ........................................... 12.04
313(a) ........................................... 8.06
(b)(1) ........................................... N.A.
(b)(2) ........................................... 8.06
(c) ........................................... 12.3
(d) ........................................... 8.06
314(a) ........................................... 5.02; 13.03
(b) ........................................... 13.04
(c)(1) ........................................... 13.05
(c)(2) ........................................... 10.05
(c)(3) ........................................... N.A.
(d) ........................................... N.A.
(e) ........................................... 13.06
(f) ........................................... 5.06
315(a) ........................................... 8.01
(b) ........................................... 8.05; 13.03
(c) ........................................... 8.01
(d) ........................................... 8.01
(e) ........................................... 7.11
316(a)(last ........................................... 13.07
sentence)
(a)(1)(A) ........................................... 7.05
(a)(1)(B) ........................................... 7.04
(a)(2) ........................................... N.A.
(b) ........................................... 7.07
317(a)(1) ........................................... 7.08
(a)(2) ........................................... 7.09
(b) ........................................... 2.04
318(a) ........................................... 13.01
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be part of the Indenture.
INDENTURE dated as of [February __], 2002, between AMPEX
CORPORATION, a Delaware corporation ("Corporation"), and STATE STREET BANK &
TRUST COMPANY, a Massachusetts trust company, as trustee ("Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Corporation's 12% Senior
Secured Notes Due 2008 (the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01 Definitions
"ADSC" means Ampex Data Systems Corporation, a Delaware
corporation.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with") of any Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise.
"Asset Sale" means (i) any sale, lease, conveyance or other
disposition by the Corporation or any Restricted Subsidiary (other than to the
Corporation or a Restricted Subsidiary and other than directors' qualifying
shares) of any assets (including by way of a sale-and-leaseback) other than in
the ordinary course of business or (ii) the issuance or sale of Capital Stock
(other than Disqualified Stock) of any Restricted Subsidiary, in the case of
each of (i) and (ii), whether in a single transaction or a series of related
transactions, to any Person (other than to the Corporation or a Restricted
Subsidiary and other than directors' qualifying shares) for Net Proceeds in
excess of $1,000,000; provided, however, the following transactions shall not be
deemed Asset Sales:
(i) the Corporation or any Restricted Subsidiary may sell
accounts receivable (or participations therein) in connection with any
accounts receivables financing;
(ii) the Corporation or any Restricted Subsidiary may sell
Capital Stock or Indebtedness or other securities of an Unrestricted
Subsidiary;
(iii) the Corporation and any Restricted Subsidiary may (x)
convey, sell, lease, transfer, assign or otherwise dispose of assets
pursuant to and in accordance with the provisions of Section 6.01 of this
Indenture and (y) make Restricted Payments permitted by the provisions of
Section 5.04 of this Indenture;
(iv) the Corporation and any Restricted Subsidiary may
create or assume Liens (or permit any foreclosure thereon) securing
Indebtedness to the extent that such Lien does not violate the provisions of
Section 5.06 of this Indenture; and
(v) the Corporation and any Restricted Subsidiary may
consummate any sale or series of related sales of assets or properties of
the Corporation and any Restricted Subsidiary having an aggregate fair
market value for all such sales of less than $1 million in any fiscal year.
"Available Cash Flow" means, with respect to any relevant period,
the sum of (i) royalty payments and license fees received during such period in
cash under the Corporation's License Agreements (as defined in the Security
Agreement) on its patents currently or hereafter issued and in force, plus (ii)
Net Available Cash from an Asset Sale involving the assets or Capital Stock of
ADSC in such period, minus (iii) payments of principal or interest required to
be made by the Corporation on notes or guarantees issued to Hillside in
accordance with the Hillside Agreement, (iv) mandatory pension payments for
periods during which Hillside is not required to advance funds, (v) payments
required to be made under employee supplementary pension plans of the
Corporation or any Subsidiary created prior to 1992 and currently in effect,
(vi) withholding, income, property or other taxes, licenses or fees payable in
connection with the conduct of the business of the Corporation or to maintain
its existence, (vii) operating expenses payable by the Corporation, including,
but not limited to, expenditures incurred in developing, issuing, maintaining
and enforcing patents and collecting royalties, (viii) incentive payments to
employees engaged in collecting royalties not to exceed 3% of the net royalties
received in any applicable period, and (ix) payments of accrued liabilities of
the Corporation, including Existing Indebtedness, to the extent set forth in the
aggregate on the Corporation's financial statements as of December 31, 2001;
whenever a calculation of Available Cash Flow is required under this Indenture
in respect of any payment of the Securities such calculation shall be made by
the principal financial or accounting officers of the Corporation and a written
copy thereof shall be provided to the Trustee at least five days prior to the
relevant payment date accompanied by an Officers' Certificate, and the Trustee
shall conclusively rely upon such Officers' Certificate and calculation without
any investigation, recalculation or other action on its part.
"Average Life" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of numbers of years (rounded upwards to the nearest
month) from the date of determination to the dates of each successive scheduled
principal payment of such Indebtedness or redemption or similar payment with
respect to such Preferred Stock multiplied by the amount of such payment by (ii)
the sum of all such payments.
"Board of Directors" means the Board of Directors of the Corporation
or any duly authorized committee thereof.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is required to
be classified and accounted for as a capital lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of
2
such obligation determined in accordance with GAAP; and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty.
"Capital Stock" of any Person means and includes any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in equity (however designated) of such Person,
including Preferred Stock, but excluding any debt securities convertible into
such equity.
"Cash Equivalents" means (i) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United States,
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Rating Services or ▇▇▇▇▇'▇ Investors
Service, Inc.; (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from Standard & Poor's Rating Services or at least P-1 from ▇▇▇▇▇'▇
Investors Service, Inc.; (iv) certificates of deposit or bankers' acceptances
(or, with respect to foreign banks, similar instruments) maturing within one
year from the date of acquisition thereof issued by any bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia or any member of the European Economic Community or any U.S. branch of
a foreign bank having at the date of acquisition thereof combined capital and
surplus of not less than $200 million; (v) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (iv) above; and (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (v) above.
"Change of Control" means the occurrence of any of the following
events: (i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act except that for purposes of this clause (i) such person or group
shall be deemed to have "beneficial ownership" of all shares that any such
person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total voting power of the outstanding Voting Stock of the
Corporation; or (ii) the sale, lease or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Corporation and its Restricted Subsidiaries to any person or group (as so
defined), excluding any such sale, lease or other transfer (x) to or among the
Corporation's Restricted Subsidiaries and (y) to any Person that is controlled
by the Permitted Holders.
"Collateral" means all the Corporation's rights as licensor under
the License Agreements (as defined in the Security Agreement), including,
without limitation, rights to receive royalties and other fees thereunder, now
in existence or hereafter arising, subject to the rights of the holders of the
Senior Discount Notes, pursuant to the Senior Security Agreement.
3
"Collateral Agent" means State Street Bank and Trust Company, a
Massachusetts trust company as collateral agent under the Security Agreement,
and its successors as collateral agents thereunder.
"Congress Loan Agreement" means the Loan and Security Agreement,
dated as of May 5, 1994, between Ampex Finance Corporation, a Delaware
corporation ("AFC") and Congress Financial (Western), as in effect on the date
hereof or as the same may be amended, supplemented or modified from time to time
in accordance with the terms thereof.
"Consolidated Coverage Ratio" means, with respect to any Person for
any period, the ratio of EBITDA of such Person for such period to the
Consolidated Interest Expense of such Person for such period provided, however,
that (A) if the Corporation or any Restricted Subsidiary has incurred any
Indebtedness since the beginning of such period and through the date of
determination of the Consolidated Coverage Ratio that remains outstanding or if
the transaction giving rise to the need to calculate Consolidated Coverage Ratio
is an incurrence of Indebtedness or both, the EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving effect on a pro forma
basis to (1) such Indebtedness as if such Indebtedness had been incurred on the
first day of such period (provided that if such Indebtedness is incurred under a
revolving credit facility or similar arrangement or under any predecessor
revolving credit or similar arrangement only that portion of such Indebtedness
that constitutes the one year projected average balance of such Indebtedness (as
determined in good faith by the Board of Directors of the Corporation) shall be
deemed outstanding for purposes of this calculation) and (2) the discharge of
any other Indebtedness repaid, repurchased defeased or otherwise discharged with
the proceeds of such new Indebtedness as if such discharge had occurred on the
first day of such period, (B) if since the beginning of such period and
Indebtedness of the Corporation or its Restricted Subsidiaries has been repaid,
repurchased, defeased or otherwise discharged (other than Indebtedness under a
revolving credit or similar arrangement unless such revolving credit
Indebtedness has been permanently repaid and the underlying commitment
terminated and not replaced), Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such
Indebtedness had been repaid, repurchased, defeased or otherwise discharged on
the first day of such period, (C) if since the beginning of such period the
Corporation or any of its Restricted Subsidiaries shall have made any Asset
Sale, EBITDA for such period shall be reduced by an amount equal to the EBITDA
(if positive) attributable to the assets which are the subject of such Asset
Sale for such period or increased by an amount equal to the EBITDA (if negative)
attributable thereto for such period, Consolidated Interest Expense for such
period (i) reduced by an amount equal to the Consolidated Interest Expense
attributable to any Indebtedness of the Corporation or any of its Restricted
Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect
to the Corporation and its continuing Restricted Subsidiaries in connection with
such Asset Sale for such period (or if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest For such period directly
attributable to the Indebtedness of Restricted Subsidiary to the extent the
Corporation and its continuing Restricted Subsidiaries are no longer liable for
such Indebtedness after such sale) and (ii) increased by interest income
attributable to the assets which are the subject of such Asset Sale for such
period, (D) if since the beginning of such period the Corporation or any of its
Restricted Subsidiaries (by merger or otherwise) shall have made an Investment
in any Restricted Subsidiary (or any Person which becomes a Restricted
Subsidiary as a result thereof) or an acquisition of assets occurring in
connection with a transaction causing
4
a calculation to be made hereunder which constitutes all or substantially all of
an operating unit of a business, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto (including
the incurrence of any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period, and (E) if since the beginning of such
period any Person (that subsequently became a Restricted Subsidiary of the
Corporation or was merged with or into the Corporation or any other Restricted
Subsidiary since the beginning of such period) shall have made any Asset Sale,
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (C) or (D) above if made by the Corporation or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Sale, Investment or acquisition had occurred on the first day of such
period. For purposes of this definition whenever pro forma effect is to be given
to an acquisition of assets, the amount of income or earnings relating thereto
and the amount of Consolidated Interest Expense associated with any Indebtedness
incurred in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer of the
Corporation. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest expense on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period.
"Consolidated GAAP Net Income" means, with respect to any period,
the net income (or loss) of the Corporation and its consolidated Subsidiaries
for such period, determined in accordance with GAAP as from time to time in
effect.
"Consolidated Interest Expense" means, with respect to any period,
the sum of (i) the interest expense of the Corporation and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, including, without limitation, (a) amortization of debt discount, (b)
the net cash payments, if any, under interest rate contracts, (c) the interest
portion of any deferred payment obligation, (d) accrued interest, and (e) all
commissions, discounts and other fees and charges owed with respect to letters
of credit, bankers' acceptance financing or similar facilities, plus (i) the
interest component of the Capital Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Corporation during such period, of the
Corporation and its Restricted Subsidiaries, plus (iii) all cash dividends paid
during such period by the Corporation and its Restricted Subsidiaries with
respect to any Disqualified Stock, in each case as determined on a consolidated
basis in accordance with GAAP; provided, that Consolidated Interest Expense
shall exclude the amortization of fees and expenses related to the issuance of
the Securities.
"Consolidated Net Income" means, with respect to any period, the
Consolidated GAAP Net Income (or loss) of the Corporation and its Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, adjusted to the extent included in calculating such net income (or
loss), by excluding, without duplication, (i) extraordinary gains and losses,
(ii) the portion of net income (or loss) of the Corporation and its Restricted
Subsidiaries allocable to interests in unconsolidated Persons or Unrestricted
Subsidiaries, except that the Corporation's equity in the net income of such
Person or Subsidiary shall be included in Consolidated Net Income to the extent
of the amount of dividends or distributions actually paid to the Corporation or
its Restricted Subsidiaries by such Person or Subsidiary during such period,
(iii) net income (or loss) of any Person combined with the Corporation or any of
its Restricted
5
Subsidiaries on a "pooling of interests" basis attributable to any period prior
to the date of combination, (iv) net gain or loss in respect of any sale,
transfer or disposition of assets (including without limitation, pursuant to
sale and leaseback transactions) other than in the ordinary course of business,
(v) the net income of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that Restricted Subsidiary
of that income to the Corporation is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to the Restricted Subsidiary or its stockholders (other than pursuant
to the Securities or this Indenture), and (vi) the non-recurring cumulative
effect of a change in accounting principles.
"Consolidated Total Assets" means, as of any date, the total assets
of the Corporation and its Restricted Subsidiaries as shown on the most recently
available consolidated balance sheet of the Corporation and its Restricted
Subsidiaries prepared in conformity with GAAP.
"Corporate Trust Office" of the Trustee shall be at the address of
the Trustee specified in Section 13.02 of this Indenture or such other address
as to which the Trustee gives notice to the Company.
"Currency Agreement Obligations" means the obligations of any Person
under any foreign exchange contract, currency swap agreement or other similar
agreement to protect such Person against fluctuations in currency values.
"Corporation" means the party named as such in this Indenture until
a successor replaces it and, thereafter, means the successor.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, New York, New York,
or any successor thereto registered under the Securities Exchange Act or other
applicable statute or regulation.
"Disqualified Stock" means (a) any Preferred Stock of any Restricted
Subsidiary, and (b) any Capital Stock which by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) or upon
the happening of any event (i) matures or is mandatorily redeemable pursuant to
a sinking fund obligation or otherwise, or (ii) is redeemable at the option of
the holder thereof (other than upon the occurrence of an "Asset Sale" or a
change of control of the Corporation in circumstances where the holders of the
Notes would have similar rights), in whole or in part, in each case on or prior
to the Stated Maturity of the Securities, including without limitation the
Noncumulative Redeemable Preferred Stock.
"EBITDA" means, with respect to any Person for any period, the sum
of Consolidated Net Income of such Person for such period plus the following to
the extent deducted in calculating such Consolidated Net Income: (a) provision
for taxes based on the net income or profits of such Person, (b) Consolidated
Interest Expense, (c) consolidated depreciation and amortization, calculated in
accordance with GAAP, (d) any other non-cash
6
charges (excluding any non-cash items that represent an accrual of or reserve
for cash charges reasonably expected to be disbursed in any subsequent period
prior to the Stated Maturity of the Notes) deducted in computing Consolidated
Net Income, less, (e) non-cash items increasing Consolidated Net Income
(excluding any items which represent an accrual for cash receipts or the
reduction of required future cash disbursements reasonably expected to be
received or disbursed in a subsequent period prior to the Stated Maturity of the
Notes).
"Equity Offering" means any public or private sale of Capital Stock
(other than Disqualified Stock) of the Corporation other than public offerings
with respect to the Corporation's common stock registered on Form S-8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Agreement" means the Exchange Agreement for 12% Senior
Secured Notes dated as of [February __], 2002, among the Corporation and each of
the Holders signatory thereto, as the same may be amended, supplemented or
modified from time to time in accordance with the terms thereof.
"Existing Indebtedness" means Indebtedness of the Corporation or its
Restricted Subsidiaries in existence or incurred pursuant to any loan or other
agreement in effect on the Issue Date plus any premium or interest accrued
thereon, as set forth in Section 3.4 of the Exchange Agreement.
"Foreign Subsidiary" means a Subsidiary of a Person not organized
under the laws of the United States or any political subdivision thereof and the
operations of which are located substantially outside the United States.
"GAAP" means generally accepted accounting principles in the United
States set forth in the Statements of Financial Accounting Standards and the
Interpretations, Accounting Principles Board Opinions and AICPA Accounting
Research Bulletins which are applicable as of December 31, 1997 except as
otherwise specified herein.
"Guarantee" means any obligation, contingent or otherwise, of any
Person guaranteeing any Indebtedness of any Person (including, without
limitation, obligations to purchase assets, securities or services, to
take-or-pay or to maintain financial statement conditions or arrangements or
agreements entered into for the purpose of assuring the obligee of such
Indebtedness of the payment thereof or to protect such obligee against loss in
respect thereof, in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements of negotiable instruments for
collection or deposit in the ordinary course of business, or contingent
obligations in connection with the sale or discount of accounts receivable and
similar paper. The term "Guarantee" used as a verb has a corresponding meaning.
The term "Guarantor" shall mean any Person Guaranteeing any obligation.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Hillside" means Hillside Capital Incorporated, a Delaware
corporation.
7
"Hillside Agreement" means the Hillside-Ampex/Sherborne Agreement,
dated December 1, 1994 (effective November 24, 1994), by and among the
Corporation, Hillside and Sherborne Group Incorporated, a Delaware corporation,
and certain Affiliates of such corporations, as in effect on the date hereof or
as the same may be amended, supplemented or modified from time to time in
accordance with the terms thereof.
"Indebtedness" means, with respect to any Person, without
duplication, (i) the principal of and the premium (if any) on all indebtedness
of such Person for money borrowed or which is evidenced by a note, bond,
debenture or similar instrument for payment of which such Person is liable, (ii)
all obligations of such Person under any conditional sale, title retention or
similar agreement in respect of the deferred or unpaid purchase price of
property or services acquired by such Person, (iii) all Capital Lease
Obligations of such Person, (iv) all obligations of such Person in respect of
letters of credit or bankers' acceptance issued or created for the account of
such Person, (v) all net obligations of such Person under Interest Rate
Agreement Obligations or Currency Agreement Obligations of such Person, (vi) all
liabilities of others of the kind described in the preceding clauses (i), (ii)
or (iii) secured by any Lien on any property owned by such Person even though
such Person has not assumed or become liable for the payment of such
liabilities; provided, however, the amount of such Indebtedness for purposes of
this definition shall be limited to the lesser of the amount of Indebtedness
secured by such Lien or the value of the property subject to such Lien, (vii)
all Disqualified Stock issued by such Person and all Preferred Stock issued by a
Restricted Subsidiary of such Person, and (viii) to the extent not otherwise
included, any Guarantee by such Person of any other Person's Indebtedness or
other obligations described in clauses (i) through (vii) above. "Indebtedness"
of the Corporation and the Restricted Subsidiaries shall not include (i) trade
payables incurred in the ordinary course of business, and (ii) contingent
obligations incurred in connection with the sale or discount of accounts
receivable and similar paper in the ordinary course of business. The principal
amount outstanding of any Indebtedness issued with original issue discount is
the accreted value of such Indebtedness and Indebtedness shall not include any
liability for federal, state, local or other taxes.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Interest Rate Agreement Obligations" means, with respect to any
Person, the Obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements, and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Investment" in any Person means any direct or indirect advance,
loan or other extension of credit (including, without limitation, by way of
Guarantee or similar arrangement but excluding advances to customers and
employees in the ordinary course of business) to, capital contribution (by means
of any transfer of cash or other property to others or any payment for property
or services for the account or use of others) to, or any purchase or acquisition
of capital stock, bonds, notes, debentures or other similar instruments issued
by, such Person and shall include the designation of a Restricted Subsidiary as
an Unrestricted Subsidiary. For purposes of the definition of "Unrestricted
Subsidiary" below and the provisions of Section 5.09 of this Indenture, (i)
"Investment" shall include the fair market value of the assets (net of
liabilities) of any Restricted Subsidiary of the Corporation at the time that
such Restricted
8
Subsidiary of the Corporation is designated an Unrestricted Subsidiary and shall
exclude the fair market value of the assets (net of liabilities) of any
Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is
designated a Restricted Subsidiary of the Corporation and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer, in each case as determined by the
Board of Directors in good faith.
"Issue Date" means the date on which the Notes are first issued
under the Indenture.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in any asset and any filing of, or agreement to give, any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Maturity Date" means August 15, 2008.
"Minimum Available Cash Flow" means an amount of the aggregate
Available Cash Flow of the Corporation received during the three-year period
commencing January 1, 2002 and ending December 31, 2004 which amount shall be
not less than $25 million.
"Net Available Cash" means, with respect to any Asset Sale by any
Person, the aggregate cash or Cash Equivalent proceeds received by such Person
(including any cash payments received by way of deferred payment pursuant to, or
monetization of, a note or installment receivable or otherwise, but only as and
when received) in connection with such Asset Sale, plus the amount of cash and
Cash Equivalents referred to in the provided, however clause of paragraph (a)
(ii) of Section 5.05 of this Indenture, if any, net of (i) the amount of any
Indebtedness (including Disqualified Stock or Preferred Stock of a Subsidiary)
which is required to be repaid by such Person or its Affiliates in connection
with such Asset Sale, plus (ii) all fees, commissions and other expenses
incurred (including without limitation, the fees and expenses of legal counsel
and investment banking, accounting, underwriting and brokerage fees and
expenses) by such Person in connection with such Asset Sale, (iii) provision for
taxes, including income taxes, attributable to the Asset Sale or attributable to
required prepayments or repayments of Indebtedness with the proceeds of such
Asset Sale, (iv) any amounts reasonably provided by the Corporation or any
Restricted Subsidiary of the Corporation as a reserve against any liabilities
associated with such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, (v) any dividends or distributions or other amounts payable to
Persons holding a beneficial interest in the assets sold or to holders of
minority interests in a Restricted Subsidiary or other entity as a result of
such Asset Sale, and (vi) any amount required to be retained to provide
substitute collateral to Hillside pursuant to Section 4.2 of the Hillside
Agreement.
"Net Proceeds," with respect to any issuance or sale of Capital
Stock, means the proceeds, in cash, securities or property (with any securities
or property valued at fair market value), of the issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or
9
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees and expenses incurred in connection with such issuance or sale and
net of taxes paid or payable as a result of such issuance or sale.
"Noncumulative Redeemable Preferred Stock" means the shares of the
Corporation's 8% Noncumulative Convertible Preferred Stock and 8% Noncumulative
Redeemable Preferred Stock issued effective as of July 2, 1998 outstanding on
the Issue Date, and any subsequent refinancings thereof, provided, however, that
the aggregate liquidation value of all outstanding securities issued in any such
refinancings shall not exceed the aggregate liquidation value of the
Noncumulative Redeemable Preferred Stock outstanding on July 2, 1998."
"Note Purchase Agreement for Senior Discount Notes" means the Note
Purchase Agreement, dated as of November 6, 2000, among the Corporation, ADSC,
the entities identified as "Purchaser" on the signature pages thereof, and DDJ
Capital Management LLC, as agent, as in effect on the date hereof or as the same
may be amended, supplemented or modified from time to time in accordance with
the terms thereof.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Officer" means the Chairman of the Board, the President, the
Executive Vice President, any Senior Vice President, any Vice President, the
Treasurer or the Secretary of the Corporation.
"Officers' Certificate" means a certificate signed by two Officers
or by an Officer and an Assistant Treasurer or Assistant Secretary of the
Corporation.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
the Corporation or the Trustee.
"Permitted Holders" means collectively or individually (i) ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and (ii) his "associates" (as defined in Rule 12B-2 under the Exchange
Act, except that a person shall not be an "associate" for purposes of this
Indenture solely because such person comes within the definition of such term in
clause (a) of such Rule) and his Affiliates.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock corporation, limited liability corporation,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock" as applied to the Capital Stock of any Person
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Capital Stock of any other class of such
Person.
10
"Principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security in connection with the transaction
in question.
"Purchase Money Obligation" means any Indebtedness secured by a Lien
on assets related to the business of the Corporation or the Restricted
Subsidiaries, and any additions and accessions thereto, which are purchased or
constructed by the Corporation or any Restricted Subsidiary at any time after
the Issue Date; provided that (i) any security agreement or conditional sales or
other title retention contract pursuant to which the Lien on such assets is
created (collectively a "Security Agreement") shall be entered into within 180
days after the purchase or substantial completion of the construction of such
assets and shall at all times be confined solely to the assets so purchased or
acquired, any additions and accessions thereto and any proceeds therefrom, (ii)
at no time shall the aggregate principal amount of the outstanding Indebtedness
secured thereby be increased, except in connection with the purchase of
additions and accessions thereto and except in respect of fees and other
obligations in respect of such Indebtedness and (iii)(A) the aggregate
outstanding principal amount of Indebtedness secured thereby (determined on a
per asset basis in the case of any additions and accessions) shall not at the
time such Security Agreement is entered into exceed 100% of the purchase price
to the Corporation or any Restricted Subsidiary of the assets subject thereto or
(B) the Indebtedness secured thereby shall be with recourse solely to the assets
so purchased or acquired, any additions and accessions thereto and any proceeds
therefrom.
"Record Date" means the 1st day of February or August immediately
preceding a payment date specified in the Securities.
"Restricted Investment" means an Investment by the Corporation or a
Restricted Subsidiary in any Subsidiary other than a Restricted Subsidiary.
"Restricted Payment" means (i) any dividend or other distribution
declared or paid on any Capital Stock of the Corporation (other than dividends
or distributions payable solely in Capital Stock (other than Disqualified Stock)
of the Corporation or dividends or distributions payable to the Corporation or
any Restricted Subsidiary and other than pro rata dividends or other
distributions made by a Restricted Subsidiary that is not a Wholly Owned
Subsidiary to minority stockholders (or owners of an equivalent interest in the
case of a Subsidiary that is not a corporation); (ii) any payment to purchase,
redeem or otherwise acquire or retire for value any Capital Stock of the
Corporation; (iii) any voluntary or optional payment to purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated in right of payment to the Notes other than a purchase, redemption,
defeasance or other acquisition or retirement for value that is paid for with
the proceeds of Refinancing Indebtedness that is permitted under Section 5.03 of
this Indenture; or (iv) any Restricted Investment.
"Restricted Subsidiary" means each direct or indirect Subsidiary of
the Corporation other than an Unrestricted Subsidiary.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
11
"Security Agreement" means the Collateral Security Agreement, dated
as of [February __], 2002, by and between the Corporation and the Trustee,
substantially in the form of Exhibit B hereto.
"Senior Discount Notes" means $8,919,555.56 aggregate principal
amount of Senior Discount Notes issued by ADSC pursuant to the Note Purchase
Agreement for Senior Discount Notes, and guaranteed by the Corporation pursuant
to such Agreement, as the same may be amended, supplemented or modified from
time to time in accordance with the terms thereof.
"Senior Indebtedness" in the case of the Notes means Indebtedness
that is not by its terms expressly subordinate or junior in right of payment to
any other Indebtedness of the Corporation.
"Senior Security Agreement" means the Collateral Security Agreement
dated as of November 6, 2000, between ADSC, as debtor, and DDJ Capital
Management LLC, as secured party and agent for the ratable benefit of the
holders of the Senior Discount Notes, as the same may be amended, supplemented
or modified from time to time in accordance with the terms thereof.
"Sherborne Loan Agreement" means the Loan Agreement, dated October
29, 2001, between ADSC and Sherborne & Company Incorporated, a Delaware
corporation, and the related agreements entered into pursuant to such Agreement,
as the same may be amended, supplemented or modified from time to time in
accordance with the terms thereof.
"Significant Subsidiary" means any Restricted Subsidiary that would
be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation
S-X promulgated pursuant to the Securities Act.
"Subordinated Indebtedness" means Indebtedness (including, without
limitation, secured Indebtedness) of the Corporation which by its express terms
is subordinated or junior in right of payment to the Notes.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding voting power of the Voting Stock of which is owned or
controlled, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person, or by such Person and one or more other
Subsidiaries thereof, or (ii) any limited partnership of which such Person or
any Subsidiary of such Person is a general partner, or (iii) any other Person
(other than a corporation or limited partnership) in which such Person, or one
or more other Subsidiaries of such Person, or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has more than 50% of the
outstanding partnership or similar interests or has the power, by contract or
otherwise, to direct or cause the direction of the policies, management and
affairs thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of this Indenture.
12
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the
Trustee in its Corporate Trust Department or with respect to a particular
matter, any officer to whom such matter is referred because of such officer's
knowledge and familiarity with the particular subject.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America for the payment of which the full faith and credit of
the United States of America is pledged and which are not callable at the
issuer's option.
"Unrestricted Subsidiary" means Ampex Holdings Corporation and any
other Subsidiary of the Corporation designated as such pursuant to and in
compliance with the provisions of Section 5.09 of this Indenture. Any such
designation may be revoked by a Board Resolution of the Corporation delivered to
the Trustee, subject to the provisions of such covenant.
"Voting Stock" of a Person means all classes of Capital Stock of
such Person then outstanding as to which the holders thereof are entitled under
ordinary circumstances (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees of such Person.
"Wholly Owned Subsidiary" means any Subsidiary with respect to which
all of the outstanding Voting Stock (other than directors' qualifying shares) of
which are owned, directly or indirectly, by the Corporation.
SECTION 1.02 Other Definitions
Term Defined in Section
"Acquired Person"........................... 5.03
"Agent Members"............................. 2.08
"Bankruptcy Law"............................ 7.01
"Custodian"................................. 7.01
"Designation"............................... 5.09
"Event of Default".......................... 7.01
"Excess Proceeds"........................... 5.05
"Global Security"........................... 2.01
"Incur"..................................... 5.03
"Legal Holiday"............................. 13.08
"Offer"..................................... 5.05
"Offer Amount".............................. 5.05
"Offer Period".............................. 5.05
"Paying Agent".............................. 2.03
"Permitted Payments"........................ 5.04
13
Term Defined in Section
"Physical Securities"....................... 2.01
"Purchase Date"............................. 5.05
"Refinancing"............................... 5.03
"Refinancing Indebtedness".................. 5.03
"Registrar"................................. 2.03
"Restricted Payment"........................ 5.04
"Revocation"................................ 5.09
"Successor Corporation"..................... 6.01
SECTION 1.03 Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Corporation.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04 Rules of Construction. Unless the context otherwise
requires:
(1) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect on the Issue Date;
(2) "or" is not exclusive;
(3) "including" means including, without limitation; and
(4) words in the singular include the plural and words in the plural
include the singular.
14
ARTICLE 2
The Securities
--------------
SECTION 2.01 Form and Dating. The Securities and the Trustee's
certificate of authentication relating thereto shall be substantially in the
form of Exhibit A hereto. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or depository rule or usage.
The Corporation shall approve the form of the Securities and any notation,
legend or endorsement on them. Each Security shall be dated the date of its
authentication and shall show the date of its authentication.
The additional terms and provisions contained in the forms of
Securities annexed hereto as Exhibit A shall constitute, and are hereby
expressly made, a part of this Indenture and, to the extent applicable, the
Corporation and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
Securities shall be issued initially in the form of one or more
global Securities in registered form, substantially in the form set forth in
Exhibit A (the "Global Security"), deposited with the Trustee, as custodian for
the Depository, duly executed by the Corporation and authenticated by the
Trustee as hereinafter provided and shall bear the legend set forth in Section
2.07 hereof. The aggregate principal amount of the Global Security may from time
to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository.
Securities may be issued, in the form of certificated Securities in
registered form, in substantially the form set forth in Exhibit A (the "Physical
Securities"). The Physical Securities are sometimes collectively herein referred
to as the "Physical Securities." Physical Securities may initially be registered
in the name of the Depository or a nominee of such Depository and be delivered
to such Depository. Beneficial owners of Physical Securities, however, may
request registration of such Physical Securities in their names or the names of
their nominees.
SECTION 2.02 Execution and Authentication. Two Officers shall sign
the Securities for the Corporation by manual or facsimile signature. The
Corporation's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and deliver Securities for original
issue from time to time in an aggregate principal amount of up to $50,000,000
plus additional Securities that may be issued in payment of interest in
accordance with the Securities, upon a written order of the Corporation signed
by two Officers or by an Officer and an Assistant Treasurer or an Assistant
15
Secretary of the Corporation. The aggregate principal amount of Securities
outstanding at any time may not exceed that amount except as provided in Section
2.11.
The Securities shall be issuable only in registered form and only in
denominations of $1,000 principal amount and any integral multiple thereof.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Corporation to authenticate Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03 Registrar and Paying Agent. The Corporation shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange ("Registrar") and an office or agency where
Securities may be presented for payment ("Paying Agent"). The Registrar shall
keep a register of the Securities and of their transfer and exchange. The
Corporation may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Corporation shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Corporation shall
notify the Trustee of the name and address of any such agent. If the Corporation
fails to maintain a Registrar or Paying Agent. the Trustee shall act as such,
and shall be entitled to appropriate compensation in accordance with Section
8.07. The Corporation or any Subsidiary or Affiliate may act as Paying Agent,
Registrar, co-registrar or transfer agent.
The Corporation initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04 Paying Agent To Hold Money in Trust. On or prior to
each due date of the principal and interest on any Security, the Corporation
shall deposit with the Paying Agent a sum in immediately available funds
sufficient to pay such principal and interest when due. The Corporation shall
require each Paying Agent (other than the Trustee) to agree in writing that the
Paying Agent shall hold in trust for the benefit of Securityholders or the
Trustee all money held by the Paying Agent for the payment of principal of or
interest on the Securities and shall notify the Trustee of any default by the
Corporation in making any such payment. If the Corporation or a Subsidiary acts
as Paying Agent, it shall segregate the money held by it as Paying Agent and
hold it as a separate trust fund. The Corporation at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed by it. Upon making such payment, the Paying Agent (other than
the Corporation) shall have no further liability for the money delivered to the
Trustee.
SECTION 2.05 Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of
16
Securityholders. If the Trustee is not the Registrar, the Corporation shall
furnish to the Trustee at least five Business Days before each payment date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of Securityholders.
SECTION 2.06 Transfer and Exchange. When a Security is presented to
the Registrar or a co-registrar with a request to register a transfer, the
Registrar shall register the transfer as requested if duly authorized or
accompanied by a written instrument of transfer, by the Holder. The Registrar
may require the assurances set forth in Section 8-402 of the Uniform Commercial
Code that any endorsement is genuine and effective. When Securities are
presented to the Registrar or a co-registrar with a request to exchange them for
an equal principal amount of Securities of other denominations, the Registrar
shall make the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Corporation shall execute and the
Trustee shall authenticate Securities at the Registrar's or co-registrar's
request. The Corporation may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges. The Corporation shall not be
required to make and the Registrar need not register transfers or exchanges of
Securities selected for redemption (except, in the case of Securities to be
redeemed in part, the portion thereof not to be redeemed) or for a period of 15
days before a selection of Securities to be redeemed or 15 days before a payment
date.
Prior to the due presentation for registration of transfer of any
Security, the Corporation, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the
Corporation, the Trustee, the Paying Agent, the Registrar or any co-registrar
shall be affected by notice to the contrary. Furthermore, any Holder of a Global
Security shall, by acceptance of such Global Security, agree that transfers of
beneficial interests in such Global Security may be effected only through a
book-entry system maintained by the Depositary (or its agent) and that ownership
of a beneficial interest in the Global Security shall be required to be
reflected in a book entry.
SECTION 2.07 Restrictive Legends. Each Global Security shall also
bear a legend on the face thereof in substantially the following form:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
17
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF
THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.07 OF THE
INDENTURE.
SECTION 2.08 Book Entry Provisions for Global Securities. This
Section 2.08 shall apply only to the Global Security deposited with the
Depository or its custodian.
(1) So long as the Securities are eligible for book-entry
settlement with the Depository, or unless otherwise required by law, the Global
Security initially shall (i) be registered in the name of the Depository or the
nominee of such Depository, (ii) be delivered to the Trustee as custodian for
such Depository and (iii) bear legends as set forth in Section 2.07.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Security, and the Depository may be treated by the Corporation,
the Trustee and any agent of the Corporation or the Trustee as the absolute
owner of the Global Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Corporation, the Trustee or any
Agent of the Corporation or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depository or
impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a holder of any
Security.
(2) Transfers of the Global Security shall be limited to
transfers in whole, but, subject to the immediately succeeding sentence, not in
part, to the Depository, its successors or their respective nominees. Interests
of beneficial owners in the Global Security may be transferred or exchanged for
Physical Securities in accordance with the rules and procedures of the
Depository and the provisions of Section 2.09 hereof. In addition, Physical
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in the Global Security if (i) the Depository notifies the
Corporation that it is unwilling or unable to continue as Depository for the
Global Security and a successor depositary is not appointed by the Corporation
within 90 days of such notice or (ii) an Event of Default has occurred and is
18
continuing and the Registrar has received a written request from the Depository
to issue Physical Securities.
(3) In connection with any transfer or exchange of a portion of
the beneficial interest in the Global Security to beneficial owners pursuant to
paragraph (2), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Corporation shall execute, and the Trustee shall authenticate and deliver,
one or more Physical Securities of like tenor and amount.
(4) In connection with the transfer of the beneficial interests
in the entire Global Security to beneficial owners pursuant to paragraph (2),
the Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Corporation shall execute, and the Trustee shall,
authenticate and deliver to each beneficial owner identified by the Depository
in exchange for its beneficial interest in the Global Security, an equal
aggregate principal amount of Physical Securities of authorized denominations.
(5) The owner of a beneficial interest in the Global Security
may grant proxies and otherwise authorize any person, including Agent Members
and persons that may hold interests through Agent Members, to take any action
which a Holder is entitled to take under this Indenture or the Securities.
SECTION 2.09 Special Transfer Provisions.
(1) Any Security authenticated and issued hereunder may be
transferred or otherwise exchanged as provided in Section 3.6 of the Exchange
Agreement.
(2) The following provisions shall apply with respect to the
registration of any proposed transfer of a Security:
(a) If the proposed transferor is an Agent Member holding a
beneficial interest in the Global Security, upon receipt by the Registrar of
written instructions given in accordance with the Depository's and the
Registrar's procedures, (i) the Registrar shall reflect on its books and
records the date and if the transfer does not involve a transfer of
outstanding Physical Securities) a decrease in the principal amount of the
Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and (ii) the Corporation
shall execute and the Trustee shall authenticate and deliver one or more
Physical Securities of like tenor and amount.
(b) If the proposed transferee is an Agent Member (and the
Securities to be transferred consist of Physical Securities which after
transfer are to be evidenced by an interest in the Global Security), upon
receipt by the Registrar of written instructions given in accordance with
the Depository's and the Security Registrar's procedures, (i) the Registrar
shall reflect on its books and records the date and an increase in the
principal amount of the Global Security in an amount equal to the principal
amount of the Physical Securities to be transferred, and (ii) the Trustee
shall cancel the Physical Securities so transferred.
19
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.08 hereof or this Section
2.09. The Corporation shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
during the Registrar's normal business hours upon the giving of reasonable
written notice to the Registrar.
In connection with any transfer of the Securities, the Trustee, the
Registrar and the Corporation shall be entitled to receive, shall be under no
duty to inquire into, may conclusively presume the correctness of, and shall be
fully protected in relying upon the certificates, opinions and other information
referred to herein (or in the forms provided herein, attached hereto or to the
Securities, or otherwise) received from any Holder and any transferee of any
Security regarding the validity, legality and due authorization of any such
transfer, the eligibility of the transferee to receive such Security and any
other facts and circumstances related to such transfer.
SECTION 2.10 Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Corporation shall
issue and the Trustee shall authenticate a replacement Security if the
requirements of Section 8-405 of the Uniform Commercial Code are met and the
Holder satisfies any other reasonable requirements of the Trustee. If required
by the Trustee or the Corporation, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Corporation and the Trustee to protect the
Corporation, the Trustee, the Paying Agent, the Registrar and any co-registrar
from any loss which any of them may suffer if a Security is replaced. The
Corporation and the Trustee may charge the Holder for their expenses in
replacing a Security.
Every replacement Security is an additional obligation of the
Corporation.
SECTION 2.11 Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it and those delivered to it for cancellation and those described in this
Section as not outstanding. A Security does not cease to be outstanding because
the Corporation or an Affiliate of the Corporation holds the Security.
If a Security is replaced pursuant to Section 2.10, it ceases to be
outstanding unless the Trustee and the Corporation receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Corporation or a Subsidiary)
holds in trust, in accordance with this Indenture, on a redemption date or
maturity date money sufficient to pay all amounts payable on that date with
respect to the Securities (or portions thereof) and is not prohibited from
paying such money to the Holders thereof pursuant to the terms of this
Indenture, then on and after that date such Securities (or portions thereof)
cease to be outstanding and interest on them ceases to accrue.
If a Security is called for redemption or if it matures in less than
a year and if the Corporation has satisfied its obligation to pay the Security
in accordance with Article 9 of this Indenture, the Corporation and the Trustee
need not treat the Security as outstanding in
20
determining whether Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent.
SECTION 2.12 Temporary Securities. Until definitive Securities are
ready for delivery, the Corporation may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the
Corporation considers appropriate for temporary Securities. Without unreasonable
delay, the Corporation shall prepare and the Trustee, upon receipt of the
Corporation's written order signed by two Officers which shall specify the
amount of definitive Securities to be authenticated, and the date thereof, shall
authenticate definitive Securities and deliver them in exchange for temporary
Securities.
SECTION 2.13 Cancellation. The Corporation at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for transfer,
exchange or payment. The Trustee and no one else shall cancel and destroy
(subject to the record retention requirements of the Exchange Act) all
Securities surrendered for transfer, exchange, payment or cancellation and
deliver a certificate of such destruction to the Corporation unless the
Corporation directs the Trustee to deliver canceled Securities to the
Corporation. The Corporation may not issue new Securities to replace Securities
it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.14 Additional Securities. Additional Securities issued
pursuant to this Indenture and the Securities shall be governed by and entitled
to the benefits of this Indenture and the Security Agreement, shall be issued in
substantially the form of Exhibit A hereto, and shall be subject to the same
terms (including the rate of interest) as the Securities originally issued
hereunder, except, as the case may be, with respect to the issue date, the
principal amount and the payment of interest scheduled to be paid prior to or on
the date of issuance of such additional Securities. The Corporation shall notify
the Trustee in writing of its election to pay interest on the Securities on any
payment date in additional Securities at least five but not more than thirty
days prior to the record date for the payment date.
SECTION 2.15 Defaulted Interest. If the Corporation defaults in a
payment of interest on the Securities, it shall pay the defaulted interest
(plus, to the extent permitted by applicable law, interest on such defaulted
interest at the rate borne by the Securities plus 1%) in any lawful manner to
the persons who are Securityholders on a subsequent special record date, which
date shall be at least five business days prior to the special payment date. The
Corporation shall fix the special record date and special payment date, which
special record date shall be at least 10 days before the special payment date,
and the Corporation, or the Trustee in the name of and at the expense of the
Corporation, shall promptly mail to each Securityholder a notice that states the
special record date, the special payment date and the amount of defaulted
interest to be paid.
SECTION 2.16 CUSIP Numbers. The Corporation in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption or notices of
optional prepayment, as the case may be, as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
21
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
ARTICLE 3
Application of Available Cash Flow
----------------------------------
SECTION 3.01 General. (a) Except as expressly provided in this
Indenture or the Securities, and subject to the provisions of Article 12 hereof,
all payments of the principal of, and accrued interest on, the Securities shall
be made solely out of Available Cash Flow of the Corporation in the manner and
to the extent provided below. Each Securityholder, by accepting a Security,
acknowledges and agrees to the limitations on payment of the Securities set
forth herein.
(b) Not less than 5 days prior to each payment date on the
Securities, the Corporation shall furnish to the Trustee a statement containing
a calculation in reasonable detail of the Available Cash Flow with respect to
such payment date and setting forth (i) the amount of such Available Cash Flow
to be applied to the payment of the Senior Discount Notes in accordance with the
Note Purchase Agreement for Senior Discount Notes, (ii) the amount to be applied
to the payment of accrued interest on the Securities pursuant to Section
3.02(a), (iii) the amount to be applied to the prepayment of principal of the
Securities pursuant to Section 3.03, and (iv) the amount of any additional
Securities to be issued in payment of accrued interest pursuant to Section
3.02(b).
SECTION 3.02 Application of Available Cash Flow. (a) Subject to the
provisions of Article 12 hereof, on each payment date specified in the
Securities, the Corporation shall apply 100% of the Available Cash Flow received
by the Corporation during the semi-annual period ended on the December 31 or
June 30 next preceding such payment date (i) first to be the payment of all
amounts due the Trustee hereunder, and then (ii) to the payment of accrued
interest on the Securities (to the extent of such Available Cash Flow) and the
balance to the prepayment of principal pursuant to Section 3.03. Notwithstanding
the foregoing, the Corporation may retain an amount equal to 5% of Available
Cash Flow on each payment date to establish a working capital reserve (the
"Reserve"), until it has accumulated an aggregate of $2.5 million, and
thereafter 100% of such Available Cash Flow shall be applied in accordance with
this Section 3.02.
(b) If Available Cash Flow (less the Reserve) on any payment date
would be insufficient to make such payment in full, the Corporation shall issue
additional Securities (valued at 100% of the principal amount thereof) in an
aggregate amount equal to the aggregate amount of interest otherwise payable in
cash on such date. Such additional Securities shall be issued in accordance with
Section 2.14 hereof.
(c) If, and to the extent that, Available Cash Flow for any period
includes Net Available Cash attributable to an Asset Sale involving ADSC, the
provisions of Section 3.02 and Article 12 hereof and not of Section 5.05 shall
govern the application of such Net Available Cash by the Corporation.
22
SECTION 3.03 Mandatory Prepayment. If, with respect to any payment
date specified in the Securities, after application of Available Cash Flow as
provided in paragraph (a) of Section 3.02, there remains any balance (in excess
of $10,000) of such Available Cash Flow, subject to the provisions of Article 12
hereof, the Corporation shall apply such balance to the pro rata prepayment of
the outstanding principal of the Securities. The Trustee shall promptly notify
each Holder of any such prepayment of principal of the Securities held by such
Holder.
SECTION 3.04 Obligation to Pay Securities in Cash at Maturity.
Notwithstanding anything contained in this Indenture or the Securities, subject
to the provisions of Article 12 hereof, the full amount of all interest accrued
on, and the principal amount of, the Securities shall be payable in cash without
regard to the source of such cash or the amount of Available Cash Flow on the
maturity date of the Securities, whether at the stated maturity on the Maturity
Date, or upon acceleration or otherwise.
ARTICLE 4
Redemption
----------
SECTION 4.01 Notices to Trustee. If the Corporation elects to redeem
Securities pursuant to paragraph 7 of the Securities, it shall notify the
Trustee in writing of the redemption date and the principal amount of Securities
to be redeemed.
The Corporation shall give the notices provided for in this Section
at least 60 days before the redemption date, unless the Trustee consents to a
shorter period. Such notice shall be accompanied by an Officers' Certificate and
an Opinion of Counsel from the Corporation that such redemption will comply with
the conditions contained herein.
If less than all the Securities are to be redeemed, the record date
relating to such redemption shall be selected by the Corporation and given by
notice to the Trustee, which record date shall be not less than 15 days after
the date of notice to the Trustee.
SECTION 4.02 Selection of Securities To Be Redeemed. If less than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000, subject to the restriction that
Securities and portions of Securities the Trustee selects shall be in amounts of
$1,000 or a whole multiple of $1,000. Securities in denominations of $1,000 or
less may only be redeemed in whole. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Corporation promptly of the Securities
or portions of Securities to be redeemed.
SECTION 4.03 Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, the Corporation shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
23
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if less than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;
(6) that, unless the Corporation defaults in making such redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the redemption date;
(7) the paragraph of the Securities and/or Section of this Indenture
pursuant to which the Securities called for redemption are being redeemed;
and
(8) the CUSIP number, provided that no representation is made as to
the correctness or accuracy of the CUSIP number, if any, listed in such
notice or printed on the Securities.
At the Corporation's request, the Trustee shall give the notice of
redemption in the Corporation's name and at the Corporation's expense. In such
event the Corporation shall provide the Trustee with the information required by
clauses (1) through (4) and (7).
SECTION 4.04 Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date.
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 4.05 Deposit of Redemption Price. Prior to 10:00 a.m. New
York City time on the redemption date, the Corporation shall deposit with the
Paying Agent (or if the Corporation or a Subsidiary is the Paying Agent, shall
segregate and hold in trust) money, in immediately available funds, sufficient
to pay the redemption price of and accrued interest on all Securities to be
redeemed on that date other than Securities or portions of Securities called for
redemption which have been delivered by the Corporation to the Trustee for
cancellation.
SECTION 4.06 Securities Redeemed in Part. Upon surrender to the
Trustee at the Corporate Trust Office of a Security that is redeemed in part,
the Trustee shall authenticate for the Holder (at the Corporation's expense) a
new Security equal in principal amount to the unredeemed portion of the Security
surrendered.
24
ARTICLE 5
Covenants
---------
SECTION 5.01 Payment of Securities. The Corporation shall promptly
pay the principal of and interest on the Securities not later than 11:00 a.m.
New York City time on the dates and in the manner provided in the Securities and
in this Indenture. Principal and interest (including any redemption price) shall
be considered paid on the date due if the Trustee or the Paying Agent (other
than the Corporation or a Subsidiary) holds on such date as of 11:00 a.m. New
York City time money in U.S. dollars sufficient to pay all principal and
interest (including any redemption price) then due and the Trustee or the Paying
Agent is not prohibited from paying such money to the Holders on that date
pursuant to the terms of this Indenture; provided, however, that, in the event
of payment of interest through the issuance of additional Securities as set
forth in the Securities, interest shall be considered paid on the date due if
such additional Securities are issued on that date.
The Corporation shall pay interest on overdue principal (including
any redemption price) at the rate borne by the Securities plus 1% per annum, and
it shall pay interest on overdue installments of interest at the same rate to
the extent lawful.
SECTION 5.02 SEC Reports. The Corporation shall file with the
Trustee within 15 days after it files them with the SEC copies of the annual
report and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Corporation is required to file with the SEC pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934. In the event the
Corporation is at any time no longer subject to the reporting requirements of
Section 13 or 15(d) of the Securities and Exchange Act of 1934, it shall
continue to file with the SEC and provide the Trustee with reports containing
substantially the same information as would have been required to be filed with
the SEC with respect to financial statements, management's discussion and
analysis and a discussion of significant changes in the business and financial
condition of the Corporation had the Corporation continued to have been subject
to such reporting requirements. In such event, such reports shall be provided at
the times the Corporation would have been required to provide reports had it
continued to have been subject to such reporting requirements. Subsequent to
qualification of the Indenture under the TIA, the Corporation also shall comply
with the other provisions of TIA Section 314(a).
SECTION 5.03 Limitation on Indebtedness. (a) The Corporation shall
not, and shall not permit any of its Restricted Subsidiaries to, issue, assume,
guarantee, incur or otherwise become liable for (collectively, "Incur") any
Indebtedness; provided, however, that: (i) the Corporation may Incur
Indebtedness which is expressly subordinate and junior in right of payment to
the Notes; and (ii) the Corporation and its Restricted Subsidiaries may Incur
Indebtedness if, on the date of Incurrence, the Consolidated Coverage Ratio
would be at least equal to 3.00 to 1.00.
(b) Notwithstanding the foregoing paragraph (a), the Corporation and
its Restricted Subsidiaries may Incur the following Indebtedness:
25
(i) Indebtedness of the Corporation represented by the
Securities;
(ii) Existing Indebtedness;
(iii) Indebtedness owed by any Restricted Subsidiary to the
Corporation or to another Restricted Subsidiary, or owed by the Corporation
to any Restricted Subsidiary; provided, however, that any such Indebtedness
shall be at all times held by a Person which is either the Corporation or a
Restricted Subsidiary of the Corporation;
(iv) Indebtedness of the Corporation or any Restricted
Subsidiary arising with respect to Interest Rate Agreement Obligations and
Currency Agreement Obligations Incurred for the purpose of fixing or hedging
interest rate risk or currency risk;
(v) Indebtedness represented by performance, completion,
guarantee, surety and similar bonds provided by the Corporation or any
Restricted Subsidiary in the ordinary course of business;
(vi) Indebtedness Incurred by the Corporation or any of its
Restricted Subsidiaries constituting reimbursement obligations with respect
to letters of credit or other instruments issued in the ordinary course of
business, including without limitation letters of credit in respect of
workmen's compensation claims or self-insurance or securing obligations of
the Corporation or any Restricted Subsidiary under operating leases;
provided that upon drawing of such letters of credit or other instrument
such drawings are reimbursed within 30 days following demand for
reimbursements;
(vii) Indebtedness Incurred in connection with or given in
exchange for the renewal, extension, modification, amendment, refunding,
defeasance, refinancing or replacement (a "refinancing") of any of the
Securities or any Existing Indebtedness or any Indebtedness issued after the
Issue Date and not Incurred in violation of the Indenture ("Refinancing
Indebtedness"); provided, however, that (a) the principal amount of such
Refinancing Indebtedness shall not exceed the principal amount (or accreted
amount, if less) of the Indebtedness so refinanced at the time outstanding
(or obtainable under any outstanding revolving credit or similar agreement)
(plus the premiums paid in connection therewith and the reasonable expenses
incurred in connection therewith), provided further, that in the case of a
refinancing of Indebtedness under a revolving credit or similar agreement,
if the agreement has been terminated prior to the date of such refinancing
and all Indebtedness thereunder been repaid, the amount of such Refinancing
Indebtedness shall not exceed the maximum amount obtainable under such
agreement at the time of termination thereof; (b) with respect to
Subordinated Indebtedness being refinanced, the Stated Maturity of the
Refinancing Indebtedness shall be not earlier than the Stated Maturity of
the Indebtedness being refinanced, and such Refinancing Indebtedness shall
have an Average Life at the time such Refinancing Indebtedness is incurred
that is equal to or greater than the remaining Average Life of the
Indebtedness being Refinanced; (c) with respect to Subordinated Indebtedness
of the Corporation being refinanced, such Refinancing Indebtedness shall
rank no more senior than, and shall be at
26
least as subordinated in right of payment to the Securities as the
Indebtedness being refinanced; and (d) the obligor on such Refinancing
Indebtedness shall be the obligor on the Indebtedness being refinanced or
the Corporation or another Restricted Subsidiary;
(viii)Indebtedness of the Corporation or any Restricted
Subsidiary (a) representing Capital Lease Obligations and (b) in respect of
Purchase Money Obligations for property acquired in the ordinary course of
business, which taken together do not exceed $3 million in aggregate amount
at any time outstanding;
(ix) Indebtedness of Foreign Subsidiaries of the Corporation
not to exceed a principal amount outstanding at any time of $5 million in
the aggregate for all Foreign Subsidiaries; and
(x) Guarantees by the Corporation or any Restricted
Subsidiary of Indebtedness of the Corporation or any Restricted Subsidiary
that was permitted to be Incurred pursuant to another provision of this
covenant;
(xi) Indebtedness of a Restricted Subsidiary engaged in
providing lease or similar financing to customers of the Corporation or its
Restricted Subsidiaries, not exceeding 7.5% of Consolidated Total Assets;
(xii) Indebtedness of the Corporation or any Restricted
Subsidiary Incurred pursuant to the Hillside Agreement, including without
limitation any Guarantee of such Indebtedness Incurred pursuant to such
Agreement; and
(xiii)Indebtedness of the Corporation or any Restricted
Subsidiary in addition to that described in clauses (i) through (xii) above,
and any refinancings of such Indebtedness, so long as the aggregate
principal amount of all such Indebtedness Incurred pursuant to this clause
(xii) does not exceed at any time outstanding $15 million plus 75% of the
amount by which accounts receivable (net of reserves) of the Corporation and
its Restricted Subsidiaries (as shown in the Corporation's most recent
consolidated balance sheet) exceeds $15 million.
Any Indebtedness of a Person existing at the time such Person
becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition
or otherwise; an "Acquired Person") shall be deemed to be Incurred by such
Restricted Subsidiary at the time it becomes a Restricted Subsidiary.
SECTION 5.04 Limitation on Restricted Payments. The Corporation will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
make any Restricted Payment (including any Restricted Investment), unless at the
time of and immediately after giving effect to the proposed Restricted Payment
(with the value of any such Restricted Payment, if other than cash, to be
determined reasonably and in good faith by the Board of Directors of the
Corporation), (i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof, (ii) the Corporation could
Incur at least $1.00 of additional Indebtedness pursuant to the first paragraph
under Section 5.03 and (iii) the aggregate amount of all Restricted Payments
made after the Issue Date shall not exceed the sum of (a) an amount equal to 50%
of the Corporation's aggregate cumulative Consolidated Net Income accrued on a
27
cumulative basis during the period (treated as one accounting period) beginning
on January 1, 1998 and ending on the last day of the fiscal quarter of the
Corporation immediately preceding the date of such proposed Restricted Payment
(or, if such aggregate cumulative Consolidated Net Income for such period shall
be a deficit, minus 100% of such deficit), plus (b) (x) the aggregate amount of
all Net Proceeds received since the Issue Date by the Corporation from the
issuance and sale (other than to a Restricted Subsidiary) of Capital Stock
(other than Disqualified Stock), and (y) an amount equal to the amount (as shown
on the Corporation's most recent consolidated balance sheet, prepared in
accordance with GAAP) of all Indebtedness or Disqualified Stock that, after the
Issue Date, is converted into or exchanged for Capital Stock of the Corporation
(other than Disqualified Stock) (less the amount of any cash or property
distributed by the Corporation upon such conversion or exchange), plus (c) the
amount of the net reduction in Investments by the Corporation or its Restricted
Subsidiaries in Unrestricted Subsidiaries resulting from (x) the payment of
dividends or the repayment in cash of the principal of loans or the net proceeds
from the sale of the Capital Stock or assets of such Unrestricted Subsidiaries
or other cash return on such Investment, in each case to the extent received by
the Corporation or any Restricted Subsidiary of the Corporation, (y) the release
or extinguishment of any guarantee of Indebtedness of any Unrestricted
Subsidiary, and (z) the redesignation of Unrestricted Subsidiaries as Restricted
Subsidiaries of the Corporation (valued as provided in the definition of
"Investment"), such aggregate amount of the net reduction in Investments not to
exceed the amount of Restricted Investments previously made by the Corporation
or any Restricted Subsidiary of the Corporation in such Unrestricted
Subsidiaries, which amount was included in the calculation of the amount of
Restricted Payments. For purposes of the foregoing clause (c), the Corporation
shall be deemed to have made a Restricted Investment under the Indenture in an
amount equal to any cash contribution made or subscribed for by the Corporation
on or immediately prior to the Issue Date to one or more Unrestricted
Subsidiaries.
In addition, so long as there is no Default or Event of Default
continuing, the following payments and other actions shall be expressly
permitted notwithstanding anything contained in the covenant described above
(collectively, "Permitted Payments"):
(i) the payment of any dividend within 60 days after the
date of declaration thereof, if at such declaration date such payment would
have been permitted under the Indenture and such payment shall be deemed to
have been paid on such date of declaration for purposes of clause (iii) of
the preceding paragraph;
(ii) the redemption, repurchase, retirement or other
acquisition of any Capital Stock or any Indebtedness of the Corporation that
is subordinated in right of payment to the Notes in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a
Restricted Subsidiary) of Capital Stock of the Corporation (other than any
Disqualified Stock); (iii) any purchase or defeasance of Subordinated
Indebtedness to the extent required upon a Change of Control or Asset Sale
(as defined herein) by this Indenture or other agreement or instrument
pursuant to which such Subordinated Indebtedness was issued, but only if the
Corporation (x) in the case of a Change of Control, has complied with its
obligations under Section 5.10 or (y) in the case of an
28
Asset Sale has applied the Net Available Cash from such Asset Sale in
accordance with the provisions of Section 5.05 of this Indenture;
(iv) any Restricted Investments made with the proceeds of
the substantially concurrent sale of Capital Stock (other than Disqualified
Stock);
(v) Restricted Investments in any Unrestricted Subsidiary
engaged in providing lease or similar financing to customers of the
Corporation and its Restricted Subsidiaries, in an amount such that the sum
of the aggregate amount of Restricted Investments made pursuant to this
clause (v) after the Issue Date and outstanding on the date of determination
does not exceed the greater of $5 million or 7.5% of Consolidated Total
Assets;
(vi) the repurchase of Capital Stock of the Corporation
(including options, warrants or other rights to acquire such Capital Stock)
from directors, officers or employees (or their nominees) of the Corporation
or its Subsidiaries pursuant to the terms of an employee benefit plan or
employment agreement or similar arrangement; provided that an aggregate
amount of all such repurchases (net of repayments or cancellations of
indebtedness as a result of such repurchases) shall not exceed $1 million in
any fiscal year;
(vii) the redemption or repurchase of the Corporation's
Noncumulative Redeemable Preferred Stock at a price not to exceed 100% of
liquidation value; provided, however, that the aggregate amount of all
payments pursuant to this clause (vii) shall not exceed 100% of cumulative
Consolidated GAAP Net Income accrued during the period from January 1, 1998
to the date of payment (treated as one accounting period); and
(viii)Restricted Payments (other than a dividend or other
distribution declared on any Capital Stock of the Corporation or a payment
to purchase, redeem or otherwise acquire or retire for value any Capital
Stock of the Corporation) not to exceed $1 million in the aggregate.
For purposes of clause (iii) of the first paragraph of this
covenant, Permitted Payments made pursuant to clauses (i), (vi) and (vii) of the
immediately preceding paragraph shall be included (without duplication) as
Restricted Payments made since the Issue Date.
SECTION 5.05 Limitation on Asset Sales. (a) The Corporation will
not, and will not permit any Restricted Subsidiary to, make any Asset Sale
unless (i) the Corporation or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or other property sold or disposed of in the Asset
Sale and (ii) at least 75% of such consideration consists of either cash or Cash
Equivalents, provided, however, that, at the option of the Corporation, clause
(ii) shall not be applicable to Asset Sales (or portions of Asset Sales) to the
extent the Corporation shall apply cash and Cash Equivalents available from
other sources to make any required Asset Sale Offer as if 75% of such
consideration had consisted of cash and Cash Equivalents.
29
For the purposes of this covenant, the following will be deemed to
be cash: (x) the assumption by the transferee of Indebtedness of the Corporation
or Indebtedness of any Restricted Subsidiary of the Corporation and the release
of the Corporation or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Sale (in which case the Corporation
shall, without further action, be deemed to have applied such assumed
Indebtedness in accordance with clause (A) of the preceding paragraph) and (y)
securities received by the Corporation or any Restricted Subsidiary of the
Corporation from the transferee that are promptly (and in any event within 120
days) converted by the Corporation or such Restricted Subsidiary into cash.
(b) Subject to the provisions of Article 12 hereof, within 365 days
after any Asset Sale, the Corporation may elect to apply the Net Available Cash
from such Asset Sale to (i) permanently reduce or redeem any Senior Debt of the
Corporation or a Restricted Subsidiary and/or (ii) make an Investment in, or
acquire assets and properties that will be used in the business of the
Corporation and its Restricted Subsidiaries, and (iii) any balance of such Net
Available Cash exceeding $10 million and not applied or invested as provided in
clauses(i) and (ii) within 365 days of such Asset Sale, will be deemed to
constitute "Excess Proceeds" and shall be applied to make an offer to purchase
Securities to the holders of the Securities. Pending the final application of
any such Net Available Cash, the Corporation may temporarily invest such Net
Available Cash in cash or Cash Equivalents.
(c) In the event of an Asset Sale that requires the purchase of
Securities pursuant to clause (b)(iii) above, the Corporation will be required
to purchase Securities tendered pursuant to an offer by the Corporation for the
Securities (the "Offer") at a purchase price of 100% of their principal amount
plus accrued and unpaid interest, if any, to the purchase date in accordance
with the procedures (including prorating in the event of oversubscription) set
forth in Section 5.05(d) below. If the aggregate purchase price of the
Securities tendered pursuant to the Offer is less than the Net Available Cash
allotted to the purchase of the Securities, the Corporation will apply the
remaining Net Available Cash to general corporate purposes not prohibited by
this Indenture. Upon the consummation of any Asset Sale Offer, the amount of
Excess Proceeds shall be deemed to be reset to zero.
(d) (1) Promptly, and in any event within 10 days after the
Corporation becomes obligated to make an offer, the Corporation shall be
obligated to deliver to the Trustee and send, by first-class mail to each
Holder, a written notice stating that the Holder may elect to have his
Securities purchased by the Corporation either in whole or in part (subject to
the prorationing as hereinafter described in the event the Offer is
oversubscribed) in integral multiples of $1,000 of principal amount, at the
applicable purchase price. The notice shall specify a purchase date of not less
than 30 days nor more than 60 days after the date of such notice (the "Purchase
Date") and shall contain such information concerning the business of the
Corporation which the Corporation in good faith believes will enable such
Holders to make an informed decision (which at a minimum will include (1) the
most recently filed Annual report on 10-K (including audited consolidated
financial statements) of the Corporation, the most recent subsequently filed
Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the
Corporation filed subsequent to such Quarterly report, other than Current
Reports describing Asset Sale otherwise described in the offering materials (or
corresponding successor reports), (ii) a description of material developments in
the Corporation's business subsequent to the date of
30
the latest of such reports, and (iii) if material, appropriate pro forma
financial information and all instructions and materials necessary to tender
Securities pursuant to the Offer, together with the information contained in
clause (3).
(2) Not later than the date upon which the written notice
of an Offer is delivered to the Trustee as provided below, the Corporation shall
deliver to the Trustee an Officers' Certificate as to (i) the amount of the
Offer (the "Offer Amount"), (ii) the allocation of the Net Available Cash from
the Asset Sale pursuant to which such Offer is being made and (iii) the
compliance of such allocation with the provisions of Section 5.05(a). On such
date, the Corporation shall also irrevocably deposit with the Trustee or with a
paying agent (or, if the Corporation is acting as its own paying agent,
segregate and hold in trust) in cash or Cash Equivalents maturing on the day
prior to the Purchase Date or on the Purchase Date if funds are immediately
available by open of business an amount equal to the Offer Amount to be held for
payment in accordance with the provisions of this Section. Upon the expiration
of the period for which the Offer remains open (the "Offer Period"), the
Corporation shall deliver to the Trustee or the Paying Agent for cancellation
the Securities or portions thereof which have been properly tendered to and are
to be accepted by the Corporation. The Trustee shall, on the Purchase date, mail
or deliver payment to each tendering Holder in the amount of the purchase price.
In the event that the aggregate purchase price of the Securities delivered by
the Corporation to the Trustee is less than the Offer Amount, the Trustee shall
deliver the excess to the Corporation immediately after the expiration of the
Offer Period for application in accordance with this Section.
(3) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Corporation at the address specified in the notice at least three Business
Days prior to the Purchase Date. Holders will be entitled to withdraw their
election if the Trustee or the Corporation receives not later than one Business
day prior to the Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Security which was delivered for purchase by the Holder and a statement that
such Holder is withdrawing his election to have such Security purchased. If at
the expiration of the Offer Period the aggregate principal amount of Securities
surrendered by Holders exceeds the Offer Amount, the Corporation shall select
the Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Corporation so that only Securities in denominations
of $1,000 or integral multiples thereof, shall be purchased). Holders whose
Securities are purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered.
(4) At the time the Corporation delivers Securities to the
Trustee which are to be accepted for the purchase, the Corporation will also
deliver an Officers' Certificate stating that such Securities are to accepted by
the Corporation pursuant to and in accordance with the terms of this Section. A
Security shall be deemed to have been accepted for purchase at the time the
Trustee, directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
(e) The Corporation will comply, to the extent applicable, with the
requirements of Section 14 (e) of the Exchange Act and any other applicable
securities laws or
31
regulations in connection with the repurchase of Securities pursuant to this
Indenture and will not be deemed to have breached its obligations under this
Indenture by virtue thereof.
SECTION 5.06 Limitation on Liens. The Corporation will not, and will
not permit any Restricted Subsidiary to, directly or indirectly, Incur or suffer
to exist any Lien securing any Indebtedness (other than (1) Indebtedness under
this Indenture and Indebtedness described in paragraphs (a)(ii) and (b)(ii),
(vi), (vii)(to the extent the Refinanced Indebtedness was secured by a Lien
permitted by this Indenture), (xi), (xii) and (xiii) of the provisions of
Section 5.03 of this Indenture; and (2) Indebtedness of an Acquired Person
existing at the date such Person became a Restricted Subsidiary, and any
refinancing thereof, provided however, that such Lien is not applicable to any
Person or the properties or assets of any Person, other than the Acquired Person
) on any asset now owned or hereafter acquired unless the Securities are equally
and ratably secured thereby.
SECTION 5.07 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Corporation will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary to (i) pay dividends or make any
other distributions to the Corporation or any other Restricted Subsidiary on its
Capital Stock, or pay any Indebtedness owed to the Corporation or any other
Restricted Subsidiary, make loans or advances to the Corporation or any other
Restricted Subsidiary or (iii) transfer any of its properties or assets to the
Corporation or any other Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of
(1) any agreement or instrument evidencing or governing any Existing
Indebtedness and any refinancings thereof;
(2) applicable law;
(3) any instrument governing Indebtedness or Capital Stock of an
Acquired Person acquired by the Corporation or any of its Restricted
Subsidiaries as in effect at the time of such acquisition or any refinancing
thereof; provided, however, that such restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Acquired
Person;
(4) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices;
(5) Purchase Money Indebtedness for property acquired in the
ordinary course of business that only impose restrictions on the property so
acquired;
(6) an agreement for the sale or disposition of the Capital Stock or
assets of such Restricted Subsidiary; provided, however, that such
restriction is only applicable to such Restricted Subsidiary or assets, as
applicable, and such sale or disposition otherwise is permitted under
Section 5.05 of this Indenture;
32
(7) Refinancing Indebtedness permitted under the Indenture;
provided, however, that the restrictions contained in the agreements
governing such Refinancing Indebtedness are not materially more restrictive
in the aggregate than those contained in the agreements governing the
Indebtedness being refinanced immediately prior to such refinancing;
(8) the Indenture and the Securities; arising or agreed to in the
ordinary course of business, not relating to any Indebtedness, and that do
not, individually or in the aggregate, detract from the value of property or
assets of the Corporation or any Restricted Subsidiary in any manner
material to the Corporation or any Restricted Subsidiary; or
(9) any instrument governing Indebtedness of a Foreign Subsidiary
which is permitted by the terms of the Indenture.
Nothing contained in this Section 5.07 shall prevent the Corporation
or any Restricted Subsidiary from (1) creating, incurring, assuming or suffering
to exist any Liens otherwise permitted in the Section 5.06 covenant or (2)
restricting the sale or other disposition of property or assets of the
Corporation or any of its Restricted Subsidiaries that secure Indebtedness of
the Corporation or any of its Restricted Subsidiaries.
SECTION 5.08 Limitation on Transactions with Affiliates. The
Corporation will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of assets,
property or services) with any Affiliate of the Corporation (other than the
Corporation or a Restricted Subsidiary) unless (1) such transaction or series of
transactions is on terms that are not materially less favorable to the
Corporation or such Restricted Subsidiary, as the case may be, than would be
available in a comparable transaction in arm's-length dealings with an unrelated
third party, and (2) the Corporation delivers to the Trustee, with respect to
any transaction or series of related transactions involving aggregate payments
in excess of $5.0 million, an Officers' Certificate certifying that such
transaction or series of related transactions has been approved by a majority of
the members of the Board of Directors of the Corporation and evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate.
Notwithstanding the foregoing, this covenant will not apply to
(i) employment agreements, compensation or employee benefit
arrangements, stock options or stock purchase plans or agreements with or
for the benefit of any officer, director or employee of the Corporation
entered into in the ordinary course of business and approved by the Board of
Directors of the Corporation (including loans and stock repurchase
arrangements thereunder, customary fringe benefits and including
reimbursement or advancement of out of pocket expenses, loans to officers,
directors and employees in the ordinary course of business, reasonable fees
paid to directors who are not employees of the Corporation, and director's
and officer's liability insurance and indemnification arrangements);
(ii) any transaction entered into by or among the
Corporation or one of its Restricted Subsidiaries with one or more
Restricted Subsidiaries of the Corporation;
33
(iii) the sale, discount or other disposition of accounts
receivable or inventory to one or more Unrestricted Subsidiaries engaged in
financing receivables for the benefit of the Corporation or in providing
lease or similar financing to customers of the Corporation;
(iv) any Restricted Payment not prohibited by the provisions
of Section 5.04 of this Indenture;
(v) transactions permitted by, and complying with, the
provisions of Section 6.01 of this Indenture;
(vi) any sale or issuance of Capital Stock (other than
Disqualified Stock) of the Corporation;
(vii) the grant or performance of registration rights with
respect to securities of the Corporation;
(viii) transactions under and pursuant to the Sherborne
Agreement; and
(ix) transactions in which the Corporation or any of its
Restricted Subsidiaries delivers to the Trustee an opinion from an
independent nationally recognized financial advisor stating that such
transaction is fair to the Corporation or such Restricted Subsidiary from a
financial point of view and meets the requirements of clauses (1) and (2)
above.
SECTION 5.09 Limitation on Designation of Unrestricted Subsidiaries.
The Corporation will not designate any Subsidiary of the Corporation (other than
a newly created Subsidiary in which no Investment in excess of $1,000 has
previously been made) as an "Unrestricted Subsidiary" under the Indenture (a
"Designation") after the Issue Date unless:
(a) no Default shall have occurred and be continued at the time of
or after giving effect to such Designation; and
(b) the Corporation would not be prohibited under the Indenture from
making an Investment at the time of Designation in an amount (the
"Designation Amount") equal to the fair market value of such Restricted
Subsidiary on such date.
In the event of any such Designation, the Corporation shall be
deemed to have made an Investment constituting a Restricted Payment pursuant to
the provisions of Section 5.04 of this Indenture for all purposes of the
Indenture in the Designation Amount. Neither the Corporation nor any Restricted
Subsidiary shall at any time (x) provide a Guarantee of or similar undertaking
(including any undertaking, agreement or instrument evidencing such
Indebtedness)with respect to any Indebtedness of an Unrestricted Subsidiary;
provided that the Corporation and its Restricted Subsidiaries may pledge Capital
Stock or Indebtedness of any Unrestricted Subsidiary on a nonrecourse basis such
that the pledgee has no claim whatsoever against the Corporation other than to
obtain such pledged property or (y) be directly or indirectly liable for any
Indebtedness of any Unrestricted Subsidiary, except to the extent permitted
under the provisions of Section 5.04 of this Indenture.
34
The Corporation may not revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation"), unless:
(c) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(d) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation shall be deemed to have
been incurred at such time and shall have been permitted to be incurred for
all purposes of the Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions delivered to the Trustee certifying compliance with the foregoing
provisions.
SECTION 5.10 Change of Control. (a) Upon a Change of Control, each
Holder shall have the right to require that the Corporation repurchase such
Holder's Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on a record date to receive interest
on the relevant payment date), in accordance with the terms contemplated in
Section 5.10(b).
(b) Within 30 days following any Change of Control, the Corporation
shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Corporation to purchase such Holder's Securities at
a purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of Holders of record on a record date to receive interest on the
relevant payment date);
(2) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(3) the procedures determined by the Corporation, consistent with
this Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Note purchased will be required to
surrender the Security, with an appropriate form duly completed, to the
Corporation at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Corporation receives not later than three Business Days
prior to the purchase date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Security which
was delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities to be purchased by the
Corporation under this Section shall be delivered to the Trustee for
cancellation, and the Corporation shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
35
(e) The Corporation shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Corporation shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 5.11 Compliance Certificate; Notice of Defaults. The
Corporation shall deliver to the Trustee within 120 days after the end of each
fiscal year of the Corporation an Officers' Certificate stating that in the
course of the performance by the signers of such Certificate of their duties as
Officers of the Corporation they would normally have knowledge of any Default by
the Corporation and whether or not the signers know of any Default or Event of
Default that occurred during such period. If they do know of such a Default or
Event of Default, the certificate shall describe the Default or Event of
Default, its status and what action the Corporation is taking or proposes to
take with respect thereto.
Promptly after an Officer of the Corporation obtains knowledge of a
Default or Event of Default under this Indenture, the Corporation will deliver
to the Trustee an Officers' Certificate specifying such Default or Event of
Default and what action the Corporation is taking or proposes to take with
respect thereto.
SECTION 5.12 Further Instruments and Acts. The Corporation will,
upon request of the Trustee, execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
ARTICLE 6
Successor Corporation
---------------------
SECTION 6.01 When Corporation May Merge or Transfer Assets. The
Corporation shall not consolidate with or merge with or into, or convey or
transfer or lease in one transaction or a series of related transactions, all or
substantially all of its assets to, another Person unless:
(i) the resulting, surviving or transferee Person (the
"Successor Corporation") shall be a Person organized and existing under the
laws of the United States or any State thereof or the District of Columbia,
and (if not the Corporation) shall assume by supplemental indenture all the
obligations of the Corporation under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction, no
Default shall have happened and be continuing;
(iii) immediately after giving effect to such transaction,
the Corporation would be able to incur an additional $1.00 of Indebtedness
pursuant to Section 5.03(a); and
36
(iv) the Corporation shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture comply
with this Indenture. The Trustee shall be entitled to rely conclusively upon
such Officers' Certificate and Opinion of Counsel.
The resulting, surviving or transferee Person shall be the successor
Corporation hereunder, and, in the case of any such transfer, the predecessor
Corporation shall be released from its obligations under this Indenture.
Notwithstanding the foregoing clauses (ii), (iii) and (iv), any
Restricted Subsidiary may consolidate with, merge into or transfer all or part
of its property and assets to the Corporation.
ARTICLE 7
Defaults and Remedies
---------------------
SECTION 7.01 Events of Default. An "Event of Default" occurs if:
(1) the Corporation defaults in the payment of interest on any
Security when the same becomes due and payable, and such default continues
for a period of 30 days;
(2) the Corporation (i) defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated Maturity,
upon redemption, upon declaration or otherwise; or (ii) fails to redeem or
purchase any securities when required pursuant to the Indenture or the
Securities;
(3) the Corporation fails to observe or perform any of its covenants
or agreements set forth in Sections 5.02, 5.03, 5.04, 5.05, 5.06, 5.07,
5.08, 5.09, 5.10, 5.11 or 5.12 (other than the failure to purchase
Securities when required under Section 5.05 or Section 5.10) and 6.01 hereof
and in the Security Agreement and the Default continues for a period of 30
days after the notice specified below;
(4) the Corporation fails to receive the Minimum Available Cash Flow
during the three-year period ending December 31, 2004;
(5) the Corporation fails to observe or perform any of its covenants
or agreements set forth in the Securities or in this Indenture or the
Security Agreement other than the covenants and agreements specified in
clause (1), (2) or (3) above and the Default continues for a period of 60
days after the notice specified below;
(6) a default or event of default (as such term is defined in the
instrument or agreement under which any Indebtedness is issued) occurs under
any instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness of the Corporation or any Significant
Subsidiary (other than Indebtedness of a Restricted Subsidiary incurred
pursuant to Section 5.03) and the holders of such Indebtedness have
accelerated such Indebtedness or any default occurs in the payment of the
principal amount of such Indebtedness at final maturity if the total of all
such
37
Indebtedness which has been so accelerated and all such Indebtedness which
is overdue shall exceed $5,000,000 or its foreign currency equivalent at the
time, and there shall have been a failure to obtain rescission or annulment
of all such accelerations or to pay in full the amount in default (together
with any applicable interest) by the later of the expiration of any
applicable grace period or 10 days after the notice specified below;
(7) any judgment or decree for the payment of money in excess of
$5.0 million or its foreign currency equivalent at the time is entered
against the Corporation or any Significant Subsidiary, remains outstanding
for a period of 60 days after the entry of such judgment or decree and is
not discharged, waived or the execution thereof stayed within 10 days after
the notice specified below;
(8) the Corporation or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in
an involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency; or
(9) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Corporation or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Corporation or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Corporation or
any Significant Subsidiary;
or any similar relief is granted under any foreign laws; and the order or decree
remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (5), (6) or (7) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the
Securities notify the Corporation of the Default and the Corporation does not
cure such Default within the time specified after receipt of
38
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Corporation shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (1), (2), (3), (4), (5), (6) or (7) hereof, its
status and what action the Corporation is taking or proposes to take with
respect thereto.
The Trustee shall not be charged with knowledge of any Default or
Event of Default unless written notice thereof shall have been given to a Trust
Officer at the Corporate Trust Office of the Trustee by the Corporation or any
other Person.
SECTION 7.02 Acceleration. If an Event of Default (other than an
Event of Default specified in Section 7.01(8) or (9) with respect to the
Corporation) occurs and is continuing, the Trustee by notice to the Corporation,
or the Holders of at least 25% in principal amount of the Securities by notice
to the Corporation and the Trustee may declare the principal of and accrued
interest on all the Securities to be due and payable. Upon such a declaration,
such principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 7.01(8) or (9) with respect to the Corporation
occurs, the principal of and all accrued interest on the Securities shall ipso
facto become immediately due and payable without any declaration or other action
on the part of the Trustee or any Securityholders. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default
or Event of Default or impair any right consequent thereto.
SECTION 7.03 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture or of the Security Agreement.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 7.04 Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default or Event of Default and its consequences except (i) a Default
in the payment of the principal or interest on a Security or (ii) a Default in
respect of a provision that under Section 10.02 cannot be amended without the
consent of the Securityholders affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any consequent right.
39
SECTION 7.05 Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture or, subject to
Section 8.01, that the Trustee determines is unduly prejudicial to the rights of
other Securityholders or would involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction. Prior to taking any
action hereunder, the Trustee shall be entitled to indemnification satisfactory
to it in its sole discretion against all losses and expenses caused by taking or
not taking such action.
SECTION 7.06 Limitation on Suits. A Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer and, if requested, provide to the
Trustee reasonable security or indemnity against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, provision of
security or indemnity; and
(5) the Trustee has not received from the Holders of a majority of
principal amount of the Securities a direction inconsistent with the request
during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 7.07 Rights of Holders To Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 7.08 Collection Suit by Trustee. If an Event of Default in
payment of interest or principal specified in Section 7.01(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Corporation for the whole amount of principal
and interest remaining unpaid and the amounts provided for in Section 8.07.
SECTION 7.09 Trustee May File Proofs of Claim. Subject to Section
7.05, the Trustee may file such proofs of claim and other papers or documents
and take other action including participating as a member (voting or otherwise)
of any committee of creditors
40
appointed in the matter as may be necessary or advisable in order to have the
claims of the Trustee and the Securityholders allowed in any judicial
proceedings relative to the Corporation, its creditors or its property and,
unless prohibited by law or applicable regulations, may vote on behalf of the
Holders in any election of a trustee in bankruptcy or other person performing
similar functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 8.07.
SECTION 7.10 Priorities. If the Trustee collects any money pursuant
to this Article, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 8.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without
preference or priority of any kind, according to the amounts due
and payable on the Securities for principal and interest,
respectively; and
THIRD: to the Corporation.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section. At least 15 days before such record
date, the Corporation shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION 7.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 7.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
SECTION 7.12 Waiver of Stay or Extension Laws. The Corporation (to
the extent it may lawfully do so) shall not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the
Corporation (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law; and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
41
ARTICLE 8
Trustee
-------
SECTION 8.01 Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise its rights and powers and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use in the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default known to
the Trustee:
(1) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others and
no implied covenants or obligations shall be read into this Indenture; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(c) The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction in
writing received by it pursuant to Section 7.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (e), (f) and (h) of this Section
8.01 and Section 8.02.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree with the Corporation.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) The Trustee shall not be deemed to know of any Default (other
than those under Sections 7.01 and 7.02) or other fact or circumstances upon the
occurrence of which it may
42
be require to take action hereunder unless and until one of its Trust Officers
receives written notice of or has actual knowledge thereof.
(h) No provision of this Indenture or the Security Agreement shall
require the Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder or in the exercise
of any rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risks or liabilities
is not reasonably assured to it.
(i) Every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee shall be subject
to the provisions of this Section and to the applicable provisions of the TIA.
SECTION 8.02 Rights of Trustee. (a) The Trustee may conclusively
rely on, and shall be protected from acting or refraining from acting based
upon, any document believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall comply with the
provisions of Section 13.05. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on the Officers' Certificate or
Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers provided that the Trustee's conduct does not constitute negligence or bad
faith.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer.
SECTION 8.03 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Corporation or its Affiliates with the same
rights it would have if it were not Trustee. However, if the Trustee acquires
any conflicting interest it must eliminate such conflict within 90 days, apply
to the Commission for permission to continue as Trustee or resign. Any Paying
Agent, Registrar or co-registrar may do the same with like rights. However, the
Trustee must comply with Sections 8.10 and 8.11.
SECTION 8.04 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the
Corporation's use of the proceeds from the Securities, and it shall not be
responsible for any statement of the Corporation in this Indenture, pursuant to
this Indenture or any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication.
43
SECTION 8.05 Notice of Default. If a Default or an Event of Default
occurs and is continuing and the Trustee has knowledge of such event, the
Trustee shall mail to each Securityholder notice of the Default or Event of
Default within 90 days after the occurrence thereof, unless such Default or
Event of Default has been cured. Except in the case of a Default in payment of
principal of or interest on any Security, the Trustee may withhold the notice if
and as long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 8.06 Reports by Trustee to Holders. Within 60 days after
each May 15 beginning with the May 15 following the date of this Indenture, the
Trustee if required by TIA Section 313(a) shall mail to each Securityholder a
brief report dated as of May 15 that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which the Securities are
listed. The Corporation agrees promptly to notify the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 8.07 Compensation and Indemnity. The Corporation shall pay
to the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Corporation shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents and counsel. The Corporation shall indemnify the Trustee
against any and all loss, liability or expense (including attorneys' fees)
incurred by it without negligence or bad faith on its part in connection with
the administration of this trust and the performance of its duties hereunder.
The Trustee shall promptly notify the Corporation promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Corporation
shall not relieve the Corporation of its obligations hereunder. The Corporation
shall defend the claim and the Trustee may have separate counsel and the
Corporation shall pay the fees and expenses of such counsel. The Corporation
need not reimburse any expense or indemnify against any loss or liability
incurred by the Trustee through negligence or bad faith.
To secure the Corporation's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal of and
interest on particular Securities. Such Lien shall survive the satisfaction and
discharge of this Indenture.
The Corporation's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of an Event of Default specified in subsection 7.01(6) or (7),
the expenses are intended to constitute expenses of administration under the
Bankruptcy Law.
SECTION 8.08 Replacement of Trustee. The Trustee may resign at any
time by so notifying the Corporation. The Holders of a majority in principal
amount of the Securities
44
may remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee. The Corporation may remove the Trustee if:
(1) the Trustee fails to comply with Section 8.10;
(2) the Trustee is adjudged a bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring trustee) the Corporation shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Corporation. Immediately after
receiving such acceptance, the retiring Trustee shall transfer all property held
by it as Trustee to the successor Trustee, subject to the lien provided for in
Section 8.07, the resignation or removal of the retiring Trustee shall then
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Corporation or
the Holders of a majority in principal amount of the Securities may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 8.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
SECTION 8.09 Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
45
SECTION 8.10 Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a)(1). The Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(2) any indenture or indentures
under which other securities or certificates of interest or participation in
other securities of the Corporation are outstanding if the requirement for such
exclusions set forth in TIA Section 310(b)(1) are met.
SECTION 8.11 Preferential Collection of Claims Against Corporation.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 9
Satisfaction and Discharge of Indenture
---------------------------------------
SECTION 9.01 Discharge of Liability on Securities; Defeasance. (a)
When (i) the Corporation delivers to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.10) for cancellation or
(ii) all outstanding Securities have become due and payable and the Corporation
irrevocably deposits with the Trustee funds sufficient to pay at maturity or
upon redemption all outstanding Securities including interest thereon if any
(other than Securities replaced pursuant to Section 2.10), and if in either case
the Corporation pays all other sums payable hereunder by the Corporation, then
this Indenture shall, subject to Sections 9.01(c) and 9.06, cease to be of
further effect. Upon satisfaction of the conditions set forth herein and upon
the Corporation's request (and at the Corporation's expense), the Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Corporation accompanied by an Officers' Certificate and an Opinion of Counsel
and at the cost and expense of the Corporation.
(b) Subject to Sections 9.01(c), 9.02 and 9.06, the Corporation at
any time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
5.02 through 5.12 and Section 6.01(a)(iii) and the operation of Sections
7.01(3), 7.01(4), 7.01(5), 7.01(6) and 7.01(7)(with respect to Significant
Subsidiaries) ("covenant defeasance option"). The Corporation may exercise its
defeasance option notwithstanding its prior exercise of its covenant defeasance
option.
If the Corporation exercises its legal defeasance option, the
Securities may not be accelerated because of an Event of Default. If the
Corporation exercises its covenant defeasance option, the Securities, may not be
accelerated because of an Event of Default specified in Sections 7.01(3), (4),
(5), (6) and (7) (with respect to Significant Subsidiaries) or because of the
failure of the Corporation to comply with Section 6.01(a)(iii).
Before or after a deposit, the Corporation may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 4.
46
Upon satisfaction of the conditions set forth herein and upon
request of the Corporation, the Trustee shall acknowledge in writing the
discharge of those obligations that the Corporation terminates.
(c) Notwithstanding clauses (a) and (b) above, the Corporation's
obligations in Sections 2.03, 2.04, 2.05, 2.08, 2.09, 8.07, 8.08, 9.04, 9.05 and
9.06 shall survive until the Securities have been paid in full. Thereafter the
Corporation's obligations in Sections 8.07, 9.04 and 9.05 shall survive.
SECTION 9.02 Conditions to Defeasance. The Corporation may exercise
its legal defeasance option or its covenant defeasance option only if:
(1) the Corporation irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal and
interest on the Securities to maturity or redemption, as the case may be;
(2) the Corporation delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any deposited
money without investment will provide cash at such times and in such amounts
(but not more than such amounts) as will be sufficient to pay principal and
interest when due on all the Securities to maturity or redemption, as the
case may be;
(3) 123 days pass after the deposit is made and during the 123 day
period no Event of Default specified in Section 7.01(7) or (8) (without
giving effect to the period of time referred to therein) occurs which is
continuing at the end of the period;
(4) no Default or Event of Default has occurred and is continuing on
the date of such deposit and after giving effect thereto and is not
prohibited by Article 12;
(5) the Corporation delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment Corporation under the Investment
Corporation Act of 1940;
(6) In the case of the legal defeasance option, the Corporation
shall have delivered to the Trustee an Opinion of Counsel stating that (i)
the Corporation has received from, or there has been published by, the
Internal revenue Service a ruling, or (ii) since the date of this Indenture
there has been a change in the applicable Federal income tax law, in either
case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Security holders will not recognize income, gain or loss
for Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance had not
occurred;
(7) in the case of the covenant defeasance option, the Corporation
shall have delivered to the Trustee an opinion of Counsel to the effect that
the Securityholders will not recognize income, gain or loss for Federal
income tax purposes as a result of such
47
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred; and
(8) the Corporation delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article 9
have been complied with.
SECTION 9.03 Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to Section
9.02. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities. Money and securities
so held in trust are not subject to Article 12.
SECTION 9.04 Repayment to Corporation. The Trustee and the Paying
Agent shall promptly turn over to the Corporation upon request any excess money
or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Corporation upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years and, thereafter, Securityholders entitled to the money must look to the
Corporation for payment as general creditors.
SECTION 9.05 Indemnity for Government Obligations. The Corporation
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
SECTION 9.06 Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with Article 9
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Corporation's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Article 9 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with this Article 9; provided, however, that if the Corporation has made any
payment of interest on or principal of any Securities because of the
reinstatement of its obligations, the Corporation shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money
or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 10
Amendments, Supplements and Waivers
-----------------------------------
SECTION 10.01 Without Consent of Holders. The Corporation and the
Trustee may amend or supplement this Indenture or the Securities or the Security
Agreement without notice to or consent of any Securityholder:
48
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 6;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(4) to add to the covenants of the Corporation for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Corporation;
(5) to comply with any requirements of the SEC in connection with
the qualification of the Indenture under the TIA; or
(6) to make any change that does not materially adversely affect the
legal rights of any Securityholder under this Indenture.
Upon the Corporation's request, after receipt by the Trustee of a
resolution of the Board of Directors authorizing the execution of any amended or
supplemental indenture, the documents described in Section 10.06 hereof, the
Trustee shall join with the Corporation in the execution of any amended or
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
contained in any such amended or supplemental indenture, but the Trustee shall
not be obligated to enter into an amended or supplemental indenture that affects
its own rights, duties or immunities under this Indenture or otherwise.
SECTION 10.02 With Consent of Holders. The Corporation may amend or
supplement this Indenture or the Securities or the Security Agreement without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities. The Holders of a
majority in principal amount of the Securities may waive any past default or
compliance by the Corporation with any provision of this Indenture or the
Securities or the Security Agreement without notice to any Securityholder.
However, without the consent of each Securityholder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 7.04, may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the fixed maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security
or change the time whereby any Security may be redeemed in accordance with
Article 4;
(5) make any Security payable in money other than that stated in the
Security;
(6) make any change in Section 7.04 or 7.07 or this Section; or
49
(7) waive any Default in the payment of principal of or interest on
any Security.
Upon the Corporation's request and after receipt by the Trustee of a
resolution of the Board of Directors authorizing the execution of any
supplemental indenture, evidence of the Holders' consent, and the documents
described in Section 10.06 hereof, the Trustee shall join with the Corporation
in the execution of any amended or supplemental indenture unless such amended or
supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but not be obligated to, enter into such amended or supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section 10.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment under this Section becomes effective, the
Corporation shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment otherwise
validly adopted under this Section 10.02.
SECTION 10.03 Compliance with Trust Indenture Act. Every amendment
to or supplement of this Indenture or the Securities shall comply with the TIA
as then in effect.
SECTION 10.04 Revocation and Effect of Consents. A consent to an
amendment, supplement or waiver by a Holder of a Security shall bind the Holder
and every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent is not made on the Security. However, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Security or portion of the
Security if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective. After an amendment,
supplement or waiver becomes effective in accordance with Section 10.01 or
10.02, it shall bind every Securityholder.
The Corporation may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 10.05 Notation on or Exchange of Securities. If an
amendment, supplement or waiver changes the terms of a Security, the Trustee may
require the Holder of the Security to deliver it to the Trustee. The Trustee may
place an appropriate notation on the Security regarding the changed terms and
return it to the Holder. Alternatively, if the
50
Corporation or the Trustee so determines, the Corporation in exchange for the
Security shall issue and the Trustee shall authenticate a new Security that
reflects the changed terms.
SECTION 10.06 Trustee To Sign Amendments. The Trustee shall sign any
amendment, supplement or waiver authorized pursuant to this Article if the
amendment, supplement or waiver does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may but need
not sign it. In signing such amendment, supplement or waiver the Trustee shall
be entitled to receive an indemnity satisfactory to it and to receive, and
(subject to Section 8.01) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that such amendment, supplement or
waiver is authorized or permitted by this Indenture.
SECTION 10.07 Payment for Consent. Neither the Corporation nor any
Affiliate of the Corporation shall, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or otherwise, to any
Holder for or as an inducement to any consent, waiver or amendment of any of the
terms or provisions of this Indenture or the Securities unless such
consideration is offered to be paid to all Holders that so consent, waive or
agree to amend in the time frame set forth in solicitation documents relating to
such consent, waiver or agreement.
ARTICLE 11
Concerning the Collateral
-------------------------
SECTION 11.01 Security Agreement. To secure the due and punctual
payment of the principal of and interest on the Securities when and as the same
shall be due and payable, whether on a payment date, at maturity, by
acceleration or otherwise, and interest on the overdue principal of and interest
(to the extent permitted by law), if any, on the Securities and performance of
all other obligations of the Corporation to the Holders or the Trustee under
this Indenture and the Securities, according to the terms hereunder or
thereunder, the Corporation has simultaneously with the execution of this
Indenture granted a security interest to the Trustee, as Collateral Agent, of
its right, title and interest in and to the Collateral pursuant to the Security
Agreement in the manner and to the extent therein provided. The Trustee is
hereby authorized ands directed to execute and deliver such Security Agreement
in the form presented to it. Each Holder, by accepting a Security, authorizes
the Trustee to enter into and perform the Security Agreement, and agrees to all
of the terms and provisions of the Security Agreement, as the same may be in
effect or may be amended from time to time pursuant to its terms and the terms
hereof. The Corporation will execute, acknowledge and deliver to the Trustee, as
the Collateral Agent, such further assignments, transfers, assurances or other
instruments as the Trustee may require or request, and will do or cause to be
done all such acts and things as may be necessary or proper, or as may be
reasonably required by the Trustee, as the Collateral Agent, including the
furnishing of an Opinion of Counsel, to assure and confirm to the Trustee, as
the Collateral Agent the security interest in the Collateral contemplated
hereby, by the Security Agreement, or by any part thereof, as from time to time
constituted, so as to render the same available for the security and benefit of
this Indenture and of the Securities secured hereby, according to the intent and
purposes herein expressed.
51
SECTION 11.02 Payment of Expenses. On demand of the Trustee, the
Corporation forthwith shall pay or satisfactorily provide for payment of
reasonable compensation, reimbursement of expenses and indemnification of the
Trustee as Collateral Agent, and all such sums shall be a lien upon the
Collateral and shall be secured thereby.
SECTION 11.03 Opinions as to Recording, etc. If this Indenture is
being qualified under the TIA:
(a) the Corporation shall furnish to the Trustee, promptly after the
execution of this Indenture on the Security Agreement, an Opinion of Counsel
either stating that in the opinion of such Counsel the actions necessary to
be taken with respect to the recording, registering and filing of this
Indenture, financing statements or other instruments to make effective the
lien intended to be created by the Security Agreement have been taken, and
reciting the details thereof, or stating that no such action is necessary to
make such lien effective; and
(b) the Corporation shall furnish to the Trustee within one hundred
twenty (20) days after January 1 in each year, beginning with January 1,
2003, an Opinion of Counsel, dated such date, either (i) stating that in the
opinion of such Counsel, action has been taken with respect to the
recording, registering, filing, re-recording, re-registering or re-filing of
all supplemental indentures, financing statements, continuation statements
or other instruments of further assurance as is necessary to maintain the
lien under the Security Agreement, and reciting the details thereof, or (ii)
stating that no such action is necessary to maintain such lien.
SECTION 11.04 Authorization of Actions to be Taken by the Trustee
Under the Security Agreement. The Trustee may, in its sole discretion and
without the consent of the Holders, take all actions it deems necessary or
appropriate to (a) enforce any of the terms of the Security Agreement and (b)
collect and receive any and all amounts payable in respect of the obligations of
the Corporation hereunder. Subject to the provisions of this Indenture and the
Security Agreement the Trustee shall have power to institute and to maintain
such suits and proceedings as it may deem expedient to prevent any impairment of
the Collateral by any acts which may be unlawful or in violation of the Security
Agreement or this Indenture, and such suits and proceedings as the Trustee may
deem expedient to reserve or protect its interest and the interests of the
Holders in the Collateral (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with such enactment, rule
or order would impair the security interest hereunder or be prejudicial to the
interests of the Holders or of the Trustee).
SECTION 11.05 Authorization of Receipt of Funds by the Trustee under
the Security Agreement. The Trustee is authorized to receive any funds for the
benefit of Holders distributed under the Security Agreement, and to make further
distributions of such funds to the Holders according to the provisions of this
Indenture.
52
ARTICLE 12
Subordination
-------------
SECTION 12.01 Agreement to Subordinate. The Corporation agrees, and
each Securityholder by accepting a Security agrees, that the indebtedness
evidenced by the Securities is subordinated in right of payment, to the prior
payment in full of the Senior Discount Notes, and that the subordination is for
the benefit of the holders of the Senior Discount Notes.
SECTION 12.02 Liquidation; Dissolution; Bankruptcy. Upon any
distribution to creditors of the Corporation in a liquidation, dissolution or
winding up of the Corporation or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Corporation or its property:
(1) holders of the Senior Discount Notes shall be entitled to
receive cash payment in full of the principal of, interest on and all other
obligations due in respect of the Senior Discount Notes (including, to the
extent permitted by applicable law, interest on or after the commencement of
a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Corporation or its property, whether or not representing an
allowed claim in such proceeding) before the Securityholders shall be
entitled to receive any payments of principal of or premium, if any, or
interest on or other obligations due in respect of the Securities; and
(2) until the principal of, interest on and all other obligations
due in respect of the Senior Discount Notes have been paid in full in cash,
any distribution of cash, securities or other property to which
Securityholders would be entitled but for this Article shall be made to the
holders of the Senior Discount Notes as their interests may appear.
SECTION 12.03 Corporation Not to Make Payments With Respect to
Securities While Senior Discount Notes are Outstanding. The principal of,
interest on and all other obligations due in respect of the Senior Discount
Notes shall first be paid in full in cash, before any payment (including any
payment as a result of any acceleration of the Securities) is made on account of
the principal of or premium, if any, or interest on, or other obligations due in
respect of the Securities or on account of the purchase, redemption, defeasance
or other acquisition in respect of any of the Securities.
SECTION 12.04 Subordination of Security Interest. The security
interest in the Collateral granted to the Trustee for the benefit of the
Securityholders as security for the payment of the Securities shall be, in all
respects, subject, junior and subordinate to the security interest in the
Collateral granted to holders of the Senior Discount Notes or to any agent
acting on behalf of the holders of the Senior Discount Notes, notwithstanding
anything to the contrary contained in any agreement or filing to which the
Trustee or any Securityholder may now or hereafter be a party, and irrespective
of the time, order or method of attachment or perfection of any financing
statements or other security interests or any defect or deficiency or alleged
defect or deficiency in any of the foregoing. The proceeds of any sale,
disposition or other realization upon all or any part of the Collateral, after
satisfaction of the expenses of the collection of such Collateral and the
enforcement of the rights of the holders of the Senior Discount Notes in such
53
Collateral, shall be applied to the payment in fall in cash of the principal of,
interest on and all other obligations due in respect of the Senior Discount
Notes before the Securityholders shall be entitled to receive any portion of
such proceeds in respect of the Securities. The security interest priorities
provided in this Article shall not be altered or otherwise affected by any
amendment, modification, supplement, extension, renewal, restatement or
refinancing of either the Senior Discount Notes or the Securities, nor by any
action or inaction which the holders of the Senior Discount Notes, any agent
acting on behalf of the holders of the Senior Discount Notes, the Trustee or any
Securityholder may take or fail to take in respect of the Collateral. The
Trustee (for itself and on behalf of the Securityholders) agrees that it will
not contest the validity, perfection, priority or enforceability of the security
interests in the Collateral of the holders of the Senior Discount Notes or of
any agent acting on behalf of the holders of the Senior Discount Notes, or the
respective priorities of the security interests securing the Senior Discount
Notes and the Securities set forth in this Article, or the validity or
reasonableness of any act or omission by the holders of the Senior Discount
Notes or by any agent acting on behalf of the Senior Discount Notes, including,
without limitation, the timing, method, or manner of collecting or otherwise
realizing upon the Collateral. As between the holders of the Senior Discount
Notes and the Securityholders, the terms of this Article shall govern even if
part or all of the Senior Discount Notes or the security interests securing
payment and performance thereof are not perfected or are avoided, disallowed,
set aside or otherwise invalidated in any judicial proceeding or otherwise.
SECTION 12.05 Acceleration of Securities. If payment of the
Securities is accelerated because of an Event of Default, the Corporation shall
promptly notify holders of the Senior Discount Notes of the acceleration.
SECTION 12.06 When Distribution Must Be Paid Over. If a distribution
is made to Securityholders that, because of this Article, should not have been
made to them, the Securityholders who receive the distribution shall hold the
same in trust for the holders of the Senior Discount Notes and shall pay it over
to the holders of the Senior Discount Notes as their interests may appear.
SECTION 12.07 Notice by Corporation. The Corporation shall promptly
notify the Trustee and the Paying Agent of any facts known to the Corporation
that would cause a payment of principal of or premium, if any, or interest on
the Securities to violate this Article.
SECTION 12.08 Subrogation. After the principal of, interest on and
all other obligations due in respect of the Senior Discount Notes has been paid
in full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of the Senior Discount Notes to receive
distributions applicable to the Senior Discount Notes to the extent that
distributions otherwise payable to the Securityholders have been applied to the
payment of the Senior Discount Notes. A distribution made under this Article to
holders of the Senior Discount Notes which otherwise would have been made to
Securityholders is not, as between the Corporation and Securityholders, a
payment by the Corporation on the Senior Discount Notes.
SECTION 12.09 Relative Rights. This Article defines the relative
rights of Securityholders and holders of the Senior Discount Notes. Nothing in
this Indenture shall:
54
(1) impair, as between the Corporation and Securityholders, the
obligation of the Corporation, which is absolute and unconditional, to pay
principal of and premium, if any, and interest on the Securities in
accordance with their terms;
(2) affect the relative rights of Securityholders and creditors of
the Corporation, other than holders of the Senior Discount Notes; or
(3) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of the
Senior Discount Notes to receive distributions otherwise payable to
Securityholders.
If the Corporation fails because of this Article to pay principal of or premium,
if any, or interest on a Security on the due date, such failure shall
nevertheless be deemed a Default.
SECTION 12.10 Subordination May Not Be Impaired by Corporation. No
right of any holder of the Senior Discount Notes, or any agent acting on behalf
of the Senior Discount Notes, to enforce the subordination of the indebtedness
evidenced by the Securities or the subordination of the security interest
securing the Securities, shall be impaired by any act or failure to act by the
Corporation or by its failure to comply with the terms of this Indenture.
SECTION 12.11 Effectuation of Subordination by Trustee. Each
Securityholder, by acceptance of a Security, authorizes and directs the Trustee
on behalf of such Securityholder to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee attorney-in-fact for such Securityholder for any and all
such purposes.
ARTICLE 13
Miscellaneous
-------------
SECTION 13.01 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02 Notices. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by
first-class mail addressed as follows:
if to the Corporation:
Ampex Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
if to the Trustee:
State Street Bank & Trust Company
2 Avenue de Lafayette - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
55
Attention: Corporate Trust Administration
Re: Ampex 12% Senior Secured Notes due 2008
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
The Corporation or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Corporation, the Trustee, the Registrar and anyone else shall
have the protection of TIA Section 312(c).
SECTION 13.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Corporation to the Trustee to take any
action or refrain from taking any action under this Indenture, the Corporation
shall furnish to the Trustee upon the Trustee's request:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 13.05 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
56
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such covenant or condition has been complied with.
SECTION 13.06 When Treasury Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the
Corporation or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Corporation shall be
disregarded and deemed not to be outstanding, except that for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee knows are so
owned shall be so disregarded. Also, subject to the foregoing, only Securities
outstanding at the time shall be considered in any such determination.
SECTION 13.07 Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 13.08 Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York, or in the Commonwealth of Massachusetts. If a payment date is
a Legal Holiday, payment shall be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 13.09 Governing Law. The laws of the State of New York shall
govern this Indenture and the Securities without giving effect to applicable
principles of conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby.
SECTION 13.10 No Recourse Against Others. No director, officer,
employee or stockholder, as such, of the Corporation shall have any liability
for any obligations of the Corporation under the Securities or this Indenture or
for any claim based on, or in respect of or by reason of such obligations or
their creation. By accepting a Security, each Securityholder shall waive and
release all such liability.
SECTION 13.11 Successors. All agreements of the Corporation in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 13.12 Counterparts. This Indenture may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
57
AMPEX CORPORATION,
By:__________________________
Title:
STATE STREET BANK & TRUST COMPANY, as Trustee
By:__________________________
Title:
58
EXHIBIT A
[RESTRICTIVE LEGENDS IF APPLICABLE]
CUSIP NO. ____
[FORM OF FACE OF SECURITY]
No.
$
AMPEX CORPORATION
12% Senior Secured Note Due 2008
Ampex Corporation, a Delaware corporation, promises to pay to
_____________, or registered assigns, the principal sum of ____________________
Dollars on August 15, 2008.
Payment Dates: February 15 and August 15, commencing August 15,
2002.
Record Dates: February 1 and August 1, commencing August 1, 2002.
Additional provisions of this Security are set forth on the
following pages of this Security.
Dated:
AMPEX CORPORATION,
By:__________________________
President
__________________________
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated: [SEAL]
STATE STREET BANK & TRUST COMPANY,
as Trustee, certifies that this is
one of the Securities referred to
in the Indenture.
by ___________________________________
Authorized Signatory
[FORM OF REVERSE SIDE OF SECURITY]
12% Senior Secured Note Due 2008
Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Indenture dated as of [February __], 2002
between Ampex Corporation, a Delaware corporation (the "Corporation"), and State
Street Bank & Trust Company, a Massachusetts trust company, as trustee
("Trustee"), as amended from time to time in accordance with its terms (the
"Indenture"), to which Indenture reference is hereby made for a statement of
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Corporation, the Trustee and the Holders of the Securities,
and of the terms upon which the Securities are, and are to be, authenticated and
delivered.
1. Interest
--------
The Corporation promises to pay interest on the principal amount of
this Security at the rate per annum shown above solely out of Available Cash
Flow for the six-month period ending December 31 or June 30 of each year next
preceding the applicable payment date. If with respect to any payment date, the
Available Cash Flow would be insufficient to make such payment in cash, the
Corporation shall issue additional Securities in an aggregate amount equal to
the amount of the interest otherwise payable on such payment date in accordance
with Section 2.14 of the Indenture; provided, however, that, payment of accrued
and unpaid interest on the Securities at the stated maturity or upon
acceleration shall be due and payable in cash only. Additional Securities shall
be governed by, and entitled to the benefits of, the Indenture. The Corporation
will pay interest to Holders of record at the close of business on the February
1st and August 1st immediately preceding the payment date on February 15 and
August 15 of each year, commencing August 15, 2002. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the Issue Date. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. Mandatory Prepayment
--------------------
In addition to interest payments as set forth in paragraph 1 above,
the Securities are subject to mandatory prepayment payable out of Available Cash
Flow under the circumstances set forth in Section 3.03 of the Indenture.
3. Method of Payment
-----------------
The Corporation will pay interest on the Securities (except
defaulted interest) or make mandatory prepayment, as the case may be, to the
persons who are registered holders of Securities at the close of business on the
February 1 or August 1 next preceding the payment date even if Securities are
canceled after the record date and on or before the payment date. Holders must
surrender Securities to a Paying Agent to collect amounts due upon final
maturity of the Securities. The Corporation will pay principal and interest in
(other than interest payable in additional Securities as provided above) money
of the United States that at the time of payment
2
is legal tender for payment of public and private debts. However, the
Corporation may pay principal and interest by check payable in such money. It
may mail an interest check to a Holder's registered address. At its option, the
Corporation may pay principal and interest by wire transfer to an account
designated in writing by the Holder.
4. Paying Agent and Registrar
--------------------------
Initially, Trustee will act as Paying Agent and Registrar. The
Corporation may appoint and change any Paying Agent, Registrar or co-registrar
without prior notice to any holder, but will promptly notify the Trustee of any
change. The Corporation or any of its Subsidiaries may act as Paying Agent,
Registrar or co-registrar.
5. Indenture
---------
The Corporation issued the Securities under the Indenture. The terms
of the Securities include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Section 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of those terms.
The Securities are general obligations of the Corporation limited to
$50,000,000 aggregate principal amount (subject to Section 2.11 of the
Indenture) plus additional Securities issuable in payment of interest as
provided hereunder. The Indenture imposes certain limitations on the payment of
dividends and other distributions by the Corporation and certain of its
Subsidiaries, the sale or transfer of assets, the sale or transfer of shares of
stock of certain of its Subsidiaries, the incurrence of debt by the Corporation
and certain of its Subsidiaries and transactions with affiliates.
6. Subordination
-------------
The Securities are subordinated to the prior payment in full of
certain Senior Discount Notes as provided in Article 12 of the Indenture.
7. Optional Redemption
-------------------
Subject to the prior payment of the Senior Discount Notes, the
Corporation may redeem the Securities at any time as a whole, or from time to
time in part, at a redemption price equal to 100% of the principal amount to be
redeemed plus accrued interest to the redemption date.
8. Notice of Redemption
--------------------
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Securities to be
redeemed at the Holder's registered address. If money sufficient to pay the
redemption price and accrued interest on all Securities to be redeemed on the
redemption date is deposited with the Paying Agent prior to the redemption date,
on and after such date interest ceases to accrue on such Securities or portions
of them.
3
Securities in denominations larger than $1,000 may be redeemed in part but only
in whole multiples of $1,000.
9. Security
--------
The Securities are secured by a lien on the Collateral (subject to
the rights of the holders of the Senior Discount Notes granted pursuant to a
Senior Security Agreement) pursuant to a Security Agreement described in the
Indenture.
10. Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not transfer or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be redeemed) or any Securities for a period of 15
days before a selection of Securities to be redeemed or before an payment date.
11. Persons Deemed Owners
---------------------
The registered holder of this Security may be treated as the owner
of it for all purposes.
12. Unclaimed Money
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Corporation at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Corporation (unless abandoned property law designates another person) and
not to the Trustee for payment.
13. Satisfaction and Discharge of Indenture
---------------------------------------
On the terms and subject to certain conditions specified in the
Indenture, the Corporation will be discharged from the Indenture and the
Securities (other than certain specified provisions) or will be discharged from
certain covenants under the Indenture and the Securities upon deposit with the
Trustee of moneys or U.S. Government Obligations sufficient to pay at maturity
or upon redemption all Securities not previously delivered to the Trustee for
cancellation, including principal and accrued interest and all other sums then
payable by the Corporation under the Indenture.
14. Amendment, Supplement, Waiver
-----------------------------
Subject to certain exceptions, (i) the Indenture or the Securities
may be amended or supplemented with the written consent of the Holders of at
least a majority in principal amount outstanding of the Securities, and (ii) any
past default or noncompliance with any
4
provision may be waived with the written consent of the Holders of a majority in
principal amount outstanding of the Securities. Subject to certain exceptions,
without the consent of any Securityholder, the Corporation and the Trustee may
amend or supplement the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article 6 of the Indenture,
or to provide for uncertificated Securities in addition to or in place of
certificated Securities or to make any change that does not adversely affect the
rights of any Securityholder.
15. Defaults and Remedies
---------------------
Each of the following is an Event of Default: default for 30 days in
payment of any interest on the Securities; default in payment of any principal
of the Securities when the same becomes due and payable at stated maturity, upon
redemption, upon declaration or otherwise; failure by the Corporation for 30
days after notice to the Corporation by the Trustee or to the Corporation and
the Trustee by the Holders of at least 25% aggregate principal amount of the
Securities to comply with certain covenants and agreements in the Indenture
relating to the payment of dividends and other distributions by the Corporation
and Subsidiaries, the sale or transfer of assets, the incurrence of debt by the
Corporation and Subsidiaries, transactions with affiliates and certain mergers,
consolidations and transfers of assets; failure by the Corporation for 60 days
after notice to the Corporation by the Trustee or to the Corporation and the
Trustee by the Holders of at least 25% aggregate in principal amount of the
Securities to comply with certain other covenants and agreements in the
Indenture and the Securities; failure of the Corporation to receive the Minimum
Available Cash Flow; certain payment defaults with respect to other indebtedness
of the Corporation or certain of its Subsidiaries, or other defaults resulting
in the acceleration of such other indebtedness, where the aggregate of such
indebtedness exceeds $5,000,000; and certain events of bankruptcy or insolvency.
If an Event of Default occurs and is continuing, the Holders of at least 25% in
principal amount of the Securities may declare the principal of and accrued
interest on all the Securities to be due and payable immediately.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in their interest.
16. Trustee Dealings with the Corporation
-------------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Corporation or its affiliates and may otherwise deal with the
Corporation or its affiliates with the same rights it would have if it were not
Trustee.
5
17. No Recourse Against Others
--------------------------
A director, officer, employee or stockholder, as such, of the
Corporation and the Trustee shall not have any liability for any obligations of
the Corporation under the Securities or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
18. Authentication
--------------
This Security shall not be valid until authenticated by the manual
signature of the Trustee or an authenticating agent on the other side of this
Security.
19. Abbreviations
-------------
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Corporation has caused CUSIP numbers to
be printed on the Securities and has directed the Trustee to use CUSIP numbers
in notices of redemption as a convenience to Security holders. No representation
is made as to the accuracy of such numbers either as printed on the Securities
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
The Corporation will furnish to any Securityholder upon written
request and without charge to such Holder a copy of the Indenture which has in
it the text of this Security in larger type. Requests may be made to: Ampex
Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of Vice
President.
6
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Corporation pursuant
to Section 5.05 or 5.10 of the Indenture, check the Box: { }
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 5.06 or 5.11 of the Indenture, state the amount:
$_______________
Dated: ____________ Your Signed:______________________________
(Sign exactly as name appears on the
other side of this Security)
Dated: ____________ By: _____________________________________
NOTICE: To be signed by an executive
officer
NOTICE: Signature(s) must be guaranteed by an institution which is a
participant in the Securities Transfer Agent Medallion Program ("STAMP") or
similar program.
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
_______________________________________________________
(insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint____________________________________________ agent to
transfer this Security on the books of the Corporation. The agent may
substitute another to act for him.
Dated: ____________ Signature(s):
________________________________________
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee:___________________
2
EXHIBIT B
---------
COLLATERAL SECURITY AGREEMENT
COLLATERAL SECURITY AGREEMENT (this "Security Agreement") dated as of
February [__], 2002, by and between AMPEX CORPORATION, a Delaware corporation
(the "Corporation"), and State Street Bank and Trust Company, as trustee under
the Indenture referred to below (herein together with its successors in trust
and assigns, the "Trustee").
The Corporation and the Trustee have contemporaneously herewith entered
into an indenture of even date (the "Indenture"), pursuant to which the
Corporation and the Trustee have respectively issued and authenticated 12%
Senior Secured Notes due 2008 (the "Securities"). Pursuant to the terms of the
Indenture and in order to secure the payment of the Securities and the
performance of all other obligations of the Corporation under the Indenture, the
Securities and this Security Agreement (collectively, "Obligations"), the
Corporation has agreed to grant a security interest in the Collateral more fully
described below, to the Trustee on behalf of itself and for the equal and
ratable benefit of the holders of the Securities ("Holders").
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Corporation hereby covenants and agrees with the Trustee, for
the benefit of the Trustee and the Holders, as follows:
1. DEFINITIONS. Capitalized terms used but not defined herein shall
have the meanings given to them in Schedule 1 hereto, in the Indenture and in
the UCC (defined below).
2. GRANT OF SECURITY INTEREST.
(a) The Corporation hereby grants to the Trustee, for the benefit
of the Trustee and the Holders, a continuing security interest in and lien on
the Collateral (as defined in Schedule 1 hereto), subject to the Senior Security
Interest.
(b) The Corporation covenants and agrees that if, at any time
before the Obligations have been paid in full, the Corporation shall enter into
any license agreement or agreements providing for payment of any royalties or
licensing fees for the licensing by the Corporation to any third party of any
patents now or hereafter owned by the Corporation, then (i) the Corporation
shall give the Trustee prompt written notice thereof; (ii) Schedule 2 hereto
shall be amended to include such license agreements as "License Agreements"
hereunder; and (iii) the Corporation shall execute and deliver to the Trustee
such additional instruments and documents, including UCC-1 financing statements,
as are necessary or appropriate or as the Trustee may reasonably request to
evidence its interest in the Collateral attributable to such License Agreements.
3. SUBORDINATION OF SECURITY INTEREST. The security interest in the
Collateral granted to the Trustee for the benefit of the Holders shall be, in
all respects, subject, junior and subordinate to the Senior Security Interest,
notwithstanding anything to the contrary contained in any agreement or filing to
which the Trustee or any Holder may now or hereafter be a party, and
irrespective of the time, order or method of attachment or perfection of any
financing statements or other security interests or any defect or deficiency or
alleged defect or deficiency in any of the foregoing. The proceeds of any sale,
disposition or other realization upon all or any part of the Collateral, after
satisfaction of the expenses of the collection of such Collateral and the
enforcement of the rights of the holders of the Senior Security Interest in such
Collateral, shall be applied to the payment in full in cash of the principal of,
interest on and all other obligations due in respect of the Senior Discount
Notes before the Holders shall be entitled to receive any portion of such
proceeds in respect of the Securities. The security interest priorities provided
in this Agreement shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement or refinancing of
either the Senior Discount Notes or the Securities, nor by any action or
inaction which the holders of the Senior Discount Notes, any agent acting on
behalf of the holders of the Senior Discount Notes, the Trustee or any Holder
may take or fail to take in respect of the Collateral. The Trustee agrees that
it will not (either for itself or on behalf of the Holders) contest the
validity, perfection, priority or enforceability of the Senior Security
Interest, or the respective priorities of the security interests securing the
Senior Discount Notes and the Securities set forth herein, or the validity or
reasonableness of any act or omission by the holders of the Senior Discount
Notes or by any agent acting on behalf of the Senior Discount Notes, including,
without limitation, the timing, method, or manner of collecting or otherwise
realizing upon the Collateral. As between the holders of the Senior Discount
Notes and the Holders, the terms of this Agreement shall govern even if part or
all of the Senior Discount Notes or the Senior Security Interest are not
perfected or are avoided, disallowed, set aside or otherwise invalidated in any
judicial proceeding or otherwise.
4. RIGHTS TO PAYMENTS, ETC. So long as no Event of Default has
occurred and is continuing hereunder, the Corporation shall be entitled to
receive and hold the Collateral, including without limitation, all Collateral
Revenues, and to exercise any and all rights with respect to the Collateral,
subject, however, to its obligations under this Security Agreement and the
Indenture. If the Trustee receives any such Collateral or Collateral Revenues
prior to an Event of Default, it shall promptly pay and deliver the same to the
Corporation upon written request from the Corporation to do so. Prior to an
Event of Default, neither the Trustee nor any Holder of the Securities shall
contact any of the licensees under the License Agreements.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Corporation hereby
represents, warrants and covenants to the Trustee as follows, except that with
respect to the following representations, warranties and covenants, each of the
Corporation and the Trustee hereby acknowledges that the License Agreements with
Hitachi, Ltd. and Toshiba prohibit the assignment by the Corporation of its
rights thereunder:
5.1 Power and Authority. The Corporation has full corporate power,
authority and the legal right to grant to the Trustee the security interest in
the Collateral granted hereunder; and to execute, deliver and perform its
obligations hereunder. This Security Agreement has been duly
2
and validly executed and delivered by the Corporation, and constitutes the
Corporation's legal, valid and binding obligation, enforceable against the
Corporation in accordance with its terms.
5.2 Title to Collateral. The Corporation has and will maintain good
and marketable title to the Collateral, free and clear of all liens, claims,
encumbrances or rights of others (other than the security interest granted to
the Trustee hereunder and the Senior Security Interest). Except for the Senior
Security Interest and the UCC-1 financing statements as filed with the Secretary
of State of the States of California and Delaware on November 8, 2000 in
connection therewith, there is no financing statement (or similar statement,
agreement, pledge, mortgage, notice or registration), lien (including any
federal or state tax lien), suit (including any action, proceeding, or other
litigation pending, or to the Corporation's knowledge, threatened) or judgment
(including any award, injunction, order) filed with, registered, indexed or
recorded in any public office, court, arbitration panel, administrative agency
or regulatory authority, directly or indirectly, naming or encumbering or
covering or involving any of the Collateral. Each of the License Agreements is
genuine and in all respects what it reports to be and, to the Corporation's
knowledge, represents the genuine, valid and binding obligations of each
licensee thereunder, evidences true and undisputed obligations enforceable in
accordance with its terms, and is in compliance and conforms with all applicable
federal, state and local laws and applicable laws of any jurisdiction outside of
the United States in effect on the date hereof.
5.3 Perfected Security Interest. The execution and delivery of this
Security Agreement and the grant by the Corporation of a security interest in
the Collateral hereunder creates a valid security interest in the Collateral,
subject to the Senior Security Interest, which has attached and is enforceable
and which, upon filing of the Financing Statements with the Secretary of State
of the State of Delaware (which is the only jurisdiction in which Financing
Statements are required to be filed), will be perfected and subject to no prior
or equal security interest, other than the Senior Security Interest.
5.4 Maintenance of the Collateral. The Corporation shall keep and
maintain the Collateral, shall duly and timely fulfill and perform all
obligations on its part to be fulfilled or performed under or in connection with
the License Agreements, and shall not take any action or omit to take any action
that could reasonably be expected to impair its rights thereunder. The
Corporation shall use its best efforts to collect or cause to be collected from
the licensees named in each License Agreement, as and when due, any and all
amounts owing under or on account of such License Agreement (including, without
limitation, any payments thereunder which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures),
and apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance payable under such License Agreement. Except as
contemplated hereby, and except for the Senior Security Interest, the
Corporation shall not, without the Trustee's written consent, sell, assign,
lease, transfer, hypothecate, mortgage, incur, permit or suffer to exist a lien
upon, or otherwise dispose of any of the Collateral, and nothing in this
Security Agreement shall be deemed a consent by the Trustee to any such action
except as expressly permitted herein. The Corporation shall maintain the
security interest created by the Corporation under this Security Agreement,
subject to the Senior Security Interest, and will defend the Collateral against
and take such other action as is necessary to remove any other lien on the
Collateral except as permitted hereunder.
3
5.5 Chief Executive Office; Records. The Corporation is incorporated
in the State of Delaware and shall not change its state of incorporation without
the prior written consent of the Trustee. The Corporation's chief executive
office is located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, and the
Corporation shall give Trustee the prompt written notice of any change in the
address of such office. The Corporation shall keep and maintain at its chief
executive office, at its own cost and expense, to the reasonable satisfaction of
the Trustee, complete and accurate records relating to the License Agreements,
including, but not limited to, records of all payments received and all credits
granted thereon, and all other dealings in connection therewith. The Corporation
shall make all such records available or deliver to the Trustee or its
representatives, from time to time, both promptly following the Trustee's
request and immediately following an Event of Default, all at the Corporation's
own cost and expense. If the Trustee shall so request (but subject to the Senior
Security Interest), upon an Event of Default the Corporation shall promptly (i)
legend, register and record, in form and substance satisfactory to the Trustee,
the License Agreements and other books, records and documents evidencing or
pertaining thereto, with an appropriate reference to the interest of the Trustee
therein and (ii) notify the licensee with respect thereto to make payments
directly to the Trustee.
5.6 No Violation of Law; Indemnity. The Corporation has not and shall
not acquire, obtain, hold, possess, maintain, use, sell, transfer, grant,
pledge, or dispose (for purposes of this section, collectively "the
Corporation's use") of any of the Collateral in violation of any statute, law,
rule, ordinance, regulation, policy, procedure, injunction, award, decree,
judgment, contract, agreement, understanding, or right or interest of any other
Person (for purposes of this section collectively "violation"), and to the
Corporation's knowledge no such violation has been made by any other Person and
no basis for a claim of any such violation exists. The Corporation shall
indemnify and hold the Trustee harmless from and against any such violation or
claim of violation, or any other loss, liability, damage, cost or expense
whatsoever arising out of or in connection with the Corporation's use of any of
the Collateral.
5.7 License Agreements. Schedule 2 hereto lists each License
Agreement in effect as of the date hereof pursuant to which the Corporation
received during 2001, or expects to receive during 2002, any patent royalties,
license fees or similar payments.
6. EVENTS OF DEFAULT. The occurrence of any "Event of Default" under
the Securities or the Indenture shall constitute an "Event of Default"
hereunder.
7. REMEDIES.
7.1 Cumulative Rights and Remedies. Upon the occurrence of an Event
of Default, the Trustee shall have the rights, powers and remedies (i) granted
to secured parties under the UCC or other applicable Uniform Commercial Code;
(ii) granted to the Trustee under any other applicable statute, law, rule or
regulation; and (iii) granted to the Trustee under this Security Agreement
(including without limitation the right to cause the registration of this
Security Agreement with the United States Patent and Trademark Office), the
Securities, the Indenture, or any other agreement between the Corporation and
the Trustee. In addition, all such rights, powers and remedies shall be
cumulative and not alternative. Any single or partial exercise of, or
forbearance, failure or delay in exercising any right, power or remedy shall not
be, nor shall any such single or partial exercise of, or forbearance, failure or
delay be deemed to be a
4
limitation, modification or waiver of any right, power or remedy and shall not
preclude the further exercise thereof; and every right power and remedy of the
Trustee shall continue in full force and effect until such right, power and
remedy is specifically waived by an instrument in writing executed and delivered
with respect to each such waiver by the Trustee.
7.2 Additional Rights of the Trustee. Without limiting the provisions
of Section 7.1 hereof, upon an Event of Default, the Trustee may, from time to
time, in its discretion, and without the Corporation's assent, without
advertisements or notices of any kind (except for the notice specified in
Section 7.4 below regarding notice required in connection with a public or
private sale), or demand for performance or other demand, or obligation or
liability (except to account for amounts actually received) to the Corporation
or any other Person (all such advertisements, notices and demands, obligation
and liabilities, if any, hereby being expressly waived and discharged to the
extent permitted by law), forthwith and subject to all applicable laws and
regulations, enter any premises, with or without the assistance of other persons
or legal process, require the Corporation to account for (including accounting
for any products and proceeds of any Collateral), segregate, assemble, make
available and deliver to the Trustee or its representatives, take possession of,
collect, transfer and receive, recover, appropriate, foreclose, extend payment
of, adjust, compromise, settle, release any claims included in, and do all other
acts or things necessary or, in the Trustee's judgment appropriate, to protect,
maintain, preserve and realize upon the Collateral and any products and proceeds
thereof, in whole or in part, exercise all rights, powers and interests with
respect to any and all Collateral, and sell, assign, license, pledge, transfer,
negotiate (including, without limitation, endorse checks, drafts, orders, or
instruments), deliver or otherwise dispose (by contract, option(s) or otherwise)
the Collateral or any part thereof. Any such disposition may be in one or more
public or private sales, at such price, for cash or credit (or for future
delivery without credit risk) and upon such other terms and conditions, and at
such locations, as it deems appropriate, with the right of the Trustee (to the
extent permitted by law upon any such sale or sales, public or private) to
purchase the whole or any part of said Collateral, free of any right, claim or
equity of redemption (such rights, claims and equity of redemption, if any,
hereby being expressly waived). Notwithstanding that the Trustee, whether in its
own behalf or on behalf of another or others, may continue to hold the
Collateral, and regardless of the value thereof, or may delay or fail to dispose
thereof, unless and then only to the extent that the Trustee proposes to retain
the Collateral in satisfaction of the Obligations by written notice in
accordance with the UCC, the Corporation shall be and remain liable for the
payment in full of any balance of the Obligations at any time unpaid.
7.3 Application of Proceeds. The Trustee may apply the net proceeds,
if any, of any collection, receipt, recovery, appropriation, foreclosure or
realization, or from any sale, assignment, license, pledge, transfer, delivery
or disposition, after deducting all costs and expenses (including reasonable
attorneys' fees, court costs and legal expenses) incurred therein or with
respect to the care, safekeeping, custody, maintenance, protection,
administration or otherwise of any and all of Collateral or in any way relating
to the rights of the Trustee under this Security Agreement: (i) first, to the
satisfaction of the Obligations, in whole or in part, in such order as the
Trustee may, in its discretion, elect; (ii) second, to the payment, satisfaction
or discharge of any other indebtedness or obligation of the Corporation as
required by any law, rule or regulation; and (iii) lastly, the surplus, if any,
to the Corporation.
5
7.4 Required Notice of Sale. In exercising its rights, powers and
remedies as the Trustee, the Trustee agrees to give the Corporation ten (10)
days' notice of the time and place of any public sale of Collateral or of the
time after which any private sale of Collateral may take place, unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market. The Corporation agrees that such
period and notice is commercially reasonable under the circumstances.
7.5 Waivers. The Trustee may waive an existing Event of Default and
its consequences on the terms and conditions described in the Indenture. In
addition, any such Event of Default may be waived directly by the Holders so
empowered to act under the Indenture. Upon any such waiver, any Event of Default
shall be deemed to have been cured for purposes of this Agreement, but no such
waiver shall extend to any subsequent or other Event of Default or impair any
right consequent thereto. In the event any provision contained in this Agreement
shall be breached by the Corporation and thereafter duly waived by the Trustee
on behalf and at the request of the Holders or directly by the Holders so
empowered to act, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder.
8. RIGHTS AND DUTIES WITH RESPECT TO COLLATERAL. The Trustee shall
be under no duty to collect or protect the Collateral or to preserve rights
pertaining thereto, beyond the exercise of reasonable care to assure the safe
custody of the Collateral while in its possession, and shall be relieved of all
further responsibility for the Collateral upon surrendering it to the
Corporation. Without limiting the generality of the foregoing, the Trustee shall
have no obligation to preserve any rights against prior parties or, except as
expressly provided herein, to exercise any right or perform any obligation in
connection with the Collateral. The Trustee shall hold the Collateral while in
its possession for the benefit of itself and the Holders in accordance with and
subject to the provisions of the Indenture.
9. POWER OF ATTORNEY. The Corporation hereby irrevocably constitutes
and appoints the Trustee or any officer or agent thereof, with full power of
substitution, as the Corporation's true and lawful attorney-in-fact with full
irrevocable power and authority in the Corporation's place and stead and in the
Corporation's name or in its own name, upon an Event of Default and from time to
time thereafter in the Trustee's discretion, to take any and all action, to do
any and all things, including without limitation, to execute, endorse, deliver
and file any and all writings, documents, instruments, notices, statements
(including, without limitation, financing statements), applications and
registrations (including, without limitation, registrations with the United
States Patent and Trademark Office), checks, drafts, acceptances, money orders,
or other evidence of payment or proceeds, which may be or become necessary or
desirable in the sole discretion of the Trustee to accomplish the terms,
purposes and intent of this Security Agreement. Said attorney or designee shall
not be liable for any acts of commission or omission, nor for any error of
judgment or mistake of fact or law, unless and then only to the extent that the
same constitutes its gross negligence or willful misconduct. This power is
coupled with an interest and is irrevocable.
10. INDEMNIFICATION. The Corporation hereby indemnifies, saves and
holds harmless the Trustee from and against all expenses, costs, liabilities,
losses or damages, including, without limitation, reasonable attorney's fees and
expenses, suffered or incurred by
6
the Trustee arising out of or in connection with this Security Agreement or the
transactions contemplated hereby. Without limiting the foregoing, the
Corporation will pay to the Trustee all expenses (including reasonable
attorney's fees and expenses) of, or incidental to, the enforcement of any of
the provisions hereof or of any of the Obligations, or any actual or attempted
sale, assignment, license or other disposition of, or any exchange, enforcement,
collection, compromise or settlement of any of the Collateral or receipt of the
proceeds thereof in accordance with the terms of this Security Agreement, and
for the care of the Collateral and defending or asserting the rights and claims
of the Trustee in respect thereof, by litigation or otherwise, including expense
of insurance, and all such expenses shall be deemed to be included in the
Corporation's Obligations.
11. OBLIGATIONS ABSOLUTE. The Corporation's Obligations shall be
absolute, unconditional and irrevocable and shall be paid or satisfied strictly
in accordance with their respective terms, including without limitation: (i) the
invalidity or unenforceability of all or any or any part of this Security
Agreement, the Securities or the Indenture, or any consent, waiver, amendment or
modification hereof or thereof; (ii) the existence of any claim, setoff, defense
or other right which the Corporation may have at any time against the Trustee or
any other Person, whether in connection with this Security Agreement, the
Securities or the Indenture, the License Agreements or the transactions
contemplated hereby or thereby; or (iii) the loss, theft, damage, destruction or
unavailability to the Corporation of the Collateral for any reason whatsoever,
it being understood and agreed that the Corporation retains all liability and
responsibility with respect to the Collateral.
12. BINDING AGREEMENT; ASSIGNMENT. This Security Agreement shall bind
and inure to the benefit of the parties hereto, their respective, heirs,
executors, administrators, successors and permitted assigns. The Corporation may
not, in whole or in part, directly or indirectly, assign this Security Agreement
or its rights hereunder or delegate its duties hereunder without, in each
instance, the specific prior written consent of the Trustee, which consent may
be withheld or delayed in the Trustee's sole discretion.
13. FURTHER ASSURANCES. The Corporation agrees, at any time and from
time to time, at the Corporation's sole cost and expense, to obtain, procure,
execute and deliver, file and affix such further agreements, bills of sale and
assignment, instruments, documents, notices, statements (including financing
statements), powers (including stock and bond powers, and powers of attorney),
tax stamps and information, and to do or cause to be done all such further acts
and things (including the execution, delivery and filing of financing statements
on Form UCC-1, payment of filing fees and transfer, gains and recording taxes)
as may be required to perfect or maintain the security interest in the
Collateral granted to the Trustee hereby, or as the Trustee may reasonably
request, from time to time, in its discretion, and to pay all fees, costs and
expenses relating thereto. Upon the Corporation's failure to abide by and comply
with its obligations under this Section 13, in addition to its other rights and
remedies, the Trustee may, in its sole discretion and to the extent it deems
necessary, advisable or appropriate, take or cause such action to be taken or
thing to be done as required hereby and under the UCC and the costs incurred in
connection therewith shall be deemed to be included in the Corporation's
Obligations. Without limiting the foregoing, the Corporation authorizes the
Trustee, to the extent permitted under the UCC, to execute, file or file without
the Corporation's signature any and all financing statements, amendments thereto
and continuations thereof as the Trustee deems
7
necessary or appropriate and the Corporation shall pay, indemnify the Trustee
for and hold the Trustee harmless from and against any and all costs and
expenses in connection therewith.
14. TERM. This Security Agreement shall commence on the date hereof
and shall terminate upon the indefeasible payment and performance in full of all
of the Obligations. Upon termination of this Security Agreement, at the request
and expense of the Corporation, the Trustee will promptly execute and deliver to
the Corporation a proper instrument or instruments (including UCC termination
statements on Form UCC-3) acknowledging the satisfaction and termination of this
Security Agreement, and will duly assign, transfer and deliver to the
Corporation (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Trustee that has not
theretofore been sold or otherwise applied or released pursuant to this Security
Agreement.
15. MISCELLANEOUS.
15.1 Amendments, Consents, Authorizations. None of the terms or
provisions of this Security Agreement may be waived, altered, modified, or
amended except with the prior written consent of the Trustee given in accordance
with Article 10 of the Indenture. Without limiting the foregoing, no action or
omission to act shall be deemed to be a consent, authorization, representation
or agreement of any party hereto, under the UCC or otherwise, unless, in each
instance, the same is in a specific writing signed by such party and is in
accordance with the terms of the Indenture.
15.2 Notices. All notices under this Security Agreement shall be in
writing and shall be deemed effective if made in accordance with and as provided
in the Indenture.
15.3 Governing Law. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and wholly performed in the State of New York.
15.4 WAIVER OF RIGHT TO JURY TRIAL. EACH OF THE CORPORATION AND THE
TRUSTEE HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM,
CAUSE OF ACTION, COUNTERCLAIM OR OTHER PROCEEDING BASED UPON OR ARISING OUT OF
OR RELATING TO THIS SECURITY AGREEMENT, THE VALIDITY OR ENFORCEABILITY OF THIS
SECURITY AGREEMENT, OR ANY PROVISIONS HEREOF, OR THE TRANSACTIONS CONTEMPLATED
HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
15.5 Severability. If and to the extent that any provision of this
Security Agreement shall be held invalid and unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provisions hereof.
8
15.6 Captions. The headings, titles and captions used herein are for
convenience only and shall not effect the construction of this Security
Agreement or any term or provision hereof.
[END OF TEXT]
9
IN WITNESS WHEREOF, each of the parties hereto has executed and delivered
this Security Agreement and as of the date first set forth above.
AMPEX CORPORATION
By: ___________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: ____________________________
Name:
Title:
10
SCHEDULE 1
----------
DEFINITIONS
-----------
"Collateral" means all of the right, title and interest now owned or
hereafter acquired by the Corporation, as licensor under the License Agreements,
including, without limitation, the Corporation's rights to receive all
royalties, license fees and other payments thereunder and all accounts
receivable arising in connection therewith; and all additions thereto,
substitutions therefor and replacements thereof, all royalty and other
receivables, income, interest, dividends, distributions and earnings thereon or
other monies or revenues derived therefrom ("Collateral Revenues"); and all
products and proceeds of the foregoing.
"Collateral Revenues" has the meaning accorded to such term in the
definition of Collateral.
"Event of Default" has the meaning accorded to such term in section 5
hereof.
"Financing Statements" means the financing statements on Form UCC-1,
covering the security interest in the Collateral granted by the Corporation to
the Trustee hereunder.
"License Agreements" means the patent license agreements (and any and all
amendments, modifications and supplements thereto entered into by the
Corporation after the date hereof) listed in SCHEDULE 2 hereto, as such SCHEDULE
2 may be amended from time to time in accordance with the terms and conditions
of this Security Agreement.
"Person" means any individual, corporation, partnership, association,
firm, or other entity.
"Senior Security Interest" means the security interest in and lien on the
Collateral granted by the Corporation to the Secured Party under the Senior
Security Agreement (as defined in the Indenture).
"UCC" means the Uniform Commercial Code of the State of New York.
11
SCHEDULE 2
----------
Patent License Agreements
-------------------------
1. Consumer VTR License Agreement dated as of July 1, 1994 between the
Corporation, as Licensor, and Daewoo Electronics Co., Ltd. ("Daewoo"),
a Licensee.
2. License Agreement dated as of September 16, 1995, between the
Corporation, as Licensor, and Funai Electric Company Limited ("Funai"),
as Licensee.
3. First Amendment to License Agreement dated as of June 16, 2000, between
the Corporation, as Licensor, and Funai, as Licensee, as amended on
October 1, 2001.
4. Second Amendment to License Agreement dated as of January 1, 2001,
between the Corporation, as Licensor, and Funai Electric Company
Limited ("Funai"), as Licensee.
5. Consumer Video Recorder License Agreement dated as of April 1, 1996,
between the Corporation and Hitachi, Ltd.
6. Computer Data Recorder License Agreement dated as of April 1, 1996
between the Corporation and Hitachi, Ltd.
7. License Agreement dated as of May 1, 1969, between the Corporation and
Ampex International S.A.("AISA"), as Licensors, and Matsushita Electric
Industrial Co, Ltd. ("Matsushita"), as Licensee, amending (the "1969
License Agreement").
8. Amendment dated as of October 1, 1973, between the Corporation and AISA,
as Licensors, and Matsushita, as Licensee, amending the 1969 License
Agreement.
9. Memorandum dated as of May 19, 1981, between the Corporation and AISA as
Licensors, and Matsushita, as Licensee, the 1969 License Agreement.
10. Amendment to License Agreement dated as of October 16, 1986, between the
Corporation and AISA as Licensors, and Matsushita, as Licensee.
11. Memorandum dated as of January 1, 1987 between the Corporation and AISA as
Licensors, and Matsushita, as Licensee, supplementing the 1969 License
Agreement dated May 1, 1969.
12. Consumer VTR License Agreement dated as of July 1, 1985, between the
Corporation and AISA, as Licensors, and Orion Electric Co. Ltd.("Orion"),
as Licensee.
13. License Agreement dated as of April 1, 1998, between the Corporation,
as Licensor, and Orion, as Licensee.
14. License Agreement dated as of February 21, 1995, between the
Corporation, as Licensor, and Sanyo Electric Company, Ltd., as Licensee.
15. Grant of Release and License dated as of January 1, 1995, between the
Corporation, as Licensors, and Sharp Corporation, as Licensee.
16. License Agreement dated as of July 1, 1998, between the Corporation, as
Licensor, and Shintom Company Ltd. ("Shintom"), as Licensee.
17. Settlement Agreement dated as of March 1, 1999, between the Corporation
and AISA, as Licensor, and Sony Corporation ("Sony") as Licensee.
18. Side Letter to License Agreement dated as of January 1, 1991, between the
Corporation and AISA, as Licensors, and Sony, as Licensee.
19. License Agreement dated as of April 1, 1986 between the Corporation and
AISA, as Licensors, and Sony, as Licensee.
20. License Agreement dated as of July 1, 1997, among the Corporation, on
the one hand, and Toshiba Corporation, Toshiba Video Products Pte.,
Ltd., and Toshiba Consumer Products (UK) Ltd., on the other hand
(collectively, "Toshiba").
13
Table of Contents
-----------------
Page
----
ARTICLE 1 Definitions and Incorporation by Reference.....................1
SECTION 1.01 Definitions...........................................1
SECTION 1.02 Other Definitions....................................13
SECTION 1.03 Incorporation by Reference of Trust Indenture Act....14
SECTION 1.04 Rules of Construction................................14
ARTICLE 2 The Securities................................................15
SECTION 2.01 Form and Dating......................................15
SECTION 2.02 Execution and Authentication.........................15
SECTION 2.03 Registrar and Paying Agent...........................16
SECTION 2.04 Paying Agent To Hold Money in Trust..................16
SECTION 2.05 Securityholder Lists.................................16
SECTION 2.06 Transfer and Exchange................................17
SECTION 2.07 Restrictive Legends..................................17
SECTION 2.08 Book Entry Provisions for Global Securities..........18
SECTION 2.09 Special Transfer Provisions..........................19
SECTION 2.10 Replacement Securities...............................20
SECTION 2.11 Outstanding Securities...............................20
SECTION 2.12 Temporary Securities.................................21
SECTION 2.13 Cancellation.........................................21
SECTION 2.14 Additional Securities................................21
SECTION 2.15 Defaulted Interest...................................21
SECTION 2.16 CUSIP Numbers........................................21
ARTICLE 3 Application of Available Cash Flow............................22
SECTION 3.01 General..............................................22
SECTION 3.02 Application of Available Cash Flow...................22
SECTION 3.03 Mandatory Prepayment.................................23
SECTION 3.04 Obligation to Pay Securities in Cash at Maturity.....23
ARTICLE 4 Redemption....................................................23
SECTION 4.01 Notices to Trustee...................................23
-1-
Table of Contents
-----------------
(continued)
Page
----
SECTION 4.02 Selection of Securities To Be Redeemed...............23
SECTION 4.03 Notice of Redemption.................................23
SECTION 4.04 Effect of Notice of Redemption.......................24
SECTION 4.05 Deposit of Redemption Price..........................24
SECTION 4.06 Securities Redeemed in Part..........................24
ARTICLE 5 Covenants.....................................................25
SECTION 5.01 Payment of Securities................................25
SECTION 5.02 SEC Reports..........................................25
SECTION 5.03 Limitation on Indebtedness...........................25
SECTION 5.04 Limitation on Restricted Payments....................27
SECTION 5.05 Limitation on Asset Sales............................29
SECTION 5.06 Limitation on Liens..................................32
SECTION 5.07 Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries.......32
SECTION 5.08 Limitation on Transactions with Affiliates...........33
SECTION 5.09 Limitation on Designation of Unrestricted
Subsidiaries.........................................34
SECTION 5.10 Change of Control....................................35
SECTION 5.11 Compliance Certificate; Notice of Defaults...........36
SECTION 5.12 Further Instruments and Acts.........................36
ARTICLE 6 Successor Corporation.........................................36
SECTION 6.01 When Corporation May Merge or Transfer Assets........36
ARTICLE 7 Defaults and Remedies.........................................37
SECTION 7.01 Events of Default....................................37
SECTION 7.02 Acceleration.........................................39
SECTION 7.03 Other Remedies.......................................39
SECTION 7.04 Waiver of Past Defaults..............................39
SECTION 7.05 Control by Majority..................................40
SECTION 7.06 Limitation on Suits..................................40
SECTION 7.07 Rights of Holders To Receive Payment.................40
-ii-
Table of Contents
-----------------
(continued)
Page
----
SECTION 7.08 Collection Suit by Trustee...........................40
SECTION 7.09 Trustee May File Proofs of Claim.....................40
SECTION 7.10 Priorities...........................................41
SECTION 7.11 Undertaking for Costs................................41
SECTION 7.12 Waiver of Stay or Extension Laws.....................41
ARTICLE 8 Trustee.......................................................42
SECTION 8.01 Duties of Trustee....................................42
SECTION 8.02 Rights of Trustee....................................43
SECTION 8.03 Individual Rights of Trustee.........................43
SECTION 8.04 Trustee's Disclaimer.................................43
SECTION 8.05 Notice of Default....................................44
SECTION 8.06 Reports by Trustee to Holders........................44
SECTION 8.07 Compensation and Indemnity...........................44
SECTION 8.08 Replacement of Trustee...............................44
SECTION 8.09 Successor Trustee by Merger..........................45
SECTION 8.10 Eligibility; Disqualification........................46
SECTION 8.11 Preferential Collection of Claims Against
Corporation..........................................46
ARTICLE 9 Satisfaction and Discharge of Indenture.......................46
SECTION 9.01 Discharge of Liability on Securities; Defeasance.....46
SECTION 9.02 Conditions to Defeasance.............................47
SECTION 9.03 Application of Trust Money...........................48
SECTION 9.04 Repayment to Corporation.............................48
SECTION 9.05 Indemnity for Government Obligations.................48
SECTION 9.06 Reinstatement........................................48
ARTICLE 10 Amendments, Supplements and Waivers...........................48
SECTION 10.01 Without Consent of Holders...........................48
SECTION 10.02 With Consent of Holders..............................49
SECTION 10.03 Compliance with Trust Indenture Act..................50
SECTION 10.04 Revocation and Effect of Consents....................50
-iii-
Table of Contents
-----------------
(continued)
Page
----
SECTION 10.05 Notation on or Exchange of Securities................50
SECTION 10.06 Trustee To Sign Amendments...........................51
SECTION 10.07 Payment for Consent..................................51
ARTICLE 11 Concerning the Collateral.....................................51
SECTION 11.01 Security Agreement...................................51
SECTION 11.02 Payment of Expenses..................................52
SECTION 11.03 Opinions as to Recording, etc........................52
SECTION 11.04 Authorization of Actions to be Taken by the
Trustee Under the Security Agreement.................52
SECTION 11.05 Authorization of Receipt of Funds by the
Trustee under the Security Agreement.................52
ARTICLE 12 Subordination.................................................53
SECTION 12.01 Agreement to Subordinate.............................53
SECTION 12.02 Liquidation; Dissolution; Bankruptcy.................53
SECTION 12.03 Corporation Not to Make Payments With Respect to
Securities While Senior Discount Notes are
Outstanding..........................................53
SECTION 12.04 Subordination of Security Interest...................53
SECTION 12.05 Acceleration of Securities...........................54
SECTION 12.06 When Distribution Must Be Paid Over..................54
SECTION 12.07 Notice by Corporation................................54
SECTION 12.08 Subrogation..........................................54
SECTION 12.09 Relative Rights......................................54
SECTION 12.10 Subordination May Not Be Impaired by Corporation.....55
SECTION 12.11 Effectuation of Subordination by Trustee.............55
ARTICLE 13 Miscellaneous.................................................55
SECTION 13.01 Trust Indenture Act Controls.........................55
SECTION 13.02 Notices..............................................55
SECTION 13.03 Communication by Holders with Other Holders..........56
SECTION 13.04 Certificate and Opinion as to Conditions
Precedent............................................56
-iv-
Table of Contents
-----------------
(continued)
Page
----
SECTION 13.05 Statements Required in Certificate or Opinion........56
SECTION 13.06 When Treasury Securities Disregarded.................57
SECTION 13.07 Rules by Trustee, Paying Agent and Registrar.........57
SECTION 13.08 Legal Holidays.......................................57
SECTION 13.09 Governing Law........................................57
SECTION 13.10 No Recourse Against Others...........................57
SECTION 13.11 Successors...........................................57
SECTION 13.12 Counterparts.........................................57
Signatures
EXHIBIT A Form of Security
EXHIBIT B Form of Security Agreement
Note: This Table of Contents shall not, for any purpose, be deemed to be a
part of the Indenture.
-v-
EXHIBIT B
---------
FORM OF SECURITY AGREEMENT
18
EXHIBIT B
---------
COLLATERAL SECURITY AGREEMENT
COLLATERAL SECURITY AGREEMENT (this "Security Agreement") dated as of
February [__], 2002, by and between AMPEX CORPORATION, a Delaware corporation
(the "Corporation"), and State Street Bank and Trust Company, as trustee under
the Indenture referred to below (herein together with its successors in trust
and assigns, the "Trustee").
The Corporation and the Trustee have contemporaneously herewith entered
into an indenture of even date (the "Indenture"), pursuant to which the
Corporation and the Trustee have respectively issued and authenticated 12%
Senior Secured Notes due 2008 (the "Securities"). Pursuant to the terms of the
Indenture and in order to secure the payment of the Securities and the
performance of all other obligations of the Corporation under the Indenture, the
Securities and this Security Agreement (collectively, "Obligations"), the
Corporation has agreed to grant a security interest in the Collateral more fully
described below, to the Trustee on behalf of itself and for the equal and
ratable benefit of the holders of the Securities ("Holders").
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Corporation hereby covenants and agrees with the Trustee, for
the benefit of the Trustee and the Holders, as follows:
1. DEFINITIONS. Capitalized terms used but not defined herein shall
have the meanings given to them in Schedule 1 hereto, in the Indenture and in
the UCC (defined below).
2. GRANT OF SECURITY INTEREST.
(a) The Corporation hereby grants to the Trustee, for the benefit
of the Trustee and the Holders, a continuing security interest in and lien on
the Collateral (as defined in Schedule 1 hereto), subject to the Senior Security
Interest.
(b) The Corporation covenants and agrees that if, at any time
before the Obligations have been paid in full, the Corporation shall enter into
any license agreement or agreements providing for payment of any royalties or
licensing fees for the licensing by the Corporation to any third party of any
patents now or hereafter owned by the Corporation, then (i) the Corporation
shall give the Trustee prompt written notice thereof; (ii) Schedule 2 hereto
shall be amended to include such license agreements as "License Agreements"
hereunder; and (iii) the Corporation shall execute and deliver to the Trustee
such additional instruments and documents, including UCC-1 financing statements,
as are necessary or appropriate or as the Trustee may reasonably request to
evidence its interest in the Collateral attributable to such License Agreements.
3. SUBORDINATION OF SECURITY INTEREST. The security interest in the
Collateral granted to the Trustee for the benefit of the Holders shall be, in
all respects, subject, junior and subordinate to the Senior Security Interest,
notwithstanding anything to the contrary contained in any agreement or filing to
which the Trustee or any Holder may now or hereafter be a party, and
irrespective of the time, order or method of attachment or perfection of any
financing statements or other security interests or any defect or deficiency or
alleged defect or deficiency in any of the foregoing. The proceeds of any sale,
disposition or other realization upon all or any part of the Collateral, after
satisfaction of the expenses of the collection of such Collateral and the
enforcement of the rights of the holders of the Senior Security Interest in such
Collateral, shall be applied to the payment in full in cash of the principal of,
interest on and all other obligations due in respect of the Senior Discount
Notes before the Holders shall be entitled to receive any portion of such
proceeds in respect of the Securities. The security interest priorities provided
in this Agreement shall not be altered or otherwise affected by any amendment,
modification, supplement, extension, renewal, restatement or refinancing of
either the Senior Discount Notes or the Securities, nor by any action or
inaction which the holders of the Senior Discount Notes, any agent acting on
behalf of the holders of the Senior Discount Notes, the Trustee or any Holder
may take or fail to take in respect of the Collateral. The Trustee agrees that
it will not (either for itself or on behalf of the Holders) contest the
validity, perfection, priority or enforceability of the Senior Security
Interest, or the respective priorities of the security interests securing the
Senior Discount Notes and the Securities set forth herein, or the validity or
reasonableness of any act or omission by the holders of the Senior Discount
Notes or by any agent acting on behalf of the Senior Discount Notes, including,
without limitation, the timing, method, or manner of collecting or otherwise
realizing upon the Collateral. As between the holders of the Senior Discount
Notes and the Holders, the terms of this Agreement shall govern even if part or
all of the Senior Discount Notes or the Senior Security Interest are not
perfected or are avoided, disallowed, set aside or otherwise invalidated in any
judicial proceeding or otherwise.
4. RIGHTS TO PAYMENTS, ETC. So long as no Event of Default has
occurred and is continuing hereunder, the Corporation shall be entitled to
receive and hold the Collateral, including without limitation, all Collateral
Revenues, and to exercise any and all rights with respect to the Collateral,
subject, however, to its obligations under this Security Agreement and the
Indenture. If the Trustee receives any such Collateral or Collateral Revenues
prior to an Event of Default, it shall promptly pay and deliver the same to the
Corporation upon written request from the Corporation to do so. Prior to an
Event of Default, neither the Trustee nor any Holder of the Securities shall
contact any of the licensees under the License Agreements.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Corporation hereby
represents, warrants and covenants to the Trustee as follows, except that with
respect to the following representations, warranties and covenants, each of the
Corporation and the Trustee hereby acknowledges that the License Agreements with
Hitachi, Ltd. and Toshiba prohibit the assignment by the Corporation of its
rights thereunder:
5.1 Power and Authority. The Corporation has full corporate power,
authority and the legal right to grant to the Trustee the security interest in
the Collateral granted hereunder; and to execute, deliver and perform its
obligations hereunder. This Security Agreement has been duly
2
and validly executed and delivered by the Corporation, and constitutes the
Corporation's legal, valid and binding obligation, enforceable against the
Corporation in accordance with its terms.
5.2 Title to Collateral. The Corporation has and will maintain good
and marketable title to the Collateral, free and clear of all liens, claims,
encumbrances or rights of others (other than the security interest granted to
the Trustee hereunder and the Senior Security Interest). Except for the Senior
Security Interest and the UCC-1 financing statements as filed with the Secretary
of State of the States of California and Delaware on November 8, 2000 in
connection therewith, there is no financing statement (or similar statement,
agreement, pledge, mortgage, notice or registration), lien (including any
federal or state tax lien), suit (including any action, proceeding, or other
litigation pending, or to the Corporation's knowledge, threatened) or judgment
(including any award, injunction, order) filed with, registered, indexed or
recorded in any public office, court, arbitration panel, administrative agency
or regulatory authority, directly or indirectly, naming or encumbering or
covering or involving any of the Collateral. Each of the License Agreements is
genuine and in all respects what it reports to be and, to the Corporation's
knowledge, represents the genuine, valid and binding obligations of each
licensee thereunder, evidences true and undisputed obligations enforceable in
accordance with its terms, and is in compliance and conforms with all applicable
federal, state and local laws and applicable laws of any jurisdiction outside of
the United States in effect on the date hereof.
5.3 Perfected Security Interest. The execution and delivery of this
Security Agreement and the grant by the Corporation of a security interest in
the Collateral hereunder creates a valid security interest in the Collateral,
subject to the Senior Security Interest, which has attached and is enforceable
and which, upon filing of the Financing Statements with the Secretary of State
of the State of Delaware (which is the only jurisdiction in which Financing
Statements are required to be filed), will be perfected and subject to no prior
or equal security interest, other than the Senior Security Interest.
5.4 Maintenance of the Collateral. The Corporation shall keep and
maintain the Collateral, shall duly and timely fulfill and perform all
obligations on its part to be fulfilled or performed under or in connection with
the License Agreements, and shall not take any action or omit to take any action
that could reasonably be expected to impair its rights thereunder. The
Corporation shall use its best efforts to collect or cause to be collected from
the licensees named in each License Agreement, as and when due, any and all
amounts owing under or on account of such License Agreement (including, without
limitation, any payments thereunder which are delinquent, such amounts to be
collected in accordance with generally accepted lawful collection procedures),
and apply forthwith upon receipt thereof all such amounts as are so collected to
the outstanding balance payable under such License Agreement. Except as
contemplated hereby, and except for the Senior Security Interest, the
Corporation shall not, without the Trustee's written consent, sell, assign,
lease, transfer, hypothecate, mortgage, incur, permit or suffer to exist a lien
upon, or otherwise dispose of any of the Collateral, and nothing in this
Security Agreement shall be deemed a consent by the Trustee to any such action
except as expressly permitted herein. The Corporation shall maintain the
security interest created by the Corporation under this Security Agreement,
subject to the Senior Security Interest, and will defend the Collateral against
and take such other action as is necessary to remove any other lien on the
Collateral except as permitted hereunder.
3
5.5 Chief Executive Office; Records. The Corporation is incorporated
in the State of Delaware and shall not change its state of incorporation without
the prior written consent of the Trustee. The Corporation's chief executive
office is located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, and the
Corporation shall give Trustee the prompt written notice of any change in the
address of such office. The Corporation shall keep and maintain at its chief
executive office, at its own cost and expense, to the reasonable satisfaction of
the Trustee, complete and accurate records relating to the License Agreements,
including, but not limited to, records of all payments received and all credits
granted thereon, and all other dealings in connection therewith. The Corporation
shall make all such records available or deliver to the Trustee or its
representatives, from time to time, both promptly following the Trustee's
request and immediately following an Event of Default, all at the Corporation's
own cost and expense. If the Trustee shall so request (but subject to the Senior
Security Interest), upon an Event of Default the Corporation shall promptly (i)
legend, register and record, in form and substance satisfactory to the Trustee,
the License Agreements and other books, records and documents evidencing or
pertaining thereto, with an appropriate reference to the interest of the Trustee
therein and (ii) notify the licensee with respect thereto to make payments
directly to the Trustee.
5.6 No Violation of Law; Indemnity. The Corporation has not and shall
not acquire, obtain, hold, possess, maintain, use, sell, transfer, grant,
pledge, or dispose (for purposes of this section, collectively "the
Corporation's use") of any of the Collateral in violation of any statute, law,
rule, ordinance, regulation, policy, procedure, injunction, award, decree,
judgment, contract, agreement, understanding, or right or interest of any other
Person (for purposes of this section collectively "violation"), and to the
Corporation's knowledge no such violation has been made by any other Person and
no basis for a claim of any such violation exists. The Corporation shall
indemnify and hold the Trustee harmless from and against any such violation or
claim of violation, or any other loss, liability, damage, cost or expense
whatsoever arising out of or in connection with the Corporation's use of any of
the Collateral.
5.7 License Agreements. Schedule 2 hereto lists each License
Agreement in effect as of the date hereof pursuant to which the Corporation
received during 2001, or expects to receive during 2002, any patent royalties,
license fees or similar payments.
6. EVENTS OF DEFAULT. The occurrence of any "Event of Default" under
the Securities or the Indenture shall constitute an "Event of Default"
hereunder.
7. REMEDIES.
7.1 Cumulative Rights and Remedies. Upon the occurrence of an Event
of Default, the Trustee shall have the rights, powers and remedies (i) granted
to secured parties under the UCC or other applicable Uniform Commercial Code;
(ii) granted to the Trustee under any other applicable statute, law, rule or
regulation; and (iii) granted to the Trustee under this Security Agreement
(including without limitation the right to cause the registration of this
Security Agreement with the United States Patent and Trademark Office), the
Securities, the Indenture, or any other agreement between the Corporation and
the Trustee. In addition, all such rights, powers and remedies shall be
cumulative and not alternative. Any single or partial exercise of, or
forbearance, failure or delay in exercising any right, power or remedy shall not
be, nor shall any such single or partial exercise of, or forbearance, failure or
delay be deemed to be a
4
limitation, modification or waiver of any right, power or remedy and shall not
preclude the further exercise thereof; and every right power and remedy of the
Trustee shall continue in full force and effect until such right, power and
remedy is specifically waived by an instrument in writing executed and delivered
with respect to each such waiver by the Trustee.
7.2 Additional Rights of the Trustee. Without limiting the provisions
of Section 7.1 hereof, upon an Event of Default, the Trustee may, from time to
time, in its discretion, and without the Corporation's assent, without
advertisements or notices of any kind (except for the notice specified in
Section 7.4 below regarding notice required in connection with a public or
private sale), or demand for performance or other demand, or obligation or
liability (except to account for amounts actually received) to the Corporation
or any other Person (all such advertisements, notices and demands, obligation
and liabilities, if any, hereby being expressly waived and discharged to the
extent permitted by law), forthwith and subject to all applicable laws and
regulations, enter any premises, with or without the assistance of other persons
or legal process, require the Corporation to account for (including accounting
for any products and proceeds of any Collateral), segregate, assemble, make
available and deliver to the Trustee or its representatives, take possession of,
collect, transfer and receive, recover, appropriate, foreclose, extend payment
of, adjust, compromise, settle, release any claims included in, and do all other
acts or things necessary or, in the Trustee's judgment appropriate, to protect,
maintain, preserve and realize upon the Collateral and any products and proceeds
thereof, in whole or in part, exercise all rights, powers and interests with
respect to any and all Collateral, and sell, assign, license, pledge, transfer,
negotiate (including, without limitation, endorse checks, drafts, orders, or
instruments), deliver or otherwise dispose (by contract, option(s) or otherwise)
the Collateral or any part thereof. Any such disposition may be in one or more
public or private sales, at such price, for cash or credit (or for future
delivery without credit risk) and upon such other terms and conditions, and at
such locations, as it deems appropriate, with the right of the Trustee (to the
extent permitted by law upon any such sale or sales, public or private) to
purchase the whole or any part of said Collateral, free of any right, claim or
equity of redemption (such rights, claims and equity of redemption, if any,
hereby being expressly waived). Notwithstanding that the Trustee, whether in its
own behalf or on behalf of another or others, may continue to hold the
Collateral, and regardless of the value thereof, or may delay or fail to dispose
thereof, unless and then only to the extent that the Trustee proposes to retain
the Collateral in satisfaction of the Obligations by written notice in
accordance with the UCC, the Corporation shall be and remain liable for the
payment in full of any balance of the Obligations at any time unpaid.
7.3 Application of Proceeds. The Trustee may apply the net proceeds,
if any, of any collection, receipt, recovery, appropriation, foreclosure or
realization, or from any sale, assignment, license, pledge, transfer, delivery
or disposition, after deducting all costs and expenses (including reasonable
attorneys' fees, court costs and legal expenses) incurred therein or with
respect to the care, safekeeping, custody, maintenance, protection,
administration or otherwise of any and all of Collateral or in any way relating
to the rights of the Trustee under this Security Agreement: (i) first, to the
satisfaction of the Obligations, in whole or in part, in such order as the
Trustee may, in its discretion, elect; (ii) second, to the payment, satisfaction
or discharge of any other indebtedness or obligation of the Corporation as
required by any law, rule or regulation; and (iii) lastly, the surplus, if any,
to the Corporation.
5
7.4 Required Notice of Sale. In exercising its rights, powers and
remedies as the Trustee, the Trustee agrees to give the Corporation ten (10)
days' notice of the time and place of any public sale of Collateral or of the
time after which any private sale of Collateral may take place, unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market. The Corporation agrees that such
period and notice is commercially reasonable under the circumstances.
7.5 Waivers. The Trustee may waive an existing Event of Default and
its consequences on the terms and conditions described in the Indenture. In
addition, any such Event of Default may be waived directly by the Holders so
empowered to act under the Indenture. Upon any such waiver, any Event of Default
shall be deemed to have been cured for purposes of this Agreement, but no such
waiver shall extend to any subsequent or other Event of Default or impair any
right consequent thereto. In the event any provision contained in this Agreement
shall be breached by the Corporation and thereafter duly waived by the Trustee
on behalf and at the request of the Holders or directly by the Holders so
empowered to act, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder.
8. RIGHTS AND DUTIES WITH RESPECT TO COLLATERAL. The Trustee shall
be under no duty to collect or protect the Collateral or to preserve rights
pertaining thereto, beyond the exercise of reasonable care to assure the safe
custody of the Collateral while in its possession, and shall be relieved of all
further responsibility for the Collateral upon surrendering it to the
Corporation. Without limiting the generality of the foregoing, the Trustee shall
have no obligation to preserve any rights against prior parties or, except as
expressly provided herein, to exercise any right or perform any obligation in
connection with the Collateral. The Trustee shall hold the Collateral while in
its possession for the benefit of itself and the Holders in accordance with and
subject to the provisions of the Indenture.
9. POWER OF ATTORNEY. The Corporation hereby irrevocably constitutes
and appoints the Trustee or any officer or agent thereof, with full power of
substitution, as the Corporation's true and lawful attorney-in-fact with full
irrevocable power and authority in the Corporation's place and stead and in the
Corporation's name or in its own name, upon an Event of Default and from time to
time thereafter in the Trustee's discretion, to take any and all action, to do
any and all things, including without limitation, to execute, endorse, deliver
and file any and all writings, documents, instruments, notices, statements
(including, without limitation, financing statements), applications and
registrations (including, without limitation, registrations with the United
States Patent and Trademark Office), checks, drafts, acceptances, money orders,
or other evidence of payment or proceeds, which may be or become necessary or
desirable in the sole discretion of the Trustee to accomplish the terms,
purposes and intent of this Security Agreement. Said attorney or designee shall
not be liable for any acts of commission or omission, nor for any error of
judgment or mistake of fact or law, unless and then only to the extent that the
same constitutes its gross negligence or willful misconduct. This power is
coupled with an interest and is irrevocable.
10. INDEMNIFICATION. The Corporation hereby indemnifies, saves and
holds harmless the Trustee from and against all expenses, costs, liabilities,
losses or damages, including, without limitation, reasonable attorney's fees and
expenses, suffered or incurred by
6
the Trustee arising out of or in connection with this Security Agreement or the
transactions contemplated hereby. Without limiting the foregoing, the
Corporation will pay to the Trustee all expenses (including reasonable
attorney's fees and expenses) of, or incidental to, the enforcement of any of
the provisions hereof or of any of the Obligations, or any actual or attempted
sale, assignment, license or other disposition of, or any exchange, enforcement,
collection, compromise or settlement of any of the Collateral or receipt of the
proceeds thereof in accordance with the terms of this Security Agreement, and
for the care of the Collateral and defending or asserting the rights and claims
of the Trustee in respect thereof, by litigation or otherwise, including expense
of insurance, and all such expenses shall be deemed to be included in the
Corporation's Obligations.
11. OBLIGATIONS ABSOLUTE. The Corporation's Obligations shall be
absolute, unconditional and irrevocable and shall be paid or satisfied strictly
in accordance with their respective terms, including without limitation: (i) the
invalidity or unenforceability of all or any or any part of this Security
Agreement, the Securities or the Indenture, or any consent, waiver, amendment or
modification hereof or thereof; (ii) the existence of any claim, setoff, defense
or other right which the Corporation may have at any time against the Trustee or
any other Person, whether in connection with this Security Agreement, the
Securities or the Indenture, the License Agreements or the transactions
contemplated hereby or thereby; or (iii) the loss, theft, damage, destruction or
unavailability to the Corporation of the Collateral for any reason whatsoever,
it being understood and agreed that the Corporation retains all liability and
responsibility with respect to the Collateral.
12. BINDING AGREEMENT; ASSIGNMENT. This Security Agreement shall bind
and inure to the benefit of the parties hereto, their respective, heirs,
executors, administrators, successors and permitted assigns. The Corporation may
not, in whole or in part, directly or indirectly, assign this Security Agreement
or its rights hereunder or delegate its duties hereunder without, in each
instance, the specific prior written consent of the Trustee, which consent may
be withheld or delayed in the Trustee's sole discretion.
13. FURTHER ASSURANCES. The Corporation agrees, at any time and from
time to time, at the Corporation's sole cost and expense, to obtain, procure,
execute and deliver, file and affix such further agreements, bills of sale and
assignment, instruments, documents, notices, statements (including financing
statements), powers (including stock and bond powers, and powers of attorney),
tax stamps and information, and to do or cause to be done all such further acts
and things (including the execution, delivery and filing of financing statements
on Form UCC-1, payment of filing fees and transfer, gains and recording taxes)
as may be required to perfect or maintain the security interest in the
Collateral granted to the Trustee hereby, or as the Trustee may reasonably
request, from time to time, in its discretion, and to pay all fees, costs and
expenses relating thereto. Upon the Corporation's failure to abide by and comply
with its obligations under this Section 13, in addition to its other rights and
remedies, the Trustee may, in its sole discretion and to the extent it deems
necessary, advisable or appropriate, take or cause such action to be taken or
thing to be done as required hereby and under the UCC and the costs incurred in
connection therewith shall be deemed to be included in the Corporation's
Obligations. Without limiting the foregoing, the Corporation authorizes the
Trustee, to the extent permitted under the UCC, to execute, file or file without
the Corporation's signature any and all financing statements, amendments thereto
and continuations thereof as the Trustee deems
7
necessary or appropriate and the Corporation shall pay, indemnify the Trustee
for and hold the Trustee harmless from and against any and all costs and
expenses in connection therewith.
14. TERM. This Security Agreement shall commence on the date hereof
and shall terminate upon the indefeasible payment and performance in full of all
of the Obligations. Upon termination of this Security Agreement, at the request
and expense of the Corporation, the Trustee will promptly execute and deliver to
the Corporation a proper instrument or instruments (including UCC termination
statements on Form UCC-3) acknowledging the satisfaction and termination of this
Security Agreement, and will duly assign, transfer and deliver to the
Corporation (without recourse and without any representation or warranty) such
of the Collateral as may be in the possession of the Trustee that has not
theretofore been sold or otherwise applied or released pursuant to this Security
Agreement.
15. MISCELLANEOUS.
15.1 Amendments, Consents, Authorizations. None of the terms or
provisions of this Security Agreement may be waived, altered, modified, or
amended except with the prior written consent of the Trustee given in accordance
with Article 10 of the Indenture. Without limiting the foregoing, no action or
omission to act shall be deemed to be a consent, authorization, representation
or agreement of any party hereto, under the UCC or otherwise, unless, in each
instance, the same is in a specific writing signed by such party and is in
accordance with the terms of the Indenture.
15.2 Notices. All notices under this Security Agreement shall be in
writing and shall be deemed effective if made in accordance with and as provided
in the Indenture.
15.3 Governing Law. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and wholly performed in the State of New York.
15.4 WAIVER OF RIGHT TO JURY TRIAL. EACH OF THE CORPORATION AND THE
TRUSTEE HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM,
CAUSE OF ACTION, COUNTERCLAIM OR OTHER PROCEEDING BASED UPON OR ARISING OUT OF
OR RELATING TO THIS SECURITY AGREEMENT, THE VALIDITY OR ENFORCEABILITY OF THIS
SECURITY AGREEMENT, OR ANY PROVISIONS HEREOF, OR THE TRANSACTIONS CONTEMPLATED
HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
15.5 Severability. If and to the extent that any provision of this
Security Agreement shall be held invalid and unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provisions hereof.
8
15.6 Captions. The headings, titles and captions used herein are for
convenience only and shall not effect the construction of this Security
Agreement or any term or provision hereof.
[END OF TEXT]
9
IN WITNESS WHEREOF, each of the parties hereto has executed and delivered
this Security Agreement and as of the date first set forth above.
AMPEX CORPORATION
By: ___________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: ____________________________
Name:
Title:
10
SCHEDULE 1
----------
DEFINITIONS
-----------
"Collateral" means all of the right, title and interest now owned or
hereafter acquired by the Corporation, as licensor under the License Agreements,
including, without limitation, the Corporation's rights to receive all
royalties, license fees and other payments thereunder and all accounts
receivable arising in connection therewith; and all additions thereto,
substitutions therefor and replacements thereof, all royalty and other
receivables, income, interest, dividends, distributions and earnings thereon or
other monies or revenues derived therefrom ("Collateral Revenues"); and all
products and proceeds of the foregoing.
"Collateral Revenues" has the meaning accorded to such term in the
definition of Collateral.
"Event of Default" has the meaning accorded to such term in section 5
hereof.
"Financing Statements" means the financing statements on Form UCC-1,
covering the security interest in the Collateral granted by the Corporation to
the Trustee hereunder.
"License Agreements" means the patent license agreements (and any and all
amendments, modifications and supplements thereto entered into by the
Corporation after the date hereof) listed in SCHEDULE 2 hereto, as such SCHEDULE
2 may be amended from time to time in accordance with the terms and conditions
of this Security Agreement.
"Person" means any individual, corporation, partnership, association,
firm, or other entity.
"Senior Security Interest" means the security interest in and lien on the
Collateral granted by the Corporation to the Secured Party under the Senior
Security Agreement (as defined in the Indenture).
"UCC" means the Uniform Commercial Code of the State of New York.
11
SCHEDULE 2
----------
Patent License Agreements
-------------------------
1. Consumer VTR License Agreement dated as of July 1, 1994 between the
Corporation, as Licensor, and Daewoo Electronics Co., Ltd. ("Daewoo"),
a Licensee.
2. License Agreement dated as of September 16, 1995, between the
Corporation, as Licensor, and Funai Electric Company Limited ("Funai"),
as Licensee.
3. First Amendment to License Agreement dated as of June 16, 2000, between
the Corporation, as Licensor, and Funai, as Licensee, as amended on
October 1, 2001.
4. Second Amendment to License Agreement dated as of January 1, 2001,
between the Corporation, as Licensor, and Funai Electric Company
Limited ("Funai"), as Licensee.
5. Consumer Video Recorder License Agreement dated as of April 1, 1996,
between the Corporation and Hitachi, Ltd.
6. Computer Data Recorder License Agreement dated as of April 1, 1996
between the Corporation and Hitachi, Ltd.
7. License Agreement dated as of May 1, 1969, between the Corporation and
Ampex International S.A.("AISA"), as Licensors, and Matsushita Electric
Industrial Co, Ltd. ("Matsushita"), as Licensee, amending (the "1969
License Agreement").
8. Amendment dated as of October 1, 1973, between the Corporation and AISA,
as Licensors, and Matsushita, as Licensee, amending the 1969 License
Agreement.
9. Memorandum dated as of May 19, 1981, between the Corporation and AISA as
Licensors, and Matsushita, as Licensee, the 1969 License Agreement.
10. Amendment to License Agreement dated as of October 16, 1986, between the
Corporation and AISA as Licensors, and Matsushita, as Licensee.
11. Memorandum dated as of January 1, 1987 between the Corporation and AISA as
Licensors, and Matsushita, as Licensee, supplementing the 1969 License
Agreement dated May 1, 1969.
12. Consumer VTR License Agreement dated as of July 1, 1985, between the
Corporation and AISA, as Licensors, and Orion Electric Co. Ltd.("Orion"),
as Licensee.
13. License Agreement dated as of April 1, 1998, between the Corporation,
as Licensor, and Orion, as Licensee.
14. License Agreement dated as of February 21, 1995, between the
Corporation, as Licensor, and Sanyo Electric Company, Ltd., as Licensee.
15. Grant of Release and License dated as of January 1, 1995, between the
Corporation, as Licensors, and Sharp Corporation, as Licensee.
16. License Agreement dated as of July 1, 1998, between the Corporation, as
Licensor, and Shintom Company Ltd. ("Shintom"), as Licensee.
17. Settlement Agreement dated as of March 1, 1999, between the Corporation
and AISA, as Licensor, and Sony Corporation ("Sony") as Licensee.
18. Side Letter to License Agreement dated as of January 1, 1991, between the
Corporation and AISA, as Licensors, and Sony, as Licensee.
19. License Agreement dated as of April 1, 1986 between the Corporation and
AISA, as Licensors, and Sony, as Licensee.
20. License Agreement dated as of July 1, 1997, among the Corporation, on
the one hand, and Toshiba Corporation, Toshiba Video Products Pte.,
Ltd., and Toshiba Consumer Products (UK) Ltd., on the other hand
(collectively, "Toshiba").
13
EXHIBIT C
---------
FORM OF SUPPLEMENTAL INDENTURE
19
EXHIBIT C
---------
SUPPLEMENTAL INDENTURE
THIS SUPPLEMENTAL INDENTURE, dated as of February [__], 2002 (this
"Supplemental Indenture"), is entered into by and between AMPEX CORPORATION, a
Delaware corporation (the "Corporation") and THE BANK OF NEW YORK, a New York
banking corporation, as successor to IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company, as
Trustee (the "Trustee"), and supplements the Indenture, dated as of January 28,
1998, as amended (the "Indenture"), between the Corporation and the Trustee.
Capitalized terms used but not defined herein shall have the meanings set forth
in the Indenture.
PRELIMINARY STATEMENT
Holders of Securities holding at least a majority in aggregate
principal amount of the Securities outstanding, by entering into a certain
exchange agreement, dated January, [__], 2002, by and among the Company and each
holder of Securities that is a party thereto (the "Exchange Agreement"), have
consented to certain amendments to the Indenture, which amendments will be
effected through the execution and delivery of this Supplemental Indenture.
AGREEMENT
The parties wish to amend the Indenture, and, in consideration of
the premises and other good and valid consideration, intending to be legally
bound, have agreed as follows:
Section 1. Deletion of Restrictive Covenants. Section 4.02 (SEC
Reports), Section 4.03 (Limitation on Indebtedness), Section 4.04 (Limitation on
Restricted Payments), Section 4.05 (Limitation on Asset Sales), Section 4.06
(Limitation on Liens), Section 4.07 (Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries), Section 4.08 (Limitation on
Transactions with Affiliates), Section 4.09 (Limitation on Designation of
Unrestricted Subsidiaries), Section 4.10 (Change of Control), Section 4.11
(Compliance Certificate; Notice of Defaults), Section 4.12 (Further Instruments
and Acts) and Section 5.01 (When Corporation May Merge or Transfer Assets), are
hereby deleted from the Indenture in their entirety.
Section 2. Miscellaneous. Except as set forth above, the Indenture
shall remain in full force and effect as constituted as the date hereof. This
Supplemental Indenture shall become effective upon the later to occur of: (i)
the consummation of the Exchange (as defined in the Exchange Agreement) in
accordance with the terms of the Exchange Agreement and (ii) the execution and
delivery of this Supplemental Indenture by the Trustee. This Supplemental
Indenture shall be governed by the laws of the State of New York. This
Supplemental Indenture may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Supplemental Indenture by signing any such
counterpart.
Section 3. Trustee Acceptance. The Trustee accepts the amendment of
the Indenture effected by this Supplemental Indenture and agrees to execute the
trust created by the Indenture, as hereby amended, but only upon the terms and
conditions set forth in the Indenture, as hereby amended. Without limiting the
generality of the foregoing, the Trustee has no responsibility for the
correctness of the recitals of fact herein contained, which shall be taken as
the statements of the Company, and the Trustee makes no representations as to
the validity, enforceability against the Company or sufficiency of this
Supplemental Indenture.
[END OF TEXT]
2
IN WITNESS WHEREOF, the parties have caused this Supplemental
Indenture to be duly executed by their authorized officers, all as of the day
and year first above written.
AMPEX CORPORATION
By:__________________________
Name:
Title:
Attest:
--------------------------
THE BANK OF NEW YORK, TRUSTEE
By:__________________________
Name:
Title:
3
CONSENT OF NOTEHOLDER
The undersigned represents that it is the beneficial holder of the
12% Senior Notes due 2003 (the "Notes") of Ampex Corporation set forth below as
of the Record Date and that it has full power and authority to execute this
consent (this "Consent"), and hereby instructs The Bank of New York, as trustee
(the "Trustee"), to execute and deliver the foregoing Supplemental Indenture,
dated as of _________________________ _____, 2002, and hereby irrevocably
consents to its execution.
The undersigned agrees to indemnify the Trustee with respect to any
claims arising out of this Consent in the event the undersigned beneficial
holder owns less than the aggregate principal amount of Notes set forth below.
HOLDER:_____________________________________
By:_________________________________________
Name:
Title:
____________________________________________
Street Address
____________________________________________
City State Zip
Aggregate Principal Amount
of Notes Held:
$___________________________________
Nominee Name (if different
from name of Holder):
____________________________________
Tax I.D.# __________________________
Date:_______________________________
4
Signature Guarantee:
____________________________________
5