Exhibit 4.1
AMPEX DATA SYSTEMS CORPORATION
and the other parties identified on the signature pages hereto
_________________________
NOTE PURCHASE AGREEMENT
_________________________
$8,919,555.56 AGGREGATE PRINCIPAL AMOUNT OF
SENIOR DISCOUNT NOTES
DUE MAY 31, 2001
OF
AMPEX DATA SYSTEMS CORPORATION
DATED AS OF NOVEMBER 6, 2000
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS........................................... 1
1.1 Definitions................................................................ 1
1.2 Accounting Terms........................................................... 10
ARTICLE II PURCHASE AND SALE OF NOTES................................................. 10
2.1 Issuance of Senior Discount Notes.......................................... 11
2.2 Sale and Purchase of Notes................................................. 11
2.3 Closing of Sale of Notes................................................... 12
ARTICLE III CONDITIONS TO CLOSING...................................................... 12
3.1 Conditions Precedent to Obligations of the Purchasers on the Closing Date.. 12
3.2 Conditions Precedent to Obligations of the Issuer on the Closing Date...... 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES, ETC........................................ 15
4.1 Existence and Power........................................................ 15
4.2 Authority.................................................................. 16
4.3 No Violation............................................................... 16
4.4 Binding Agreements......................................................... 16
4.5 Licenses, etc.............................................................. 16
4.6 Title to Property; Liens................................................... 17
4.7 Commission Filings......................................................... 17
4.8 Litigation................................................................. 18
4.9 Defaults in Other Agreements............................................... 18
4.10 Tax Returns and Payments................................................... 18
4.11 Compliance with Applicable Laws............................................ 18
4.12 Patents, Trademarks, Franchises; Royalty Agreements........................ 19
4.13 Regulatory Matters......................................................... 20
4.14 Environmental Matters...................................................... 20
4.15 Application of Certain Laws and Regulations................................ 21
4.16 Margin Regulations, Foreign Assets Control Regulation...................... 21
4.17 Other Indebtedness......................................................... 21
4.18 No Misrepresentation....................................................... 21
4.19 Employee Benefit Plans..................................................... 22
-i-
TABLE OF CONTENTS
(continued)
Page
4.20 Employee Matters........................................................... 23
4.21 Burdensome Obligations..................................................... 23
4.22 Investment Banking and Brokerage Fees...................................... 23
4.23 Insurance.................................................................. 23
4.24 Transactions with Affiliates............................................... 23
4.25 Limitation on Subsidiary Payment Restrictions.............................. 24
4.26 Private Offering........................................................... 24
ARTICLE V PURCHASE FOR INVESTMENT; SOURCE OF FUNDS................................... 24
5.1 Purchase for Investment.................................................... 24
5.2 Authority.................................................................. 25
5.3 Existence.................................................................. 25
ARTICLE VI REDEMPTIONS................................................................ 25
6.1 Voluntary Redemption....................................................... 25
6.2 Mandatory Redemption on Asset Disposition or Change of Control............. 26
6.3 Payment of Accreted Value.................................................. 26
ARTICLE VII AFFIRMATIVE COVENANTS...................................................... 26
7.1 Payment of Senior Discount Notes........................................... 26
7.2 Legal Existence; Good Standing............................................. 26
7.3 Commission Reports, Filings and Other Information.......................... 26
7.4 Reports to Governmental Bodies and Other Persons........................... 28
7.5 Maintenance of Licenses and Other Agreements............................... 29
7.6 Maintenance of Insurance................................................... 29
7.7 Environmental Matters...................................................... 29
7.8 Compliance with Laws....................................................... 30
7.9 Taxes and Claims........................................................... 30
7.10 Maintenance of Properties.................................................. 30
7.11 Governmental Approvals..................................................... 30
7.12 Payment of Indebtedness.................................................... 30
7.13 Books and Records.......................................................... 30
ARTICLE VIII NEGATIVE COVENANTS......................................................... 30
-ii-
TABLE OF CONTENTS
(continued)
Page
8.1 Borrowing.................................................................. 30
8.2 Liens...................................................................... 31
8.3 Merger and Acquisition..................................................... 31
8.4 Contingent Liabilities..................................................... 31
8.5 Dividends and Distributions................................................ 31
8.6 Payments of Indebtedness for Borrowed Money................................ 31
8.7 Investments, Loans......................................................... 32
8.8 Fundamental Business Changes............................................... 32
8.9 Sale or Transfer of Assets................................................. 32
8.10 Acquisition of Additional Properties....................................... 32
8.11 Transactions with Affiliates............................................... 33
8.12 Compliance with ERISA...................................................... 33
8.13 Fiscal Year................................................................ 34
8.14 Restrictions Against Limitations on Upstream Payments...................... 34
8.15 Stay, Extension and Usury Laws............................................. 34
ARTICLE IX DEFAULTS AND REMEDIES...................................................... 34
9.1 Events of Default.......................................................... 34
9.2 Acceleration............................................................... 36
9.3 Other Remedies............................................................. 37
9.4 Waiver of Past Defaults.................................................... 37
9.5 Control by a Majority...................................................... 37
9.6 Rights of Holders to Receive Payment....................................... 37
9.7 Holders May File Proofs of Claim........................................... 37
9.8 Undertaking for Costs...................................................... 37
ARTICLE X AMENDMENTS................................................................. 38
10.1 Amendments and Supplements Requiring Consent of Holders; Other Consents.... 38
10.2 Revocation and Effect of Consents.......................................... 38
10.3 Notation on or Exchange of Senior Discount Notes........................... 39
10.4 Board Approval............................................................. 39
-iii-
TABLE OF CONTENTS
(continued)
Page
ARTICLE XI THE SENIOR DISCOUNT NOTES.................................................. 39
11.1 Form....................................................................... 39
11.2 Replacement Senior Discount Notes.......................................... 39
11.3 Default Interest........................................................... 40
11.4 Record Date................................................................ 40
11.5 Restrictive Legends........................................................ 40
11.6 Notice of Transfer; Opinions of Counsel.................................... 41
ARTICLE XII INDEMNIFICATION............................................................ 41
12.1 Indemnification; Expenses, Etc............................................. 41
ARTICLE XIII MISCELLANEOUS.............................................................. 43
13.1 Survival of Representations and Warranties; Severability................... 43
13.2 Notices, Etc............................................................... 43
13.3 Successors and Assigns..................................................... 45
13.4 Descriptive Headings....................................................... 45
13.5 Satisfaction Requirement................................................... 45
13.6 Governing Law.............................................................. 45
13.7 Service of Process......................................................... 45
13.8 Counterparts............................................................... 46
13.9 Disclosure to Other Persons................................................ 46
13.10 No Adverse Interpretation of Other Agreements.............................. 47
13.11 Waiver of Jury Trial....................................................... 47
13.12 Merger..................................................................... 47
13.13 Expenses................................................................... 47
ARTICLE XIV GUARANTEE.................................................................. 47
14.1 Guarantee.................................................................. 47
14.2 No Waiver, Etc............................................................. 49
ARTICLE XV THE HOLDERS' AGENT......................................................... 50
15.1 Appointment and Authorization.............................................. 50
15.2 Duties As Expressly Stated................................................. 50
15.3 Indemnification............................................................ 50
-iv-
TABLE OF CONTENTS
(continued)
Page
15.4 Consents Under Other Transaction Documents................................. 51
-v-
EXHIBIT 4.1
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of November 6,
---------
2000, is entered into by and among AMPEX DATA SYSTEMS CORPORATION, a Delaware
corporation, as issuer (the "Issuer"), AMPEX CORPORATION, a Delaware
------
corporation, as guarantor (the "Guarantor"), the PURCHASERS listed on the
---------
signature pages hereto (each individually, a "Purchaser" and collectively, the
---------
"Purchasers") and DDJ CAPITAL MANAGEMENT LLC, as agent (the "Holders' Agent")
- ----------- --------------
for the Purchasers and the other holders from time to time of the Senior
Discount Notes (defined below). Unless otherwise defined, capitalized terms
used in this Agreement are defined in Article I; references to a "Schedule" or
an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement; references to a "section" or a "subsection" are,
unless otherwise specified, to a section or a subsection of this Agreement.
WHEREAS, the Issuer has authorized the issuance of its Senior Discount
Notes as hereinafter set forth, and to provide therefor the Issuer has
authorized the execution and delivery of this Agreement;
WHEREAS, the Guarantor owns all of the issued and outstanding capital stock
of the Issuer and has authorized its guarantee of the Issuer's obligations under
the Senior Discount Notes and this Agreement, and to provide therefor the
Guarantor has authorized the execution and delivery of this Agreement;
NOW THEREFORE, the Issuer and the Guarantor, in consideration of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
agrees with the Purchasers and the Holders' Agent as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions. In addition to any terms defined elsewhere in this
-----------
Agreement, unless otherwise specifically provided herein, the following terms
shall have the following meanings for all purposes when used in this Agreement,
and in any note, agreement, certificate, report or other document made or
delivered in connection with this Agreement:
"Accreted Value" means, with respect to any Senior Discount Note as of any
--------------
date through and including the Stated Maturity Date, the sum of (a) the Issue
Price of such Senior Discount Note, and (b) the amount which has accreted at
such time calculated by applying an accretion rate of twenty percent (20%) per
annum to such Issue Price, compounding on April 30 and October 31st of each
year, and based on an annual period of twelve 30-day months. As of the dates
set forth below, the Senior Discount Notes will have the Accreted Value per
$1,000 principal amount of Senior Discount Notes at the Stated Maturity Date
appearing opposite such dates:
Date Accreted Value
- ---- --------------
Issue Date $ 896.91
- -----------------------------------------------------------------------------
November 30, 2000 $ 908.86
- -----------------------------------------------------------------------------
December 31, 2000 $ 923.81
- -----------------------------------------------------------------------------
January 31, 2001 $ 938.76
- -----------------------------------------------------------------------------
February 28, 2001 $ 953.71
- -----------------------------------------------------------------------------
March 31, 2001 $ 968.66
- -----------------------------------------------------------------------------
April 30, 2001 $ 983.61
- -----------------------------------------------------------------------------
Stated Maturity Date $1,000.00
- -----------------------------------------------------------------------------
"ADA" means the Americans with Disabilities Act of 1990, as amended, any
---
successor statute thereto, and the rules and regulations issued thereunder, as
in effect from time to time.
"Affiliate" means any Person that directly or indirectly, through one or
---------
more intermediaries, controls or is controlled by or is under common control
with another Person. The term "control" means possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities or equity
interests, by contract or otherwise. For the purposes hereof any Person which
owns or controls, directly or indirectly, 10% or more of the securities or
equity interests, as applicable, whether voting or non-voting, of any other
Person shall be deemed to "control" such Person. Notwithstanding the foregoing,
(a) the Guarantor and its Subsidiaries shall not be Affiliates of each other,
(b) no individual shall be deemed to be an Affiliate of a corporation solely by
reason of his or her being an officer of such corporation and (c) none of the
Holders or the Holders' Agent shall be deemed to be an Affiliate of the
Guarantor or any of its Subsidiaries.
"Agreement" means this Agreement, as amended, modified or supplemented from
---------
time to time, together with any exhibits, schedules or other attachments
thereto.
"Approvals" means each and every approval, consent, filing or registration
---------
by, or with, any Governmental Body or any creditor or shareholder of the
Guarantor or any of its Subsidiaries, to be obtained by the Issuer or the
Guarantor that is necessary (a) to authorize or permit the execution, delivery
or performance by the Guarantor or the Issuer of the Transaction Documents, and
(b) for the validity or enforceability of any of such Transaction Documents
against the Guarantor or the Issuer.
"Asset Disposition" means any sale, lease, transfer, conveyance, assignment
-----------------
or other disposition, including any such disposition by means of a merger,
consolidation or similar transaction, of all or substantially all of the
Property of the Issuer or of the Guarantor.
"Bankruptcy Law" means Title 11, United States Code, or any similar Federal
--------------
or state law for the relief of debtors.
2
"Board of Directors" means, with respect to any Person, the Board of
------------------
Directors of such Person or any committee of the Board of Directors of such
Person duly authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly adopted
----------------
resolution of the Board of Directors of such Person.
"Business Day" means any day other than a Legal Holiday.
------------
"Capital Stock" of any Person means any and all shares of, or interests,
-------------
rights, participations, and/or other equivalents in (however designated),
corporate stock or equity securities of such Person, including each class of
common stock and preferred stock of such Person and partnership or limited
liability company interests, whether general or limited, of such Person, and
including any securities convertible into or exercisable or exchangeable for, or
any right to acquire, any equity interest in such Person.
"Capitalized Lease" means any lease of Property, the obligations for the
-----------------
rental of which are required to be capitalized in accordance with GAAP.
"Change of Control" means the occurrence of any of the following events:
-----------------
(a) the Guarantor ceases to be the direct and beneficial owner of 100% of the
issued and outstanding Capital Stock of the Issuer; (b) any merger or
consolidation of the Issuer with or into any other Person; (c) any "person" or
"group" as such terms are used in Sections 13(d) and 14(d) of the Exchange Act),
is or becomes the "beneficial owner" directly or indirectly of more than 50% of
the total voting power of the Capital Stock of the Guarantor having the general
voting power under ordinary circumstances to vote for the election of members of
the Board of Directors of the Guarantor; or (d) any merger or consolidation of
the Guarantor with or into any other Person.
"Charter Documents" means, with respect to any Person, the Certificate of
-----------------
Incorporation or Articles of Organization and By-Laws of such Person, or similar
organizational documents, and all amendments thereto.
"Closing" has the meaning ascribed thereto in Section 2.3 hereof.
-------
"Closing Date" has the meaning ascribed thereto in Section 2.3 hereof.
------------
"Code" means the Internal Revenue Code of 1986, as amended, any successor
----
statute thereto, and the rules and regulations issued thereunder, as in effect
from time to time.
"Colorado Deed of Trust" means the Deed of Trust executed by the Issuer in
----------------------
substantially the form of Exhibit C hereto with respect to the Colorado
---------
Facility.
"Colorado Facility" means the Real Property and improvements owned by the
-----------------
Issuer and located at 600 Wooten Road, Colorado Springs, Colorado.
"Commission" means the United States Securities and Exchange Commission or
----------
any other Federal agency at the time administering the Securities Act.
3
"Consolidated" or "consolidated" when used with reference to any accounting
------------ ------------
term, means the amount described by such accounting term, determined on a
consolidated basis in accordance with GAAP, after elimination of intercompany
items.
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
---------
or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time or
-------
both would be, an Event of Default.
"Default Rate" shall mean a rate of interest equal to twenty five percent
------------
(25%) per annum, compounded daily or, if lower, the maximum amount permitted by
law.
"Designated Voluntary Redemption Date" has the meaning ascribed thereto in
------------------------------------
Section 6.1 hereof.
"Dollars" and "$" mean lawful currency of the United States of America.
------- -
"Employee Benefit Plan" means any employee benefit plan within the meaning
---------------------
of Section 3(3) of ERISA which (a) is maintained for employees of the Guarantor
or any ERISA Affiliate or (b) with respect to which the Guarantor or any ERISA
Affiliate has or reasonably could be expected to have any contingent liability.
"Environmental Laws" means any and all applicable federal, state and local
------------------
laws that relate to or impose liability or standards of conduct concerning
public or occupational health and safety or protection of the environment, as
now or hereafter in effect and as have been or hereafter may be amended or
reauthorized, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. (S)9601 et seq.), the
------
Hazardous Materials Transportation Act (42 U.S.C. (S)1802 et seq.), the Resource
------
Conservation and Recovery Act (42 U.S.C. (S)6901 et seq.), the Federal Water
------
Pollution Control Act (33 U.S.C. (S)1251 et seq.), the Toxic Substances Control
------
Act (15 U.S.C. (S)2601 et seq.), the Clean Air Act (42 U.S.C. (S)7901 et seq.),
------ ------
the National Environmental Policy Act (42 U.S.C. (S)4231, et seq.), the Refuse
------
Act (33 U.S.C. (S)407, et seq.), the Safe Drinking Water Act (42 U.S.C.
------
(S)300(f) et seq.), the Occupational Safety and Health Act (29 U.S.C. (S)651 et
------ --
seq.), and all rules, regulations, codes, ordinances and guidance documents
- ---
promulgated or published thereunder, and the provisions of any licenses,
permits, orders and decrees issued pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
"ERISA Affiliate" means any Person who is a member of a group which is
---------------
under common control with the Guarantor or any of its Subsidiaries, who together
with the Guarantor or such Subsidiary is treated as a single employer within the
meaning of Section 414(b), (c) and (m) of the Code.
"Event of Default" has the meaning ascribed thereto in Section 9.1 hereof.
----------------
4
"Exchange Act" means the Securities Exchange Act of 1934, as the same may
------------
be amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
"GAAP" means generally accepted accounting principles as in effect from
----
time to time, which shall include but shall not be limited to the official
interpretations thereof by the Financial Accounting Standards Board or any
successor thereto.
"Governmental Body" means any foreign, federal, state, municipal or other
-----------------
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
"Guaranteed Obligations" has the meaning ascribed thereto in Section 14.1
----------------------
hereof.
"Guarantor" means Ampex Corporation, a Delaware corporation.
---------
"Guarantor Security Agreement" means the Collateral Security Agreement
----------------------------
executed by the Guarantor in favor of the Holders' Agent in substantially the
form of Exhibit D hereto, granting the Holders' Agent and the Holders a Lien on
---------
all rights of the Guarantor under the Royalty Agreements.
"Hazardous Materials" means any hazardous, toxic, dangerous or other waste,
-------------------
substance or material defined as such in, regulated by or for purposes of any
Environmental Law.
"Holder" means a Person in whose name a Senior Discount Note is registered.
------
"Holders' Agent" means DDJ Capital Management LLC as agent for the Holders.
--------------
"Illegal Transfer Notice" has the meaning ascribed thereto in Section 11.13
-----------------------
hereof.
"Indebtedness" means all liabilities, obligations and reserves, contingent
------------
or otherwise, which, in accordance with GAAP, would be reflected as a liability
on a balance sheet or would be required to be disclosed in a financial
statement, including, without duplication: (a) Indebtedness for Borrowed Money,
(b) obligations secured by any Lien upon Property, (c) guaranties, letters of
credit and other contingent obligations, and (d) liabilities in respect of
unfunded vested benefits under any Pension Plan or in respect of withdrawal
liabilities incurred under ERISA by the Guarantor or any ERISA Affiliate to any
Multiemployer Plan.
"Indebtedness for Borrowed Money" means without duplication, all
-------------------------------
Indebtedness (a) in respect of money borrowed, (b) evidenced by a note,
debenture or other like written obligation to pay money (including, without
limitation, the Senior Discount Notes and the 12% Senior Notes), (c) in respect
of rent or hire of Property under Capitalized Leases or for the deferred
purchase price of Property, (d) in respect of obligations under conditional
sales or other title retention agreements, and (e) all guaranties of any or all
of the foregoing.
"Indemnified Party" or "Indemnified Parties" has the meaning ascribed
----------------- -------------------
thereto in Section 12.1(a) hereof.
5
"Insolvency or Liquidation Proceeding" means, with respect to any Person,
------------------------------------
(a) any insolvency or bankruptcy or similar case or proceeding, or any
reorganization, receivership, liquidation, dissolution or winding up of such
Person, whether voluntary or involuntary, or (b) any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of such Person.
"Issue Date" means the date of original issuance of the Senior Discount
----------
Notes.
"Issue Price" means the price paid by the Purchasers for the Senior
-----------
Discount Notes on the Issue Date, which price shall be equal to $896.91 per
$1,000 principal amount at the Stated Maturity Date of the Senior Discount
Notes.
"Issuer" means Ampex Data Systems Corporation, a Delaware corporation.
------
"Lease" means any lease of Real Property under which the Guarantor or any
-----
of its Subsidiaries is the lessee.
"Leasehold Property" means any real estate which is the subject of a Lease.
------------------
"Legal Holiday" means a Saturday, Sunday or a day on which banking
-------------
institutions in New York City, New York, or Boston, Massachusetts, or at such
place of payment, are not required to be open.
"Licenses" means all licenses, permits, consents, approvals and authority
--------
issued by any Governmental Body in connection with the operation of the
businesses of the Guarantor and its Subsidiaries.
"Lien" means any mortgage, pledge, assignment, lien, charge, encumbrance or
----
security interest of any kind, or the interest of a vendor or lessor under any
conditional sale agreement, Capitalized Lease or other title retention
agreement.
"Losses" has the meaning ascribed thereto in Section 12.1(a) hereof.
------
"Management Rights Letters" means the management rights letters dated the
-------------------------
Closing Date executed by each of the Guarantor and the Issuer in favor of the
Holders individually in substantially the form set forth in Exhibit F hereto.
---------
"Mandatory Redemption Date" means a date fixed for mandatory redemption of
-------------------------
the Senior Discount Notes as a result of the occurrence of (a) a Change of
Control, (b) an Asset Disposition, or (c) an acceleration of the maturity of the
Senior Discount Notes pursuant to Subsections 9.2(a) or 9.2(b) hereof.
"Material Adverse Effect" means (a) a material adverse effect upon the
-----------------------
business, operations, Property, profits or financial condition of the Issuer,
(b) a material adverse effect upon the business, operations, Property, profits
or financial condition of the Guarantor and its Subsidiaries taken as a whole,
or (c) a material impairment of the ability of either the Guarantor or the
Issuer, to perform any of its respective obligations under any Transaction
Document.
6
"Multiemployer Plan" means any multiemployer plan as defined pursuant to
------------------
Section 3(37) of ERISA to which the Guarantor or any ERISA Affiliate makes, or
accrues an obligation to make, contributions, or has made, or been obligated to
make, contributions within the preceding six years.
"Officer" means, with respect to any Person, the Chairman of the Board (if
-------
an officer), the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Treasurer or the Secretary of such Person.
"Officers' Certificate" means a certificate executed on behalf of any
---------------------
Person by (a) two Officers of such Person or (b) or by an Officer and an
Assistant Secretary of such Person.
"Operating Lease" means any lease which, under GAAP, is not required to be
---------------
capitalized.
"Opinion of Counsel" means a written opinion from legal counsel to the
------------------
Guarantor and its Subsidiaries who is reasonably acceptable to the Holder's
Agent.
"Payment Restriction" means, with respect to any Subsidiary of any Person,
-------------------
any encumbrance, restriction or limitation, whether by operation of the terms of
its charter or by reason of any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation, on the ability of (a) such Subsidiary
to (i) pay dividends or make other distributions on its Capital Stock or make
payments on any obligation, liability or Indebtedness owed to such Person or any
other Subsidiary of such Person, (ii) make loans or advances to such Person or
any other Subsidiary of such Person, or (iii) transfer any of its properties or
assets to such Person or any other Subsidiary of such Person, or (b) such Person
or any other Subsidiary of such Person to receive or retain any such (i)
dividends, distributions or payments, (ii) loans or advances, or (iii) transfers
of properties or assets.
"PBGC" means the Pension Benefit Guaranty Corporation or any Governmental
----
Body succeeding to the functions thereof.
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
------------
Plan, which is subject to the provisions of Part 3 of Title I of ERISA, Title IV
of ERISA, or Section 412 of the Code and (a) which is maintained for employees
of the Guarantor or any ERISA Affiliate, or (b) with respect to which the
Guarantor or any ERISA Affiliate has or reasonably could be expected to have any
contingent liability.
"Permitted Liens" means any of the following Liens:
---------------
(a) the Liens outstanding as of the Closing Date which are described
on Schedule 1.1;
------------
(b) Liens for taxes or assessments and similar charges, which either
are (i) not delinquent or (ii) being contested diligently and in good faith
by appropriate proceedings, and as to which the Guarantor or the applicable
Subsidiary of the Guarantor has set aside reserves on its books in
accordance with GAAP;
7
(c) statutory Liens, such as mechanic's, materialman's,
warehouseman's, carrier's or other like Liens, incurred in good faith in
the ordinary course of business, provided that the underlying obligations
relating to such Liens are paid in the ordinary course of business, or are
being contested diligently and in good faith by appropriate proceedings and
as to which the Guarantor or the applicable Subsidiary has set aside
reserves on its books in accordance with GAAP;
(d) zoning ordinances, easements, licenses, reservations, provisions,
covenants, conditions, waivers or restrictions on the use of Property and
other title exceptions, in each case, that are reasonably acceptable to the
Holders;
(e) Liens in respect of judgments or awards with respect to which no
Event of Default would exist pursuant to Subsection 9.1(h); and
(f) Liens to secure payment of insurance premiums (i) to be paid in
accordance with applicable laws in the ordinary course of business relating
to payment of worker's compensation, or (ii) that are required for the
participation in any fund in connection with worker's compensation,
unemployment insurance, old-age pensions or other social security programs.
"Person" means any individual, firm, corporation, business enterprise,
------
trust, association, joint venture, partnership, Governmental Body or other
entity, whether acting in an individual, fiduciary or other capacity.
"Post-Petition Interest" means, with respect to any Indebtedness of any
----------------------
Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing such Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.
"Property" means all types of real, personal or mixed property and all
--------
types of tangible or intangible property.
"Purchasers" has the meaning ascribed thereto in the introduction hereof.
----------
"Purchasers' Special Counsel" means Palmer & Dodge LLP, acting as special
---------------------------
counsel to the Purchasers in connection with the transactions contemplated
hereunder or such other counsel as the Purchasers may select.
"Qualified Depository" means a member bank of the Federal Reserve System
--------------------
having a combined capital and surplus of at least $500,000,000.
"Real Property" means real estate and the buildings and improvements
-------------
thereon.
"Redemption Date" means, when used with respect to the Senior Discount
---------------
Notes, the date fixed for redemption of the Senior Discount Notes pursuant to
this Agreement, which date
8
shall be the earliest to occur of (a) the Stated Maturity Date, (b) a Designated
Voluntary Redemption Date, or (c) a Mandatory Redemption Date.
"Restricted Security" has the meaning ascribed thereto in Section 11.6
-------------------
hereof.
"Restricted Subsidiary" means each direct or indirect Subsidiary of the
---------------------
Guarantor other than Ampex Finance Corporation, MicroNet Technology, Inc., TV
onthe Web, Inc., or Alternative Entertainment Network, Inc. and their respective
direct and indirect subsidiaries.
"Royalty Agreements" has the meaning ascribed thereto in Subsection
------------------
4.12(e).
"Rule 144" means Rule 144 as promulgated by the Commission under the
--------
Securities Act, and any successor rule or regulation thereto.
"Rule 144A" means Rule 144A as promulgated by the Commission under the
---------
Securities Act, and any successor rule or regulation thereto.
"Securities Act" means the Securities Act of 1933, as the same may be
--------------
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
"Senior Discount Notes" means collectively the Issuer's Senior Discount
---------------------
Notes due May 31, 2001, each as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to this Agreement and
each note delivered in substitution or exchange for any such note.
"Stated Maturity Date" means May 31, 2001.
--------------------
"Subsidiary" of any Person means any other Person with respect to which
----------
either (a) more than 50% of the interests having ordinary voting power to elect
a majority of the directors or individuals having similar functions of such
other Person (irrespective of whether at the time interests of any other class
or classes of such Person shall or might have voting power upon the occurrence
of any contingency), or (b) more than 50% of the equity interests of such other
Person, is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries. When used herein without reference to
any Person, Subsidiary means a Subsidiary of the Guarantor.
"Tax" and "Taxes" means all present and future taxes, surtaxes, duties,
--- -----
levies, imposts, rates, fees, assessments, withholdings and other charges of any
nature (including income, corporate, capital (including large corporations), net
worth, sales, consumption, use, transfer, goods and services, value-added,
stamp, registration, franchise, withholding, payroll, employment, excise,
business, and property) imposed by any Governmental Body, including without
limitation any ad valorem, property, production, excise, severance, windfall
profit and similar taxes, together with any fines, interest, penalties or other
additions on, to, in lieu, for non-collection of or in respect of those taxes,
surtaxes, duties, levies, imposts, rates, fees, assessments, withholdings and
other charges.
9
"Tax Return" means any return, declaration, report, claim for refund or
----------
information, return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Termination Event" means: (a) a "Reportable Event" described in Section
-----------------
4043 of ERISA and the regulations issued thereunder; or (b) the withdrawal of
the Guarantor or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2); or (c)
the termination of a Pension Plan, the filing of a notice of intent to terminate
a Pension Plan or the treatment of a Pension Plan amendment as a termination
under Section 4041 of ERISA; or (d) the institution of proceedings to terminate,
or the appointment of a trustee with respect to, any Pension Plan by the PBGC;
or (e) any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (f) the partial or complete withdrawal of the
Guarantor or any ERISA Affiliate from a Multiemployer Plan; or (g) the
imposition of a lien pursuant to Section 412 of the Code or Section 302 of
ERISA; or (h) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA; or (i)
any event or condition which results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by the PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Transaction Documents" means, collectively, this Agreement, the Senior
---------------------
Discount Notes, the Colorado Deed of Trust, the Guarantor Security Agreement,
the Management Rights Letters and any and all agreements, certificates,
instruments and other documents contemplated thereby or executed and delivered
in connection with any of the foregoing.
"12% Senior Notes" means the 12% Senior Notes issued by the Guarantor in
----------------
January 1998 and June 1998 in the aggregate original principal amount of
$44,000,000.
"Unrestricted Subsidiaries" means Ampex Finance Corporation, MicroNet
-------------------------
Technology, Inc., TV onthe Web, Inc., Alternative Entertainment Network, Inc.
and their respective direct and indirect Subsidiaries.
"Wholly-Owned Subsidiary" means, with respect to any Person, a Subsidiary
-----------------------
100% of the equity interests in which (however measured) are owned by such
Person or a Wholly-Owned Subsidiary of such Person or such Person and one or
more Wholly-Owned Subsidiaries of such Person taken together, except in any case
for the minimum equity interest required to be held by directors, if any, to
satisfy the requirements of any applicable statute requiring that directors own
qualifying shares.
1.2 Accounting Terms. All accounting terms used and not defined in this
----------------
Agreement shall be construed in accordance with GAAP and all financial data
required to be delivered hereunder shall be prepared in accordance with such
principles.
10
ARTICLE II
PURCHASE AND SALE OF NOTES
2.1 Issuance of Senior Discount Notes. The Issuer has authorized the
---------------------------------
issuance and sale of up to $8,919,555.56 aggregate principal amount at the
Stated Maturity Date of its Senior Discount Notes, to be issued pursuant to and
in accordance with the terms of this Agreement. Each Senior Discount Note will
be issued in the principal amount at the Stated Maturity Date of not less than
$100,000, substantially in the form set forth in Exhibit B hereto and with the
---------
following terms, with such changes thereto, if any, as may be approved in
writing by the Purchasers, the Guarantor and the Issuer:
(a) Maturity. The Senior Discount Notes shall mature and shall be
--------
due and payable in full on the earliest to occur of (i) the Stated Maturity
Date, (ii) a Mandatory Redemption Date, or (iii) a Designated Voluntary
Redemption Date.
(b) Principal Amount. The aggregate principal amount at the Stated
----------------
Maturity Date of the Senior Discount Notes to be issued hereunder shall be
$8,919,555.56.
(c) Interest. The Senior Discount Notes will accrete in value from
--------
and after the Issue Date. No interest will accrue on the Senior Discount
Notes prior to the earliest to occur of (i) the Stated Maturity Date,
(ii) a Mandatory Redemption Date, or (iii) a Designated Voluntary
Redemption Date. If the Issuer fails to pay to the Holders of the Senior
Discount Notes cash in an amount equal to the Accreted Value of the Senior
Discount Notes as of any Redemption Date, interest shall accrue on the
unpaid portion of the Accreted Value of the Senior Discount Notes at the
Default Rate for each day from and after such Redemption Date until the
entire Accreted Value of the Senior Discount Notes as of such Redemption
Date, and all accrued interest thereon, shall have been paid in full.
(d) Redemption. The Senior Discount Notes may be voluntarily
----------
redeemed by the Issuer at any time, without premium or penalty, in
accordance with the provisions of Section 6.1 hereof. The Senior Discount
Notes shall be subject to mandatory redemption upon the earliest to occur
of (a) the Stated Maturity Date, (b) a Change of Control, (c) an Asset
Disposition, or (d) an acceleration of maturity pursuant to Subsections
9.2(a) or 9.2(b) hereof. Except as otherwise expressly provided herein, the
Senior Discount Notes may not be prepaid prior to the Stated Maturity Date.
(e) Payments on the Senior Discount Notes. All payments due in
-------------------------------------
respect of each Senior Discount Note shall be paid to the registered Holder
of such Senior Discount Note as of the date such payment is due in
accordance with the payment instructions provided in writing to the Issuer
by such Holder. The Issuer shall pay the Accreted Value of each Senior
Discount Note (and, if applicable, interest at the Default Rate) in money
of the United States that at the time of payment is legal tender for
payment of public and private debts, by wire transfer of immediately
available funds.
2.2 Sale and Purchase of Notes. Subject to the terms and conditions of
--------------------------
this Agreement, the Issuer agrees to issue and sell to the Purchasers, and each
of the Purchasers severally agrees to purchase from the Issuer, at the Closing
provided for in Section 2.3, the aggregate principal amount at the Stated
Maturity Date of Senior Discount Notes set forth opposite such Purchaser's name
on Exhibit A hereto, at the aggregate Issue Price set forth
---------
11
opposite such Purchaser's name on Exhibit A hereto, payable in cash by wire
---------
transfer of immediately available funds.
2.3 Closing of Sale of Notes. The purchase and delivery of the Senior
------------------------
Discount Notes to be purchased by the Purchasers shall take place at the offices
of the Holders' Agent, at a closing (the "Closing") on November 6, 2000, or at
-------
such other place or on such other date as the Purchasers and the Issuer may
agree upon (such date on which the Closing shall have actually occurred, the
"Closing Date"). At the Closing, the Issuer will deliver or cause to be
delivered to each Purchaser the Senior Discount Notes to be purchased by it
against payment of the Issue Price therefor. The Senior Discount Notes to be
purchased hereunder shall be in the form of Exhibit B hereto dated the date of
---------
the Closing, each in the amounts and registered in the names of the Persons set
forth on Exhibit A hereto. If at the Closing the Issuer shall fail to tender to
---------
any Purchaser any of the Senior Discount Notes to be purchased by it as provided
in this Article II, or any of the conditions specified in Article III for the
benefit of such Purchaser or the Issuer, as the case may be, shall not have been
satisfied or waived in writing by such Purchaser or the Issuer, as applicable,
such Purchaser or the Issuer, as the case may be, shall, at its election, be
relieved of all further obligations under this Agreement, without thereby
waiving any other rights it may have by reason of such failure or such non-
fulfillment.
ARTICLE III
CONDITIONS TO CLOSING
3.1 Conditions Precedent to Obligations of the Purchasers on the Closing
--------------------------------------------------------------------
Date. Each Purchaser's obligation to purchase and pay for the Senior Discount
- -----
Notes to be sold to it at the Closing is subject to the fulfillment to its
satisfaction, prior to or at the Closing, of the following conditions, provided
that any or all of the following conditions may be waived, in whole or in part,
by such Purchaser with respect to this Agreement in its sole and absolute
discretion:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Guarantor and the Issuer contained in this Agreement
shall be correct when made and at the time of the Closing, after giving
effect to the sale of the Senior Discount Notes, except that any
representations and warranties that relate to a particular date or period
shall be correct in all material respects only as of such date or for such
period.
(b) Performance; No Default. The Guarantor and the Issuer each shall
-----------------------
have performed and complied with all agreements and conditions contained in
this Agreement and the other Transaction Documents required to be performed
or complied with prior to or at the Closing, and at the time of the
Closing, after giving effect to the sale of the Senior Discount Notes, no
Default or Event of Default shall have occurred and be continuing.
(c) Compliance Certificates. The Guarantor and the Issuer each shall
-----------------------
have delivered to the Purchasers an Officers' Certificate, dated the
Closing Date, certifying on behalf of the Guarantor and the Issuer,
respectively, that the conditions specified in Sections 3.1(a) and (b) have
been fulfilled.
12
(d) Opinions of Counsel. The Purchasers shall have received from
-------------------
Paul, Hastings, Janofsky & Walker LLP, special counsel for the Issuer and
the Guarantor, and from Joel D. Talcott, General Counsel of the Guarantor
and the Issuer, favorable opinions substantially in the forms set forth in
Exhibits E-1 and E-2, addressed to the Purchasers, dated the Closing Date,
------------ ---
and otherwise reasonably satisfactory in substance and form to the
Purchasers.
(e) Legal Investment. On the Closing Date, the Purchasers' purchase
----------------
of the Senior Discount Notes shall be permitted by the laws and regulations
of the jurisdiction to which the Purchasers are subject (including, without
limitation, Section 5 of the Securities Act and Regulations T, U, or X of
the Board of Governors of the Federal Reserve System), and credit controls
(whether voluntary or mandatory) or similar restraints applicable to the
Purchasers and shall not subject the Purchasers to any tax, penalty,
liability or other onerous condition under or pursuant to any applicable
law or governmental regulation (other than applicable securities law
restrictions on resale of the Senior Discount Notes), and shall not be
enjoined (temporarily or permanently) under, prohibited by or contrary to
any injunction, order or decree applicable to the Purchasers.
(f) Compliance With Securities Laws. The offering, issuance and sale
-------------------------------
of the Senior Discount Notes under this Agreement shall have complied in
all material respects with all applicable requirements of the Federal
securities laws and the Purchasers shall have received evidence, if
requested by the Purchasers, of such compliance in form and substance
reasonably satisfactory to the Purchasers.
(g) Proceedings and Documents. All corporate and other proceedings
-------------------------
contemplated by this Agreement, including, without limitation, the matters
set forth in the Transaction Documents and all of the other documents and
instruments incident thereto, shall be reasonably satisfactory to the
Purchasers, and the Purchasers shall have received all such counterpart
originals or certified or other copies of such documents as the Purchasers
may reasonably request.
(h) Delivery of Transaction Documents. Simultaneously with or prior
---------------------------------
to the issuance and sale to the Purchasers of the Senior Discount Notes to
be purchased by the Purchasers at the Closing:
(i) the Issuer shall have issued and delivered to the Purchasers
the Senior Discount Notes;
(ii) the Issuer and the Guarantor shall have executed and
delivered to the Holders' Agent for the ratable benefit of the
Purchasers an original of this Agreement;
(iii) the Issuer shall have executed and delivered the Colorado
Deed of Trust to Lawyers Title Insurance Corporation for recording
with the El Paso County Recorder;
(iv) the Guarantor shall have executed and delivered to the
Holders' Agent for the ratable benefit of the Holders an original of
the Guarantor Security Agreement, together with original uniform
commercial code financing statements for filing with the California
Secretary of State and the Delaware Secretary of State;
13
(v) Each of the Guarantor and the Issuer shall have executed and
delivered to the Holders' Agent for the benefit of the Holders, a
Management Rights Letter; and
(vi) any other agreements and documents contemplated by this
Agreement or the other Transaction Documents shall have been executed
and delivered by all respective parties thereto and shall be in full
force and effect.
(i) No Adverse U.S. Legislation, Action or Decision. To the knowledge
-----------------------------------------------
of the Guarantor and the Issuer, no legislation, order, rule, ruling or
regulation shall have been enacted or made by or on behalf of any
Governmental Body, department or agency of the United States, nor shall any
decision of any court of competent jurisdiction within the United States
have been rendered which, in the Purchasers' reasonable judgment, could
affect any of the Senior Discount Notes or any part thereof as an
investment. There shall be no action, suit, investigation or proceeding
pending or threatened against or affecting the Purchasers, any of their
respective properties or rights, or any of their respective Affiliates,
associates, officers or directors (in such capacity), before any court,
arbitrator or administrative or Governmental Body which (i) seeks to
restrain, enjoin, prevent the consummation of or otherwise affect the
transactions contemplated by this Agreement and the other Transaction
Documents, or (ii) questions the validity or legality of any such
transactions or seeks to recover damages or to obtain other relief in
connection with any such transactions, and, to the Purchasers' knowledge,
there shall be no valid basis for any such action, proceeding or
investigation.
(j) Governmental and Third Party Permits, Consents, Etc. The
---------------------------------------------------
Guarantor and the Issuer shall have duly applied for and obtained all
Approvals from each Governmental Body, or pursuant to any agreement to
which either the Guarantor or the Issuer is a party or to which any of them
or any of their assets is subject, which are required to be obtained by the
Guarantor or the Issuer in connection with this Agreement, the other
Transaction Documents or any other agreements and documents contemplated
thereby and in connection therewith.
(k) Secretary's Certificate. The Purchasers shall have received a
-----------------------
certificate, dated the Closing Date, of the Secretary or Assistant
Secretary of each of the Guarantor and the Issuer, on behalf of such
entity, (i) certifying as true, complete and correct its articles or
certificate of incorporation, its by-laws and resolutions relating to the
transactions contemplated hereby attached thereto, (ii) as to the absence
of proceedings or other action for dissolution, liquidation or
reorganization of such entity, and (iii) as to the incumbency and specimen
signatures of officers who shall have executed instruments, agreements and
other documents in connection with the transactions contemplated hereby.
(l) Material Adverse Change. No Material Adverse Effect shall have
-----------------------
occurred since June 30, 2000. No litigation or governmental proceeding or
investigation involving the Guarantor or any of its Subsidiaries shall be
pending which in the opinion of the Purchasers could, if adversely
determined, reasonably be expected to have a Material Adverse Effect.
(m) Fees and Expenses. The Purchasers and the Holders' Agent shall
-----------------
have received payment of all fees and expenses payable to them by the
Guarantor and the Issuer on
14
the Closing Date, including all reasonable legal fees and other reasonable
third party expenses of the Purchasers.
3.2 Conditions Precedent to Obligations of the Issuer on the Closing
----------------------------------------------------------------
Date. The Issuer's obligation to issue the Senior Discount Notes at the
- -----
Closing is subject to the fulfillment to its satisfaction, prior to or at the
Closing, of the following conditions, provided that any or all of the following
conditions may be waived, in whole or in part, by the Issuer with respect to
this Agreement in its sole and absolute discretion:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Holders' Agent and the Purchasers contained in this
Agreement shall be correct when made and at the time of the Closing, after
giving effect to the sale of the Senior Discount Notes, except that any
representations and warranties that relate to a particular date or period
shall be correct in all material respects only as of such date or for such
period.
(b) Performance; No Default. The Purchasers and the Holders' Agent
-----------------------
shall have performed and complied with all agreements and conditions
contained in this Agreement required to be performed or complied with prior
to or at the Closing, and at the time of the Closing, after giving effect
to the sale of the Senior Discount Notes, no Event of Default shall have
occurred and be continuing.
(c) Related Matters. Contemporaneously with the Closing, the Issuer
---------------
shall have received payment in full of the Issue Price for the Senior
Discount Notes to be issued pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES, ETC.
In order to induce the Purchasers to purchase the Senior Discount Notes,
the Guarantor and the Issuer each represent and warrant that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made and as though the Closing Date were substituted for the date of this
Agreement throughout Article IV):
4.1 Existence and Power. The Guarantor and the Issuer are each
-------------------
corporations duly formed, validly existing and in good standing under the laws
of the state of Delaware. The Guarantor and the Issuer are each in good standing
under the laws of each jurisdiction in which the ownership of their respective
properties or assets or the operation of their respective businesses requires
them to be in good standing and where the failure to be in good standing could
have a Material Adverse Effect. The Guarantor and the Issuer each have all
requisite power and authority to own their respective Properties and to carry
out their respective businesses as now conducted. The Guarantor owns 100% of the
outstanding capital stock of the Issuer. Except as set forth on Exhibit 4.1
-----------
hereto, the Issuer has no Subsidiaries. Except as set forth on Exhibit 4.1
-----------
hereto, neither the Guarantor nor any of its Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its Capital Stock.
15
4.2 Authority. The Guarantor and the Issuer each have full power and
---------
authority to enter into, execute, deliver and carry out the terms of this
Agreement and the other Transaction Documents to which each of them is a party,
including, without limitation, to issue and sell the Senior Discount Notes and
to incur the obligations provided for herein and therein, all of which have been
duly authorized by all proper and necessary action and are not prohibited by its
Charter Documents.
4.3 No Violation. Neither the execution, delivery or performance by
------------
either the Guarantor or the Issuer of its respective obligations under the
Transaction Documents nor compliance by either entity with the terms and
provisions thereof nor the consummation of the transactions contemplated
thereunder, (i) contravene or violate the Charter Documents of either the
Guarantor or the Issuer, (ii) require any authorization, approval, qualification
or formal exemption from, or other action by or in respect of, or filing of a
declaration or registration with, any court, Governmental Body, agency or
officials or other Person (other than under federal or state securities laws and
except for the recording of the Colorado Deed of Trust with the El Paso County,
Colorado Recorder and the filing of uniform commercial code financing statements
with the Secretary of State of California), (iii) will contravene any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or Governmental Body, or (iv) will conflict or be
inconsistent with or result in any breach of, or require the consent of any
Person under, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
the Guarantor or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which the Guarantor or
any of its Subsidiaries is a party or by which it or any of its material
property or assets is bound or to which it may be subject, except in the case of
clause (iv) for Liens in favor of the Holders' Agent for the ratable benefit of
the Holders.
4.4 Binding Agreements. This Agreement, the Senior Discount Notes and the
------------------
other Transaction Documents, when executed and delivered, will constitute the
valid and legally binding obligations of the Guarantor and the Issuer to the
extent each such entity is a party thereto, enforceable against each such entity
in accordance with their respective terms, except as such enforceability may be
limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect affecting the enforcement of creditors'
rights generally and (b) equitable principles (whether or not any action to
enforce such document is brought at law or in equity).
4.5 Licenses, etc. The Guarantor and each of its Subsidiaries have
--------------
obtained and hold in full force and effect, all franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations, easements, rights
of way and other rights, consents and approvals, and made all filings, which are
necessary for the operation of their respective businesses as presently
conducted (individually, a "License" and collectively, "Licenses"), except where
such failure to do so would not have a Material Adverse Effect. Except as would
not have a Material Adverse Effect, each License is valid and current and the
Guarantor and each of its Subsidiaries are in compliance with the terms thereof.
Except as would not have a Material Adverse Effect, (a) no event has occurred
which permits, or after notice or lapse of time or both would permit, the
revocation or termination of any License and (b) the Guarantor and each of its
Subsidiaries have filed all applications currently necessary for renewal or
extension of the Licenses and all
16
such applications have been granted without conditions. To the knowledge of the
Guarantor and the Issuer, there exists no fact that would result in the denial
of an application or renewal, or the revocation, modification, nonrenewal or
suspension of any of the Licenses.
4.6 Title to Property; Liens. The Guarantor and each of its
------------------------
Subsidiaries has (a) good and marketable title to all of their Property, except
(i) any License which cannot be transferred without the consent of a
Governmental Body or any contract right which cannot be transferred without the
consent of the other party thereto, and (ii) the portion thereof consisting of
leasehold estates and (b) a valid leasehold estate in each portion of their
Property which consists of a leasehold estate. All of such Property is free and
clear of all Liens, except Permitted Liens.
4.7 Commission Filings.
------------------
(a) Commission Reports. The Guarantor has heretofore delivered to
------------------
the Purchasers true and complete copies of its (i) Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, (ii) Quarterly
Report on Form 10-Q for each of the fiscal quarters ended March 31, 2000
and June 30, 2000, and (iii) all other reports or registration statements
filed by the Guarantor with the Commission since January 1, 2000, in each
case as filed with the Commission. The Guarantor has filed all required
forms, reports and documents with the Commission since December 31, 1994
(collectively, the "Commission Reports"), all of which were prepared in
accordance with the applicable requirements of the Securities Act and the
Exchange Act in all material respects. Except to the extent, if any, as may
have been appropriately disclosed in a Commission Report filed subsequent
thereto and prior to the date hereof as of their respective dates, the
Commission Reports did not, at the time they were filed, contain any untrue
statement of a material fact or omit 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, and complied
as to form and substance in all material respects with all applicable
requirements of law.
(b) Financial Statements. Each of the consolidated financial
--------------------
statements (including, in each case, any related notes thereto) contained
in the Commission Reports has been prepared in accordance with GAAP applied
on a consistent basis throughout the periods involved, and each fairly
presents in accordance with GAAP the consolidated financial position of the
Guarantor and its Subsidiaries as at the date thereof and the consolidated
results of their operations and changes in cash flow for the periods
indicated in all material respects, except as may be indicated in the
consolidated financial statements contained in a Commission Report filed
subsequent thereto and prior to the date hereof, and except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount.
(c) No Undisclosed Liabilities. Except as set forth in the
--------------------------
Commission Reports, neither the Guarantor nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected on a
consolidated balance sheet of the Guarantor and its Subsidiaries, or in the
notes thereto, prepared in accordance with GAAP, except for liabilities or
obligations (a) incurred in the ordinary course of business since June 30,
2000, or (b) any liability or obligation existing at
17
June 30, 2000 which, individually or in the aggregate, is not material to
the Guarantor and its Subsidiaries taken as a whole as of such date.
4.8 Litigation. There is set forth in Schedule 4.8 a description of all
---------- ------------
actions, suits, arbitration proceedings and claims pending or, to the best
knowledge of the Issuer, threatened against the Guarantor or any of its
Subsidiaries or the business or operations thereof or maintained by the
Guarantor or any of its Subsidiaries at law or in equity or before any
Governmental Body, which could reasonably be expected to (a) be adversely
determined and (b) have a Material Adverse Effect if adversely determined.
4.9 Defaults in Other Agreements. Neither the Guarantor nor any of its
----------------------------
Subsidiaries is in default under any agreement to which it is a party or by
which it or any of its Property is bound, the effect of which default could have
a Material Adverse Effect.
4.10 Tax Returns and Payments. The Guarantor, its Subsidiaries, and any
------------------------
predecessors to the Guarantor or any Subsidiary, have filed or obtained
extensions of all Tax Returns heretofore required by law to be filed by any of
them and all such Tax Returns were correct and complete in all material
respects. All Taxes for which the Guarantor or any Subsidiary is liable have
been paid in full or are adequately provided for in accordance with GAAP on the
financial statements of the applicable Person, except to the extent such failure
would not have a Material Adverse Effect. All amounts required by law to be
withheld, collected or provided for by the Guarantor or any Subsidiary,
including deposits with respect to Taxes constituting employees' income
withholding taxes, have been duly withheld, collected or provided for and have
been paid over to the proper federal, provincial, state, municipal or local
authority, to the extent due and payable, or are held by the applicable Person
for such payment. No Liens arising from or in connection with Taxes have been
filed and are currently in effect against the Guarantor or any Subsidiary,
except for Liens for Taxes which are not yet due or which are being contested in
good faith and as to which reserves have been set aside on the books of the
Guarantor or such Subsidiary, as applicable, to the extent required by GAAP.
The Guarantor and its Subsidiaries, including any predecessors thereto, have not
executed or filed with any taxing authority any agreement or document extending,
or having the effect of extending, the period for assessment or collection of
any Taxes. The federal income Tax Returns of the Guarantor and its
Subsidiaries, and any predecessors thereto, have been examined by the IRS, or
the statute of limitations with respect to federal income Taxes has expired, for
all tax years to and including the fiscal year ended December 31, 1996 and any
deficiencies have been paid in full or appropriate action or appropriate
reserves therefor in accordance with GAAP have been established on books of the
Guarantor or such Subsidiary. Except as set forth in Schedule 4.10 hereto,
-------------
neither the Guarantor nor any Subsidiary is a party to any tax sharing agreement
or arrangement. No audits or investigations are pending or, to the Guarantor's
knowledge, threatened with respect to any Tax Returns or Taxes of the Guarantor
or any Subsidiary, or any predecessor thereto.
4.11 Compliance with Applicable Laws. Neither the Guarantor nor any
-------------------------------
Subsidiary is in default in respect of any judgment, order, writ, injunction,
decree or decision of any Governmental Body, which default could have a Material
Adverse Effect. To the best knowledge of the Guarantor, the Guarantor and each
of its Subsidiaries is in compliance in all material respects with all
applicable statutes and regulations, including, without limitation, ERISA, ADA
and all laws and regulations relating to unfair labor practices, equal
employment
18
opportunity and employee safety, but specifically excluding Environmental Laws
(which are the subject of Section 4.14), of all Governmental Bodies. Neither the
Guarantor nor any of its Subsidiaries has received written notice that any
material condemnation, eminent domain or expropriation that has been commenced
or threatened against the Guarantor or any of its Subsidiaries.
4.12 Patents, Trademarks, Franchises; Royalty Agreements.
---------------------------------------------------
(a) Each of the Guarantor and its Subsidiaries owns, or is licensed
to use, all trademarks, service marks, trade names, copyrights, patents,
patent applications and other intellectual property (collectively
"Intellectual Property") necessary for the operation their respective
--------------------
businesses as presently conducted and as presently proposed to be
conducted, including, without limitation, computer software programs.
(b) Except as indicated on Part (b) of Schedule 4.12 hereto, all
-------------
items of Intellectual Property owned by the Guarantor or the Issuer have
been duly registered in, filed in or issued by the United State Patent and
Trademark Office, the United States Register of Copyrights or other
corresponding offices of other jurisdictions as identified on such
schedule, and have been properly maintained and renewed in accordance with
all applicable provisions of law and administrative regulations in the
United States or in each such other jurisdiction, as applicable, except in
each case as would not have a Material Adverse Effect. In particular, the
Guarantor and its Subsidiaries have taken commercially reasonable steps to
(i) affix appropriate copyright notices to all copies of all written
material subject to copyright protection, and all related documentation
distributed to the public and (ii) protect confidential information and
trade secrets.
(c) Except as disclosed on Part (c) of Schedule 4.12 hereto, none
-------------
of the Guarantor or its Subsidiaries or the directors and officers (and
employees with responsibility for Intellectual Property matters) of the
Guarantor or its Subsidiaries knows of any pending or currently threatened
charge, complaint, claim, demand, or notice of interference with,
infringement, misappropriation, or violation of any Intellectual Property
rights of Persons (including any claim that any of the Guarantor and its
Subsidiaries must license or refrain from using any Intellectual Property
rights of any Person), which would have a Material Adverse Effect.
(d) Except as disclosed on Part (d) of Schedule 4.12 hereto, with
-------------
respect to each item of Intellectual Property which is owned by the
Guarantor or any Subsidiary, (i) the Guarantor or its Subsidiary which owns
such Intellectual Property possesses all right, title, and interest in and
to the item, free and clear of any security interest, license, or other
restriction, except for the Royalty Agreements and the Liens created in
favor of the Holders' Agent for the benefit of the Holders under the
Guarantor Security Agreement; (ii) the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge; and
(iii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the knowledge of the
Guarantor and the directors and officers (and employees with responsibility
for Intellectual Property matters) of the Guarantor, is threatened which
challenges the legality, validity, enforceability, use, or ownership of the
item.
19
(e) Set forth on Part (e) of Schedule 4.12 hereto is a true and
-------------
complete list of all agreements (collectively "Royalty Agreements") which
------------------
provide for the Guarantor to be paid royalties, commissions or other fees
by third parties in connection with the use by such third parties of
Intellectual Property of the Guarantor. A true and correct copy of each
such Royalty Agreement together with any amendments, supplements and
modifications thereto has been delivered the Holders' Agent on or prior to
the date hereof. With respect to each Royalty Agreement, (i) such agreement
is legal, valid, binding, enforceable against Guarantor, and in full force
and effect; (ii) except for the Liens created in favor of the Holders'
Agent for the ratable benefit of the Holders under the Guarantor Security
Agreement, the rights of the Guarantor under such agreement are free and
clear of all Liens and the Guarantor has not pledged, assigned or
transferred its right to receive all or any portion of any royalty, license
fee or other amount payable to the Guarantor under such agreement; (iii) to
the knowledge of Guarantor, such agreement is legal, valid, binding and
enforceable against the other party to such Agreement, and no party to such
agreement is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration thereunder; (iv) no party to
such agreement has repudiated any provision thereof; (v) the underlying
item of Intellectual Property is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge; (vi) no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand is
pending or, to the knowledge of any of the Guarantor and the directors and
officers (and employees with responsibility for Intellectual Property
matters) of the Guarantor, is threatened which challenges the legality,
validity, or enforceability of the underlying item of Intellectual
Property; and, (vii) except as indicated on Part (e) of (Schedule 4.12,
--------------
there are no restrictions on the Guarantor's right to assign to the
Holders' Agent all right, title and interest of the Guarantor under such
agreement.
4.13 Regulatory Matters. The Guarantor and each of its Subsidiaries (a)
------------------
has duly and timely filed all reports and other filings which are required to be
filed by the Guarantor and its Subsidiaries under any applicable rule or
regulation of any Governmental Body, the non-filing of which could have a
Material Adverse Effect, and (b) is in compliance with all such rules and
regulations, the noncompliance with which could have a Material Adverse Effect.
4.14 Environmental Matters.
---------------------
(a) Neither the Guarantor nor any Subsidiary (i) has any liability
under any Environmental Law which could have a Material Adverse Effect, or
has violated any Environmental Law which violation could have a Material
Adverse Effect; (ii) has entered into or been subject to any judgment,
consent decree, compliance order, or administrative order with respect to
any environmental or health and safety matter which could have a Material
Adverse Effect, or (iii) has received any request for information, notice,
demand letter, administrative inquiry, or formal or informal complaint or
claim from any Person with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law which could have
a Material Adverse Effect.
(b) Except for any of the following that would not result in a
Material Adverse Effect, or except as disclosed in Schedule 4.14:
-------------
(i) all properties owned, operated, leased, or used by the Guarantor and
its Subsidiaries and all facilities and operations thereon comply in all
material respects with applicable Environmental Laws; (ii) neither the
Guarantor
20
nor any of its Subsidiaries has generated, transported, used, stored,
treated, manufactured, refined, transferred, produced, processed, disposed
of, or managed any Hazardous Materials, except in accordance with
applicable Environmental Laws; (iii) neither the Guarantor nor any of its
Subsidiaries have effected, or have any knowledge of, any release of
Hazardous Materials at, on, in or under any property presently or formerly
owned, operated, leased, or used by the Guarantor or any Subsidiary; and
(iv) no Lien has been imposed by any Governmental Body on any property,
facility, machinery, or equipment owned, operated, leased, or used by the
Guarantor or any Subsidiary in connection with the presence of any
Hazardous Material.
(c) Except as set forth in Schedule 4.14, neither the Guarantor nor
-------------
any of its Subsidiaries (i) presently own, operate, lease or use any
property on which underground storage tanks are or, to the Guarantor's
knowledge, were located; (ii) have placed underground storage tanks on any
property owned, operated, leased or used by the Guarantor or any
Subsidiary; (iii) have removed underground storage tanks from any property
presently or formerly owned, operated, leased or used by the Guarantor or
any Subsidiary.
4.15 Application of Certain Laws and Regulations. Neither the Guarantor
-------------------------------------------
nor any of its Subsidiaries is:
(a) An "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
(b) A "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended.
(c) A "party in interest," as that term is defined in Section 3(14) of
ERISA, with respect to any employee benefit plan having an interest in the
General Motors Employees Global Group Pension Trust.
4.16 Margin Regulations, Foreign Assets Control Regulation. None of the
-----------------------------------------------------
transactions contemplated by this Agreement or any of the other Transaction
Documents, including the use of the proceeds of the sale of the Senior Discount
Notes, will violate or result in a violation of Section 7 of the Exchange Act,
or any regulations issued pursuant thereto, including, without limitation,
Regulations T, U and X, and neither the Guarantor nor any Subsidiary owns or
intends to carry or purchase any "margin security" within the meaning of such
Regulation U.
4.17 Other Indebtedness. Upon the Closing, there will be no
------------------
Indebtedness for Borrowed Money owed by the Guarantor or any of its Subsidiaries
to any Person, except (a) the 12% Senior Notes, (b) the Senior Discount Notes,
(c) working capital loans under the Guarantor's working capital credit facility,
and (d) Indebtedness identified on Schedule 4.17 and the Guarantor and its
-------------
Subsidiaries have provided true and correct copies of all documentation related
to such Indebtedness set forth in clauses (a) through (d) to the Holders' Agent
on or prior to the date hereof.
4.18 No Misrepresentation. Neither this Agreement nor any other
--------------------
Transaction Document, certificate or financial statement furnished or to be
furnished by or on behalf of the
21
Guarantor or the Issuer to any Purchaser in connection with the purchase of the
Senior Discount Notes or pursuant to this Agreement contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements contained herein or
therein, taken as a whole, not misleading in the light of the circumstances
under which such statements were made.
4.19 Employee Benefit Plans.
----------------------
(a) Neither the Guarantor nor any ERISA Affiliate maintains or
contributes to, or has any obligation under, any Employee Benefit Plan
other than those identified on Schedule 4.19.
-------------
(b) The Guarantor and each ERISA Affiliate are in compliance with all
applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans
except where failure to comply would not result in a material liability to
the Guarantor or any of its Subsidiaries and except for any required
amendments for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each
trust related to such plan has been determined to be exempt under Section
401(a) of the Code. No material liability has been incurred by the
Guarantor or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan.
(c) No Pension Plan has been terminated, nor has any accumulated
funding deficiency (as defined in Section 412 of the Code) been incurred
(without regard to any waiver granted under Section 412 of the Code), nor
has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has the Guarantor or any
ERISA Affiliate failed to make any contributions or to pay any amounts due
and owing as required by Section 412 of the Code, Section 302 of ERISA or
the terms of any Pension Plan prior to the due dates of such contributions
under Section 412 of the Code or Section 302 of ERISA, nor has there been
any event requiring any disclosure under Section 4041(c)(3)(C), 4063(a) or
4068 of ERISA with respect to any Pension Plan.
(d) Neither the Guarantor nor any ERISA Affiliate has: (a) engaged
in a nonexempt "prohibited transaction" as such term is defined in Section
406 of ERISA or Section 4975 of the Code; (b) incurred any liability to the
PBGC which remains outstanding other than the payment of premiums and there
are no premium payments which are due and unpaid; (c) failed to make a
required contribution or payment to a Multiemployer Plan; or (d) failed to
make a required installment or other required payment under Section 412 of
the Code.
(e) Except as disclosed on Schedule 4.19, no Termination Event has
-------------
occurred or is reasonably expected to occur.
(f) No material proceeding, claim, lawsuit and/or investigation is
existing or, to the best knowledge of Issuer, threatened concerning or
involving any (a) employee welfare benefit plan (as defined in Section 3(1)
of ERISA) currently maintained or contributed to by the
22
Guarantor or any ERISA Affiliate, (b) Pension Plan or (c) Multiemployer
Plan, other than routine claims for benefits by or on behalf of employees.
4.20 Employee Matters. None of the employees of the Guarantor or any
----------------
of its Subsidiaries is subject to any collective bargaining agreement with the
Guarantor or any Subsidiary. To the best knowledge of the Issuer and Guarantor,
no petition for certification or union election is pending with respect to the
employees of the Guarantor or any of its Subsidiaries and no union or collective
bargaining unit has sought such certification or recognition with respect to the
employees of the Guarantor or any of its Subsidiaries. There are no strikes,
slowdowns, work stoppages, unfair labor practice complaints, grievances,
arbitration proceedings or controversies pending or, to the best knowledge of
the Guarantor, threatened against the Guarantor or any of its Subsidiaries by
any of its or their employees, other than employee grievances or controversies
arising in the ordinary course of business that could not in the aggregate be
expected to have a Material Adverse Effect.
4.21 Burdensome Obligations. After giving effect to the transactions
----------------------
contemplated by the Transaction Documents (a) neither the Guarantor nor any of
its Subsidiaries (i) is a party to or is bound by any franchise, agreement,
deed, lease or other instrument, or is subject to any restriction, which is so
unusual or burdensome as to cause, in the foreseeable future, a Material Adverse
Effect and (ii) intends to incur, or believes that it will incur, debts beyond
its ability to pay such debts as they become due, and (b) the Guarantor and each
of its Subsidiaries (i) owns and will own Property, the fair saleable value of
which is (A) greater than the total amount of its liabilities (including
contingent liabilities) and (B) greater than the amount that will be required to
pay the probable liabilities of its then existing debts as they become absolute
and matured, and (ii) has and will have capital that is not unreasonably small
in relation to its business as presently conducted and as proposed to be
conducted. Neither the Guarantor nor any of its Subsidiaries presently
anticipates that future expenditures needed to meet the provisions of federal or
state statutes, orders, rules or regulations in effect on or proposed as of the
Closing Date will be so burdensome so as to have a Material Adverse Effect.
4.22 Investment Banking and Brokerage Fees. No investment banking firm,
-------------------------------------
broker or other similar agent has provided services to the Guarantor or the
Issuer in connection with the transactions contemplated by the Transaction
Documents.
4.23 Insurance. The Guarantor and each of its Subsidiaries maintains in
---------
full force and effect policies of insurance and bonds of the type and in amounts
customarily carried by Persons conducting business similar to that currently
conducted by the Guarantor and its Subsidiaries. There is no claim in excess of
$25,000 by the Guarantor or any of its Subsidiaries pending under any of such
policies or bonds as to which coverage has been questioned, reserved, denied or
disputed by the underwriters of such policies or bonds or their agents. The
Guarantor has no knowledge of any threatened termination of any such policies or
bonds.
4.24 Transactions with Affiliates. Except as set forth on Schedule 4.24,
---------------------------- -------------
there are no material transactions, agreements or understandings, existing or
presently contemplated between or among the Guarantor or any of its Subsidiaries
and any of their officers or directors or stockholders or any of their
Affiliates or associates.
23
4.25 Limitation on Subsidiary Payment Restrictions. Except as set forth
---------------------------------------------
on Schedule 4.25 hereto, or as set forth in this Agreement, neither the
-------------
Guarantor nor any of its Subsidiaries is subject to any consensual restriction
on the ability of any Subsidiary of the Guarantor (a) to pay dividends or make
any other distributions on such Subsidiaries' Capital Stock to, or pay any
indebtedness owing to, or repurchase or redeem any of such Subsidiaries' Capital
Stock from the Guarantor or any other Subsidiary, (b) to make any loans or
advances to the Guarantor or any other Subsidiary, or (c) to transfer any of its
Property or assets to the Guarantor or any other Subsidiary.
4.26 Private Offering. No form of general solicitation or general
----------------
advertising, including, but not limited to, advertisements, articles, notices or
other communications, published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising, was used
by the Guarantor or any of its Subsidiaries or any of its or their
representatives, or, to the knowledge of the Guarantor, any other Person acting
on behalf of the Guarantor or any of its Subsidiaries, in connection with the
offering of the Senior Discount Notes being purchased under this Agreement.
During the six months prior to the Closing, neither the Guarantor nor any of its
Subsidiaries nor any Person acting on its or their behalf has directly or
indirectly offered the Senior Discount Notes, or any part thereof or any other
similar securities, for sale to, or sold or solicited any offer to buy any of
the same from, or otherwise approached or negotiated in respect thereof with any
Person or Persons other than the Purchasers and other investors who the
Guarantor reasonably believed had such knowledge and experience in financial and
business matters that they were capable of evaluating the merits and risks of
purchasing the Senior Discount Notes. The Guarantor further represents to the
Purchasers that, assuming the accuracy of the representations of the Purchasers
as set forth in Article V hereof, neither the Guarantor nor any of its
Subsidiaries nor any Person acting on its or their behalf has taken or will take
any action which would subject the issue and sale of the Senior Discount Notes
to the provisions of Section 5 of the Securities Act. The Issuer has not sold
the Senior Discount Notes to anyone other than the Purchasers designated in this
Agreement. During the six months prior to the Closing, no securities of the same
class or series as the securities comprising the Senior Discount Notes have been
issued and sold by the Issuer. Each Senior Discount Note shall bear
substantially the same legend set forth in Section 11.5 hereof, as applicable,
for at least so long as such restrictions apply.
ARTICLE V
PURCHASE FOR INVESTMENT; SOURCE OF FUNDS
The Holders' Agent and each Purchaser makes severally as to itself the
representations contained in this Article V.
5.1 Purchase for Investment. Each Purchaser represents that (a) by
-----------------------
reason of its business and financial experience, and the business and financial
experience of those persons, if any, retained by it to advise it with respect to
its investment in the Senior Discount Notes, it together with such advisers have
such knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risk of the prospective
investment, (b) it is an accredited investor as defined in Regulation D under
the Securities Act and (c) it is
24
purchasing the Senior Discount Notes for its own account or for one or more
separate accounts maintained by it or for the account of one or more
institutional investors on whose behalf such Purchaser has authority to make
this representation for investment and not with a view to the distribution or
other disposition thereof or with any present intention of distributing or
selling any of the Senior Discount Notes except in compliance with the
Securities Act and except to one or more such institutional investors, provided
that the disposition of such Purchaser's or such investor's property shall at
all times be within its control. Such Purchaser understands and agrees that the
Senior Discount Notes have not been registered under the Securities Act and may
be resold (which resale is not now contemplated) only if registered pursuant to
the provisions thereunder or if an exemption from registration is available.
Each Purchaser further represents that it has had access, during the course of
the transaction and prior to its purchase of the Senior Discount Notes, to
information concerning the Issuer and the Guarantor and their assets,
liabilities and prospects, and the opportunity to ask questions of, and receive
answers from, the Issuer and the Guarantor concerning the terms and conditions
of the offering of the Senior Discount Notes and to obtain additional
information (to the extent the Issuer and the Guarantor possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to such Purchaser
or to which it had access.
5.2 Authority. The Holders' Agent and each Purchaser represents that it
---------
has full organizational power and authority and has taken all action necessary
to authorize it to enter into and perform its obligations under this Agreement
and all other Transaction Documents and other documents or instruments
contemplated hereby or thereby.
5.3 Existence. The Holders' Agent and each Purchaser represents that it
---------
is an entity duly formed, validly existing and in good standing under the laws
of its state of organization.
ARTICLE VI
REDEMPTIONS
6.1 Voluntary Redemption.
--------------------
(a) The Senior Discount Notes will be subject to voluntary redemption
at any time after the Closing Date, in whole but not in part, at the option
of the Issuer at a price equal to the Accreted Value as of any Designated
Voluntary Redemption Date. If the Issuer elects to redeem Senior Discount
Notes pursuant to this Section 6.1, at least 5 days but not more than 10
days before the date that the Issuer elects to redeem the Senior Discount
Notes (such date being referred to herein as the "Designated Voluntary
--------------------
Redemption Date"), the Issuer shall notify the Holders' Agent and each
---------------
Holder of Senior Discount Notes set forth in Issuer's books and records in
writing that the Issuer elects to voluntarily redeem all of the Senior
Discount Notes. Such notice shall be irrevocable and shall identify (i)
the Designated Voluntary Redemption Date and (ii) the Accreted Value of the
Senior Discount Notes as of the Designated Voluntary Redemption Date.
(b) Once notice of a voluntary redemption of the Senior Discount Notes
is given to the Holders, the Senior Discount Notes shall become due and
payable on the Designated Voluntary Redemption Date at the Accreted Value
as of the Designated Voluntary Redemption
25
Date. If the Issuer defaults in paying the Accreted Value for the Senior
Discount Notes as of the Designated Voluntary Redemption Date, interest
shall accrue on the Accreted Value of the Senior Discount from the
Designated Voluntary Redemption Date until the Holders of the Senior
Discount Notes receive full payment of the Accreted Value and all accrued
interest.
6.2 Mandatory Redemption on Asset Disposition or Change of Control. In
--------------------------------------------------------------
the event that there shall occur any Asset Disposition or Change of Control, the
Senior Discount Notes shall automatically become due and payable three (3) days
after such event occurs, except that if such event involves a sale of Issuer's
real property in Colorado, the Senior Discount Notes shall automatically become
due and payable on the date that such sale occurs (each such date being referred
to herein as a "Mandatory Redemption Date"), and the Issuer shall immediately
-------------------------
notify the Holders' Agent and the Holders in writing of the details of such
event, which notice shall also specify the Accreted Value of the Senior Discount
Notes as of such Mandatory Redemption Date. If the Issuer defaults in paying
the Accreted Value for the Senior Discount Notes as of any such Mandatory
Redemption Date, interest shall accrue on the unpaid Accreted Value of the
Senior Discount from such Mandatory Redemption Date until the Holders of the
Senior Discount Notes receive full payment of the Accreted Value and all accrued
interest.
6.3 Payment of Accreted Value. On or prior to any Redemption Date, the
-------------------------
Issuer shall segregate money sufficient to pay the Accreted Value of all Senior
Discount Notes as of such Redemption Date. If the Issuer defaults in paying the
Accreted Value for the Senior Discount Notes as of any such Redemption Date,
interest shall accrue on the unpaid Accreted Value of the Senior Discount from
such Redemption Date until the Holders of the Senior Discount Notes receive full
payment of the Accreted Value and all accrued interest.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until all of the Senior Discount Notes are redeemed or paid and performed
in full, the Guarantor and the Issuer will, and the Guarantor will cause each of
its other Restricted Subsidiaries to:
7.1 Payment of Senior Discount Notes. Pay the Accreted Value of the
--------------------------------
Senior Discount Notes (and if applicable, all accrued interest) on the dates and
in the manner provided in this Agreement and in the Senior Discount Notes.
7.2 Legal Existence; Good Standing. Maintain its existence and its good
------------------------------
standing in the state of its organization and maintain its qualification in each
other jurisdiction in which the failure so to qualify could have a Material
Adverse Effect.
7.3 Commission Reports, Filings and Other Information. Maintain a
-------------------------------------------------
standard system of accounting in accordance with GAAP and furnish to each
Holder:
(a) As soon as available and in any event within 45 days after the
close of each fiscal quarter, a copy of the Guarantor's Quarterly Report on
Form 10-Q.
26
(b) As soon as available and in any event within 90 days after the
close of each fiscal year, a copy of the Guarantor's Annual Report on Form
10-K.
(c) The Commission Reports described in Subsections 7.3(a) and 7.3(b)
shall be accompanied by an Officer's Certificate stating that (i) a review
of the activities of the Guarantor and its Subsidiaries during the
preceding calendar quarter has been made to determine whether the Issuer
and the Guarantor have kept, observed, performed and fulfilled all of their
obligations under this Agreement and the Senior Discount Notes, (ii) such
review was supervised by the Officers of the Guarantor signing such
certificate, and (iii) that to the best knowledge of each Officer signing
such certificate, the Guarantor and the Issuer have kept, observed,
performed and fulfilled each and every covenant contained in this Agreement
and is not in default in the performance or observance of any of the terms,
provisions and conditions of this Agreement (or, if a Default or Event of
Default occurred, describing all such Defaults or Events of Default of
which each such Officer may have knowledge and what action the Guarantor
and the Issuer have taken or propose to take with respect thereto).
(d) Promptly upon receipt thereof, a copy of each report, including
any so-called "Management Letter" or similar report, submitted to the
Guarantor or any of its Subsidiaries by the Guarantor's independent public
accountants in connection with their annual, interim or special audit of
the books of the Guarantor and its Subsidiaries.
(e) Prompt written notice if: (i) any Indebtedness of Guarantor or any
of its Restricted Subsidiaries is declared or shall become due and payable
prior to its declared or stated maturity, or called and not paid when due,
(ii) there shall occur and be continuing a Default or an Event of Default,
accompanied by a statement of the Guarantor setting forth what action the
Guarantor and the Issuer propose to take in respect thereof, or (iii) any
event shall occur which has or is reasonably likely to have a Material
Adverse Effect.
(f) Prompt written notice of: (i) any citation, summons, subpoena,
order to show cause or other order naming the Guarantor or any of its
Restricted Subsidiaries a party to any proceeding before any Governmental
Body which might reasonably be expected to have a Material Adverse Effect,
including with such notice a copy of such citation, summons, subpoena,
order to show cause or other order, (ii) any lapse or other termination of
any License, permit, franchise, agreement or other authorization issued to
the Guarantor or any of its Restricted Subsidiaries by any Governmental
Body or any other Person that is material to the operation of the
businesses of the Guarantor or any of its Restricted Subsidiaries, (iii)
any refusal by any Governmental Body or any other Person to renew or extend
any such License, permit, franchise, agreement or other authorization or
(iv) any dispute between the Guarantor or any of its Restricted
Subsidiaries and any Governmental Body or any other Person, which lapse,
termination, refusal or dispute referred to in clauses (ii) and (iii) above
or in this clause (iv) could have a Material Adverse Effect.
(g) Promptly upon becoming available, copies of all Commission
Reports, proxies, prospectuses, notices, reports and other statements sent
or made available generally by the Guarantor to its shareholders or filed
by the Guarantor with the Commission or any securities exchange, and of all
other statements generally made available by the Guarantor or others
27
concerning material developments in the business of the Guarantor or any of
its Restricted Subsidiaries.
(h) With reasonable promptness, and in any event within 30 days after
occurrence of any of the following, notice and/or copies of: (i) the
establishment of any new Employee Benefit Plan, Pension Plan or
Multiemployer Plan; (ii) the commencement of contributions to any Employee
Benefit Plan, Pension Plan or Multiemployer Plan to which the Guarantor or
any of its ERISA Affiliates was not previously contributing or any increase
in the benefits of any existing Employee Benefit Plan, Pension Plan or
Multiemployer Plan; (iii) each funding waiver request filed with respect to
any Employee Benefit Plan and all communications received or sent by the
Guarantor or any ERISA Affiliate with respect to such request; and (iv) the
failure of the Guarantor or any of its ERISA Affiliates to make a required
installment or payment under Section 302 of ERISA or Section 412 of the
Code by the due date.
(i) With reasonable promptness but in any event within 10 days of
becoming aware of the occurrence of or forthcoming occurrence of any (i)
Termination Event or (ii) "prohibited transaction," as such term is defined
in Section 406 of ERISA or Section 4975 of the Code, in connection with any
Pension Plan or any trust created thereunder, a notice specifying the
nature thereof, what action the Guarantor and its Subsidiaries have taken,
is taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the Department
of Labor or the PBGC with respect thereto.
(j) With reasonable promptness but in any event within 10 days after
the occurrence of any of the following, copies of: (i) any favorable or
unfavorable determination letter from the Internal Revenue Service
regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code; (ii) all notices received by the Guarantor or any ERISA
Affiliate of any intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan; (iii) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by the Guarantor
or any ERISA Affiliate with the Internal Revenue Service with respect to
each Pension Plan; and (iv) all notices received by the Guarantor or any
ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA; and
written notice within two Business Days of the Guarantor's or any ERISA
Affiliate's filing of or intention to file a notice of intent to terminate
any Pension Plan under a distress termination within the meaning of Section
4041(c) of ERISA.
(k) Immediate notice of any Change of Control, Asset Disposition,
Default, Event of Default, or any other event that could have a Material
Adverse Effect.
7.4 Reports to Governmental Bodies and Other Persons. Timely file all
------------------------------------------------
material reports, applications, documents, instruments and information required
to be filed pursuant to all rules, regulations or requests of any Governmental
Body or other Person having jurisdiction over the operation of the businesses of
the Guarantor or any of its Restricted Subsidiaries, including, but not limited
to, such of the Transaction Documents as are required to be filed with any such
Governmental Body or other Person pursuant to applicable rules and regulations
promulgated by such Governmental Body or other Person.
28
7.5 Maintenance of Licenses and Other Agreements. Maintain in full
--------------------------------------------
force and effect at all times, and apply in a timely manner for renewal of, all
Licenses, trademarks, trade names, patents and agreements necessary for the
operation of its business, the loss of any of which could have a Material
Adverse Effect. The Guarantor shall deliver to the Holders' Agent a true and
correct copy of each agreement executed and delivered by the Guarantor after the
date hereof which would constitute a Royalty Agreement. With respect to each
Royalty Agreement executed and delivered by the Guarantor after the date hereof
within 5 Business Days of the date of such execution and delivery, the Guarantor
shall deliver to the Holders' Agent such documents, consents or instruments,
including, without limitation, UCC-1 financing statements which may be necessary
such that such Royalty Agreement shall become subject to the Lien of the
Guarantor Security Agreement subject only to Permitted Liens. With respect to
each Royalty Agreement: the Guarantor shall (i) maintain such agreement in full
force and effect (except to the extent permitted by the Guarantor Security
Agreement); (ii) except as contemplated hereby, not pledge, assign or transfer
its right to receive all or any portion of any royalty, license fee or other
amount payable to the Guarantor under such Royalty Agreement; and (iii) notify
the Holders' Agent of (A) any breach or default, and any event which with notice
or lapse of time would constitute a breach or default or permit termination,
modification, or acceleration thereunder; (B) any repudiation of any provision
thereof by any party thereto; and (C) any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand which threatens or challenges
the legality, validity, or enforceability of the underlying item of Intellectual
Property.
7.6 Maintenance of Insurance. (a) Keep at all times all of their
------------------------
properties which are of an insurable nature insured against loss or damage with
financially sound and reputable insurers to the extent that property of similar
character is usually so insured by corporations similarly situated and owning
like properties in accordance with good business practice, (b) maintain with
financially sound and reputable insurers insurance against other hazards and
risks and liability to persons and property to the extent and in a manner
customary for corporations in similar business similarly situated, and (c) use
the proceeds from any such insurance policy to repair, replace or otherwise
restore the property to which such proceeds relate.
7.7 Environmental Matters. At all times comply in all material respects
---------------------
with, and be responsible for, its obligations under all Environmental Laws
applicable to all Real Property, Leasehold Property and any other Property owned
or used by the Guarantor or any of its Restricted Subsidiaries. At its sole cost
and expense, the Guarantor and each of its Restricted Subsidiaries shall comply
in all material respects with (a) any written notice of any violation or
administrative or judicial complaint or order having been filed against the
Guarantor or any of its Restricted Subsidiaries, any portion of any Real
Property or Leasehold Property or any other Property owned or used by the
Guarantor or any of its Restricted Subsidiaries in the operation of their
businesses alleging violations of any law, ordinance and/or regulation requiring
the Guarantor or any of its Restricted Subsidiaries to take any action in
connection with the release, transportation and/or clean-up of any Hazardous
Materials, and (b) any written notice from any Governmental Body or any other
Person alleging that the Guarantor or any of its Restricted Subsidiaries is or
may be liable for costs associated with a response or clean-up of any Hazardous
Materials or any damages resulting from such release or transportation. Promptly
upon receipt of any written notice described in the foregoing sentence, the
Guarantor shall, or shall cause its applicable Restricted Subsidiary to, deliver
to Purchasers a copy thereof.
29
7.8 Compliance with Laws. Comply with all federal, state and local laws,
--------------------
ordinances, requirements and regulations and all judgments, orders, injunctions
and decrees applicable to the Guarantor and its Restricted Subsidiaries and
their operations, the failure to comply with which could have a Material Adverse
Effect.
7.9 Taxes and Claims. Pay and discharge all taxes, assessments and
----------------
governmental charges or levies imposed upon it or upon its income or profits, or
upon any Property belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien (other than
a Permitted Lien) upon the Property of the Guarantor or any Restricted
Subsidiary, provided that the Guarantor and its Subsidiaries shall not be
required by this Section 7.9 to pay any such amount if the same is being
contested diligently and in good faith by appropriate proceedings and as to
which the Guarantor or the appropriate Subsidiary has set aside reserves on its
books to the extent required by GAAP.
7.10 Maintenance of Properties. Maintain all of its Properties
-------------------------
necessary in the operation of its businesses in good working order and
condition, normal wear and tear excepted.
7.11 Governmental Approvals. Upon the exercise by the Purchasers after
----------------------
the occurrence and during the continuance of any Event of Default of any power,
right or privilege pursuant to the provisions of any of the Transaction
Documents requiring any consent, approval or authorization of any Governmental
Body (including, without limitation, transfers of Licenses), promptly execute
and cause the execution of all applications, certificates, instruments and other
documents that the Purchasers may be required to obtain for such consent,
approval or authorization.
7.12 Payment of Indebtedness. Except as to matters being contested in
-----------------------
good faith and by appropriate proceedings and except to the extent prohibited by
the terms of this Agreement, promptly pay when due, or in conformance with
customary trade practices, all of its Indebtedness.
7.13 Books and Records. Maintain proper books of record and account which
-----------------
present fairly in all material respects its financial condition and results of
operations and make provisions on its financial statements for all such proper
reserves as in each case are required in accordance with GAAP, consistently
applied.
ARTICLE VIII
NEGATIVE COVENANTS
Until all of the Senior Discount Notes are redeemed or paid and performed
in full, neither the Guarantor nor any of its Restricted Subsidiaries will:
8.1 Borrowing. Create, incur, assume or suffer to exist any liability for
---------
Indebtedness for Borrowed Money except: (a) the Senior Discount Notes; (b) the
12% Senior Notes; (c) purchase money Indebtedness and Capital Leases; (d)
existing Indebtedness identified on Schedule 8.1; (e) Indebtedness of any
------------
Restricted Subsidiary to the Guarantor or to any other Restricted Subsidiary of
the Guarantor and Indebtedness of the Guarantor to any Restricted Subsidiary, in
each case, incurred in the ordinary course of business and consistent with past
30
practices; and (f) Indebtedness of the Issuer and the Guarantor to Ampex Finance
Corporation incurred after the Closing Date under the Inter-Company Loan
Agreement described in Schedule 1.1.
------------
8.2 Liens. Create, incur, assume or suffer to exist any Lien upon any
-----
of its Property, whether now owned or hereafter acquired, except Permitted
Liens.
8.3 Merger and Acquisition. Consolidate with or merge with or into any
----------------------
Person, acquire directly or indirectly all or substantially all of the capital
stock, equity interests or Property of any Person, except that (a) any
Subsidiary of the Guarantor (other than the Issuer) may merge with and into the
Guarantor or any Wholly-Owned Subsidiary of the Guarantor, and the Guarantor or
any Wholly-Owned Subsidiary of the Guarantor (other than the Issuer) may acquire
substantially all of the capital stock, equity interests or Property of any
other Wholly Owned Subsidiary of the Guarantor (other than the Issuer), provided
that (i) the Holders' Agent shall have received at least 30 days' prior written
notice thereof, (ii) the applicable entities shall have complied in all material
respects with all applicable laws, rules and regulations and shall have received
all required consents and approvals from any Governmental Body, and (iii) such
merger could not reasonably be expected to have a Material Adverse Effect and
(b) the Issuer may consolidate with or merger with or into any Person if the
proceeds from such consolidation or merger together with other available funds
are sufficient to redeem the Senior Discount Notes in accordance with Section
6.2 hereof and if the Senior Discount Notes are so redeemed in accordance with
Section 6.2.
8.4 Contingent Liabilities. Assume, guarantee, endorse, contingently
----------------------
agree to purchase, become liable in respect of any letter of credit, or
otherwise become liable upon any Indebtedness for Borrowed Money of any Person,
except (a) for liabilities arising from the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, (b) the Guarantor's guaranty hereunder, and (c) the
guarantees described in Schedule 1.1.
------------
8.5 Dividends and Distributions. Make any dividends, distributions or
---------------------------
other shareholder expenditures with respect to its Capital Stock or apply any of
its Property to the purchase, redemption or other retirement of, or set apart
any sum for the payment of, or make any other distribution by reduction of
capital or otherwise in respect of, any of its Capital Stock, except pursuant to
the terms of the instruments governing Capital Stock and other obligations in
existence on the date hereof, and except that any Subsidiary may make dividends
and distributions to the Guarantor at any time.
8.6 Payments of Indebtedness for Borrowed Money. Make any payment or
-------------------------------------------
prepayment on account of any Indebtedness for Borrowed Money other than on the
Senior Discount Notes, except that (a) the Guarantor and its Subsidiaries may
make regularly scheduled payments of principal and interest (but no prepayments)
on account of the Indebtedness permitted under Section 8.1 above, and (b) the
Guarantor and its Subsidiaries may make payments of principal and interest on
account of intercompany Indebtedness owing from (i) the Guarantor to any of its
Subsidiaries, (ii) any of the Guarantor's Subsidiaries to the Guarantor, or
(iii) any of the Guarantor's Subsidiaries to any of the Guarantor's other
Subsidiaries.
31
8.7 Investments, Loans. At any time purchase or otherwise acquire, hold
------------------
or invest in the capital stock of, or any other interest in, any Person, or make
any loan or advance to, or enter into any arrangement for the purpose of
providing funds or credit to, or make any other investment, whether by way of
capital contribution or otherwise, in or with any Person, including, without
limitation, any Affiliate or any Subsidiary, except (a) investments in direct
obligations of, or instruments unconditionally guaranteed by, the United States
of America or in certificates of deposit issued by a Qualified Depository, (b)
investments in commercial or finance paper which, at the time of investment, is
rated "A" or better by Moody's Investors Service, Inc., or Standard & Poor's
Corporation, respectively, or at the equivalent rate by any of their respective
successors, (c) any interests in any money market account maintained, at the
time of investment, with a Qualified Depository, the investments of which, at
the time of investment, are restricted to the types specified in clause (a)
above, (d) interests of the Guarantor and its direct or indirect Wholly-Owned
Subsidiaries in other Subsidiaries, (e) loans made in the ordinary course of
business and consistent with past practices by (i) the Guarantor to any of its
Subsidiaries, (ii) any of the Guarantor's Subsidiaries to the Guarantor, or
(iii) any of the Guarantor's Subsidiaries to any of the Guarantor's other
Subsidiaries, and (f) additional investments in existence as of the date hereof
and set forth in Schedule 8.7 hereto, or proposed to be made by the Guarantor or
------------
its Wholly-Owned Subsidiaries pursuant to commitments existing as of the Closing
Date and set forth on Schedule 8.7 hereto; provided that (1) all investments
------------
permitted pursuant to clauses (a), (b) and (c) of this Section 8.7 shall have a
maturity not exceeding one year, and (2) the aggregate outstanding amount of all
loans and investments made after the Closing Date by the Guarantor or any of its
Restricted Subsidiaries to or in all Unrestricted Subsidiaries shall not exceed
$3,000,000.
8.8 Fundamental Business Changes. Materially change the nature of its
----------------------------
business, engage in any business other than that engaged in by it on the Closing
Date and related ancillary activities.
8.9 Sale or Transfer of Assets. Sell, lease, assign, transfer or
--------------------------
otherwise dispose of any Property except for: (a) the sale or disposition of
inventory in the ordinary course of business and accounts receivable of the
Issuer to Ampex Finance Corporation consistent with past practices; (b) the sale
or disposition of Property (other than inventory and accounts receivable
permitted to be sold under Subsection 8.9(a)) of the Issuer sold after the
Closing Date having an aggregate value not in excess of $500,000; (c) the sale
or disposition of Property (other than inventory permitted to be sold under
Subsection 8.9(a)) of the Guarantor not in excess of $2,500,000 sold after the
Closing Date; (d) the sale or disposition of Property (other than inventory and
accounts receivable permitted to be sold under Subsection 8.9(a)) of the Issuer
in excess of $500,000 or of the Guarantor in excess of $2,500,000 sold after the
Closing Date if the proceeds from such sale together with other available funds
are sufficient to redeem the Senior Discount Notes in accordance with Section
6.2 hereof and if the Senior Discount Notes are so redeemed in accordance with
Section 6.2; and (e) the granting of licenses by the Guarantor in its
Intellectual Property to Persons pursuant to Royalty Agreements existing as of,
or entered into after, the date hereof.
8.10 Acquisition of Additional Properties. Acquire any additional
------------------------------------
Property except such Property as is necessary to or useful in the operation of
its business, provided that all such acquisitions shall be subject to the
conditions and limitations set forth in this Agreement.
32
8.11 Transactions with Affiliates. Sell, lease, assign, transfer or
----------------------------
otherwise dispose of any Property to any Affiliate or any officer or director of
the Guarantor or any of its Subsidiaries, lease Property, render or receive
services or purchase assets from any Affiliate or any officer or director of the
Guarantor or any of its Subsidiaries, or otherwise enter into any contractual
relationship with any Affiliate or any officer or director of the Guarantor or
any of its Subsidiaries, except: (a) any transaction in the ordinary course of
business which is on terms no less favorable to the Guarantor or its
Subsidiaries than would be attainable on an arm's-length basis from anyone not
an Affiliate or an officer or director of the Guarantor or its Subsidiaries, (b)
any sale or issuance of shares of Capital Stock of the Guarantor to an Affiliate
or any officer of director of the Guarantor or any of its Subsidiaries, (c) the
payment of salary, wages, compensation or other benefits (other than loans or
repurchases described in Subsection 8.11(d) below), and reasonable directors'
fees, to officers or directors of the Guarantor or any of its Subsidiaries in
the ordinary course of business and consistent with past practices or under
employment agreements, compensation or employee benefit arrangements or other
agreements approved in good faith by the Board of Directors of the Guarantor,
(d) the making of loans to, and the repurchase of shares of Capital Stock of the
Guarantor from, officers or directors of the Guarantor or any of its
Subsidiaries in an aggregate amount not in excess of $500,000 after the Closing
Date, or (e) the consummation of the transactions described in items 1 and 3
of Schedule 4.24 hereof.
-------------
8.12 Compliance with ERISA.
---------------------
(a) Permit the occurrence of any Termination Event which would result
in a liability to the Guarantor or any ERISA Affiliate in excess of
$50,000;
(b) Permit any accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code) as of the end of any Plan Year in
excess of $50,000 with respect to any Pension Plan, whether or not waived;
(c) Fail to make any contribution or payment to any Multiemployer Plan
which the Guarantor or any ERISA Affiliate may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto which results in or is likely to result in a liability in excess of
$50,000;
(d) Engage, or with its knowledge or acquiescence, permit any
Subsidiary or any ERISA Affiliate to engage, in any "prohibited
transaction" as such term is defined in Section 406 of ERISA or Section
4975 of the Code for which a civil penalty pursuant to Section 502(i) of
ERISA or a tax pursuant to Section 4975 of the Code in excess of $50,000 is
imposed;
(e) Permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee Benefit
Plan which establishment or amendment could result in liability (or
increased liability in the case of an amendment) to the Guarantor or any
ERISA Affiliate or increase the obligation of the Guarantor or any ERISA
Affiliate to a Multiemployer Plan which liability (or increased liability)
or increase, individually or together with all similar liabilities and
increases, is material to the Guarantor or any ERISA Affiliate; or
33
(f) Fail, or with its knowledge or acquiescence, permit the Guarantor
or any ERISA Affiliate to fail, to establish, maintain and operate each
Employee Benefit Plan in compliance in all material respects with ERISA,
the Code and all other applicable laws and regulations and interpretations
thereof, and such failure has not been timely corrected without any
materially adverse consequences.
8.13 Fiscal Year. Change its fiscal year.
-----------
8.14 Restrictions Against Limitations on Upstream Payments. Except as set
-----------------------------------------------------
forth in Schedule 4.25, create or otherwise cause or suffer to exist or to
become effective any Payment Restriction or other encumbrance or restriction on
the ability of any Subsidiary of the Guarantor other than the Issuer to (a) pay
dividends or make any other distributions on its Capital Stock or any other
interest or participation in, or measured by, its profits owned by, or pay any
Indebtedness owed to, the Guarantor or any other Subsidiary, (b) make loans or
advances to the Guarantor or any other Subsidiary, or (c) transfer any of its
Properties or assets to the Guarantor or any other Subsidiary, except for such
Payment Restrictions or encumbrances existing under or by reason of: (i)
applicable law; (ii) non-assignment provisions in leases or other contracts
entered into in the ordinary course of business and consistent with past
practices; (iii) instruments governing purchase money indebtedness for Property
acquired in the ordinary course of business that only impose restrictions on the
Property so acquired; or (iv) refinancing indebtedness permitted under this
Agreement with respect to Indebtedness described in clause (iii), provided that
--------
the restrictions contained in the agreements governing such refinancing
indebtedness are no more restrictive in the aggregate than those contained in
the instrument governing the indebtedness being refinanced immediately prior to
such refinancing.
8.15 Stay, Extension and Usury Laws. Insist upon, plead, or in any manner
------------------------------
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that might
affect the covenants or the performance of its obligations under this Agreement
and the Senior Discount Notes; and the Guarantor and the Issuer each hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power granted to the Holders pursuant to this Agreement, but will suffer and
permit the execution of every such power as though no such law has been enacted.
ARTICLE IX
DEFAULTS AND REMEDIES
9.1 Events of Default. The occurrence of any of the following shall
-----------------
constitute an Event of Default:
(a) If the Issuer shall fail to pay the Accreted Value of the Senior
Discount Notes when the same become due and payable.
(b) If the Issuer or any Guarantor shall fail to observe or perform
any covenant or agreement contained in Articles VII or VIII.
34
(c) If the Guarantor or any of its Restricted Subsidiaries shall fail
to observe or perform any covenant or agreement (other than those referred
to in clause (b) above or specifically addressed elsewhere in this Section
9.1) made by such Person in any of the Transaction Documents to which such
Person is a party, and such failure shall continue for a period of 30 days
after the Guarantor or such Restricted Subsidiary first becomes aware of
such failure.
(d) If any representation or warranty made by or on behalf of the
Guarantor or the Issuer in or pursuant to any of the Transaction Documents
or in any instrument or document furnished in compliance with the
Transaction Documents shall prove to be false or misleading in any material
respect as of the most recent date such representation or warranty was
made, except to the extent any such representation or warranty expressly
relates to an earlier date.
(e) If (i) the Guarantor or any of its Restricted Subsidiaries at any
time shall be in default (as principal or guarantor or other surety) in the
payment of any principal of or premium or interest on any Indebtedness for
Borrowed Money (other than the Senior Discount Notes) beyond the grace
period, if any, applicable thereto and the aggregate amount of such
payments then in default beyond such grace period shall exceed $500,000 or
(ii) any material default shall occur in respect of any issue of
Indebtedness for Borrowed Money of the Guarantor or any of its Restricted
Subsidiaries (other than the Senior Discount Notes) outstanding in a
principal amount of at least $100,000, or in respect of any agreement or
instrument relating to any such issue of Indebtedness for Borrowed Money,
and such default shall continue beyond the grace period, if any, applicable
thereto.
(f) If the Guarantor or any of its Restricted Subsidiaries shall
(i) generally not be paying its debts as they become due, (ii) file, or
consent, by answer or otherwise, to the filing against it of a petition for
relief or reorganization or arrangement or any other petition in bankruptcy
or insolvency under the laws of any jurisdiction, (iii) make an assignment
for the benefit of creditors, (iv) consent to the appointment of a
custodian, receiver, trustee or other officer with similar powers for it or
for any substantial part of its Property, or (v) be adjudicated insolvent.
(g) If any Governmental Body of competent jurisdiction shall enter an
order appointing, without consent of the Guarantor or any of its Restricted
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
Property, or if an order for relief shall be entered in any case or
proceeding for liquidation or reorganization or otherwise to take advantage
of any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Guarantor or any of its
Restricted Subsidiaries of any petition for any such relief shall be filed
against it and such petition shall not be dismissed or stayed within 60
days.
(h) If there shall be entered against the Guarantor or any of its
Restricted Subsidiaries one or more judgments, awards or decrees, or orders
of attachment, garnishment or any other writ, which exceed $500,000
(including the amount of any self-retention and standard deductibles with
respect to any of the foregoing otherwise covered by insurance) in the
aggregate at any one time outstanding, excluding judgments, awards,
decrees, orders or writs (i) for which
35
there is full insurance (subject to self-retention and standard
deductibles) and with respect to which the insurer has assumed
responsibility in writing, (ii) for which there is full indemnification
(upon terms and by creditworthy indemnitors which are satisfactory to the
Holders of the Senior Discount Notes) or (iii) which have been in force for
less than the applicable period for filing an appeal so long as execution
has not been levied thereunder or in respect of which the Guarantor or any
of its Restricted Subsidiaries shall at the time in good faith be
prosecuting an appeal or proceeding for review and in respect of which a
stay of execution or appropriate appeal bond shall have been obtained
pending such appeal or review.
(i) If an event or condition specified in clauses (b), (c), (d), (e)
or (f) of Section 4.19 hereof shall occur or exist with respect to any
Pension Plan or Multiemployer Plan and, as a result of such event or
condition, together with all other such events or conditions, the Guarantor
or any ERISA Affiliate shall incur, or in the opinion of the Holders' Agent
be reasonably likely to incur, a liability to a Pension Plan or
Multiemployer Plan or the PBGC (or any of them) which, in the reasonable
judgment of Lender, would have a Material Adverse Effect.
(j) If the Guarantor shall deny or disaffirm its obligations hereunder
or fail to make any payment required hereunder when due.
9.2 Acceleration.
------------
(a) Except as provided in Subsection 9.2(b) below, if an Event of
Default occurs and is continuing, the Holders' Agent, at the direction of
the Holders of at least 25% in principal amount of the then outstanding
Senior Discount Notes, may declare all outstanding Senior Discount Notes to
be due and payable immediately and, upon such declaration, the Issuer shall
be immediately obligated (i) to redeem the Senior Discount Notes for cash
at the Accreted Value as of the date of such declaration, and (ii) to pay
to the Holders of the Senior Discount Notes, interest on such Accreted
Value at the Default Rate, through the date such Accreted Value and any
interest accrued thereon is paid to the Holders of the Senior Discount
Notes.
(b) Notwithstanding anything to the contrary in this Agreement, if an
Event of Default arises under Subsections 9.1(f) or 9.1(g) (other than
under clause (i) of Subsection 9.1(f)) the Issuer shall automatically
become immediately obligated (i) to redeem the Senior Discount Notes for
cash at the Accreted Value as of the date of such declaration, and (ii) to
pay to the Holders of the Senior Discount Notes, interest (including Post-
Petition Interest) on such Accreted Value and, to the extent permissible,
on such interest, at the Default Rate, through the date such Accreted Value
any interest accrued thereon is paid to the Holders of the Senior Discount
Notes, without the necessity for any declaration or other act on the part
of the Holders' Agent or any Holder.
(c) To the extent permitted under Section 10.1(b), the Holders' Agent,
in accordance with the direction of the Holders of at least a majority in
principal amount of the then outstanding Senior Discount Notes, may, by
notice to the Issuer, rescind any declaration of acceleration of such
Senior Discount Notes and its consequences if (i) the rescission would not
conflict with any judgment or decree, (ii) if all existing Defaults and
Events of Default (other than the nonpayment of the Senior Discount Notes
and interest at the Default Rate which shall
36
have become due solely by such declaration) shall have been cured or
waived, and (iii) the Issuer shall have delivered to the Holders' Agent an
Officers' Certificate to the effect of clauses (i) and (ii) above.
9.3 Other Remedies. If an Event of Default occurs and is continuing, the
--------------
Holders' Agent and/or the Holders may pursue any available remedy to collect the
payment of principal of, or premium, if any, or interest on the Senior Discount
Notes or to enforce the performance of any provision of the Senior Discount
Notes or this Agreement. A delay or omission by the Holders' Agent or the
Holders 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. All remedies are cumulative to the extent permitted by
law.
9.4 Waiver of Past Defaults. Subject to the provisions of Sections 9.6
-----------------------
and 10.1 hereof, the Holders' Agent, in accordance with the direction of the
Holders of at least a majority in principal amount of the then outstanding
Senior Discount Notes, may, by notice to the Issuer, waive on behalf of all of
the Holders any existing Default or Event of Default and its consequences under
this Agreement. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Agreement; provided that no such waiver shall extend to any
--------
subsequent or other Default or impair any right consequent thereon.
9.5 Control by a Majority. The Holders' Agent, in conducting any
---------------------
proceeding for any remedy available to the Holders of the Senior Discount Notes,
or in setting the time, method or place of any such proceeding, shall follow the
direction of the Holders of at least a majority in principal amount of the then
outstanding Senior Discount Notes.
9.6 Rights of Holders to Receive Payment. Notwithstanding any other
------------------------------------
provision of this Agreement, the right of any Holder of a Senior Discount Note
to receive payment of the Accreted Value (and interest at the Default Rate, if
applicable) on such Senior Discount Note, on or after the respective dates
expressed in this Agreement or such Senior Discount Note, shall not be impaired
or affected without the consent of such Holder.
9.7 Holders May File Proofs of Claim. The Holders' Agent, in accordance
--------------------------------
with the direction of the Holders of at least a majority in principal amount of
the then outstanding Senior Discount Notes, may file such proofs of claim and
other papers or documents as may be necessary or advisable to have the claims of
the Holders allowed in any Insolvency or Liquidation Proceeding or other
judicial proceeding relative to the Issuer or the Guarantor (or any other
obligor upon the Senior Discount Notes), or any of their respective creditors or
Property.
9.8 Undertaking for Costs. In any suit for the enforcement of any right
---------------------
or remedy under this Agreement, 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.
37
ARTICLE X
AMENDMENTS
10.1 Amendments and Supplements Requiring Consent of Holders; Other
--------------------------------------------------------------
Consents.
- --------
(a) Except as otherwise provided in Section 10.1(b), this Agreement
and the Senior Discount Notes may be amended or supplemented with the
written consent of the Holders' Agent acting at the direction of the
Holders of at least a majority of the aggregate principal amount of the
then outstanding Senior Discount Notes, and any existing Default or Event
of Default or compliance with any provision of this Agreement or the Senior
Discount Notes may be waived with the consent of the Holders' Agent acting
at the direction of the Holders of a majority of the aggregate principal
amount of the then outstanding Senior Discount Notes.
(b) Without the consent of each Holder affected, no amendment,
supplement or waiver to this Agreement shall: (i) reduce the principal
amount or the Accreted Value of the Senior Discount Notes; (ii) change the
Stated Maturity Date of the Senior Discount Notes, or alter the provisions
with respect to the redemption of the Senior Discount Notes in a manner
adverse to the Holders; (iii) reduce the rate of accretion of the Senior
Discount Notes; (iv) waive an Event of Default in the payment of the
Accreted Value of the Senior Discount Notes (except that the Holders' Agent
acting at the direction of the Holders of at least a majority in aggregate
principal amount of the then outstanding Senior Discount Notes may (A)
rescind an acceleration of the Senior Discount Notes that resulted from a
non-payment default, and (B) waive the payment default that resulted from
such acceleration); (v) make any Senior Discount Note payable in money
other than that stated in the Senior Discount Notes; (vi) make any change
in the provisions of this Agreement relating to waivers of past Events of
Defaults or the rights of Holders to receive payments in respect of the
Senior Discount Notes; or (vii) make any change in this Subsection 10.1(b).
(c) After an amendment, supplement or waiver under this Section 10.1
becomes effective, the Issuer shall mail to each Holder affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure
of the Issuer to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Agreement or waiver.
(d) Except as otherwise specified in this Agreement, if any consent or
approval of the Holders is required pursuant to the terms of this
Agreement, such consent or approval shall be deemed to have been given if
given by the Holders' Agent acting upon the direction of at least a
majority of the aggregate principal amount of then outstanding Senior
Discount Notes.
10.2 Revocation and Effect of Consents.
---------------------------------
(a) Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Senior Discount Note is a continuing consent
by the Holder and every subsequent holder of a Senior Discount Note or
portion of a Senior Discount Note that evidences
38
the same Indebtedness as the consenting Holder's Senior Discount Note, even
if notation of the consent is not made on any such Senior Discount Note.
However, any such Holder or subsequent Holder may revoke the consent as to
his or her Senior Discount Note or portion of a Senior Discount Note if the
Issuer receives the notice of revocation before the date on which the
Issuer mails to the Holders an Officers' Certificate certifying that the
Holders of the requisite principal amount of Senior Discount Notes have
consented (and not theretofore revoked such consent) to the amendment or
waiver.
(b) The Issuer may, but shall not be obligated to, fix a record date
for the purpose of determining the holders of Senior Discount Notes
entitled to consent to any amendment or waiver. If a record date is fixed,
then notwithstanding the provisions of the immediately preceding paragraph,
those Persons who were holders of Senior Discount Notes at such record date
(or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such Persons continue to be holders of
Senior Discount Notes after such record date. No consent shall be valid or
effective for more than 30 days after such record date.
(c) After an amendment or waiver becomes effective it shall bind every
Holder, unless it is of the type described in Section 10.1(b), in which
case the amendment or waiver shall only bind each Holder that consented to
it and every subsequent holder of a Senior Discount Note that evidences the
same debt as the consenting Holder's Senior Discount Note.
10.3 Notation on or Exchange of Senior Discount Notes. The Issuer may
------------------------------------------------
place an appropriate notation about an amendment, supplement or waiver on any
Senior Discount Note thereafter issued in exchange for any Senior Discount Note
issued as of the date of such amendment, supplement or waiver. The Issuer in
exchange for all Senior Discount Notes may issue new Senior Discount Notes that
reflect the amendment, supplement or waiver. Failure to make the appropriate
notation or issue a new Senior Discount Note shall not affect the validity and
effect of such amendment, supplement or waiver.
10.4 Board Approval. The Issuer may not sign any amendment, supplement or
--------------
waiver with respect to this Agreement without the approval of its Board of
Directors.
ARTICLE XI
THE SENIOR DISCOUNT NOTES
11.1 Form. The Senior Discount Notes shall be substantially in the form
----
of Exhibit B hereto, which exhibit is part of this Agreement. The terms and
---------
provisions contained in the Senior Discount Notes shall constitute, and are
hereby expressly made, a part of this Agreement and to the extent applicable,
the Issuer, by its execution and delivery of this Agreement, expressly agrees to
such terms and provisions and to be bound thereby.
11.2 Replacement Senior Discount Notes. If any mutilated Senior
---------------------------------
Discount Note is surrendered to the Issuer, or if the Issuer receives evidence
to its satisfaction of the destruction, loss or theft of any Senior Discount
Note, the Issuer shall issue a replacement Senior Discount Note and each such
replacement Senior Discount Note shall be an additional obligation of the
39
Issuer. If the Issuer requires, the Holder must supply an indemnity bond that is
sufficient in the reasonable judgment of the Issuer to protect the Issuer from
any loss that any of them may suffer if a Senior Discount Note is replaced. The
Issuer may charge for its reasonable expenses in replacing a Senior Discount
Note.
11.3 Default Interest. If the Issuer defaults in any payment on the
----------------
Senior Discount Notes, it shall pay interest at the Default Rate in any lawful
manner plus, to the extent lawful, interest payable on the Default Interest.
11.4 Record Date. The record date for purposes of determining the
-----------
identity of Holders of Senior Discount Notes entitled to vote or consent to any
action by vote or consent authorized or permitted under this Agreement shall be
5 days prior to the first solicitation of such vote or consent.
11.5 Restrictive Legends. Except as otherwise permitted by this Section
-------------------
11.5, each Senior Discount Note pursuant to this Agreement shall be stamped or
otherwise imprinted with a legend in substantially the following form:
THE SENIOR DISCOUNT NOTES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (a) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS
EFFECTIVE UNDER SUCH ACT, (b) RULE 144 OR RULE 144A UNDER SUCH ACT, OR
(c) ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT, PROVIDED
THAT, IF REQUESTED BY THE ISSUER, AN OPINION OF COUNSEL (REASONABLY
SATISFACTORY TO THE ISSUER) REASONABLY SATISFACTORY IN FORM AND
SUBSTANCE TO THE ISSUER IS FURNISHED TO THE ISSUER THAT AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.
IN ADDITION, ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER
DISPOSITION OF THIS SECURITY IS RESTRICTED BY, AND THE RIGHTS OF THE
HOLDER OF SUCH SECURITY ARE SUBJECT TO THE TERMS AND CONDITIONS
CONTAINED IN, A NOTE PURCHASE AGREEMENT DATED AS OF NOVEMBER 6, 2000,
A COMPLETE AND CORRECT COPY OF THE FORM OF WHICH WILL BE FURNISHED BY
THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT
CHARGE.
The Issuer shall maintain a copy of this Agreement and any amendments
thereto on file in its principal office, and will make such copy available
during normal business hours for inspection to any party thereto or will provide
such copy to any Purchaser upon its request.
40
Whenever the legend requirement imposed by this Section 11.5 shall
terminate, as hereinabove provided, the respective holders of Senior Discount
Notes for which such legend requirements have terminated shall be entitled to
receive from the Issuer, at the Issuer's expense, Senior Discount Notes without
such legend.
11.6 Notice of Transfer; Opinions of Counsel. The holder of each Senior
---------------------------------------
Discount Note bearing the restrictive legend set forth in Section 11.5 above (a
"Restricted Security") agrees in connection with any transfer of such Restricted
Security to give to the Issuer, upon request (a) written description of the
manner or circumstances of such transfer and/or (b) an opinion of counsel, which
is knowledgeable in securities law matters (including in-house counsel or
regular counsel to such Purchaser or its investment advisor and reasonably
acceptable to the Issuer), in form and substance reasonably satisfactory to the
Issuer, to the effect that the transfer of such Restricted Security may be
effected without registration of such Restricted Security under the Securities
Act. If for any reason the Issuer (after having been furnished with the opinion
required to be furnished pursuant to this Section 11.6) shall fail to notify
such holder within 5 days after such holder shall have delivered such
description and/or opinion to the Issuer that, in its or its counsel's opinion,
the transfer may not be legally effective (the "Illegal Transfer Notice"), such
holders shall thereupon be entitled to consummate the transfer of the Restricted
Security as proposed. If the holder of the Restricted Security delivers to the
Issuer an opinion of counsel (including in-house counsel or regular counsel to
such Purchaser or its investment adviser) in form and substance reasonably
satisfactory to the Issuer that subsequent transfers of such Restricted Security
will not require registration under the Securities Act, the Issuer will promptly
after such contemplated transfer deliver new certificates for such Restricted
Security which do not bear the Securities Act legend set forth in Section 11.5
above. The restrictions imposed by this Article XI upon the transferability of
any particular Restricted Security shall cease and terminate when such
Restricted Security has been sold pursuant to an effective registration
statement under the Securities Act or transferred pursuant to Rule 144
promulgated under the Securities Act. The holder of any Restricted Security as
to which such restrictions shall have terminated shall be entitled to receive
from the Issuer a new security of the same type but not bearing the restrictive
Securities Act legend set forth in Section 11.5 and not containing any other
reference to the restrictions imposed by this Article XI. Notwithstanding any
of the foregoing, no opinion of counsel will be required to be rendered pursuant
to this Section 11.6 with respect to the transfer of any Senior Discount Notes
on which the restrictive legend has been removed in accordance with this Section
11.6 or if the transfer is made in reliance on Rule 144A under the Securities
Act of 1933. As used in this Section 11.6, the term "transfer" encompasses any
sale, transfer or other disposition of any Senior Discount Notes referred to
herein.
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification; Expenses, Etc.
-------------------------------
(a) In addition to any and all obligations of the Issuer and the
Guarantor hereunder and under the other Transaction Documents, the Issuer
and the Guarantor each hereby agree, without limitation as to time, to
indemnify and hold harmless the Holders' Agent, each
41
Holder, each of their Affiliates, and the members, partners, employees,
officers, directors, and agents of the Holders' Agent, the Holders and
their Affiliates (individually, an "Indemnified Party" and, collectively
the "Indemnified Parties") from and against any and all losses, claims,
damages, liabilities, costs (including the reasonable costs of preparation
and attorneys' fees) and expenses (including expenses of investigation)
(collectively, "Losses") incurred or suffered by an Indemnified Party (i)
in connection with or arising out of any breach of any warranty, or the
inaccuracy of any representation, as the case may be, made by the Issuer or
the Guarantor, or the failure of the Issuer or the Guarantor to fulfill any
agreement or covenant made by the Guarantor or the Issuer contained in this
Agreement or (ii) in connection with any proceeding against the Issuer, the
Guarantor or any Indemnified Party brought by any third party arising out
of or in connection with this Agreement or the other Transaction Documents
or the transactions contemplated hereby or thereby, as the case may be, or
any action taken in connection herewith or therewith (or any other document
or instrument executed herewith or pursuant hereto or thereto), whether or
not the transactions contemplated by this Agreement are consummated and
whether or not any Indemnified Party is a formal party to any proceeding;
provided, however, that neither the Issuer nor the Guarantor shall be
-------- -------
liable for any losses resulting from action on the part of any Indemnified
Party which is finally determined in such proceeding to be an act of fraud,
gross negligence, or willful misconduct by such Indemnified Party or based
upon any material breach by any Indemnified Party of its representations
and warranties set forth in this Agreement. The Issuer and the Guarantor
each agrees promptly to reimburse any Indemnified Party for all such Losses
as they are incurred or suffered by such Indemnified Party.
Except as otherwise provided herein, the Issuer and the Guarantor each
agrees (for the benefit of the Purchasers) to pay, and to hold each
Purchaser harmless from and against, all costs and expenses (including,
without limitation, reasonable attorneys' fees, expenses and
disbursements), if any, incurred in connection with the enforcement against
the Issuer or the Guarantor of this Agreement or any other Transaction
Document, or in connection herewith or therewith in any action in which
such Purchaser shall prevail or in any action in which such Purchaser shall
in good faith assert any provision of any of the foregoing as a defense.
(b) If any Indemnified Party is entitled to indemnification hereunder,
such Indemnified Party shall give prompt written notice to the Issuer or
the Guarantor of any claim or of the commencement of any proceeding against
the Issuer or the Guarantor or any Indemnified Party brought by any third
party with respect to which such Indemnified Party seeks indemnification
pursuant hereto; provided, however, that the failure so to notify the
-------- -------
Issuer or the Guarantor shall not relieve the Issuer or the Guarantor from
any obligation or liability except to the extent that the Issuer and the
Guarantor are prejudiced by such failure. The Issuer and the Guarantor
shall have the right, exercisable by giving written notice to an
Indemnified Party promptly after the receipt of written notice from such
Indemnified Party of such claim or proceeding, to assume and control, at
the expense of the Issuer, the defense of any such claim or proceeding with
counsel reasonably satisfactory to such Indemnified Party. The Issuer and
the Guarantor will not be subject to any liability for any settlement made
without its or their consent (but such consent will not be unreasonably
withheld). The Issuer and the Guarantor shall not consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by claimant or plaintiff to such
Indemnified Party or Parties of a release, in form and substance reasonably
satisfactory to the Indemnified Party or Parties, from all liability in
respect of such claim, litigation or proceeding.
42
(c) In addition to any other obligations of the Issuer or the
Guarantor to indemnify the Purchasers herein or pursuant to any of the
Transaction Documents or any other agreements or documents executed and
delivered in connection herewith or therewith, the Issuer and the Guarantor
each agree to pay, and to save the Holders' Agent and each Holder of the
Senior Discount Notes harmless from liability for the payment of, the
following expenses arising in connection with the transactions contemplated
hereby: (a) the costs and expenses, including reasonable attorneys' fees,
incurred by the Holders' Agent or the Holders in protecting or enforcing
any rights under this Agreement or in responding to any subpoena or other
legal process issued in connection with this Agreement or the transactions
contemplated hereby or thereby or by reason of any Holder having acquired
any of the Senior Discount Notes, including, without limitation, costs and
expenses incurred by the Holders' Agent and the Holders in any bankruptcy
case; (b) the cost of delivering to the Purchasers' principal offices,
insured to their satisfaction, the Senior Discount Notes delivered to the
Purchasers hereunder and any Senior Discount Notes delivered to any Holder
upon any substitution of Senior Discount Notes pursuant to this Agreement
or any of the Transaction Documents and of any such Holder's delivering any
Senior Discount Notes, insured to its satisfaction, upon any such
substitution; and (c) the reasonable out-of-pocket expenses incurred by the
Holders' Agent and the Holders in connection with any amendments or
waivers.
ARTICLE XIII
MISCELLANEOUS
13.1 Survival of Representations and Warranties; Severability. All
--------------------------------------------------------
representations and warranties contained in this Agreement or the Transaction
Documents or made in writing by or on behalf of the Guarantor or any of its
Subsidiaries in connection with the transactions contemplated by this Agreement
or the Transaction Documents shall survive, for the duration of any statutes of
limitation applicable thereto, the execution and delivery of this Agreement, any
investigation at any time made by the Purchasers or on the Purchasers' behalf,
the purchase of the Senior Discount Notes by the Purchasers under this Agreement
and any disposition of or payment on the Senior Discount Notes. All statements
contained in any certificate or other instrument delivered to the Purchasers by
or on behalf of the Issuer or the Guarantor pursuant to this Agreement or the
Transaction Documents at the Closing shall be deemed representations and
warranties of the Guarantor and its Subsidiaries under this Agreement. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provisions
in any other jurisdiction.
13.2 Notices, Etc. Any notice or communication under this Agreement
------------
shall be duly given if in writing and delivered in person, mailed by registered
or certified mail, postage prepaid, return receipt requested or delivered by
telecopier or overnight air courier guaranteeing next day delivery to the
other's address:
43
If to the Issuer: Ampex Data Systems Corporation
500 Broadway
Redwood City, CA 94063-3199
Attn: Joel D. Talcott
Secretary and General Counsel
Fax: (650) 367-2011
Tel: (650) 367-3440
With a copy to: Paul Hastings Janofsky & Walker LLP
75 East 55th Street
New York, NY 10022-3205
Attn: David D. Griffin
Fax: (212) 318-6791
Tel: (212) 318-6673
If to the Guarantor: Ampex Corporation
500 Broadway
Redwood City, CA 94063-3199
Attn: Joel D. Talcott
Secretary and General Counsel
Fax: (650) 367-2011
Tel: (650) 367-3440
With a copy to: Paul Hastings Janofsky & Walker LLP
75 East 55th Street
New York, NY 10022-3205
Attn: David D. Griffin
Fax: (212) 318-6791
Tel: (212) 318-6673
If to the Purchasers or to
the Holders' Agent: DDJ Capital Management, LLC
141 Linden Street, Suite S-4
Wellesley, MA 02482
Attn: Wendy Schnipper Clayton
Fax: (781) 283-8555
Tel: (781) 283-8500
With a copy to: Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
Attn: David L. Ruediger
Fax: (617) 227-4420
Tel: (617) 573-0266
Any party by notice to the other parties may designate additional or
different addresses for subsequent notices or communications.
44
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; the date receipt is
acknowledged, if mailed by registered or certified mail; when answered back, if
telecopied; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
13.3 Successors and Assigns. Whenever in this Agreement any of the
----------------------
parties hereto are referred to, except as otherwise provided herein such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the respective
parties which are contained in this Agreement shall bind and inure to the
benefit of the successors and assigns of all other parties. Notwithstanding the
foregoing, the Issuer and the Guarantor shall not be permitted to assign or
delegate any of their rights or obligations hereunder without the express prior
written consent of the Holders of a majority of the Senior Discount Notes (which
consent may be withheld by the Holders in their sole discretion for any or no
reason). The terms and provisions of this Agreement and the other Transaction
Documents shall inure to the benefit of and shall be binding upon any assignee
or transferee of the Purchasers, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Purchasers shall
automatically extend to and be vested in, and become an obligation of, such
transferee or assignee, all subject to the terms and conditions hereof.
13.4 Descriptive Headings. The headings in this Agreement are for
--------------------
purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
13.5 Satisfaction Requirement. If any agreement,
------------------------
certificate or other writing, or any action taken or to be taken, is by the
terms of this Agreement required to be satisfactory to the Purchasers or to the
holders of a specified portion of the principal amount of Senior Discount Notes,
the determination of such satisfaction shall be made by the Purchasers or such
holders, as the case may be, in the sole and exclusive judgment of the Person or
Persons making such determination.
13.6 Governing Law. THIS AGREEMENT AND THE SENIOR DISCOUNT NOTES SHALL
-------------
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES
SHALL BE GOVERNED BY, THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW.
13.7 Service of Process. The Guarantor, the Issuer, the Holders' Agent
------------------
and each Purchaser (a) hereby irrevocably submits itself to the non-exclusive
jurisdiction of the state courts of the Commonwealth of Massachusetts and to the
non-exclusive jurisdiction of the United States District Court for the District
of Massachusetts for the purpose of any suit, action or other proceeding arising
out of or based upon this Agreement, the Senior Discount Notes, the other
Transaction Documents or the subject matter hereof or thereof brought by the
Guarantor, the Issuer, the Holders' Agent, any Purchaser or its successors or
assigns and (b) hereby waives, and agrees not to assert, by way of motion, as a
defense, or otherwise, in any such suit, action or proceeding, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced
45
in or by such court. The Guarantor, the Issuer, the Holders' Agent and each
Purchaser hereby consents to service of process by registered mail at the
address to which notices are to be given. The Guarantor, the Issuer, the
Holders' Agent and each Purchaser agrees that its submission to jurisdiction and
its consent to service of process by mail is made for the express benefit of the
Guarantor and the Issuer, and Holders' Agent and the Purchasers, respectively.
Final judgment against the Guarantor, the Issuer, the Holders' Agent or any
Purchaser in any such action, suit or proceeding shall be conclusive and may be
enforced in other jurisdictions (a) by suit, action or proceeding on the
judgment, a certified or true copy of which shall be conclusive evidence of the
fact and of the amount of any indebtedness or liability of any of the Guarantor,
the Issuer, the Holders' Agent or any Purchaser therein described or (b) in any
other manner provided by or pursuant to the laws of such other jurisdiction;
provided, however, that the Guarantor, the Issuer, the Holders' Agent or any
- -------- -------
Purchaser may at its option bring suit or institute other judicial proceedings
against the Guarantor, the Issuer, the Holders' Agent or any Purchaser or any of
the Guarantor's, the Issuers', the Holders' Agent's or such Purchaser's assets
in any state or federal court of the United States or in any country or place
where the Guarantor, the Issuer, the Holders' Agent or such Purchaser or such
assets may be found.
13.8 Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
13.9 Disclosure to Other Persons. The Holders' Agent and each Purchaser
---------------------------
agrees to keep confidential any financial information delivered by the Guarantor
or any of its Subsidiaries pursuant to this Agreement (other than information
that is publicly available) and such other non-public proprietary information
delivered by the Guarantor or any of its Subsidiaries that is clearly designated
in writing to be or otherwise known by such Purchaser to be confidential;
provided, however, that nothing herein shall prevent such Purchaser from
- -------- -------
disclosing such information: (a) to any prospective purchaser who agrees in
writing to be bound by this Section 13.9, (b) to any Affiliate, director,
officer, partner, member, employee, agent and professional consultant of any
prospective purchasers, in its capacity as such or any actual purchaser,
participant, assignee, or transferee of such Purchaser's or prospective
purchaser's rights under any Senior Discount Notes or any part thereof that
agrees in writing to be bound by this Section 13.9, (c) upon order of any court
or administrative agency having jurisdiction over such party, (d) upon the
request or demand of any regulatory agency or authority having jurisdiction over
such party, (e) which has been publicly disclosed through no breach of such
Purchaser, (f) which has been obtained from any Person that is not a party
hereto or an Affiliate of any such party, (g) in connection with the exercise of
any remedy hereunder, (h) to the certified public accountants for such Purchaser
or as required in summary financial or descriptive business information
disclosed by such Purchaser that is an investment fund as part of its regular
reports to its investors or partners, or (i) as otherwise expressly contemplated
by this Agreement. In order to permit the Guarantor or any of its Subsidiaries
to remove or limit any order, request or demand or to obtain confidential
treatment for any disclosure pursuant to (c) or (d) above, such Purchaser will
use reasonable efforts to inform the Guarantor of any such request for
disclosure prior to disclosure. Nothing in this Section 13.9 shall be construed
to create or give rise to any fiduciary duty on the part of such Purchaser to
the Guarantor or any of its Subsidiaries. Neither the Guarantor nor any of its
Subsidiaries shall disclose any Purchaser's name or identity as an investor in
the Issuer in any press release or other public announcement or
46
in any document or material filed with any governmental entity, without the
prior written consent of such Purchaser, unless such disclosure is required by
applicable law or governmental regulations or by order of a court of competent
jurisdiction, in which case prior to making such disclosure the Guarantor shall
give written notice to such Purchaser describing in reasonable detail the
proposed content of such disclosure and shall permit the Purchaser to review and
comment upon the form and substance of such disclosure.
13.10 No Adverse Interpretation of Other Agreements. This Agreement may
---------------------------------------------
not be used to interpret another agreement, indenture, loan or debt agreement of
the Guarantor or any of its Subsidiaries. Any such agreement, indenture, loan or
debt agreement may not be used to interpret this Agreement.
13.11 Waiver of Jury Trial. THE PARTIES HERETO HEREBY WAIVE TRIAL BY
--------------------
JURY IN ANY LITIGATION, SUIT OR PROCEEDING, IN ANY COURT WITH RESPECT TO, IN
CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE SENIOR DISCOUNT NOTES,
ANY OTHER TRANSACTION DOCUMENTS, OR ANY INSTRUMENT OR DOCUMENT DELIVERED
PURSUANT TO THIS AGREEMENT, THE SENIOR DISCOUNT NOTES OR ANY OTHER TRANSACTION
DOCUMENTS, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF, PROVIDED, HOWEVER, THAT WITH RESPECT TO ANY COMPULSORY
-------- -------
COUNTERCLAIM (I.E., A CLAIM BY ONE PARTY AGAINST ANOTHER PARTY WHICH IF NOT
BROUGHT IN SUCH ACTION WOULD RESULT IN THE PARTY BRINGING SUCH CLAIM BEING
FOREVER BARRED FROM BRINGING SUCH CLAIM), THE PARTY BRINGING SUCH CLAIM SHALL
HAVE THE RIGHT TO RAISE SUCH COMPULSORY COUNTERCLAIM IN ANY SUCH LITIGATION.
13.12 Merger. This Agreement and the other Transaction Documents
------
constitute the entire agreement of the parties hereto and express the entire
understanding of the parties hereto with respect to the Senior Discount Notes.
13.13 Expenses. The Guarantor and the Issuer agree to pay, on demand,
--------
all reasonable out-of-pocket expenses incurred by the Holders' Agent or the
Holders, including, without limitation, reasonable legal and accounting fees, in
connection with (a) the negotiation and execution of this Agreement, the Senior
Discount Notes and the Transaction Documents and any amendments thereto and (b)
the collection of amounts upon the occurrence of an Event of Default hereunder.
ARTICLE XIV
GUARANTEE
14.1 Guarantee.
---------
(a) The Guarantor hereby unconditionally and irrevocably guarantees to
each Holder (i) the full and punctual payment of the Accreted Value of the
Senior Discount Notes, and, if applicable, interest thereon at the Default
Rate, when due, whether at maturity, by acceleration, by redemption or
otherwise, and all other amounts payable by the Issuer under this
47
Agreement and the Senior Discount Notes, and (ii) the full and punctual
performance of all other obligations of the Issuer under this Agreement and
the Senior Discount Notes (all the foregoing described in (i) and (ii) for
purposes of this Article XIV being hereinafter collectively called the
"Guaranteed Obligations").
----------------------
(b) The Guarantor further agrees to pay to each Holder, on demand, all
costs and expenses (including court costs and reasonable legal expenses)
incurred or expended by it in connection with the Guaranteed Obligations
and the enforcement thereof, together with interest on amounts recoverable
hereunder from the time such amounts become due until payment, at the
Default Rate.
(c) The Guarantor further agrees that its Guarantee herein constitutes
a guarantee of payment, performance and compliance when due (and not a
guarantee of collection) and waives any right to require that any resort be
had by any Holder to any security held for payment of the Guaranteed
Obligations.
(d) The Guarantor waives presentation to, demand of payment from and
protest to the Issuer of any of the Guaranteed Obligations and also waives
notice of any Default under the Guaranteed Obligations not provided for
herein. The Guaranteed Obligations shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim
of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability
of the Guaranteed Obligations or otherwise.
(e) Without limiting the generality of the foregoing, the Guaranteed
Obligations shall not be discharged or impaired or otherwise affected by:
(i) the failure of the Holders' Agent or any Holder to assert any claim or
demand or to enforce any right or remedy against the Issuer or any other
Person under this Agreement, or the Senior Discount Notes, or otherwise;
(ii) any extension or renewal of any thereof; (iii) any rescission, waiver,
amendment or modification of any of the terms or provisions of this
Agreement, the Senior Discount Notes, or any other agreement; (iv) the
release of any collateral pledged as security for the Senior Discount
Notes; (v) the failure of the Holders' Agent or any Holder to exercise any
right or remedy against any other guarantor of all or part of the
Guaranteed Obligations; (vi) any change in the ownership of the Guarantor;
(vii) any default, failure or delay, willful or otherwise, in the
performance of the Guaranteed Obligations; or (viii) by any other act or
thing or omission or delay to do any other act or thing which may or might
in any manner or to any extent vary the risk of the Guarantor or would
otherwise operate as a discharge of the Guarantor as a matter of law or
equity.
(f) The Guarantor further agrees that if at any time payment of the
Senior Discount Notes, or any part thereof or any interest thereon, is
rescinded or must otherwise be restored by any Holder upon the bankruptcy
or reorganization of the Issuer or otherwise, its Guarantee herein as to
such amount shall continue to be effective or be reinstated, as the case
may be.
(g) In furtherance of the foregoing and not in limitation of any other
right which any Holder has at law or in equity against the Guarantor by
virtue hereof, upon the failure
48
of the Issuer to pay the Accreted Value of the Senior Discount Notes or any
interest thereon when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or
comply with any of the terms of this Agreement or the Senior Discount Notes
(in each case taking into account all applicable grace periods provided
hereunder), the Guarantor hereby promises to and will, upon receipt of
written demand by the Holders' Agent or any Holder, forthwith pay, or cause
to be paid, in cash, to the Holders such amount not so paid.
(h) Until the payment and performance in full of all Guaranteed
Obligations and any and all Guaranteed Obligations of the Issuer to the
Holders, the Guarantor shall not exercise any rights against the Issuer
arising as a result of payment by the Guarantor hereunder, by way of
subrogation or otherwise, and will not prove any claim in competition with
the Holders in respect of any payment made hereunder in its capacity as
Guarantor in bankruptcy or insolvency proceedings of any nature; the
Guarantor will not claim any set-off or counterclaim against the Issuer in
respect of any liability of the Guarantor to the Issuer; and (other than as
may be provided for herein) the Guarantor waives any benefit of and any
right to participate in any collateral which may be held by the Issuer.
(i) The payment of any amounts due with respect to any Indebtedness of
the Issuer now or hereafter held by the Guarantor is hereby subordinated to
the prior payment in full of the Guaranteed Obligations. The Guarantor
agrees that until the Senior Discount Notes have been redeemed in full, the
Guarantor (i) will not demand, sue for or otherwise attempt to collect any
such Indebtedness of the Issuer to the Guarantor until the Guaranteed
Obligations shall have been paid in full, and (ii) if, notwithstanding the
foregoing sentence, the Guarantor shall collect, enforce or receive any
amounts in respect of such Indebtedness, will collect, enforce and receive
such amounts as trustee for the Holders and such amounts shall be paid over
to the Holders on account of the Guaranteed Obligations without affecting
in any manner the liability of the Guarantor under the other provisions of
this Section 14.1 other than to reduce the total amount of Indebtedness by
the amount of any such payment made to the Holders.
(j) The Guarantor further agrees that, as between the Guarantor and
the Holders (i) the maturity of the Guaranteed Obligations guaranteed
hereby may be accelerated as provided in Article IX for the purposes of the
Guarantor's Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Guaranteed
Obligations guaranteed hereby, and (ii) in the event of any declaration of
acceleration of such obligation as provided in Article IX and if the
Guaranteed Obligations thereby become due and payable, such Guaranteed
Obligations shall forthwith become due and payable by the Guarantor for the
purpose of this Section.
14.2 No Waiver, Etc. Neither a failure nor a delay on the part of the
---------------
Holders' Agent or the Holders in exercising any right, power or privilege under
this Article XIV shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Holders herein
expressly specified are cumulative and not exclusive of any other rights,
remedies or benefits which either may have under this Article XIV at law, in
equity, by statute or otherwise.
49
ARTICLE XV
THE HOLDERS' AGENT
15.1 Appointment and Authorization. Each of the Purchasers and the other
-----------------------------
Holders from time to time of the Senior Discount Notes hereby irrevocably
appoints the Holders' Agent as its agent and authorizes the Holders' Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Holders' Agent by the terms of this Agreement, together with such actions
and powers as are reasonably incidental thereto.
15.2 Duties As Expressly Stated. The Holders' Agent shall not have any
--------------------------
duties or obligations except those expressly set forth in this Agreement.
Without limiting the generality of the foregoing and regardless of whether an
Event of Default shall have occurred and be continuing, the Holders' Agent shall
not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated by this
Agreement that the Holders' Agent is required to exercise upon the direction of
the Holders of at least a majority of the outstanding principal amount of the
Senior Discount Notes (or such other number or percentage of the Holders as is
required hereunder with respect to such action). The Holders' Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the Holders of at least a majority of the outstanding principal
amount of the Senior Discount Notes (or such other number or percentage of the
outstanding principal amount as is required hereunder with respect to such
action) or all of the Holders if expressly required, or in the absence of its
own gross negligence or willful misconduct. The Holders' Agent shall not, except
to the extent expressly instructed by the Holders of at least a majority of the
outstanding principal amount of the Notes, be required to initiate or conduct
any litigation or collection proceedings, or take any action with respect to any
collateral pledged as security for the Senior Discount Notes, and, in no event,
shall the Holders' Agent be required to take any action which exposes the
Holders' Agent to personal liability or which is contrary to this Agreement or
applicable law.
15.3 Indemnification. Each Holder agrees to indemnify and hold harmless
---------------
the Holders' Agent (to the extent the Holders' Agent is not reimbursed by the
Guarantor or the Issuer under this Agreement, but without limiting the
obligations of the Guarantor or the Issuer hereunder), ratably in accordance
with the aggregate principal amount of Senior Discount Notes held by such Holder
and all other Holders (or, if all of the Senior Discount Notes shall have been
redeemed, ratably in accordance with the aggregate outstanding amount of the
Senior Discount Notes that had been held by the Holders), for any and all
liabilities (including pursuant to any Environmental Law), obligations, losses,
damages, penalties, actions, judgments, deficiencies, suits, costs, expenses
(including reasonable attorney's fees) or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the Holders'
Agent arising out of or by reason of any investigation in or in any way relating
to or arising out of this Agreement or the Senior Discount Notes or any of the
other Transaction Documents as a result of any action taken or omitted to be
taken by the Holders' Agent under or in respect of this Agreement or any of the
Transaction Documents or the transactions contemplated thereby (including the
costs and expenses that the Guarantor or the Issuer is obligated to pay
hereunder) or the enforcement of any of the terms hereof or thereof; provided,
however, that no Holder shall be liable for any of the foregoing to the extent
they are determined by a court of competent
50
jurisdiction in a final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of the party to be indemnified. The
agreements set forth in this Section 15.3 shall survive the payment of all
Senior Discount Notes and shall be in addition to and not in lieu of any other
indemnification agreements contained in this Agreement or in any other
Transaction Document.
15.4 Consents Under Other Transaction Documents. Except as otherwise
------------------------------------------
provided in this Agreement and the other Transaction Documents, the Holders'
Agent may, with the prior consent of the Holders of at least a majority of the
outstanding principal amount of the Senior Discount Notes (but not otherwise),
consent to any modification, supplement or waiver under any of the other
Transaction Documents.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
51
NOTE PURCHASE AGREEMENT
ISSUER SIGNATURE PAGE
If this Agreement is satisfactory, please so indicate by signing the
applicable attached signature page of this Agreement and delivering such
counterpart to the Holders' Agent whereupon this Agreement will become binding
among the parties hereto in accordance with its terms.
AMPEX DATA SYSTEMS CORPORATION,
a Delaware corporation
By:
---------------------------------------
Name:
Title:
NOTE PURCHASE AGREEMENT
GUARANTOR COUNTERPART SIGNATURE PAGE
Accepted and Agreed as of
the date first above written:
AMPEX CORPORATION,
a Delaware corporation
By:
-------------------------------------
Name:
Title:
NOTE PURCHASE AGREEMENT
HOLDERS' AGENT COUNTERPART SIGNATURE PAGE
Accepted and Agreed as of
the date first above written:
DDJ CAPITAL MANAGEMENT, LLC
By:
---------------------------------
Name:
Title:
NOTE PURCHASE AGREEMENT
PURCHASER COUNTERPART SIGNATURE PAGE
Accepted and agreed as of the
date first written above:
Aggregate Accreted Value B III Capital Partners, L.P.
at the Stated Maturity Date By: DDJ Capital III, LLC, its General Partner
of Senior Discount Notes to By: DDJ Capital Management, LLC, Manager
be Purchased: $1,895,405.56
By:
------------------------------------
Aggregate Issue Price Name:
of Senior Discount Notes to Title: Member
be Purchased: $1,700,000.00
Address: c/o DDJ Capital Management, LLC
Attn: Wendy Schnipper Clayton
141 Linden Street, Suite 4
Wellesley, MA 02482
Telephone: (781) 283-8500
Telecopy: (781) 283-8555
Nominee (name in which Senior Discount Notes
are to be registered, if different than name of Purchaser):
Goldman Sachs & Company FFC B III Capital Partners, L.P.
Federal I.D. Number: 04-3341099
Payment Instructions:
Chase Manhattan Bank, N.Y.
ABA #: 021000021
F/A/O Goldman Sachs & Co., N.Y.
A/C # 930-1-0011483
F/F/C DDJ B III Capital Partners
A/C # 002-041291
NOTE PURCHASE AGREEMENT
PURCHASER COUNTERPART SIGNATURE PAGE
Accepted and agreed as of the
date first written above:
Aggregate Accreted Value B III-A Capital Partners, L.P.
at the Stated Maturity Date By: GP III-A, LLC, its General Partner
of Senior Discount Notes to By: DDJ Capital Management, LLC, Manager
be Purchased: $780,461.11
By:
---------------------------------------
Aggregate Issue Price Name:
of Senior Discount Notes to Title: Member
be Purchased: $700,000.00
Address: c/o DDJ Capital Management, LLC
Attn: Wendy Schnipper Clayton
141 Linden Street, Suite 4
Wellesley, MA 02482
Telephone: (781) 283-8500
Telecopy: (781) 283-8555
Nominee (name in which Senior Discount Notes
are to be registered, if different than name of Purchaser):
Goldman Sachs & Company FFC B III-A Capital Partners, L.P.
Federal I.D. Number: 04-3495504
Payment Instructions:
Chase Manhattan Bank, N.Y.
ABA #: 021000021
F/A/O Goldman Sachs & Co., N.Y.
A/C # 930-1-0011483
F/F/C B III-A Capital Partners, L.P.
A/C # 002-060861
NOTE PURCHASE AGREEMENT
PURCHASER COUNTERPART SIGNATURE PAGE
Accepted and agreed as of the
date first written above:
Aggregate Accreted Value State Street Bank & Trust, solely in its capacity
at the Stated Maturity Date as Custodian for General Motors Employees
of Senior Discount Notes to Global Group Pension Trust as directed by be
Purchased: $6,243,688.89 DDJ Capital Management, LLC, and not in its
individual capacity
Aggregate Issue Price
of Senior Discount Notes to By:
be Purchased: $5,600,000.00 -----------------------------------
Name:
Title:
Address: c/o DDJ Capital Management, LLC
Attn: Wendy Schnipper Clayton
141 Linden Street, Suite 4
Wellesley, MA 02482
Telephone: (781) 283-8500
Telecopy: (781) 283-8555
Nominee (name in which Senior Discount Notes
are to be registered, if different than name of Purchaser):
Southlake & Co.
Federal I.D. Number: 13-3160892
Payment Instructions:
State Street Bank & Trust Co., Boston
ABA #: 011000028
Ref: General Motors Employees Global Group Pension Trust
Account Number: 7M2E
DDA # 26572875
SCHEDULES
Schedule 1.1 - Permitted Liens
Schedule 4.1 - Subsidiaries of Issuer
Schedule 4.8 - Litigation
Schedule 4.10 - Tax Returns and Payments
Schedule 4.12 - Intellectual Property; Royalty Agreements
Schedule 4.14 - Environmental Matters
Schedule 4.17 - Other Indebtedness
Schedule 4.19 - Employee Benefit Plans
Schedule 4.24 - Transactions with Affiliates
Schedule 4.25 - Limitation on Subsidiary Payment Restrictions
Schedule 8.1 - Existing Indebtedness of Guarantor and Restricted
Subsidiaries
Schedule 8.7 - Commitments to Make Certain Investments
EXHIBITS
Exhibit A - List of Purchasers and Amounts
Exhibit B - Form of Senior Discount Note
Exhibit C - Form of Colorado Deed of Trust
Exhibit D - Form of Guarantor Security Agreement
Exhibit E-1 - Form of Opinion of Special Counsel to Guarantor and Issuer
Exhibit E-2 - Form of Opinion of General Counsel to Guarantor and Issuer
Exhibit F - Form of Management Rights Letter