UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 17, 1998
AMPEX CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-20292 13-3667696
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(State or Other (Commission) (I.R.S. Employer
Jurisdiction of File Number) Identification
Incorporation) No.)
500 Broadway, Redwood City, CA 94063-3199
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (650) 367-2011
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(Former name or former address, if changed since last report.)
737800.1
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets.
On July 17, 1998, the Company consummated the acquisition of
all the common stock of MicroNet Technology, Inc., a manufacturer of disk arrays
and network attached storage products for image-based markets, including the
video and commercial pre-press markets (the "MicroNet Acquisition"). The
MicroNet Acquisition has been accounted for as a purchase, effective as of July
1, 1998, and the Company has been managing the affairs of MicroNet since that
date. In connection with the MicroNet Acquisition, the Company issued 720,000
shares of its Common Stock to MicroNet's shareholders, and acquired MicroNet,
subject to approximately $3.5 million of preferred stock, debt of $6.0 million
and other liabilities estimated at approximately $3.0 million. The issuance of
such shares of Common Stock diluted current stockholders' interests by
approximately 1.4%. The Company is not aware of any material relationship
between the selling stockholders of MicroNet and the Company, any of its
affiliates, any director or officer of the Company, or any of their associates.
Preliminary audited financial statements for MicroNet's 1997 fiscal year
indicate that MicroNet realized net sales of approximately $32.0 million and a
net loss of approximately $13.8 million. Since the beginning of fiscal 1998,
MicroNet has substantially reduced its costs and the Company believes that
MicroNet has recently been operating on approximately a cash flow break-even
level. There can be no assurance that MicroNet will be able to achieve
profitable results for the balance of 1998, or that the Company will
successfully be able to integrate MicroNet's business or realize any financial
benefit therefrom.
Item 5. Other Events.
On July 20, 1998, the Company issued and sold $14,000,000
aggregate principal amount of its 12% Senior Notes due 2003 (the "Notes"). The
Notes were issued under an existing Indenture, dated as of January 28, 1998,
which contains restrictive covenants on (i) the incurrence of additional senior
indebtedness of the Company and its Restricted Subsidiaries (as defined), (ii)
payment of dividends on, and redemption of, capital stock and certain
subordinated obligations of, the Company, (iii) investments in Unrestricted
Subsidiaries (as defined), (iv) sales of assets and subsidiary stock, (v)
transactions with affiliates, and (vi) consolidations, mergers and transfers of
all or substantially all of the assets of the Company. The Indenture also
requires certain mandatory offers to purchase the Notes in the event of a Change
of Control (as defined) of the Company and certain sales of assets. The net
proceeds of the offering are expected to be used primarily for working capital
purposes, and possible investments in or acquisitions of new business, such as
MicroNet. The Notes were placed privately with a group of institutional
investors in a transaction exempt from registration under the Securities Act of
1933, as amended (the "Act"). The Company has agreed to exchange the Notes for
similar Notes registered under the Act and/or to register the Notes under a
shelf registration statement. The Company had previously issued a total of
$30,000,000 aggregate principal amounts of Senior Notes under the Indenture,
having substantially similar terms to the Notes described in this Report.
Item 7. Financial Statements and Exhibits.
(a) and (b). Financial Statements of Business Acquired; Pro
Forma Financial Information. The financial statements of MicroNet and related
pro forma financial information required to be filed pursuant to Item 7(a) and
(b) will be filed by the Company within 60 days after the date of the filing of
this Report.
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(c). Exhibits. The Exhibits to this Current Report on Form 8-K
are listed in the Exhibit Index which appears elsewhere herein and is
incorporated herein by reference.
737800.1
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be on its behalf by the
undersigned hereunto duly authorized.
AMPEX CORPORATION
Date: July 30, 1998 By: /s/ Craig L. McKibben
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Craig L. McKibben
Vice President, Chief Financial Officer
and Treasurer
737800.1
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EXHIBIT INDEX
Exhibit No. Exhibit Description
1.1 Purchase Agreement, dated July 17, 1998,
between the Registrant and First Albany
Corporation, as Initial Purchaser (the
"Initial Purchaser")
4.1 First Amendment to
Indenture, dated as
of July 2, 1998,
between the
Registrant and IBJ
Schroder Bank & Trust
Company, as trustee
4.2 Exchange and Registration Rights
Agreement, dated as of July 20, 1998,
between the Registrant and the Initial
Purchaser
4.3 Acquisition
Agreement, dated as
of June 24, 1998,
among the Registrant
Ampex Holdings
Corporation
("Holdings") and the
several selling
shareholders named
therein ("Sellers")
4.4 Supplement to Acquisition Agreement, dated
June 30, 1998, among the Registrant,
Holdings and the Sellers
4.5 Second Supplement to Acquisition
Agreement, dated July 16, 1998, among the
Registrant, Holdings and the Sellers
737800.1
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Exhibit 1.1.
AMPEX CORPORATION
(a Delaware corporation)
$14,000,000
12% Senior Notes Due 2003
---------------------------------------------
PURCHASE AGREEMENT
---------------------------------------------
Dated: July 17, 1998
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Table of Contents
<TABLE>
<S> <C> <C>
SECTION 1. Representations and Warranties.........................................................2
(a) Representations and Warranties by the Company..........................................2
(b) Officer's Certificates.................................................................9
SECTION 2. Sale and Delivery to Initial Purchaser; Closing........................................9
(a) Notes..................................................................................9
(b) Payment................................................................................9
(c) Qualified Institutional Buyer.........................................................10
SECTION 3. Covenants of the Company..............................................................10
(a) Offering Memorandum...................................................................10
(b) Notice and Effect of Material Events..................................................10
(c) Amendment to Offering Memorandum and Supplements......................................10
(d) Qualification of Notes for Offer and Sale.............................................11
(e) DTC...................................................................................11
(f) Use of Proceeds.......................................................................11
SECTION 4. Payment of Expenses...................................................................11
(a) Expenses..............................................................................11
(b) Termination of Agreement..............................................................11
SECTION 5. Conditions of Initial Purchaser's Obligations.........................................12
(a) Opinion of Counsel for the Company....................................................12
(b) Opinion of Patent Counsel for the Company. ...........................................12
(c) Opinion of Counsel for Initial Purchaser..............................................12
(d) Officers' Certificate.................................................................12
(e) Accountant's Comfort Letter...........................................................13
(f) Bring-down Comfort Letter.............................................................13
(g) Registration Rights Agreement.........................................................13
</TABLE>
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<TABLE>
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(h) PORTAL. ..............................................................................13
(i) Additional Documents..................................................................13
(j) Termination of Agreement..............................................................13
SECTION 6. Subsequent Offers and Resales of the Notes............................................13
(a) Offer and Sale Procedures.............................................................13
(b) Covenants of the Company..............................................................15
SECTION 7. Indemnification.......................................................................16
(a) Indemnification of Initial Purchaser..................................................16
(b) Indemnification of Company, Directors and Officers....................................16
(c) Actions against Parties; Notification.................................................17
SECTION 8. Contribution..........................................................................17
SECTION 9. Representations, Warranties and Agreements to Survive Delivery........................18
SECTION 10. Termination of Agreement..............................................................18
(a) Termination; General..................................................................18
(b) (b)Liabilities........................................................................19
SECTION 11. Notices...............................................................................19
SECTION 12. Parties...............................................................................19
SECTION 13. GOVERNING LAW AND TIME................................................................20
SECTION 14. Effect of Headings....................................................................20
</TABLE>
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$14,000,000
12% Senior Notes Due 2003
AMPEX CORPORATION
(a Delaware corporation)
PURCHASE AGREEMENT
July 17, 1998
FIRST ALBANY CORPORATION
One Penn Plaza
New York, New York 10119
Ladies and Gentlemen:
Ampex Corporation, a Delaware corporation (the "Company"), confirms its
agreement with First Albany Corporation (the "Initial Purchaser"), with respect
to the issue and sale by the Company and the purchase by the Initial Purchaser
of $14,000,000 aggregate principal amount of the Company's 12% Senior Notes Due
2003 (the "Notes"). The Notes are to be issued pursuant to an Indenture dated as
of January 28, 1998, between the Company and IBJ Schroder Bank & Trust Company,
as trustee (the "Trustee"), as amended by First Amendment to Indenture, dated as
of July 2, 1998 (the "Indenture"). Notes issued in book-entry form will be
issued to Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant
to a letter agreement, to be dated as of the Closing Time (as defined below in
Section 2(b)) (the "DTC Agreement"), among the Company, the Trustee and DTC.
The Company understands that the Initial Purchaser proposes to make an
offering of the Notes on the terms and in the manner set forth herein and agrees
that the Initial Purchaser may resell, subject to the conditions set forth
herein, all or a portion of the Notes to purchasers ("Subsequent Purchasers") at
any time after the date of this Agreement. The Notes are to be offered and sold
through the Initial Purchaser without being registered under the Securities Act
of 1933, as amended (the "1933 Act"), in reliance upon exemptions therefrom.
Pursuant to the terms of the Notes and the Indenture, investors that acquire
Notes may only resell or otherwise transfer such Notes if such Notes are
hereafter registered under the 1933 Act or if an exemption from the registration
requirements of the 1933 Act is available (including the exemption afforded by
Rule 144A ("Rule 144A") of the rules and regulations promulgated under the 1933
Act by the Securities and Exchange Commission (the "Commission")).
The Company has prepared and delivered to the Initial Purchaser copies
of a preliminary offering memorandum dated July 6, 1998 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to the Initial
Purchaser, on the date hereof or the next succeeding day, copies of a final
offering memorandum dated July 17, 1998 (the "Final Offering Memorandum"), each
for use by the Initial Purchaser in connection with its solicitation of
purchases of, or offering
739869.1
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of, the Notes. "Offering Memorandum" means, with respect to any date or time
referred to in this Agreement, the most recent offering memorandum (whether the
Preliminary Offering Memorandum or the Final Offering Memorandum, or any
amendment or supplement to either such document), including exhibits thereto,
which has been prepared and delivered by the Company to the Initial Purchaser in
connection with its solicitation of purchases of, or offering of, the Notes.
The holders of Notes will be entitled to the benefits of an Exchange
and Registration Rights Agreement between the Company and the Initial Purchaser
(the "Registration Rights Agreement"), pursuant to which the Company will file a
registration statement (the "Registration Statement") with the Commission
registering the Notes or the Exchange Notes referred to in the Registration
Rights Agreement under the 1933 Act.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to the Initial Purchaser as of the date hereof and as of
the Closing Time referred to in Section 2(b) hereof, and agrees with the Initial
Purchaser as follows:
(i) Similar Offerings. The Company has not, directly or
indirectly, solicited any offer to buy or offered to sell, and will not,
directly or indirectly, solicit any offer to buy or offer to sell, in the United
States or to any United States citizen or resident, any security which is or
would be integrated with the sale of the Notes in a manner that would require
the Notes to be registered under the 1933 Act.
(ii) Offering Memorandum. The Offering Memorandum does
not, and at the Closing Time will not, include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement shall not
apply to statements in or omissions from the Offering Memorandum made in
reliance upon and in conformity with written information furnished to the
Company in writing by the Initial Purchaser expressly for use in the Offering
Memorandum.
(iii) Incorporated Documents. The documents incorporated
or deemed to be incorporated by reference in the Offering Memorandum at the time
they were or hereafter are filed with the Commission complied and will comply in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder, and when read together with the other
information in the Offering Memorandum, at the date of the Offering Memorandum
and at the Closing Time, do not and will not include an 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 the light of the circumstances
under which they were made, not misleading.
(iv) Independent Accountants. The accountants who
certified certain of the financial statements and supporting schedules included
in the Offering Memorandum are independent certified public accountants with
respect to the Company and its subsidiaries within the
739869.1
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meaning of Regulation S-X under the 1933 Act.
(v) Financial Statements. The financial statements,
together with the related schedules and notes, included in the Offering
Memorandum present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of income,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved, except as
indicated therein or in the notes thereto. The supporting schedules, if any,
included in the Offering Memorandum present fairly in accordance with GAAP the
information required to be stated therein. The selected consolidated historical
financial data included in the Offering Memorandum present fairly the
information shown therein and have been compiled on a basis consistent with that
of the audited financial statements included in the Offering Memorandum. The pro
forma financial information of the Company and its subsidiaries and the related
notes thereto included in the Offering Memorandum present fairly the information
shown therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein.
(vi) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Offering Memorandum,
except as otherwise stated therein, (A) there has been no material adverse
change, and no development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings or business of the
Company and its subsidiaries considered as one enterprise (a "Material Adverse
Effect"), whether or not arising in the ordinary course of business, (B) there
have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which are
material with respect to the Company and its subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(vii) Good Standing of the Company. The Company has been
duly organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Offering Memorandum and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(viii) Good Standing of Significant Subsidiaries. Each
"significant subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Significant Subsidiary") has been duly organized and is
validly existing as a corporation in good standing under
739869.1
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the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse Effect;
all of the issued and outstanding capital stock of each Significant Subsidiary
has been duly authorized and validly issued, is fully paid and non-assessable
and is owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity;
none of the outstanding shares of capital stock of the Significant Subsidiaries
was issued in violation of any preemptive or similar rights arising by operation
of law, or under the charter or by-laws of any Significant Subsidiary or under
any agreement to which the Company or any Significant Subsidiary is a party.
(ix) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the Offering
Memorandum under the caption "Capitalization" as of the date set forth therein,
and except as set forth in the Offering Memorandum, there have been no material
changes thereto.
(x) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company.
(xi) Authorization of Registration Rights Agreement. The
Registration Rights Agreement has been duly authorized by the Company and, at
the Closing Time, will have been duly executed and delivered by the Company and
will constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws relating to or affecting enforcement of creditors' rights generally, or by
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law), and except that rights to indemnification and
contribution thereunder may be limited by applicable law.
(xii) Authorization of the Indenture. The Indenture has
been duly authorized, executed and delivered by the Company and constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights generally, or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(xiii) Authorization of the Notes. The Notes have been
duly authorized and, at the Closing Time, will have been duly executed by the
Company and, when authenticated in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor will constitute valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy,
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insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law), and will be in the form contemplated by, and entitled to the
benefits of, the Indenture.
(xiv) Description of the Notes, the Indenture and the
Registration Rights Agreement. The Notes, the Indenture and the Registration
Rights Agreement will conform in all material respects to the respective
statements relating thereto contained in the Offering Memorandum and will be in
substantially the respective forms previously delivered to the Initial
Purchaser.
(xv) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its charter or by-laws or
in default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets of the Company or
any of its subsidiaries is subject (collectively, "Agreements and Instruments")
and except for such defaults and, in the case of the Company's subsidiaries
only, such violations that would not result in a Material Adverse Effect; and
the execution, delivery and performance of this Agreement, the Registration
Rights Agreement, the Indenture and the Notes and any other agreement or
instrument entered into or issued or to be entered into or issued by the Company
in connection with the transactions contemplated hereby or thereby or in the
Offering Memorandum and the consummation of the transactions contemplated
herein, therein and in the Offering Memorandum (including the issuance and sale
of the Notes, the use of the proceeds from the sale of the Notes as described in
the Offering Memorandum under the caption "Use of Proceeds" and the filing of
the Registration Statement) and compliance by the Company with its obligations
hereunder, and under the Registration Rights Agreement, the Indenture and the
Notes have been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or a Repayment Event
(as defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, the Agreements and Instruments except for such
conflicts, breaches or defaults or liens, charges or encumbrances that, singly
or in the aggregate, would not result in a Material Adverse Effect, nor will
such action result in any violation of the provisions of the charter or by-laws
of the Company or any of its subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their assets or properties. As used
herein, a "Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any of its
subsidiaries.
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(xvi) Absence of Labor Dispute. To the Company's
knowledge, no labor dispute with the employees of the Company or any of its
subsidiaries exists or is imminent, and to the Company's knowledge (without
independent investigation), there is no existing or imminent labor disturbance
by the employees of any if its principal suppliers which, in either case, may
reasonably be expected to result in a Material Adverse Effect.
(xvii) Absence of Proceedings. Except as disclosed in the
Offering Memorandum, there is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company, threatened, against
or affecting the Company or any of its subsidiaries which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably be
expected to materially and adversely affect the properties or assets of the
Company or any of its subsidiaries or the consummation of this Agreement or the
performance by the Company of its obligations hereunder. The aggregate of all
pending legal or governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective property or assets
is the subject which are not described or generally referred to in the Offering
Memorandum, including ordinary routine litigation incidental to the business,
could not reasonably be expected to result in a Material Adverse Effect.
(xviii) Possession of Intellectual Property. The Company
and its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them, and, except
as disclosed in the Offering Memorandum, neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict or invalidity or
inadequacy, singly or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect; and the use, in connection with the business and
operations of the Company and its subsidiaries, of such trademarks, service
marks, trade names, patents, patent rights, licenses, inventions, copyrights and
know-how does not violate or infringe any trademark, trade name, contract,
agreement, patent, patent right, copyright or license of any person, firm,
corporation or association whatsoever.
(xix) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency (other than under state
securities laws, or the 1933 Act and the rules and regulations thereunder or the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the Registration Rights Agreement and the
transactions contemplated hereunder or thereunder) is necessary or required for
the performance by the Company of its obligations hereunder, in connection with
the offering, issuance or sale of the Notes hereunder
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or the consummation of the transactions contemplated by this Agreement.
(xx) Possession of Licenses and Permits. The Company and
its subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them, except where the failure to possess
any such Governmental Licenses could not, singly or in the aggregate, reasonably
be expected to have a Material Adverse Effect; the Company and its subsidiaries
are in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply could not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect could not reasonably be expected to have
a Material Adverse Effect; and neither the Company nor any of its subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
reasonably be expected to result in a Material Adverse Effect.
(xxi) Title to Property. The Company and its subsidiaries
have good title to all material property owned by the Company and its
subsidiaries, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind except such
as (a) are described in the Offering Memorandum or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or any
of its subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one enterprise, and
under which the Company or any of its subsidiaries holds properties described in
the Offering Memorandum, are in full force and effect, and neither the Company
nor any of its subsidiaries has any notice of any material claim of any sort
that has been asserted by anyone adverse to the rights of the Company or any of
its subsidiaries under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or any of its subsidiaries to
the continued possession of the leased or subleased premises under any such
lease or sublease.
(xxii) Tax Returns. The Company and its subsidiaries have
filed all federal, state, local and foreign tax returns that are required to be
filed or have duly requested extensions thereof and have paid all taxes required
to be paid by any of them and any related assessments, fines or penalties,
except for any such tax, assessment, fine or penalty that is being contested in
good faith and by appropriate proceedings; and adequate charges, accruals and
reserves have been provided for in the financial statements referred to in
Section 1(a)(v) above in respect of all federal, state, local and foreign taxes
for all periods as to which the tax liability of the Company or any of its
subsidiaries has not been finally determined or remains open to examination by
applicable taxing authorities.
(xxiii) Insurance. The Company and each of its subsidiaries
and their respective
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properties are insured in such amounts against such losses and with such
insurers as the Company believes are prudent when considered in light of the
nature of the properties and businesses of the Company and its subsidiaries.
(xxiv) ERISA Matters. The Company is in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(xxv) Environmental Laws. Except as described or
generally referred to in the Offering Memorandum and except such matters as
could not, singly or in the aggregate, reasonably be expected to result in a
Material Adverse Effect, to the best of the Company's knowledge, (A) neither the
Company nor any of its subsidiaries is in violation of any federal, state, local
or foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance with
their requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings relating to
any Environmental Law against the Company or any of its subsidiaries and (D)
there are no events or circumstances that might reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against or
affecting the Company or any of its subsidiaries relating to Hazardous Materials
or Environmental Laws.
(xxvi) Investment Company Act. The Company is not, and
upon the issuance and sale of the Notes as herein contemplated and the
application of the net proceeds therefrom as described in the Offering
Memorandum will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
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(xxvii) Rule 144A Eligibility. The Notes are not, and at
the Closing Time will not be, of the same class as securities listed on a
national securities exchange registered under Section 6 of the 1934 Act or
quoted in a U.S. automated interdealer quotation system.
(xxviii) No General Solicitation. None of the Company, its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
("Affiliates"), or any person acting on its or any of their behalf (other than
the Initial Purchaser, as to whom the Company makes no representation) has
engaged or will engage, in connection with the offering of the Notes, in any
form of general solicitation or general advertising within the meaning of Rule
502(c) under the 1933 Act.
(xxix) No Registration Required. Subject to compliance by
the Initial Purchaser with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not necessary
in connection with the offer, sale and delivery of the Notes to the Initial
Purchaser and to each Subsequent Purchaser in the manner contemplated by this
Agreement and the Offering Memorandum to register the Notes under the 1933 Act
or to qualify the Indenture under the Trust Indenture Act of 1939, as amended
(the "1939 Act").
(b) Officer's Certificates. Any certificate signed by any
officer of the Company or any of its subsidiaries delivered to the Initial
Purchaser or to counsel for the Initial Purchaser shall be deemed a
representation and warranty by the Company to the Initial Purchaser as to the
matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchaser; Closing.
(a) Notes. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to the Initial Purchaser, and the Initial
Purchaser agrees to purchase from the Company, at the price set forth in
Schedule A, $14,000,000 aggregate principal amount of Notes.
(b) Payment. Payment of the purchase price for, and
delivery of certificates for, the Notes shall be made at the office of Battle
Fowler LLP, 75 East 55th Street, New York, New York, or at such other place as
shall be agreed upon by the Initial Purchaser and the Company, at 10:00 A.M. on
the first business day after the date hereof, or such other time not later than
ten (10) business days after such date as shall be agreed upon by the Initial
Purchaser and the Company (such time and date of payment and delivery being
herein called the "Closing Time").
Payment of the purchase price for the Notes shall be made to the
Company by wire transfer of immediately available funds to a bank account
designated by the Company, against delivery to the Initial Purchaser of
certificates for the Notes to be purchased by it. Certificates for Notes shall
be in such denominations, not less than $1,000 each, and registered in such
names as the Initial Purchaser may request in writing at least one full business
day before the Closing Time, which writing shall specify the denomination of any
certificate to be issued in global form representing Notes resold to Qualified
Institutional Buyers (as defined in Section 6(a)(i)) and the denomination of any
certificate to be issued in registered, certificated form representing the Notes
resold to
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Accredited Investors (as defined in Section 6(a)(i)). Any certificates
representing the Notes resold to Qualified Institutional Buyers shall be shall
be registered in the name of Cede & Co. as nominee of DTC pursuant to the DTC
Agreement. All certificates for the Notes shall be made available for
examination and packaging by the Initial Purchaser in The City of New York not
later than 10:00 A.M. on the last business day prior to the Closing Time.
(c) Qualified Institutional Buyer. The Initial Purchaser
represents and warrants to, and agrees with, the Company that it is a "qualified
institutional buyer" within the meaning of Rule 144A under the 1933 Act and an
"accredited investor" within the meaning of Rule 501(a) under the 1933 Act.
SECTION 3. Covenants of the Company. The Company covenants with the
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as
possible, will furnish to the Initial Purchaser, without charge, such number of
copies of the Preliminary Offering Memorandum, the Final Offering Memorandum and
any amendments and supplements thereto and documents incorporated by reference
therein as the Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will
promptly notify the Initial Purchaser, and confirm such notice in writing, of
(x) any filing made by the Company of information relating to the offering of
the Notes with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the Notes by the Initial Purchaser as evidenced by a notice in
writing from the Initial Purchaser to the Company, which the Initial Purchaser
hereby undertakes to deliver to the Company as promptly as practicable, any
material changes in or affecting, or any developments involving prospective
material changes in or affecting, the earnings or business of the Company and
its subsidiaries considered as one enterprise which (i) make any statement in
the Offering Memorandum false or misleading or (ii) are not disclosed in the
Offering Memorandum. In such event or if during such time any event shall occur
as a result of which it is necessary, in the reasonable opinion of the Company,
its counsel, the Initial Purchaser or counsel for the Initial Purchaser, to
amend or supplement the Final Offering Memorandum in order that the Final
Offering Memorandum not include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances then existing, the Company will
forthwith amend or supplement the Final Offering Memorandum by preparing and
furnishing to the Initial Purchaser an amendment or amendments of, or a
supplement or supplements to, the Final Offering Memorandum (in form and
substance satisfactory in the reasonable opinion of counsel for the Initial
Purchaser) so that, as so amended or supplemented, the Final Offering Memorandum
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The
Company will advise the Initial Purchaser promptly of any proposal to amend or
supplement the Offering
739869.1
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Memorandum and will not effect such amendment or supplement without the consent
of the Initial Purchaser. Neither the consent of the Initial Purchaser, nor the
Initial Purchaser's delivery of any such amendment or supplement, shall
constitute a waiver of any of the conditions set forth in Section 5 hereof.
(d) Qualification of Notes for Offer and Sale. The Company
will use its best efforts, in cooperation with the Initial Purchaser, to qualify
the Notes for offering and sale under the applicable securities laws of such
jurisdictions as the Initial Purchaser may designate and will maintain such
qualifications in effect as long as required for the sale of the Notes;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject.
(e) DTC. The Company will cooperate with the Initial
Purchaser and use its best efforts to permit the Notes to be eligible for
clearance and settlement through the facilities of DTC.
(f) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Notes in the manner specified in the
Offering Memorandum under "Use of Proceeds".
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the Offering Memorandum (including
financial statements and any schedules or exhibits and any document incorporated
therein by reference) and of each amendment or supplement thereto, (ii) the
preparation, printing and delivery to the Initial Purchaser of this Agreement,
the Indenture and such other documents as may be required in connection with the
offering, purchase, sale and delivery of the Notes, (iii) the preparation,
issuance and delivery of the certificates for the Notes to the Initial
Purchasers, including any charges of DTC in connection therewith; (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Notes under securities laws in accordance with the
provisions of Section 3(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Initial Purchaser in connection therewith
and in connection with the preparation of the Blue Sky Survey, any supplement
thereto and any Legal Investment Survey, (vi) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Notes, and (vii) any fees and expenses
relating to the eligibility of the Notes for clearance and settlement through
the facilities of DTC and (vi) fees and expenses relating to the initial and
continued designation of the Notes as PORTAL securities under the PORTAL Market
Rules pursuant to NASD Rule 5322.
(b) Termination of Agreement. If this Agreement is
terminated by the Initial Purchaser in accordance with the provisions of Section
5 or Section 10(a)(i) hereof (except by reason of a default by the Initial
Purchaser), the Company shall reimburse the Initial Purchaser for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the
739869.1
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<PAGE>
Initial Purchaser.
SECTION 5. Conditions of Initial Purchaser's Obligations. The
obligations of the Initial Purchaser hereunder are subject to the accuracy of
the representations and warranties of the Company contained in Section 1 hereof
or in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Opinion of Counsel for the Company. At the Closing
Time, the Initial Purchaser shall have received the favorable opinions, dated as
of the Closing Time, of (i) Battle Fowler, counsel for the Company, in form and
substance reasonably satisfactory to counsel for the Initial Purchaser, to the
effect set forth in Exhibit A hereto (with such changes as may be agreed to by
the parties after the date hereof) and (ii) the General Counsel of the Company,
in form and substance reasonably satisfactory to counsel for the Initial
Purchaser, to the effect set forth in Exhibit B hereto (with such changes as may
be agreed to by the parties after the date hereof).
(b) Opinion of Patent Counsel for the Company. At the
Closing Time, the Initial Purchaser shall have received a favorable opinion,
dated as of the Closing Time, of the Patent Counsel of the Company, in form and
substance reasonably satisfactory to counsel for the Initial Purchaser, to the
effect set forth in Exhibit C hereto (with such changes as may be agreed to by
the parties after the date hereof).
(c) Opinion of Counsel for Initial Purchaser. At the
Closing Time, the Initial Purchaser shall have received the favorable opinion,
dated as of the Closing Time, of Brown & Wood LLP, counsel for the Initial
Purchaser, with respect to the issuance of the Notes and such other related
matters as the Initial Purchaser may require. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York, the federal law of the United States and
the General Corporation Law of the State of Delaware, upon the opinions of
counsel satisfactory to the Initial Purchaser. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.
(d) Officers' Certificate. At the Closing Time, there
shall not have been, since the date hereof or since the respective dates as of
which information is given in the Offering Memorandum, any material adverse
change, or any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings or business of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Initial Purchaser shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
the Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1 hereof are true and
correct with the same force and effect as though expressly made at and as of the
Closing Time, and (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the Closing Time.
739869.1
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(e) Accountant's Comfort Letter. At the time of the
execution of this Agreement, the Initial Purchaser shall have received from
Coopers & Lybrand L.L.P. a letter dated such date, in form and substance
reasonably satisfactory to the Initial Purchaser, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
Initial Purchaser with respect to the financial statements and certain financial
information contained in the Offering Memorandum.
(f) Bring-down Comfort Letter. At the Closing Time, the
Initial Purchaser shall have received from Coopers & Lybrand L.L.P. a letter,
dated as of the Closing Time, to the effect that they reaffirm the statements
made in the letter furnished pursuant to subsection (d) of this Section, except
that the specified date referred to shall be a date not more than three business
days prior to the Closing Time.
(g) Registration Rights Agreement. At the Closing Time,
the Registration Rights Agreement shall have been fully executed and delivered
by the Company.
(h) PORTAL. At the Closing Time, the Notes shall have been
designated for trading on PORTAL.
(i) Additional Documents. At the Closing Time, counsel for
the Initial Purchaser shall have been furnished with such documents and opinions
as they may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Notes as herein contemplated, or in order to evidence
the accuracy of any of the representations or warranties, or the fulfillment of
any of the conditions, herein contained; and all proceedings taken by the
Company in connection with the issuance and sale of the Notes as herein
contemplated shall be reasonably satisfactory in form and substance to the
Initial Purchaser and counsel for the Initial Purchaser.
(j) Termination of Agreement. If any condition specified
in this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement may be terminated by the Initial Purchaser by notice
to the Company at any time at or prior to the Closing Time, and such termination
shall be without liability of any party to any other party except as provided in
Section 4 and except that Sections 7 and 8 shall survive any such termination
and remain in full force and effect.
SECTION 6. Subsequent Offers and Resales of the Notes.
(a) Offer and Sale Procedures. The Initial Purchaser and
the Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Notes:
(i) Offers and Sales only to Institutional Accredited
Investors and Qualified Institutional Buyers. Offers and sales of the Notes will
be made only by the Initial Purchaser or Affiliates thereof qualified to do so
in the jurisdictions in which such offers or sales are made. Each such offer or
sale shall only be made to (A) persons whom the offeror or seller, or any person
acting
739869.1
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on behalf of the offeror or seller, reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the 1933 Act, "Qualified
Institutional Buyers") or (B) a limited number of other institutional accredited
investors (as such term is defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D, "Institutional Accredited Investors") that, with respect to
offers, the offeror or seller reasonably believes to be, and with respect to
sales and deliveries, that are such Institutional Accredited Investors.
(ii) No General Solicitation. The Notes will be
offered by approaching prospective Subsequent Purchasers on an individual basis.
No general solicitation or general advertising (within the meaning of Rule
502(c) under the 1933 Act) will be used in the United States in connection with
the offering of the Notes.
(iii) Purchases by Non-Bank Fiduciaries. In the case
of a non-bank Subsequent Purchaser of a Security acting as a fiduciary for one
or more third parties, in connection with an offer and sale to such purchaser
pursuant to clause (a) above, each such third party shall, in the judgment of
the applicable Initial Purchaser, be a Qualified Institutional Buyer.
(iv) Subsequent Purchaser Notification. The Initial
Purchaser will take reasonable steps to inform persons acquiring Notes from the
Initial Purchaser that the Notes (A) have not been and will not be registered
under the 1933 Act, (B) are being sold to them without registration under the
1933 Act in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be offered,
sold or otherwise transferred prior to the earlier of (x) the date when such
Notes can be sold pursuant to Rule 144 under the 1933 Act without any
limitations under clauses (c), (e), (f) and (h) of Rule 144 and (y) the date
which is three years after the later of the original issuance date thereof and
the last date on which the Company or any "affiliate" of the Company was the
owner of such Notes (or any predecessor Notes), except (1) to the Company, (2)
pursuant to a registration statement which has been declared effective under the
1933 Act, (3) as long as the Notes are eligible for resale pursuant to Rule
144A, to a person whom the seller reasonably believes is a Qualified
Institutional Buyer that is purchasing such Notes for its own account or for the
account of a Qualified Institutional Buyer to whom notice is given that the
offer, sale or transfer is being made in reliance on Rule 144A or (4) pursuant
to any other available exemption from the registration requirements of the 1933
Act.
(v) Minimum Principal Amount. No sale of the Notes to
any one Subsequent Purchaser will be for less than U.S. $1,000 principal amount
and no Note will be issued in a smaller principal amount. If the Subsequent
Purchaser is a non-bank fiduciary acting on behalf of others, each person for
whom it is acting must purchase at least U.S. $1,000 principal amount of the
Notes.
(vi) Restrictions on Transfer. The transfer
restrictions and the other provisions set forth in Section 1.5 of the Indenture,
including the legend required thereby, shall apply to the Notes, except as
otherwise agreed by the Company and the Initial Purchaser. Following the sale of
the Notes by the Initial Purchaser to Subsequent Purchasers pursuant to the
terms hereof, the Initial Purchaser shall not be liable or responsible to the
Company for any losses, damages or liabilities suffered or incurred by the
Company, including any losses, damages or liabilities under the 1933
739869.1
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<PAGE>
Act, arising from or relating to any resale or transfer of any Security, except
those arising from or relating to any breach of the obligations hereunder of the
Initial Purchaser.
(vii) Delivery of Offering Memorandum. The Initial
Purchaser will deliver to each purchaser of the Notes from the Initial
Purchaser, in connection with its original distribution of the Notes, a copy of
the Offering Memorandum, as amended and supplemented at the date of such
delivery.
(b) Covenants of the Company. The Company covenants with
the Initial Purchaser as follows:
(i) Due Diligence. In connection with the original
distribution of the Notes , the Company agrees that, prior to any offer or
resale of the Notes by the Initial Purchaser, the Initial Purchaser and counsel
for the Initial Purchaser shall have the right to make reasonable inquiries into
the business of the Company and its subsidiaries. The Company also agrees to
provide answers to each prospective Subsequent Purchaser of Notes who so
requests concerning the Company and its subsidiaries (to the extent that such
information is available or can be acquired and made available to prospective
Subsequent Purchasers without unreasonable effort or expense and to the extent
the provision thereof is not prohibited by applicable law) and the terms and
conditions of the offering of the Notes , as provided in the Offering
Memorandum.
(ii) Integration. The Company agrees that it will not
and will cause its Affiliates not to make any offer or sale of securities of the
Company of any class if, as a result of the doctrine of "integration" referred
to in Rule 502 under the 1933 Act, such offer or sale would render invalid (for
the purpose of (i) the sale of the Notes by the Company to the Initial
Purchaser, (ii) the resale of the Notes by the Initial Purchaser to Subsequent
Purchasers or (iii) the resale of the Notes by such Subsequent Purchasers to
others) the exemption from the registration requirements of the 1933 Act
provided by Section 4(2) thereof or by Rule 144A thereunder or otherwise.
(iii) Rule 144A Information. The Company agrees that,
in order to render the Notes eligible for resale pursuant to Rule 144A under the
1933 Act, while any of the Notes remain outstanding, it will make available,
upon request, to any holder of Notes or prospective purchasers of Notes the
information specified in Rule 144A(d)(4), unless the Company furnishes
information to the Commission pursuant to Section 13 or 15(d) of the 1934 Act
(such information, whether made available to holders or prospective purchasers
or furnished to the Commission, is herein referred to as "Additional
Information").
(iv) Restriction on Repurchases. Until the expiration
of three years after the original issuance of the Notes, the Company will not,
and will cause its Affiliates not to, purchase or agree to purchase or otherwise
acquire any Notes which are "restricted securities" (as such term is defined
under Rule 144(a)(3) under the 1933 Act), whether as beneficial owner or
otherwise (except as agent acting as a securities broker on behalf of and for
the account of customers in the ordinary course of business in unsolicited
broker's transactions) unless, immediately upon any such purchase, the Company
or any Affiliate shall submit such Notes to the Trustee for cancellation.
739869.1
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SECTION 7. Indemnification.
(a) Indemnification of Initial Purchaser. The Company
agrees to indemnify and hold harmless the Initial Purchaser and each person, if
any, who controls the Initial Purchaser within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum or the
Final Offering Memorandum (or any amendment or supplement
thereto) or in any Additional Information, or the omission
or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of
the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency
or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or
omission; provided that (subject to Section 7(d) below)
any such settlement is effected with the written consent
of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by
the Initial Purchaser), reasonably incurred in
investigating, preparing or defending against any
litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchaser expressly for use in the Offering Memorandum (or any amendment
or supplement thereto).
(b) Indemnification of Company, Directors and Officers.
The Initial Purchaser agrees to indemnify and hold harmless the Company, its
directors and officers, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Offering Memorandum in reliance upon and in conformity
with written information furnished to the Company by the Initial Purchaser
expressly for use in the Offering Memorandum (or any amendment or
739869.1
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<PAGE>
supplement thereto).
(c) Actions against Parties; Notification. Each
indemnified party shall give notice as promptly as reasonably practicable to
each indemnifying party of any action commenced or threatened against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified
pursuant to Section 7(a) above, counsel to the indemnified parties shall be
selected by the Initial Purchaser, and, in the case of parties indemnified
pursuant to Section 7(b) above, counsel to the indemnified parties shall be
selected by the Company. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 7 or Section 8 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
SECTION 8. Contribution. If the indemnification provided for in Section
7 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Initial Purchaser on the other hand from the offering of the Notes
pursuant to this Agreement and the relative fault of the Company on the one hand
and of the Initial Purchaser on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchaser on the other hand in connection with the offering of the Notes
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Notes pursuant to
this Agreement (before deducting expenses) received by the Company and the total
underwriting discount received by the Initial Purchaser, bear to the aggregate
initial offering
739869.1
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<PAGE>
price of the Notes.
The relative fault of the Company on the one hand and the Initial
Purchaser on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchaser and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchaser agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 8. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 8 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, the Initial Purchaser
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Notes underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which the
Initial Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Initial
Purchaser, and each director and officer of the Company, and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act shall have the same rights to contribution as the
Company.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Initial Purchaser or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Notes to the Initial Purchaser.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Initial Purchaser may
terminate this Agreement, by notice to the Company, at any time at or prior to
the Closing Time (i) if there has been, since the
739869.1
18
<PAGE>
time of execution of this Agreement or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change, or
any development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings or business of the Company
and its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the reasonable judgment
of the Initial Purchaser, impracticable to market the Notes or to enforce
contracts for the sale of the Notes, or (iii) if trading in the Notes has been
suspended or limited by the Commission, or if trading generally on the American
Stock Exchange or the New York Stock Exchange or in the NASDAQ National Market
System has been suspended or limited (other than in accordance with New York
Stock Exchange Rules 80A and 80B or any similar rules of the American Stock
Exchange or the NASDAQ National Market System regarding limitations on trading
during significant market declines and extraordinary market volatility), or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) (b)Liabilities. If this Agreement is terminated
pursuant to this Section, such termination shall be without liability of any
party to any other party except as provided in Section 4 hereof, and provided
further that Sections 7 and 8 shall survive such termination and remain in full
force and effect.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchaser shall be directed to the First Albany Corporation at One Penn Plaza,
New York, New York 10119, attention of Frank Lunn, with a copy to Brown & Wood
LLP, One World Trade Center, New York, New York 10048, attention of Joseph W.
Armbrust, Jr.; notices to the Company shall be directed to it at 500 Broadway,
Redwood City, California 94063-3199, attention of Chief Financial Officer, with
a copy to Battle Fowler LLP, 75 East 55th Street, New York, New York 10022,
attention of David D. Griffin.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Initial Purchaser and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchaser and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchaser and the
Company and their
739869.1
19
<PAGE>
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Notes from the Initial Purchaser
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
739869.1
20
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Initial Purchaser and the Company in accordance with its terms.
Very truly yours,
AMPEX CORPORATION
By:/s/ CRAIG L. MCKIBBEN
----------------------------
Name: Craig L. McKibben
Title: Vice President
CONFIRMED AND ACCEPTED,
as of the date first above written:
FIRST ALBANY CORPORATION
By: /s/ FRANK P. LUNN
-------------------------------
Authorized Signatory
739869.1
21
<PAGE>
SCHEDULE A
AMPEX CORPORATION
$14,000,000
12% Senior Notes Due 2003
1. The initial offering price of the Notes shall be 100% of the
principal amount thereof, plus accrued interest, if any, from January 28, 1998.
2. The purchase price to be paid by the Initial Purchaser for the Notes
shall be 97% of the principal amount thereof.
3. The interest rate on the Notes shall be 12% per annum.
739869.1
22
<PAGE>
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(a)(i)
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under the Purchase
Agreement, the Indenture and the Registration Rights Agreement.
3. Each Significant Subsidiary has been duly organized and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Memorandum and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; all of the issued and
outstanding capital stock of each Significant Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and, to the best
of our knowledge, is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; none of the outstanding shares of capital stock of the
Significant Subsidiaries was issued in violation of any preemptive or similar
rights arising by operation of law, or under the charter or by-laws of any
Significant Subsidiary or under any agreement to which the Company or any
Significant Subsidiary is a party.
4. The authorized, issued and outstanding capital stock of the Company
is as set forth in the Offering Memorandum under the caption "Capitalization" as
of the date set forth therein, and except as set forth in the Offering
Memorandum, there have been no material changes thereto; the shares of issued
and outstanding capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in violation of
the preemptive or other similar rights of any securityholder of the Company.
5. The Notes, the Indenture and the Registration Rights Agreement
conform in all material respects to the descriptions thereof contained in the
Offering Memorandum.
6. The information in the Offering Memorandum under the caption
"Description of the
739869.1
23
<PAGE>
Notes", to the extent that it constitutes summaries of legal matters, or legal
conclusions, has been reviewed by us and is correct in all material respects.
7. The statements in the Offering Memorandum, insofar as they purport
to describe certain aspects of contracts and other documents to which the
Company or any of its subsidiaries are a party, are accurate in all material
respects (as to such descriptions).
8. No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority or
agency, domestic or foreign, (other than such as may be required under the
applicable securities laws of the various jurisdictions in which the Notes will
be offered or sold, as to which we express no opinion) is necessary or required
in connection with the due authorization, execution and delivery of the Purchase
Agreement or the Registration Rights Agreement or the due execution, delivery or
performance of the Indenture by the Company or for the offering, issuance, sale
or delivery of the Notes to the Initial Purchasers or the resale by the Initial
Purchasers in accordance with and in the manner contemplated by the Purchase
Agreement.
9. It is not necessary in connection with the offer, sale and delivery
of the Notes to the Initial Purchasers and to each Subsequent Purchaser in
accordance with and in the manner contemplated by the Purchase Agreement and the
Offering Memorandum to register the Notes under the 1933 Act (other than with
respect to the Registration Rights Agreement and the transactions contemplated
thereunder) or to qualify the Indenture under the Trust Indenture Act.
10. The Company is not an "investment company" as such term is defined
in the 1940 Act.
Nothing has come to our attention that would lead us to
believe that the Offering Memorandum or any amendment or supplement thereto
(except for financial statements and schedules and other financial data included
or incorporated by reference therein, as to which we make no statement),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Offering Memorandum or any amendment or supplement
thereto (except for financial statements and schedules and other financial data
included or incorporated by reference therein, as to which we make no statement
at the time the Offering Memorandum was issued), at the time the Offering
Memorandum was issued, at the time any such amended or supplemented Offering
Memorandum was issued or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
24
<PAGE>
Exhibit B
FORM OF OPINION OF CORPORATE COUNSEL
OF THE COMPANY TO BE DELIVERED
PURSUANT TO SECTION 5(a)(ii)
1. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
2. The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
3. The Registration Rights Agreement has been duly authorized, executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws relating to or affecting enforcement of creditors'
rights generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and except that
rights to indemnification and contribution thereunder may be limited by
applicable law.
4. The Indenture has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
5. The Notes are in the form contemplated by the Indenture, have been
duly authorized by the Company and, assuming that the Notes have been duly
authenticated by the Trustee pursuant to the Indenture and in the manner
described in its certificate delivered to you today, the Notes have been duly
executed, issued and delivered by the Company and constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditor's rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law), and will be entitled to the benefits of the Indenture.
25
<PAGE>
6. To the best of my knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company or any
of its subsidiaries is a party, or to which the property of the Company or any
of its subsidiaries is subject, before or brought by any court or governmental
agency or body, which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets of the Company and its subsidiaries
considered as one enterprise or the consummation of the transactions
contemplated in the Purchase Agreement or the Registration Rights Agreement or
the performance by the Company of its obligations thereunder or the transactions
contemplated by the Offering Memorandum;
7. To the best of my knowledge, neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws (except in the case of
the Company's subsidiaries only, for such violations that, singly or in the
aggregate, would not result in a Material Adverse Effect) and no default by the
Company or any of its subsidiaries exists in the due performance or observance
of any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Offering Memorandum.
8. The execution, delivery and performance of the Purchase Agreement,
the DTC Agreement, the Registration Rights Agreement, the Indenture, the Notes
and the consummation of the transactions contemplated therein and in the
Offering Memorandum (including the issuance and sale of the Notes, the use of
the proceeds from the sale of the Notes as described in the Offering Memorandum
under the caption "Use Of Proceeds" and the filing of the Registration
Statement) and compliance by the Company with its obligations under the Purchase
Agreement, the Registration Rights Agreement, the Indenture, the Notes will not,
whether with or without the giving of notice or lapse of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as defined in
Section 1(a) of the Purchase Agreement) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary thereof pursuant to, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to me, to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any of its subsidiaries is
subject (except for such conflicts, breaches or defaults or liens, charges or
encumbrances that could not reasonably be expected to have a Material Adverse
Effect), nor will such action result in any violation of the provisions of the
charter or by-laws of the Company or any of its subsidiaries, or any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known to me, of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of their
respective properties, assets or operations.
Nothing has come to my attention that would lead me to believe that the
Offering Memorandum or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included or incorporated by
reference therein, as to which I make no statement), contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Offering Memorandum or any amendment or supplement thereto (except for
financial statements and schedules and other financial
26
<PAGE>
data included or incorporated by reference therein, as to which I make no
statement at the time the Offering Memorandum was issued), at the time the
Offering Memorandum was issued, at the time any such amended or supplemented
Offering Memorandum was issued or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
27
<PAGE>
Exhibit C
FORM OF OPINION OF PATENT COUNSEL
OF THE COMPANY TO BE DELIVERED
PURSUANT TO SECTION 5(b)
1. To the best of my knowledge, there is no basis for a finding that
the Company does not have clear title or valid license rights to the patents or
patent applications described in the Offering Memorandum as being owned by or
licensed to the Company, and I have not identified any basis for a finding of
unenforceability or invalidity of any such patents.
2. Other than as disclosed in the Offering Memorandum, to the best of
my knowledge, there are no legal or governmental proceedings pending (other than
patent applications pending) relating to patents or proprietary information
rights to which the Company is a party or of which any such property of the
Company is subject, and no such proceedings are threatened or contemplated by
governmental authorities or others.
3. The statements in the Offering Memorandum under the headings "Risk
Factors--Dependence on Licensed Patent Applications Proprietary Technology" and
"Business--Patents, Licenses and Trademarks" constitute an accurate summary of
the matters referred to therein and fairly present the information called for
with respect to such matters; and I have no reason to believe that the
statements under such headings in the Offering Memorandum contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
4. Other than as disclosed in the Offering Memorandum, based upon a
review of the third party rights made known to me and discussions with Company
scientific personnel, such counsel is not aware of any valid United States,
foreign patent or published foreign patent application that is or would be
infringed by the activities of the Company described in the Offering Memorandum
and relating to products currently manufactured, used or sold by the Company or
currently proposed to be manufactured, used or sold by the Company.
5. Except as disclosed in the Offering Memorandum, neither the Company
nor any of its subsidiaries is subject to any current claim or notice of
infringement or other violation of any asserted rights of others with respect to
any Intellectual Property, which, singly or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
28
<PAGE>
6. There are no legal or governmental proceedings pending relating to
the Intellectual Property owned or used by the Company or its subsidiaries,
other than review of pending patent and trademark applications, which, singly or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect and no such proceedings, including without limitation interference
proceedings, are currently threatened by governmental authorities or others,
with such exceptions as could not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
29
Exhibit 4.1
FIRST AMENDMENT TO INDENTURE
This FIRST AMENDMENT TO INDENTURE is dated as of July 2, 1998
(the "Amendment") between AMPEX CORPORATION, a Delaware corporation (the
"Corporation") and IBJ SCHRODER BANK & TRUST COMPANY, a New York banking
corporation (the "Trustee").
WHEREAS, the Corporation and the Trustee have entered into the
Indenture dated as of January 28, 1998 (the "Indenture") (all capitalized terms
used and not otherwise defined herein shall have the respective meanings set
forth in the Indenture); and
WHEREAS, the Corporation desires to amend the Indenture to
permit the redemption (the "Redemption") of all of the Corporation's shares of
Noncumulative Redeemable Preferred Stock outstanding on the date hereof in
exchange for the following securities: (i) 3,000,000 shares of the Corporation's
Class A Common Stock, par value $0.01 per share (the "Class A Stock"); (ii)
10,000 shares of a new series of the Corporation's 8% Noncumulative Convertible
Preferred Stock; and (iii) 21,859 shares of a new series of the Corporation's 8%
Noncumulative Redeemable Preferred Stock. Each share of 8% Noncumulative
Preferred Stock and 8% Noncumulative Redeemable Preferred Stock has a
liquidation preference of $2,000 per share. The 8% Noncumulative Convertible
Preferred Stock is convertible, at the option of the holder thereof, into 500
shares of Class A Stock, subject to adjustment under certain circumstances.
WHEREAS, pursuant to the limited waiver and Consent entered
into as of the date hereof, by and among the Corporation and the Holders named
in the signature pages thereto, the Holders of at least a majority in principal
amount of the outstanding Securities have consented in writing to amend the
Indenture to permit the Redemption, and have authorized the Corporation and the
Trustee to enter into this Amendment;
NOW, THEREFORE, in consideration of the foregoing, each party
hereto, for the benefit of the other party hereto and the Holders, hereby agrees
as follows:
1. Effective as of the date hereof, the definition of
"Noncumulative Redeemable Preferred Stock; contained in Section 1.01 of the
Indenture shall be deleted in its entirety and the following definition
substituted therefor:
739017.1
<PAGE>
"Noncumulative Redeemable Preferred Stock" means the shares of
the Corporation's 8% Noncumulative Convertible Preferred Stock and 8%
Noncumulative Redeemable Preferred Stock issued effective as of July 2, 1998,
and any subsequent refinancings thereof, provided, however, that the aggregate
liquidation value of all outstanding securities issued in any such refinancings
shall not exceed the aggregate liquidation value of the Noncumulative Redeemable
Preferred Stock outstanding on July 2, 1998."
2. As amended by this Amendment, the Indenture is in all
respects ratified and confirmed, and as so amended by this Amendment shall be
read, taken and construed as one and the same instrument.
3. The laws of the State of New York shall govern this
Amendment, without giving effect to applicable principles of conflicts of laws,
to the extent that the application of the laws of another jurisdiction would be
required thereby.
4. The parties hereto may execute this Amendment in
counterparts, each of which shall be an original, and all of which, when taken
together, shall represent the same instrument.
AMPEX CORPORATION
By:/s/Craig L. McKibben
-----------------------
Name: Craig L. McKibben
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:/s/Luis Perez
-----------------------
Name: Luis Perez
Title: Assistant Vice President
739017.1
Exhibit 4.2
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
July 20, 1998
First Albany Corporation
One Penn Plaza
New York, New York 10119
Dear Sirs:
Ampex Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to you (the "Initial Purchaser"), upon the terms set forth in a
purchase agreement dated July 17, 1998 (the "Purchase Agreement"), $14,000,000
aggregate principal amount of its 12% Senior Notes due 2003 (the "Securities")
which Securities shall be issued pursuant to an Indenture dated as of January
28, 1998 between the Company and IBJ Schroder Bank & Trust Company, as trustee
(the "Trustee"), as amended by the First Amendment to the Indenture dated July
2, 1998 (the "Indenture"). Unless otherwise indicated, capitalized terms used
but not specifically defined herein have the respective meanings ascribed
thereto in the Purchase Agreement. As an inducement to the Initial Purchaser to
enter into the Purchase Agreement and in satisfaction of a condition to your
obligations thereunder, the Company agrees with you, for the benefit of the
holders of the Securities (including the Initial Purchaser) (the "Holders"), as
follows:
1. Registered Exchange Offer. The Company shall prepare and,
not later than 60 days following the date on which the original Securities were
sold to the Initial Purchaser pursuant to the Purchase Agreement (the "Issue
Date"), shall file with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Exchange Offer Registration
Statement") on an appropriate form under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to a proposed offer (the "Registered
Exchange Offer") to the Holders to issue and deliver to such Holders, in
exchange for the Securities, a like aggregate principal amount of debt
securities of the Company (the "Exchange Securities") identical in all material
respects to the Securities, except for the transfer restrictions, registration
rights and liquidated damages relating to the Securities, shall use its
reasonable efforts to cause the Exchange Offer Registration Statement to become
effective under the Securities Act no later than 150 days after the Issue Date
and to be consummated no later than 180 days after the Issue Date, and shall
keep the Exchange Offer Registration Statement effective for not less than 20
business days (or longer, if required by applicable law) commencing the date
notice of the Exchange Offer is mailed to the Holders (such period being called
the "Exchange Offer Registration Period"). The Exchange Securities will be
issued under the Indenture or an indenture (the "Exchange Securities Indenture")
between the Company and the Trustee or such other bank or trust company
reasonably satisfactory to you, as trustee (the "Exchange Securities Trustee"),
such indenture to be identical in all material respects to the Indenture except
for the transfer restrictions relating to the Securities (as described above).
Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the
721640.3
<PAGE>
objective of such Registered Exchange Offer to enable each Holder electing to
exchange Securities for Exchange Securities (assuming that such Holder (a) is
not (i) an "affiliate" of the Company within the meaning of Rule 405 of the
Securities Act or (ii) an Exchanging Dealer (as defined below) not complying
with the requirements of the next sentence, (b) acquires the Exchange Securities
in the ordinary course of such Holder's business and (c) has no arrangements or
understandings with any person to participate in the distribution of the
Exchange Securities) and to trade such Exchange Securities from and after their
receipt without any limitations or restrictions, except as provided herein,
under the Securities Act and without material restrictions under the securities
laws of the several states of the United States. The Company, the Initial
Purchaser and each Exchanging Dealer acknowledge that, pursuant to current
interpretations of Section 5 of the Securities Act by the Commission's staff,
(i) each Holder which is a broker-dealer electing to exchange Securities,
acquired for its own account as a result of market making activities or other
trading activities, for Exchange Securities (an "Exchanging Dealer"), is
required to deliver a prospectus containing the information set forth in Annex A
hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section, and in Annex C hereto
in the "Plan of Distribution" section of such prospectus in connection with a
sale of any such Exchange Securities received by such Exchanging Dealer pursuant
to the Registered Exchange Offer and (ii) if the Initial Purchaser elects to
sell Exchange Securities acquired in exchange for Securities constituting any
portion of an unsold allotment it is required to deliver a prospectus containing
the information required by Items 507 or 508 of Regulation S-K under the
Securities Act, as applicable, in connection with such a sale.
In connection with the Registered Exchange Offer, the Company shall:
(a) mail to each Holder a copy of the prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and
related documents;
(b) keep the Registered Exchange Offer open for not
less than 20 business days commencing the date notice of
the Exchange Offer is mailed to the Holders (or longer if
required by applicable law);
(c) utilize the services of a Depositary for the
Registered Exchange Offer with an address in the Borough
of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at
any time prior to the close of business, New York time, on
the last business day on which the Registered Exchange
Offer shall remain open;
(e) notify each Holder that any Security not tendered
by such Holder in the Registered Exchange Offer will
remain outstanding and continue to accrue interest, but
will not retain rights under this Agreement; and
(f) otherwise comply in all respects with all laws
applicable to the Registered Exchange Offer.
721640.3
-2-
<PAGE>
As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(a) accept for exchange all Securities tendered and
not validly withdrawn pursuant to the Registered Exchange
Offer;
(b) deliver to the Trustee for cancellation all
Securities so accepted for exchange; and
(c) issue and cause the Trustee or the Exchange
Securities Trustee, as the case may be, promptly to
authenticate and deliver to each Holder of Securities,
Exchange Securities equal in principal amount to the
Securities of such Holder so accepted for exchange.
The Company shall make available for a period of 90 days after
the consummation of the Registered Exchange Offer, a copy of a prospectus which
meets the requirements of the Securities Act and forms part of the Exchange
Offer Registration Statement to any broker-dealer for use in connection with any
resale of any Exchange Securities.
Interest on each Exchange Security issued pursuant to the
Registered Exchange Offer will accrue from the last interest payment date on
which interest was paid on the Securities surrendered in exchange therefor or,
if no interest has been paid on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Exchange Securities within the meaning of
the Securities Act and (iii) such Holder is not an "affiliate" of the Company
within the meaning of Rule 405 of the Securities Act, or if it is an affiliate,
it will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) any Exchange Offer Registration Statement and any
amendment thereto does not, when it becomes effective, contain an 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 not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not include, as of the consummation
of the Registered Exchange Offer, an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
2. Shelf Registration. If (i) applicable interpretations of
the staff of the Commission do not permit the Company to effect the Registered
Exchange Offer as contemplated by Section 1 hereof, or (ii) any Holder either
(A) is not eligible to participate in the Registered Exchange Offer or (B)
participates in the Registered Exchange Offer and does not receive freely
721640.3
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<PAGE>
transferrable Exchange Securities in exchange for tendered Securities or (iii)
for any other reason the Registered Exchange Offer is not consummated within 180
days after the Issue Date the following provisions shall apply:
(a) The Company shall as promptly as practicable file with the
Commission and thereafter shall use its best efforts to cause to be declared
effective a shelf registration statement on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined below) by the Holders from time to time in accordance
with the methods of distribution set forth in such registration statement
(hereafter, a "Shelf Registration Statement" and, together with any Exchange
Offer Registration Statement, a "Registration Statement"); provided, however,
that no Holder of Securities or Exchange Securities (other than the Initial
Purchaser) shall be entitled to have Securities or Exchange Securities held by
it covered by such Shelf Registration Statement unless such Holder agrees in
writing to be bound by all the provisions of this Agreement applicable to such
Holder.
(b) The Company shall use its reasonable best efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be usable by Holders for a period of two
years from the Issue Date (subject to extension pursuant to this Section 2(b))or
such shorter period that will terminate when all the Securities and Exchange
Securities covered by the Shelf Registration Statement have been sold pursuant
to the Shelf Registration Statement (in any such case, such period being called
the "Shelf Registration Period"). The Company shall be deemed not to have used
its reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would result
in Holders of Securities or Exchange Securities covered thereby not being able
to offer and sell such Securities or Exchange Securities during that period,
unless such action is required by applicable law; provided, however, that the
foregoing shall not apply to actions taken by the Company in good faith and for
valid business reasons (not including avoidance of its obligations hereunder),
including, without limitation, the acquisition or divestiture of assets, so long
as the Company within 120 days thereafter complies with the requirements of
Section 4(i) hereof. Any such period during which the Company fails to keep the
Shelf Registration Statement effective and usable for offers and sales of
Securities and Exchange Securities is referred to as a "Suspension Period." A
Suspension Period shall commence on and include the date that the Company gives
notice that the Shelf Registration Statement is no longer effective or the
prospectus included therein is no longer usable for offers and sales of
Securities and Exchange Securities and shall end on the date when each Holder of
Securities and Exchange Securities covered by such registration statement either
receives the copies of the supplemented or amended prospectus contemplated by
Section 4(i) hereof or is advised in writing by the Company that use of the
prospectus may be resumed. If one or more Suspension Periods occur, the two-year
time period referenced above shall be extended by the number of days included in
each such Suspension Period.
(c) Notwithstanding any other provisions hereof, the Company
will ensure that (i) any Shelf Registration Statement and any amendment thereto
and any prospectus forming part thereof and any supplement thereto complies in
all material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in
either case, other than with respect to information included therein in reliance
upon or in conformity with written information furnished to the Company by or on
behalf of any Holder specifically for use therein (the "Holders' Information"))
does not, when it becomes effective, contain an untrue statement of a material
721640.3
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<PAGE>
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (iii) any prospectus forming
part of any Shelf Registration Statement, and any supplement to such prospectus
(in either case, other than with respect to Holders' Information), does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
3. Additional Interest. (a) The parties hereto agree that the
Holders of Securities will suffer damages for which there is no adequate remedy
at law if the Company fails to fulfill its obligations under Section 1 or
Section 2, as applicable, and that it would not be feasible to ascertain the
extent of such damages. Accordingly, if (i) the applicable Registration
Statement is not filed with the Commission on or prior to 60 days after the
Issue Date, (ii) the Exchange Offer Registration Statement is not declared
effective within 150 days after the Issue Date, (iii) the Registered Exchange
Offer is not consummated or a Shelf Registration Statement has not been declared
effective on or prior to 180 days after the Issue Date (or in the case of a
Shelf Registration Statement required to be filed in response to a change in law
or the applicable interpretations of the Commission's Staff, if later, within 45
days after publication of the change in law or interpretation), or (iv) if after
either the Exchange Offer Registration Statement or the Shelf Registration
Statement is declared effective, such Registration Statement ceases to be
effective or usable (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 60 days by an additional
Registration Statement filed and declared effective (each such event referred to
in clauses (i) through (iii), a "Registration Default"), then the interest rate
borne by the Securities shall be increased by one-half of one percent per annum
following such 60-day period in the case of clause (i) above, following such
150-day period in the case of clause (ii) above or following such 180-day period
in the case of clause (iii) above. Upon (x) the filing of the Exchange Offer
Registration Statement after the 60-day period described in clause (i) above,
(y) the effectiveness of the Exchange Offer Registration Statement after the
150-day period described in clause (ii) above or (z) the consummation of the
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement, as the case may be, after the 180-day period described in clause
(iii) above, the interest rate borne by the Securities from the date of such
filing, effectiveness or consummation, as the case may be, will be reduced to
the original interest rate if the Company is otherwise in compliance with this
Section; provided, however, that if, after any such reduction in interest rate,
a different event specified in clause (i), (ii) or (iii) above occurs, the
interest rate may again be increased and thereafter reduced pursuant to the
foregoing provisions.
Pending the announcement of a material corporate transaction,
if the Company issues a notice that the Shelf Registration Statement is
unusable, or such a notice is required under applicable securities laws to be
issued by the Company and the aggregate number of days in any consecutive
twelve-month period for which all such notices are issued or required to be
issued exceeds 60 days in the aggregate, then the interest rate borne by the
Securities will be increased by one-half of one percent per annum following the
date that such Shelf Registration Statement ceases to be usable beyond the
60-day period permitted above. Upon the Company declaring that the Shelf
Registration Statement is usable after the period of time described in the
preceding sentence, the interest rate borne by the Securities will be reduced to
the original interest rate if the Company is otherwise in compliance with this
Section; provided, however, that if after any such reduction in interest rate
the Shelf Registration Statement again ceases to be usable beyond the period
permitted above, the interest rate may
721640.3
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<PAGE>
again be increased and thereafter reduced pursuant to the foregoing provisions.
"Transfer Restricted Securities" means each Security or Exchange Security until
(i) the date on which such Security or Exchange Security has been exchanged for
a freely transferrable Exchange Security in the Registered Exchange Offer, (ii)
the date on which such Security or Exchange Security has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) the date on which such Security or Exchange
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is salable pursuant to Rule 144(k) under the Securities Act.
(b) The Company shall notify the Trustee within one business
day after each and every date on which an event occurs in respect of which
additional interest is required to be paid. The Company shall pay the additional
interest due on the Transfer Restricted Securities by depositing with the Paying
Agent (as defined in the Indenture) (which shall not be the Company for these
purposes) for the Transfer Restricted Securities, in trust, for the benefit of
the Holders, prior to 10:00 a.m. on the next interest payment date specified by
the Indenture (or such other indenture), sums sufficient to pay the additional
interest then due. Any amounts of additional interest due pursuant to clauses
(a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable to the Holders of
affected Notes in cash semi-annually on each interest payment date specified by
the Indenture (or such other indenture) to the record holders entitled to
receive the interest payment to be made on such date commencing with the first
such date occurring after any such additional interest commences to accrue. The
amount of additional interest will be determined by multiplying the applicable
additional interest rate by the principal amount of the affected Securities of
such Holders, multiplied by a fraction, the numerator of which is the number of
days such additional interest rate was applicable during such period (determined
on the basis of a 360-day year comprised of twelve 30-day months and, in the
case of a partial month, the actual number of days elapsed), and the denominator
of which is 360.
4. Registration Procedures. In connection with any
Registration Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to you, prior to the filing
thereof with the Commission, a copy of the Registration Statement and each
amendment thereof and each supplement, if any, to the prospectus included
therein and, in the event that the Initial Purchaser (with respect to any
portion of an unsold allotment from the original offering) is participating in
the Registered Exchange Offer or the Shelf Registration, shall use reasonable
efforts to reflect in each such document, when so filed with the Commission,
such comments as you reasonably may propose; (ii) if applicable, include the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration Statement, and
include the information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; and (iii) if requested by
the Initial Purchaser, include the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in the prospectus
forming a part of the Exchange Offer Registration Statement.
(b) The Company shall advise you and, if requested by the
Holders, but only as to events set forth in clauses (i) and (ii) below, the
Holders and, if requested by you, confirm such advice in writing (which advice
pursuant to
721640.3
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<PAGE>
clauses (ii)-(iv) hereof shall be accompanied by an instruction to suspend the
use of the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto
has been filed with the Commission and when such Registration
Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus
included therein or for additional information;
(iii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the
Securities or the Exchange Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(iv) of the happening of any event that requires the making of
any changes in any Registration Statement or the prospectus so
that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading.
(c) The Company will furnish to each Holder of Transfer
Restricted Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one copy of such Shelf Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
exhibits (including those incorporated by reference).
(d) The Company will, during the Shelf Registration Period,
promptly deliver to each Holder of Transfer Restricted Securities included
within the coverage of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary prospectus) included in
such Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company consents to the use in
accordance with applicable law of the prospectus or any amendment or supplement
thereto by each of the selling Holders of Transfer Restricted Securities in
connection with the offering and sale of the Transfer Restricted Securities
covered by the prospectus or any amendment or supplement thereto.
(e) The Company will furnish to each Exchanging Dealer or the
Initial Purchaser, as applicable, which so requests, without charge, at least
one copy of the Exchange Offer Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if the
Exchanging Dealer or Initial Purchaser, as applicable, so requests in writing,
all exhibits (including those incorporated by reference) except those previously
filed by EDGAR.
(f) The Company will, during the Exchange Offer Registration
Period, promptly deliver to each Exchanging Dealer or the Initial Purchaser, as
applicable, without charge, as many copies of the prospectus included within the
coverage of the Exchange Offer Registration Statement and any amendment or
supplement thereto as such Exchanging Dealer or the Initial Purchaser, as
721640.3
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<PAGE>
applicable, may reasonably request for delivery by (i) such Exchanging Dealer in
connection with a sale of Exchange Securities received by it pursuant to the
Registered Exchange Offer or (ii) the Initial Purchaser in connection with a
sale of Exchange Securities received by it in exchange for Securities
constituting any portion of an unsold allotment; and the Company consents to the
use in accordance with applicable law of the prospectus or any amendment or
supplement thereto by any such Exchanging Dealer or the Initial Purchaser, as
applicable, as aforesaid.
(g) Prior to any public offering of Securities or Exchange
Securities pursuant to any Registration Statement, the Company will use its
reasonable best efforts to register or qualify or cooperate with the Holders of
Securities included therein and its counsel in connection with the registration
or qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Securities or Exchange
Securities covered by such Registration Statement; provided, however, that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject.
(h) The Company will cooperate with the Holders of Securities
or Exchange Securities to facilitate the timely preparation and delivery of
certificates representing Securities or Exchange Securities to be sold pursuant
to any Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request in writing
prior to sales of Securities or Exchange Securities pursuant to such
Registration Statement.
(i) If (i) any event contemplated by paragraphs (b)(ii)
through (iv) above occurs during the period in which the Company is required to
maintain an effective Registration Statement or (ii) any Suspension Period
remains in effect more than 120 days after the occurrence thereof, the Company
will promptly prepare a post-effective amendment to the Registration Statement
or a supplement to the related prospectus or file any other required document so
that, as thereafter delivered to purchasers of the Securities or purchasers of
Exchange Securities from a Holder, the prospectus will not include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(j) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Securities or Exchange Securities, as the case may be, and provide the
applicable trustee with printed certificates for the Securities or Exchange
Securities, as the case may be, in a form eligible for deposit with The
Depository Trust Company, or any successor depository.
(k) The Company will use its best efforts to comply with all
applicable rules and regulations of the Commission and will make generally
available to its security holders as soon as practicable after the effective
date of the applicable Registration Statement an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act; provided that in no event
shall such earnings statement be delivered later than 45 days after the end of a
12-month period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Company's first fiscal quarter commencing after the
721640.3
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<PAGE>
effective date of the applicable Registration Statement, which statements shall
cover such 12-month period.
(l) The Company will cause the Indenture or the Exchange
Securities Indenture, as the case may be, to be qualified under the Trust
Indenture Act as required by applicable law in a timely manner.
(m) The Company may require each Holder of Transfer Restricted
Securities to be sold pursuant to any Shelf Registration Statement to furnish to
the Company such information regarding the Holder and the distribution of such
Transfer Restricted Securities as the Company may from time to time reasonably
require for inclusion in such Registration Statement, and the Company may
exclude from such registration the Transfer Restricted Securities of any Holder
that unreasonably fails to furnish such information within a reasonable time
after receiving such request.
(n) In the case of a Shelf Registration Statement, each Holder
of Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through (iv) hereof, such
Holder will discontinue disposition of such Transfer Restricted Securities and
use of the applicable prospectus until such Holder's receipt of copies of the
supplemental or amended prospectus contemplated by Section 4(i) hereof, or until
advised in writing (the "Advice") by the Company that the use of the applicable
prospectus may be resumed. If the Company shall give any notice under Section
4(b)(ii) through (iv) during the period that the Company is required to maintain
an effective Registration Statement (the "Effectiveness Period"), such
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Transfer Restricted Securities covered by such
Registration Statement shall have received (x) the copies of the supplemental or
amended prospectus contemplated by Section 4(i) (if an amended or supplemental
prospectus is required) or (y) the Advice (if no amended or supplemental
prospectus is required).
(o) The Company will cooperate with each seller of Transfer
Restricted Securities covered by any Registration Statement and their respective
counsel in connection with any filings required to be made with the NASD.
(p) The Company will use its best efforts to take all other
steps necessary to effect the registration of the Transfer Restricted Securities
covered by a Registration Statement contemplated hereby.
5. Registration Expenses.
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer Registration Statement or a Shelf Registration
Statement is filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws, (ii) printing expenses, including, without
limitation, expenses of printing certificates for Securities or Exchange
Securities in a form eligible for deposit with The Depository Trust Company and
of printing prospectuses if the printing of prospectuses is requested by the
managing underwriter or underwriters, if any, by the Holders of a majority in
721640.3
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<PAGE>
aggregate principal amount of the Securities included in any Registration
Statement or sold by any Exchanging Dealer, as the case may be, (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company, (v) fees and disbursements of the Company's independent certified
public accountants (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance by
or incident to such performance), (vi) rating agency fees, if any, and any fees
associated with making the Securities or Exchange Securities eligible for
trading through The Depository Trust Company, (vii) Securities Act liability
insurance, if the Company desires such insurance, (viii) fees and expenses of
all other persons retained by the Company, (ix) internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees of the Company performing legal or accounting duties), (x) the expense
of any annual audit, (ix) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange or any
inter-dealer quotation system, if applicable, and (xii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.
(b) The Company shall (i) reimburse the Holders of the
Securities being registered in a Shelf Registration Statement for the reasonable
fees and disbursements of not more than one counsel (in addition to appropriate
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Securities to be included in such Registration Statement and (ii)
reimburse out-of-pocket expenses (other than legal expenses) of Holders of
Securities incurred in connection with the registration and sale of the
Securities pursuant to a Shelf Registration Statement or in connection with the
exchange of Securities pursuant to the Exchange Offer. In addition, the Company
shall reimburse the Initial Purchaser for the reasonable fees and expenses of
one counsel in connection with the Exchange Offer which shall be Brown & Wood
LLP.
6. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by an Exchanging Dealer or the Initial Purchaser,
as applicable, the Company shall indemnify and hold harmless each Holder and
Exchanging Dealer, and each of their directors, officers, agents and employees
and each person, if any, who controls such Holder or Exchanging Dealer within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act and the directors, officers, agents and employees of such controlling
persons against any and all loss, liability, claim and damage whatsoever, as
incurred, arising out of any untrue statement or alleged untrue statement of a
material fact contained in any such Registration Statement or any prospectus
forming part thereof or in any amendment or supplements thereto or the omission
or alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and shall reimburse each Holder promptly upon demand for
any and all expenses (including, subject to Section 6(c) hereof, the fees and
disbursements of counsel chosen by the indemnified party), reasonably incurred
as such expenses are incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental or
regulatory agency or body, commenced or threatened, or any claim based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission; provided, however, that (i) this indemnity shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with Holders' Information and (ii) this
indemnity with respect to any untrue statement
721640.3
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<PAGE>
or alleged untrue statement or omission or alleged omission in any related
preliminary prospectus shall not enure to the benefit of any indemnified party
from whom the person asserting any such loss, claim, damage or liability
received Securities or Exchange Securities if such persons did not receive a
copy of the final prospectus at or prior to the confirmation of the sale of such
Securities or Exchange Securities to such person in any case where such delivery
is required by the Securities Act and the untrue statement or omission of
material fact contained in the related preliminary prospectus was corrected in
the final prospectus unless such failure to deliver the final prospectus was a
result of noncompliance by the Company with Sections 4(c), 4(d), 4(e) or 4(f).
(b) In the event of a Shelf Registration Statement, each
Holder and Exchanging Dealer agrees to indemnify and hold harmless the Company,
its directors, officers, agents and employees and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and the directors, officers, agents and employees
of such controlling persons against any and all loss, liability, claim, damage
and expense described in the indemnity contained in Section 6(a) hereof, as
incurred, arising out of or based upon any untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or
any amendment or supplement thereto) in reliance on and in conformity with
Holders' Information furnished to the Company by such Holder or Exchanging
Dealer; provided, however, that no such Holder or Exchanging Dealer shall be
liable for any indemnity claims hereunder in excess of the amount of net
proceeds received by such Holder or Exchanging Dealer from the sale of
Securities or Exchange Securities pursuant to the Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any claim or action
commenced against it in respect of which indemnity may be sought hereunder,
enclosing a copy of all papers properly served on such indemnified party;
provided, however, that failure to so notify an indemnifying party shall not
relieve such indemnifying party from any obligation that it may have pursuant to
this Section except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure;
provided further, however, that the failure to notify an indemnifying party
shall not relieve it from any liability that it may have to an indemnified party
otherwise than on account of this indemnity agreement. If any such claim or
action shall be brought against an indemnified party, the indemnified party
shall notify the indemnifying party thereof, and the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided, however, that an indemnified party will have the right to
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel will be at the expense of such indemnified party unless
(1) the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based on the written advice of counsel) that there may be legal
defenses available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on the written advice of counsel to the
indemnified party) between the indemnified party and indemnifying party (in
which
721640.3
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<PAGE>
case the indemnifying party will not have the right to direct the defense of
such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel for the indemnified party will be at the expense of the indemnifying
party or parties. It is understood that the indemnifying party or parties shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other charges
of more than one separate firm of attorneys (in addition to any local counsel)
at any one time for all such indemnified party or parties. Each indemnified
party, as a condition of the indemnity agreements contained in Sections 6(a) and
6(b), shall use all reasonable efforts to cooperate with the indemnifying party
in the defense of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action effected without its written
consent, but if settled with its written consent or if there be a final judgment
of the plaintiff in any such action, the indemnifying party agrees to indemnify
and hold harmless any indemnified party from and against any loss or liability
by reason of such settlement or judgment. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional written
release in form and substance satisfactory to the indemnified party of such
indemnified party from all liability on claims that are the subject matter of
such proceeding, and does not include a statement as to or an admission of
fault, culpability or failure to act by or on behalf of such indemnified party.
(d) If a claim by an indemnified party for indemnification
under this Section 6 is unenforceable even though the express provisions hereof
provide for indemnification in such case, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions,
statements or omissions that resulted in such losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such indemnifying party
or indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any losses shall
be deemed to include, subject to the limitations set forth in Section 6(c)
herein, any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section, an indemnifying party
that is a holder of Transfer Restricted Securities or Exchange Securities shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Transfer Restricted Securities or Exchange Securities
sold by such indemnifying party and distributed to the public were offered to
the public
721640.3
-12-
<PAGE>
exceeds the amount of any damages that such indemnifying party would have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Securities Act)
shall be entitled to any contribution from any person who was not guilty of such
fraudulent misrepresentation.
7. Miscellaneous. (a) Amendments and Waivers. The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of at least a majority in
aggregate principal amount of the Securities and the Exchange Securities, taken
as a single class. Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter that relates exclusively to
the rights of the Holders of Securities or Exchange Securities whose Securities
or Exchange Securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect the rights of other Holders may be
given by Holders of at least a majority in aggregate principal amount of the
Securities or Exchange Securities being sold by such Holders pursuant to such
Registration Statement. Notwithstanding the provisions of this Section 7(a), (i)
this Agreement may be amended, without consent of any Holder of the Securities
or Exchange Securities, by written agreement signed by the Company and the
Initial Purchaser, to cure any ambiguity, correct or supplement any provision of
this Agreement that may be inconsistent with any other provision of this
Agreement or to make any other provisions with respect to matters or questions
arising under this Agreement which shall not be inconsistent with other
provisions of this Agreement and (ii) this Agreement may be amended, modified or
supplemented, and waivers and consents to departures from the provisions hereof
may be given, by written agreement signed by the Company and the Initial
Purchaser to the extent that any such amendment, modification, supplement,
waiver or consent is, in their reasonable judgment, necessary or appropriate to
comply with applicable law (including any interpretation of the Staff of the
SEC) or any change therein.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions
of this Section 7(b), which address initially is, with respect
to each Holder, the address of such Holder maintained by the
Registrar under the Indenture;
(2) if to you, initially at your address set forth in the
Purchase Agreement; and
(3) if to the Company, initially at the address of the
Company set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being delivered to a next-day air courier; five business days after
being deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if telecopied.
721640.3
-13-
<PAGE>
(c) Successors And Assigns. This Agreement shall be binding
upon the Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number
of counterparts (which may be delivered in original form or by telecopies) and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(f) Governing Law; Submission to Jurisdiction.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
(g) No Inconsistent Agreements. The Company has not and shall
not, on or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The Company has not previously entered into any agreement which remains in
effect granting any registration rights with respect to any of its debt
securities to any person. Without limiting the generality of the foregoing,
without the written consent of the holders of at least a majority in aggregate
principal amount of the then outstanding Transfer Restricted Securities, the
Company shall not grant to any person the right to request the Company to
register any debt securities of the Company under the Securities Act unless the
rights so granted are not in conflict or inconsistent with the provisions of the
Agreement.
(h) No Piggyback on Registrations. Neither the Company, nor
any of its security holders (other than the holders of Transfer Restricted
Securities in such capacity) shall have the right to include any securities of
the Company in any Shelf Registration or Registered Exchange Offer other than
Transfer Restricted Securities.
(i) Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) Remedies. In the event of a breach by the Company, or by
any holder of Transfer Restricted Securities, of any of their obligations under
this Agreement, each holder of Transfer Restricted Securities or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages (other than the recovery of damages for a
breach
721640.3
-14-
<PAGE>
by the Company of its obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The Company
and each holder of Transfer Restricted Securities agree that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of any of the provisions of this Agreement and hereby further agree that,
in the event of any action for specific performance in respect of such breach,
it shall waive the defense that a remedy at law would be adequate.
721640.3
-15-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Very truly yours,
AMPEX CORPORATION
By: /s/CRAIG L. MCKIBBEN
------------------------
Name: Craig L. McKibben
Title: Vice President
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written:
FIRST ALBANY CORPORATION
By: /s/FRANK P. LUNN
---------------------------
Name: Frank P. Lunn
Title: Senior Vice President
721640.3
-16-
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 90 days after the
Expiration Date (as defined herein), it will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
721640.3
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<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
721640.3
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<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Securities received in exchange for Securities where such Securities were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that, for a period of 90 days after the Expiration Date,
it will make this Prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
_______________, 199_, all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.(1)
The Company will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Registered Exchange Offer
may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 90 days after the Expiration Date the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
- -----------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
721640.3
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<PAGE>
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:___________________________________________
Address:________________________________________
________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
721640.3
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<PAGE>
Exhibit 4.3
ACQUISITION AGREEMENT
Among
AMPEX CORPORATION
and
AMPEX HOLDING CORPORATION
and
THE SEVERAL SHAREHOLDERS NAMED HEREIN
dated as of
June 24, 1998
713283.7
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
1. Purchase and Sale of the Shares and Related Transactions...............................................-1-
2. Related Agreements.....................................................................................-4-
3. Representations and Warranties of Sellers..............................................................-5-
4. Representations and Warranties of Buyer and Parent....................................................-29-
5. Covenants of the Sellers..............................................................................-33-
6. Covenants of Buyer....................................................................................-39-
7. Buyer's Closing Conditions............................................................................-40-
8. Sellers' Closing Conditions...........................................................................-50-
9. Closing and Closing Date..............................................................................-54-
10. Survival of Representations and Warranties............................................................-54-
11. Indemnification of Buyer..............................................................................-55-
12. Closing Date Balance Sheet............................................................................-58-
13. Brokerage; Expenses...................................................................................-61-
14. Assigns...............................................................................................-61-
15. Governing Law.........................................................................................-62-
16. Further Assurances....................................................................................-62-
17. Termination...........................................................................................-62-
18. Consent to Service....................................................................................-64-
19. Entire Agreement; Amendments..........................................................................-64-
20. Notices...............................................................................................-65-
21. Designated Subsidiary.................................................................................-66-
22. Miscellaneous.........................................................................................-66-
</TABLE>
713283.7
i
<PAGE>
Exhibit A List of Sellers
Exhibit B Certificate of Designations
Exhibit C Escrow Agreement
Exhibit D Registration Rights Agreement
Exhibit E Disclosure Schedule
713283.7
ii
<PAGE>
ACQUISITION AGREEMENT
THIS AGREEMENT dated this 24th day of June, 1998 by and among
AMPEX CORPORATION, a Delaware corporation ("Parent"), AMPEX HOLDINGS
CORPORATION, a Delaware corporation ("Buyer"), and the several shareholders
named below (each, a "Seller" and collectively, "Sellers").
W I T N E S S E T H
WHEREAS, Sellers own all the issued and outstanding shares of
common stock (the "Shares") of MicroNet Technology, Inc., a Delaware corporation
(the "Company"); and
WHEREAS, Buyer desires to acquire, and Sellers desire to sell,
the Shares, in exchange for shares of Class A Common Stock of Parent and the
other consideration specified herein below;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained and for other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereby agree
as follows:
1. Purchase and Sale of the Shares and Related Transactions.
--------------------------------------------------------
(a) On the Closing Date (as defined in Section 9) and upon the
terms and subject to the conditions hereof, Sellers will sell to Buyer and Buyer
will purchase and acquire from Sellers, the Shares in exchange for (i) the
number of shares of Class A Common Stock, par value $0.01 per share (the "Class
A Stock") of
713283.7
<PAGE>
Parent determined by dividing $1,800,000 by the "Closing Stock Price" (as
hereinafter defined) (the "Purchase Plan"); and (ii) the other covenants,
agreements and undertakings of Buyer set forth herein. The aggregate number of
shares of Class A Stock deliverable to Sellers pursuant to this Section 1(a)
shall be allocated among Sellers (or their permitted designees)in accordance
with written instructions signed by all Sellers, and delivered to Buyer not less
than two business days prior to the Closing Date. In no event shall Parent have
any obligation to issue more than 720,000 shares of Class A Stock pursuant to
this Section 1(a). The "Closing Stock Price" shall be determined by taking the
average of the closing prices of the Class A Stock as reported on the American
Stock Exchange for the five trading day period ending on the second business day
before Closing. A Seller shall have the right, upon not less than two business
days' written notice prior to the Closing Date to designate an entity controlled
by such Seller to acquire title to the shares of Class A Stock issuable to such
Seller hereunder, provided that such entity shall be an "accredited investor" as
defined in Section 3(v) hereof.
(b) At the Closing and concurrently with consummation of the
transactions referred to in Section 1(a), Sellers will sell and assign to Buyer,
and Buyer will purchase from Sellers, Sellers' interests in the bank
certificates of deposit pledged by Sellers as collateral security under certain
Third Party Pledge
713283.7
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<PAGE>
Agreements (the "CIT Pledge Agreements") between the several Sellers and The CIT
Group/Credit Finance, Inc. ("CIT"), more fully described on Exhibit A hereto,
relating to a Loan and Security Agreement, dated as of December 20, 1996,
between the Company and CIT (the "CIT Loan Agreement"), for cash in an amount
equal to the respective amounts of such certificates of deposit, or Buyer will
otherwise obtain the full release of Sellers' obligations under the CIT Pledge
Agreements.
(c) On or prior to the Closing, Sellers will exchange all
outstanding shares of Series A Redeemable Preferred Stock ("Series A Preferred
Stock") of the Company and all outstanding shares of Series B Redeemable
Exchangeable Preferred Stock ("Series B Preferred Stock" and together with the
Series A Preferred Stock, the "Old Preferred Stock") of the Company for the
number of shares of 8% Noncumulative Redeemable Junior Preferred Stock (the
"Junior Preferred Stock") of the Company set forth on Exhibit A hereto opposite
each Seller's name; which shares shall have the terms specified in the form of a
Certificate of Designations attached as Exhibit B hereto (the "Certificate of
Designations").
(d) The acquisition of the Company by Buyer contemplated by
this Agreement shall not include any of the Company's Subsidiaries (as defined
in Section 3(c) hereof). On or prior to the Closing Date, Sellers shall cause
the Company to transfer all of the shares of capital stock of the Subsidiaries
713283.7
-3-
<PAGE>
held by the Company to Sellers or their designee and to change their Corporate
names to names that do not include the word "Micronet." There shall be no
adjustment to the Purchase Price as a result of the transactions contemplated by
this Section 1(d).
(e) The sale of Shares and related transactions referred to in
this Section 1, including the manner of making all payments, shall be effected
in accordance with the terms and provisions of Section 9.
2. Related Agreements.
------------------
(a) Escrow Agreement. At the Closing, Buyer, Parent and
Sellers will enter into an escrow agreement in the form of Exhibit C attached
hereto (the "Escrow Agreement") with IBJ Schroder Bank & Trust Company, as
Escrow Agent and 720,000 shares of Class A Stock and all the shares of Junior
Preferred Stock deliverable to the Sellers pursuant to Section 1 shall be
deposited with the Escrow Agent at the Closing and held in escrow for the
periods specified in the Escrow Agreement as security for Sellers'
indemnification obligations set forth in Section 11 hereof.
(b) Registration Rights Agreement. At the Closing, Buyer,
Parent and Sellers will enter into a Registration Rights Agreement in the form
of Exhibit D attached hereto, providing for the registration of the shares of
Class A Stock deliverable to
713283.7
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<PAGE>
Sellers pursuant to Section 1 under the Securities Act of 1933, as amended (the
"Securities Act").
3. Representations and Warranties of Sellers. Sellers jointly and severally
represent and warrant to Buyer as follows:
(a) Corporate Status of the Company. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware with full corporate power and authority to carry on its
business as now conducted and to own or lease and operate its properties as and
in the places where such business is now conducted and such properties are now
owned, leased or operated. The Company is duly qualified or authorized to do
business and is , or on the Closing Date will be, in good standing in each
jurisdiction listed in Schedule 3(a)of the disclosure schedule attached hereto
as Exhibit E and forming a part hereof (the "Disclosure Schedule"), which are
the only jurisdictions where it owns or leases real property or where the
failure to be so qualified would result in a material adverse effect on the
business, assets, financial condition or results of operations of the Company (a
"Material Adverse Effect"). Sellers have delivered to Buyer a complete and
correct copy of the Com pany's certificate of incorporation (certified by the
appropriate official of the State of Delaware and the Company's By-Laws
(certified by the Secretary of the Company), as amended and in effect on the
date hereof.
713283.7
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<PAGE>
(b) The Company's Capitalization. The Company's authorized
capital stock consists of 85,000 shares of capital stock, $0.001 par value per
share, consisting of (i) 55,000 shares of Common Stock, of which 19,125 Class A
shares and 30,150 Class B shares are issued and outstanding, and no shares are
held in treasury; and (ii) 30,000 shares of Preferred Stock, of which 3,500
shares of the Series A Preferred Stock and 4,500 shares of the Series B
Preferred Stock are issued and outstanding, and no shares are held in treasury;
and (iii) no other shares of any other class or series of capital stock are
issued or outstanding or held in treasury. Except as set forth in the first
sentence of this Section 3(b) and for employee stock options and contingent
warrants listed on Schedule 3(b) of the Disclosure Schedule (all of which shall
have been cancelled on or prior to the Closing Date), no options, warrants,
conversion, exchange or other rights, agreements or commitments of any kind
obligating the Company, contingently or otherwise, to issue or sell any shares
of its capital stock of any class or any securities convertible into or
exchangeable for any such shares are outstanding, and no authorization therefore
has been given. Each of the Shares is a validly issued, fully-paid and
non-assessable share of capital stock of the Company, and no personal liability
will attach to the ownership thereof. Each Seller is and on the Closing Date
will be the sole record and beneficial owner of the Shares set forth opposite
such Seller's name on Exhibit A hereto,
713283.7
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<PAGE>
free and clear of any liens, charges, encumbrances, security interests, options
or rights of others with respect thereto, and upon the transfer of the Shares by
Sellers to Buyer and full payment therefor as contemplated in this Agreement,
Buyer will acquire legal, valid and marketable title thereto.
(c) The Company's Subsidiaries. Schedule 3(c) of the
Disclosure Schedule sets forth the name of all direct and indirect subsidiaries
of the Company ("Subsidiaries") at the date of this Agreement. Neither the
Company nor any of the Subsidiaries owns any shares of capital stock or other
interests in any corporation, partnership, association or other entity, other
than the shares of the Subsidiaries indicated on Schedule 3(c). At the Closing,
the Company will have no Subsidiaries. Neither the Interim Balance Sheet (as
defined in Section 3(e) hereof) nor the related unaudited statement of
operations reflects any assets, liabilities, revenues or income of the
Subsidiaries. The Company has not assumed, incurred, guaranteed or otherwise
become liable for any liabilities or obligations of the Subsidiaries, and except
as indicated in Schedule 3(c), on and after the Closing Date the Company will
have no liabilities or obligations (actual, contingent, asserted, unasserted or
otherwise) with respect to any Subsidiaries now or heretofore owned or operated
by the Company, directly or indirectly, whether arising before, on or after the
Closing Date, including, without limitation, any liabilities or obligations with
respect to
713283.7
-7-
<PAGE>
severance costs relating to former employees or any other costs or expenses in
connection with the liquidation or winding up of former Subsidiaries.
(d) Authority for Agreements, etc. Each Seller has full power
and authority to execute and deliver this Agreement and to carry out its
obligations hereunder and the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by Seller and, assuming its due
authorization, execution and delivery by Parent and Buyer, constitutes the valid
and legally binding obligation of each Seller in accordance with its terms
except as the same may be limited by (a) bankruptcy, insolvency, reorganization,
fraudulent conveyance or laws or equitable principles relating to or affecting
the enforcement of creditors' rights generally, or (b) general principles of
equity, whether considered in a proceeding in equity or at law. The instruments
referred to in Section 2 will be duly authorized, executed and delivered by each
Seller at Closing and, assuming their due authorization, execution and delivery
by the other parties thereto, will constitute valid and legally binding
obligations of each Seller in accordance with their respective terms (except as
aforesaid). The execution, delivery and performance of this Agreement by Seller
will not conflict with or result in any violation of, or constitute a default
under, or give rise to a right of termination or acceleration of (a) the
Certificate of
713283.7
-8-
<PAGE>
Incorporation or By-Laws of Sellers or the Company, or (b) any mortgage,
indenture, lease, agreement or other instrument to which any Seller or the
Company is a party, or by which their respective properties are bound, or (c)
any permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Sellers, the Company, or any of
their respective properties, except in the case of clauses (b) and (c) as would
not result in a Material Adverse Effect on the Company or materially and
adversely affect the ability of Sellers to consummate the transactions
contemplated by this Agreement. No consent, approval, order or authorization of,
or registration, declaration or filing with any governmental authority or any
other person is required to be made or obtained by the Company or any Seller in
connection with Sellers' execution, delivery, and performance of this Agreement,
except as disclosed on Schedule 3(d) to the Disclosure Schedule, all of which
shall have been obtained or made by the Company or Sellers on or prior to the
Closing Date.
(e) Financial Statements. Sellers have delivered to Buyer (i)
the combined balance sheets, statements of operations, statements of net capital
deficiency and statements of cash flows of the Company and its Subsidiaries as
at December 19, 1996 and December 31, 1995 and for the periods then ended,
audited by Ernst & Young LLP; and (ii) the unaudited combined balance sheet of
the Company and its Subsidiaries as of March 31, 1998 (the
713283.7
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<PAGE>
"Interim Balance Sheet") and the unaudited combined statement of operations of
the Company and its Subsidiaries for the three months then ended, certified by
the chief financial officer of the Company. The financial statements referred to
in the preceding sentence, together with the related notes thereto are
hereinafter referred to collectively as the "Company Financial Statements." The
Company Financial Statements, which are attached hereto as Schedule 3(e) to the
Disclosure Schedule, have been prepared from the books and records of the
Company and its Subsidiaries in accordance with generally accepted accounting
principles ("GAAP")applied on a consistent basis except as noted in Schedule
3(e). The combined balance sheets included in the Company Financial Statements
present fairly the consolidated financial position of the Company as of the
respective dates thereof and the combined statements of operations included in
the Company Financial Statements present fairly the consolidated income of the
Company for the periods covered thereby, subject, in the case of the Interim
Balance Sheet and the related interim unaudited statement of operations, to
normal year-end adjustments which will not be material in the aggregate. Except
as disclosed in the Company Financial Statements or Schedule 3(e) of the
Disclosure Schedule, the Company has no liabilities or obligations, whether
accrued, absolute, contingent or otherwise,of a kind that should properly be
reflected or reserved against in a balance sheet prepared in conformity with
GAAP applied on a
-10-
713283.7
<PAGE>
consistent basis, other than liabilities and obligations that are (i) reflected,
accrued or reserved for in the Interim Balance Sheet, (ii) incurred in the
ordinary course of business consistent with past practice since the date of the
Interim Balance Sheet or (iii) incurred in connection with the transactions
contemplated by and in accordance with the terms of this Agreement. The Closing
Date Balance Sheet (as defined in Section 12 hereof) will be prepared from the
books and records of the Company in accordance with GAAP consistently applied
and will present fairly the financial position of the Company as at the date
thereof.
(f) No Adverse Change. Since the date of the Interim Balance
Sheet (i) except as disclosed in Schedule 3(f) of the Disclosure Schedule, there
has been no material adverse change in the business, properties, revenues,
operations or condition (financial or otherwise)of the Company, (ii) the Company
has not suffered any damage, destruction or loss of property (whether or not
covered by insurance) materially and adversely affecting its condition
(financial or otherwise) or operations; and (iii) none of the Sellers or the
Company has taken or permitted any of the actions referred to in Section 5(c)
hereof.
(g) Taxes. (i) The Company has filed or will file or cause to
be filed, within the time and in the manner prescribed by law, all material
returns, declarations, reports, estimates, information returns and statements,
including information returns
713283.7
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and reports ("Returns"), required to be filed by it that are due on or prior to
the Closing Date, taking into account all applicable extensions of due dates.
All Returns so filed are or will be complete and accurate, and otherwise
complied (or will comply) in all material respects with the laws, rules and
regulations applicable to such Returns. For purposes of this Section 3(g),
references to the Company shall, wherever appropriate, include the Subsidiaries,
and references to Code Sections shall be to sections of the Internal Revenue
Code of 1986, as amended.
(ii) The Company has paid, within the time and in the
manner prescribed by law (and until the Closing will pay, within the time and in
the manner prescribed by law), all material Taxes (as defined below) that are
due and payable on or prior to the Closing Date, except where the payment
thereof is being contested in good faith by appropriate proceedings and has been
disclosed on Schedule 3 (g) of the Disclosure Schedule.
(iii) As of the Closing Date, the Company will in all
material respects, for all periods prior to the Closing, have satisfied or have
provided adequate reserves for all of its applicable federal, state, local and
foreign withholding tax requirements (including without limitation income,
social security and employment tax withholding for all types of compensation).
713283.7
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<PAGE>
(iv) The Company has established (and until the
Closing will establish) on the Company Financial Statements reserves adequate
for the payment of all Taxes not yet due and payable, and except as so provided
for, no liability (actual or contingent, asserted or unasserted) exists or will
arise with respect to Taxes, resulting from operations or transactions of the
Company occurring prior to the Closing Date.
(v) There is (and until the Closing will be) no
material difference between the amounts of the book basis and the tax basis of
assets (net of liabilities) that is not accounted for by an accrual on the books
for federal income tax purposes or, if not required to be so accrued under GAAP,
is not described in the Disclosure Schedule.
(vi) There are no liens for Taxes upon the assets of
the Company except liens for Taxes not yet due.
(vii) The Company has not filed (and will not file
prior to the Closing Date) any consent agreement under Code Section 341(f) or
agreed to have Code Section 341(f)(2) apply to any disposition of the subsection
(f) asset (as such term is defined in Code Section 341(f)(4)) owned by the
Company.
(viii) No deficiency or adjustment for any Taxes has
been proposed or asserted or assessed against the Company; to the best of the
Seller's knowledge, no foreign, federal, state or local audits, examination or
other administrative proceedings or court proceedings are pending with regard to
any Taxes.
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<PAGE>
(ix) The federal income tax returns of the Company
have never been examined by the Internal Revenue Service (the "IRS"). Except as
is set forth in the Disclosure Schedule, none of Sellers or the Company has
received any notice of deficiency or assessment from any Federal, state, local
or foreign taxing authority with respect to liabilities for Taxes of the Company
which have not been paid or finally settled. The Company not has executed or
filed with the IRS or any other governmental authority any agreement or
instrument extending, or having the effect of extending, the period for
collection or assessment of any Taxes, nor are any requests for such waivers or
consents pending. The Company has not entered into any closing agreement with
any taxing authority that will affect any period ending after the Closing Date.
(x) The Company is not a party to any tax-sharing or
allocation agreement, nor does the Company owe any amount under any tax-sharing
or allocation agreement.
(xi) The acquisition of the Company by the Buyer will
not result in the payment of any "excess parachute payment" within the meaning
of Code Section 280G. There is no agreement, plan or arrangement covering any
employee or independent contractor of the Company that would give rise to any
payment that would not be deductible pursuant to Code Section 280G or Code
Section 162(m).
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<PAGE>
(xii) The Company has not made any election
under Code Section 338(g) with respect to any acquisition and no outstanding
debt obligation of the Company is "corporate acquisition indebtedness" within
the meaning of Code Section 279(b).
(xiii) The Company is not a United States Real
Property Holding Corporation as defined in Code Section 897(c)(2).
(xiv) To the knowledge of Sellers and the
Company, no material income economically attributable to transactions occurring
before the Closing Date will be required to be recognized for Tax purposes by
the Company on or after the Closing Date, excluding any such income for which
reserves for deferred Taxes have been established.
(xv) None of Sellers is a "foreign person" (as
that term is defined in Code Section 1445) and each Seller shall furnish to
Buyer on or prior to the Closing Date a certificate of such Seller's non-foreign
status, as set forth in Treasury Regulation Section 1.1445-2(b).
(xvi) For purposes of this Agreement, "Taxes" shall
mean all taxes, charges, fees, levies, or other assessments of whatever kind or
nature, including, without limitation, all net income, gross income, gross
receipts, sales, use, value-added, ad valorem, transfer, franchise, profits,
license,
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withholding, payroll, employment, excise, estimated, severance, stamp, net
worth, environmental, occupancy or property taxes, customs duties, fees,
assessments or charges of any kind whatsoever (together with any interest and
any penalties, additions to tax or additional amounts) imposed by any taxing
authority (domestic or foreign) upon or payable by the Company or the
Subsidiaries.
(h) Patents, Trademarks and Trade Names, etc. Schedule 3(h) of
the Disclosure Schedule hereto contains a complete and correct list of each
patent, trademark, trade name, copyright, servicemark or maskwork owned or used
by any of the Company as well as all registrations thereof and pending
applications therefor, and each license or other agreement relating thereto
(collectively, the "Intellectual Property"). Except as disclosed in Schedule
3(h), the Company pays no royalty or similar fees to anyone relating to the
Intellectual Property. Except as set forth in Schedule 3(h) there is no action,
suit or proceeding pending or, to the best knowledge of Sellers threatened
against, by or affecting any of the Company alleging that any of the
Intellectual Property rights of others with respect to any product manufactured,
used or sold by the Company are being infringed, or challenging the validity or
effectiveness of the Intellectual Property.
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<PAGE>
(i) Permits; Compliance with Laws. The Company has all
necessary permits, licenses and governmental authorizations required for the
ownership or occupancy of its properties and assets and the carrying on of its
business, except where the failure to have any such permit, license or
governmental authorization would not have a Material Adverse Effect on the
Company. The Company has complied in all material respects with all laws,
regulations, orders and permits, the violation of which would have a Material
Adverse Effect on the Company.
(j) Insurance. Schedule 3(j) to the Disclosure Schedule
contains a complete and correct list of all policies of insurance covering the
Company, indicating the type and amount of coverage, the premium and the
expiration date of each policy. Such policies are in full force and effect.
Complete and correct copies of each insurance policy have been furnished or made
available to Buyer.
(k) Material Contracts. Except as listed in Schedule 3(k) of
the Disclosure Schedule (the "Material Contracts") or any other exhibit hereto,
the Company is not a party to any (i) contract not made in the ordinary course
of business; (ii) contract for the employment of any officer or employee; (iii)
licenses of patents, trademarks or trade names, copyrights, servicemarks or
other intellectual properties, including trade secrets or proprietary know-how;
(iv) written
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<PAGE>
franchise, distributorship, sales agency, consignment or similar agreement; (v)
written contract for the future purchase of materials, supplies, services,
merchandise or equipment not capable of being fully performed or not terminable
within a period of one year from the date hereof or in excess of normal
operating requirements; (vi) agreement or arrangement for the sale or lease of
any assets or services other than in the ordinary course of business; (vii)
contract or commitment for capital expenditures in excess of $50,000 for any one
project; (viii) mortgage, pledge, security agreement, or other similar agreement
with respect to liens or encumbrance of any real or personal property; (ix)
lease of machinery or equipment, where any one lease requires payments in excess
of $50,000 per annum; (x) collective bargaining agreement or other agreement
with any labor union or association representing any employee; (xi) loan
agreement, guarantee, subordination or similar type of agreement relating to
borrowed money; (xii) retirement, severance, pension, bonus, profit-sharing,
stock option, stock purchase, group insurance, medical or other fringe benefit
plan or program providing employee benefits; (xiii) consulting agreement; (xiv)
contract with, or material permit issued by, any government or agency or
instrumentality thereof; or (xv) other material agreement, whether or not
entered into in the ordinary course of business, under which the Company's
liability exceeds $50,000,
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<PAGE>
other than any agreement entered into in the ordinary course of business for the
purchase or sale of goods or services. Complete and correct copies of each such
agreement have been furnished or made available to Buyer. The Company has
performed all the obligations required to be performed by it to date and is not
in default under any of the material agreements, leases, contracts or other
documents to which it is a party except for any failures to perform or defaults
that would not, singly or in the aggregate, have a Material Adverse Effect on
the Company.
(l) Litigation. Except as described in Schedule 3(l) to the
Disclosure Schedule or in the Financial Disclosure Schedule referred to in
Section 3(m)below, there is no action, suit or proceeding pending or, to the
best of the knowledge of Sellers, threatened against, by or affecting the
Company in any court, or by or before any national, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. Except as disclosed
in Schedule 3(l), to the best of the knowledge of Sellers, there are no
governmental investigations pending or threatened, and no decrees, injunctions
or orders of any court, governmental department or agency outstanding against
the Company or against Sellers and materially and adversely affecting the
business of the Company.
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<PAGE>
(m) Financial Disclosure Schedule. Sellers have delivered to
Buyer a true and complete copy of a financial disclosure schedule, as of March
31, 1998 (the "Financial Disclosure Schedule"), a copy of which is attached as
Schedule (m) to the Disclosure Schedule. The Financial Disclosure Schedule has
been prepared by the Company in good faith and with reasonable diligence and, to
the best of the knowledge of Sellers, does not omit any accounts payable or
other material claims pending or, to the knowledge of Sellers, threatened
against the Company("Claims"), except accounts payable arising in the ordinary
course of business after the date of the Financial Disclosure Schedule as
permitted by this Agreement and except that the Financial Disclosure Schedule
does not necessarily list any individual Claim which is less than $100.00 in
amount. Except as permitted by Section 7(g) hereof, all Claims listed in the
Financial Disclosure Schedule have been, or on or prior to the Closing Date will
be, settled and the Company has, or will have, received a settlement agreement
and mutual release ("Release")from each of the Creditors listed on the Financial
Disclosure Schedule, in substantially the form heretofore submitted by the
Company to Buyer, true copies of which have been or on or prior to the Closing
Date will be delivered to Buyer. Subject to the Company's obligation to make the
cash payments required thereunder, the Releases are and will be valid and
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<PAGE>
effective to release the Company from all Claims held by Creditors who have
executed and delivered Releases to the Company in accordance with their
respective terms.
(n) Title to Properties; Absence of Encumbrances.
(i) (A) Schedule 3(n) of the Disclosure
Schedule contains a correct and complete list of the real properties leased or
occupied by the Company as of the date hereof. The Company owns no real
properties.
(B) The Company enjoys peaceful and
undisturbed possession to the real property covered by all of the leases under
which it is operating. All of such leases are valid, subsisting and in full
force and effect, and the Company is not in material breach or default of any
such lease, except as disclosed in Schedule 3(n).
(C) None of the Sellers has received any
notice that any buildings leased or used by the Company violate or conflict with
any restrictive covenant, zoning ordinance, administrative regulation or
provision of national, state or local law in effect which in any material
respect interferes with or prevents the continued use of the properties
described in Schedule 3(n) for the purposes for which they are now being used or
which would materially affect the value thereof.
(ii) All material items of tangible personal
property owned or leased by any of the Company in the ordinary
713283.7
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<PAGE>
course of its business is in good operating condition, ordinary wear and tear
excepted.
(iii) The Company has good and marketable title to
all its properties and assets shown on the Interim Balance Sheet (except for
assets disposed of in the ordinary course of business since the date of the
Interim Balance Sheet or otherwise in accordance with this Agreement) or shown
on any exhibit delivered pursuant hereto, free and clear of any and all liens,
mortgages, pledges, leases, security interests, restrictions, prior assignments,
claims and encumbrances of any kind whatsoever ("Liens"), except as set forth in
Schedule 3(n) or another schedule, excepting therefrom the Lien of current taxes
not yet due and payable and Liens which would not, singly or in the aggregate,
have a Material Adverse Effect on the Company.
(o) Inventory. The inventories of the Company, shown on the
Interim Balance Sheet, or thereafter acquired, consist of a quality and quantity
useful or saleable in the ordinary course of business, other than those items of
inventory not saleable in the ordinary course of business or which are obsolete
or below standard quality, which in each case have been written down to their
current realizable value or adequately reserved for as reflected on the Company
Financial Statements.
(p) ERISA Compliance. Schedule 3(p) of the Disclosure Schedule
sets forth a true and complete list of each "pension
713283.7
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plan," as such term is defined by Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")(the "Pension Plans"), each "welfare
plan," as such term is defined in Section 3(1) of ERISA (the "Welfare Plans"),
and each other plan of deferred compensation for one or more employees,
established or maintained by the Company or to which the Company makes or has
made contributions (collectively, the "Benefit Plans"). Sellers have delivered
true and complete copies of all Benefit Plans as currently in effect, and the
three most recent annual reports relating thereto, to Buyers. Each Benefit Plan
complies in all material respects with the requirements of ERISA and no such
Plan has incurred "any accumulated funding deficiency" within the meaning of
Section 302 of ERISA. No liability to the Pension Benefit Guaranty Corporation
("PBGC") has been incurred with respect to any Benefit Plan nor, to Sellers'
knowledge, has any event or circumstance occurred in connection with any Benefit
Plan maintained by the Company which could result in any liability to the PBGC.
No "reportable event", within the meaning of Section 4043 of ERISA, has occurred
with respect to any Benefit Plan and no such Plan has been terminated, nor has
the PBGC been given notice of any intention to terminate any such Plan. Neither
the Company nor any fiduciary of any such plan has engaged in, nor is any Seller
aware of the occurrence or continuing existence of, any "prohibited transaction"
within the
713283.7
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<PAGE>
meaning of Section 406(a) or (b) of ERISA or of Section 4975(c) of the Code.
Each Benefit Plan has received a determination letter from the Internal Revenue
Service to the effect that it is qualified under Section 401(a) and, to the best
of Sellers' knowledge, nothing has occurred before or since the receipt of the
latest determination letter with respect to each such Plan to affect adversely
its continued qualification. The Company has, for all periods ending on or
before the date hereof, administered each Benefit Plan, in all material respects
in compliance with the fiduciary, funding, reporting and disclosure requirements
applicable thereto under ERISA, the Code or any other Federal, state or local
law. No Benefit Plan constitutes a "multiemployer plan" as defined in Section
3(37) of ERISA. No Pension Plan invests in stock of the Company. There is no
arrangement with any employee of the Company that could give rise to a payment
that would not be deductible under Section 280G or 162(a)(i) of the Code. No
event has occurred that will result in a material penalty, excise tax or other
tax to the Company under Chapter 43 of the Code. The Company does not maintain
or have any obligation for any post-retirement health, medical or welfare
benefits for retired employees. No condition exists that would prevent the
Company from amending or terminating a Pension Plan or Welfare Plan. No change,
or announcement relating to any change, to any Benefit Plan has been made nor
shall be made prior
713283.7
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<PAGE>
to Closing without the written consent of Buyer. There are no pending or
anticipated lawsuits and no outstanding claims for benefits (except initial
claims in the ordinary course) with respect to any Benefit Plan.
(q) Restrictions. Except as disclosed herein or in Schedule
3(q) hereto, the Company is not a party to any non-compete or similar agreement
which in any material way restricts the ability of the Company to compete with
any party to such agreement.
(r) Corporate Records. (i) The minute books of the Company, as
previously made available to Buyer, contain complete and accurate records of all
meetings of and action by the stockholders and boards of directors of the
Company.
(ii) Schedule 3(r) of the Disclosure Schedule
contains a true and complete list of (A) all directors and officers of the
Company; (B) the name of each bank in which the Company has an account or safe
deposit box, the identifying numbers or symbols thereof, and the name of each
person authorized to draw thereon or to have access thereto; and (C) the name of
each person, if any, holding powers of attorney from the Company, and a summary
statement of the terms thereof.
(s) Interests in Other Businesses. Sellers do not have any
direct or indirect interest in any business entity which is competitive with or
related to the business of the Company.
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<PAGE>
(t) Accounts Receivable. All accounts receivable of the
Company are reflected on the Interim Balance Sheet in accordance with GAAP, or
were accrued thereafter in the ordinary course of business and all arose only
from bona fide sales transactions in accordance with the Company's customary
terms of sale and practices. Sellers have no reason to believe that all such
receivables are not collectible in the ordinary course of business with the
exercise of diligent collection efforts, at the aggregate recorded amounts
thereof shown on the books of the Company, less the reserves established with
respect to such receivables.
(u) Relationships with Customers and Suppliers. Sellers have
not received written notice to the effect that the benefits of any material
relationship of the Company with its customers or suppliers will not continue to
be available to Buyer.
(v) Securities Act Representations. Sellers are acquiring the
shares of Class A Stock issuable pursuant to Section 1 hereof for investment and
not with a view to the distribution or resale thereof. Sellers understand that
such shares have not been registered under the Securities Act and cannot be
resold unless they are so registered or unless an exemption from registration is
available, and, as a result, that such shares may be held for an indefinite
period of time. Each
713283.7
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<PAGE>
Seller further represents that it (and any permitted designee of Seller) is an
"accredited investor" as that term is defined in Regulation D under the
Securities Act and possesses such knowledge and experience in financial and
business matters so that such Seller is capable of evaluating the risks and
merits of an investment in such shares. Each Seller acknowledges and agrees that
the certificates for such shares will bear a legend restricting transferability
of such shares except in compliance with the Securities Act.
(w) Environmental Matters. Except as set forth in Schedule
3(x) of the Disclosure Schedule, the Company has not received any notice
alleging the present, past or threatened violation of any applicable Federal,
state, or local laws or regulations related to the protection of the environment
("Environmental Laws") and, to the best knowledge of Sellers, the Company is and
has been in compliance with all Environmental Laws in all material respects.
(x) Product Warranties. Except as set forth in Schedule 3(x)
of the Disclosure Schedule, the Company has no unexpired express product
warranty with respect to any product manufactured or sold on or prior to the
Closing Date, nor is there any basis for any claim (actual, contingent, asserted
or unasserted) based upon any product warranty, except as adequately reflected
or reserved against in the Interim Balance Sheet or
713283.7
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<PAGE>
other claims against the Company not exceeding $50,000 in the aggregate
(collectively, the "Warranty Reserve").
(y) No Misrepresentation. No representation or warranty
contained in this Agreement or in any exhibit hereto or in any certificate or
other instrument furnished to Buyer pursuant to the terms hereof contains any
untrue statement of a material fact, or, taken together, omits to state a
material fact necessary to make the statements contained herein or therein not
misleading.
4. Representations and Warranties of Buyer and Parent. Buyer and
Parent hereby jointly and severally represent and warrant to Sellers as follows:
(a) Organization and Good Standing. Each of Buyer and Parent
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has full power and authority to own its
property and carry on its business as it is now being conducted.
(b) Authority for Agreements, etc. Each Buyer and Parent has
full power and authority to execute and deliver this Agreement and to carry out
its obligations hereunder and the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by each of Buyer and
Parent and, assuming its due authorization, execution and delivery by Sellers,
constitutes the valid and legally binding obligation of
713283.7
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each of Buyer and Parent in accordance with its terms except as the same may be
limited by (a) bankruptcy, insolvency, reorganization, fraudulent conveyance or
other laws or equitable principles relating to or affecting the enforcement of
creditors' rights generally, or (b) general principles of equity, whether
considered in a proceeding in equity or at law. The instruments referred to in
Section 2 will be duly authorized, executed and delivered by each of Buyer and
Parent at Closing and, assuming their due authorization, execution and delivery
by the other parties thereto, will constitute valid and legally binding
obligations of each of Buyer and Parent in accordance with their respective
terms (except as aforesaid). The execution, delivery and performance of this
Agreement by Buyer and Parent will not conflict with or result in any violation
of, or constitute a default under, or give rise to a right of termination or
acceleration of, (a) the Certificate Of Incorporation or By-Laws of Buyer or
Parent, or (b) any mortgage, indenture, lease, agreement or other instrument to
which any Buyer or Parent is a party, or by which their respective properties
are bound, or (c) any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Buyer or
Parent, or any of their respective properties, except in the case of clauses (b)
and (c) as would not result in a Material Adverse Effect or materially and
adversely affect the ability of
713283.7
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<PAGE>
Buyer or Parent to consummate the transactions contemplated by this Agreement.
Except for filings under Federal or state securities laws and as contemplated by
the Registration Rights Agreement, no consent, approval, order or authorization
of, or registration, declaration or filing with any governmental authority or
any other person is required to be made or obtained by Buyer or Parent in
connection with their execution, delivery, and performance of this Agreement.
(c) Authorization of Class A Stock. The issuance and delivery
of the Class A Stock issuable to Sellers as contemplated by Section 1 hereof has
been duly authorized by all requisite corporate action on behalf of Parent, and
when issued and delivered in accordance with the terms of this Agreement, the
Class A Stock will be validly issued, fully paid and nonassessable, and not
subject to any preemptive or similar rights of stockholders of Parent.
(d) Parent SEC Reports; Financial Statements. Parent has
delivered to Sellers true and complete copies of Parent's annual report on Form
10-K for the fiscal year ended December 31, 1997 and of all reports on Form 8-K
or 10-Q (excluding exhibits) filed by Parent with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended since December 31, 1997 (collectively, the "Parent SEC Reports"),
receipt of which is hereby acknowledge by Sellers. As
713283.7
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<PAGE>
of their respective dates, the Parent SEC Reports did not 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 made therein, in light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in or incorporated by reference into the Parent SEC
Reports (including the related notes and schedules) fairly presents in all
material respects the consolidated financial position of Parent and its
Subsidiaries as of its date, and each of the consolidated statements of income
and cash flows included in or incorporated by reference into the Parent SEC
Reports (including any related notes and schedules) fairly presents in all
material respects the results of operations, retained earnings and cash flows,
as the case may be, of Parent and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as otherwise noted therein. Since March 31,
1998, there has been no material adverse change in the business, operations or
financial condition of Parent and no material change in the capitalization of
Parent.
713283.7
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<PAGE>
(e) Securities Act Representations; Listing of Class A Stock.
Parent has not, directly or indirectly, solicited any offer to buy or offered to
sell, and will not, directly or indirectly, solicit any offer to buy or offer to
sell, any security which is or would be integrated with the offer and sale of
the Class A Stock to be issued to Sellers pursuant to this Agreement. None of
Parent, Buyer or any of their affiliates (as such term is defined in Rule 501(b)
under the Securities Act), or any person acting on their behalf, has engaged or
will engage, in connection with the offer and sale of the Class A Stock, in any
form of general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act. Assuming the accuracy of the representations
and warranties of Sellers in Section 3(v) hereof, it is not necessary in
connection with the offer, sale and delivery of the Class A Stock to Sellers in
the manner contemplated by this Agreement to register the Class A Stock under
the Securities Act. The shares of Class A Stock to be issued to Sellers have
been or, at the Closing, will have been, approved for listing on the American
Stock Exchange upon issuance as contemplated by this Agreement.
5. Covenants of the Sellers. From and after the date hereof and until the
Closing Date, Sellers hereby covenant and agree that:
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(a) Access to Documents; Opportunity to Ask Questions. Sellers
shall cause the Company to grant to Buyer or its representatives, during normal
business hours, access to the properties, corporate records, books of account,
contracts and all other documents, of the Company reasonably requested by Buyer,
its managerial employees, counsel and accountants in order to permit Buyer and
such representatives to make such engineering, legal, financial, accounting and
other reviews and investigations as Buyer shall reasonably desire to make
concerning the business and affairs of the Company, and shall instruct the
Company's independent public accountants to permit Buyer's independent public
accountants to inspect its accounting and tax accrual work papers and other
non-privileged records relating to the Company. Seller shall further cause the
managerial employees, counsel and accountants of the Company to be available
upon reasonable notice to answer questions of Buyer's representatives concerning
their businesses and affairs, and shall further cause them to make available all
relevant books and records in connection with such inspection and examination
and to furnish such additional financial, technical and other data and
information as the Buyer shall from time to time reasonably request.
(b) Maintenance of Insurance. Sellers shall cause the Company
to maintain in full force and effect all its presently
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<PAGE>
existing insurance coverage, or insurance comparable to such existing coverage.
(c) Conduct of Business. Sellers shall cause the business of
the Company to be conducted in the ordinary course, consistent with the present
conduct of its business, and will use their reasonable best efforts to maintain,
preserve and protect the assets and goodwill of the Company. During such period
of time, except upon the prior written consent of Buyer, Sellers will not permit
the Company to: (i) amend its By-Laws or Certificate of Incorporation, except
that on or prior to the Closing Date the Sellers shall cause the Certificate of
Designations to be authorized, executed and filed by the Company in the State of
Delaware, (ii) issue any additional shares of capital stock or issue, sell or
grant any option or right to acquire or otherwise dispose of any of its
authorized but unissued capital stock or other corporate securities or redeem or
repurchase any shares of its capital stock, except such as are necessary to
effectuate the transactions contemplated by this Agreement, (iii) declare or pay
any dividends or make any other distribution in cash or property on its capital
stock, (iv) incur any obligation or liability (absolute or contingent) except
current obligations and liabilities incurred in the ordinary course of business,
(v) enter into any employment agreement or become liable for any bonus,
profit-sharing or incentive payment
713283.7
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<PAGE>
to any of its officers, directors or employees, except pursuant to
presently existing plans, arrangements or agreements disclosed herein or in an
exhibit hereto, (vi) sell, transfer or acquire any properties or assets,
tangible or intangible, other than in the ordinary course of business, (vii)
make any material changes in its customary method of operations, including
marketing and pricing policies and maintenance of business premises, fixtures
and equipment, (viii) modify, amend or cancel any of its existing leases or
enter into any contracts, agreements, leases or understandings other than in the
ordinary course of business, or enter into any loan agreements, (ix) make any
investments other than in certificates of deposit or short-term commercial
paper, or accounts receivable and other trade credit extended in the ordinary
course of business, or (x) take any other action which would cause any of the
representations and warranties made by Sellers in this Agreement not to be true
and correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made on and
as of the Closing Date.
(d) Covenant to Satisfy Closing Conditions. Sellers will use
their reasonable best efforts to cause the conditions set forth in Section 7 to
be satisfied at or prior to the Closing and that the deliveries by Sellers
contemplated by Sections 1 and
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2 are made, insofar as such matters are within the control of the Sellers.
(e) Preferred Stock. (i) At or prior to Closing, Sellers will
cause the Company to adopt, execute and file, in the requisite public offices in
the State of Delaware, (i) an amendment to its Certificate of Incorporation
increasing the authorized number of its shares of preferred stock to 130,000
shares, and (ii) the Certificate of Designations in the form attached as Exhibit
B hereto and to issue the shares of Junior Preferred Stock in exchange for the
outstanding shares of Old Preferred Stock as contemplated by Section 1(c)
hereof. In connection therewith, Sellers covenant to effect such exchange in
reliance upon the exemption from registration under Section 4(2) of the
Securities Act pursuant to Rule 506 thereunder and to file a Form D with the
Securities and Exchange Commission and the California Department of
Corporations. The certificates for the Junior Preferred Stock shall bear a
legend restricting transfer absent registration under the Securities Act or an
available exemption from registration.
(ii) Subject to the Company's right to redeem
shares of Junior Preferred Stock in accordance with Section 6 of the Certificate
of Designations, Parent shall have the option, exercisable by written notice
given in the manner provided in Section 6 of the Certificate of Designations, to
purchase shares
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of Junior Preferred Stock from Sellers, in whole at any time or in part from
time to time, on any Redemption Date (as defined in the Certificate of
Designations), at a price equal to 100% of the Redemption Price (as so defined)
which would be payable by the Company on such Date if the Company were then
redeeming the shares pursuant to said Section 6. The purchase price payable by
Parent for such shares shall be payable in cash or at Parent's election in
shares of Class A Stock, valued in the manner specified in Section 1 (a) hereof.
Sellers shall deliver the certificates for the shares of Junior Preferred Stock
being purchased by Parent on the date specified in the notice of purchase
referred to above, and shall take all such other actions as Parent may
reasonably request in order effectively to transfer such shares to Parent free
and clear of any liens, claims or encumbrances. Parent agrees to execute and
deliver to Sellers a registration rights agreement covering the shares of Class
A Stock issued to Sellers pursuant to this Section 5(e) having terms and
conditions substantially similar to those contained in the Registration Rights
Agreement. The restrictions, notice requirements and other provisions relating
to the Company's redemption rights under Section 6 of the Certificate of
Designations, shall apply equally to Parent's redemption rights hereunder.
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(f) Adjustment of Accounts Payable and Accrued Liabilities. In
order to satisfy the conditions set forth in Section 7(g), in the event that
accounts payable and accrued liabilities at the Closing are greater than $3
million (or the adjusted amount referred to in Section 7(g)(ii)), Sellers will
apply the proceeds of the sale or release of collateral under the CIT Pledge
Agreements pursuant to Section 1(b) hereof or contribute cash to the Company in
an amount sufficient to enable the Company to meet the conditions specified in
said Section 7(g).
(g) Additional Financial Statements. Sellers shall furnish
Buyer with unaudited financial statements similar to those referred to in
Section 3(e) as at the end of each month subsequent to March 31, 1998 occurring
prior to the Closing Date, and for the fiscal period then ended, all certified
by the chief financial officer of the Company, as soon as such financial
statements become available, and in any event no later than 15 days after the
end of each such month.
(h) Confidentiality Agreements. Sellers will use reasonable
efforts to cause the Company to enter into confidentiality agreements in form
and substance reasonably satisfactory to Buyer with each employee of the Company
designated by Buyer not less than 10 days prior to the Closing Date.
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6. Covenants of Buyer. From and after the date hereof and
until the Closing Date, Buyer hereby covenants and agrees that:
(a) Representations and Warranties. Buyer will not take any
action which would cause any of the representations and warranties made by it in
this Agreement not to be true and correct in all material respects on and as of
the Closing Date with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date.
(b) Covenant to Satisfy Closing Conditions. Buyer will use
reasonable best efforts to insure that the conditions set forth in Section 8 are
satisfied and that the deliveries by Buyer contemplated by Sections 1 and 2 are
made, insofar as such matters are within the control of Buyer.
(c) Financial Statements. Following the Closing, so long as
any of the shares of Junior Preferred Stock are held by any Sellers, Buyer will
cause the Company to deliver to the holders of the then outstanding Junior
Preferred Stock, as soon as practicable after the end of each fiscal year, and
in any event within 90 days thereafter, a consolidated balance sheet of the
Company and its consolidated subsidiaries for such fiscal year, and consolidated
statements of income and retained earnings and changes in financial position of
the Company and its consolidated subsidiaries for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal
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year, prepared in accordance with GAAP consistently applied, certified by the
Chief Financial Officer of the Company.
7. Buyer's Closing Conditions. Buyer's obligation to purchase and pay for the
Shares pursuant to this Agreement is subject to the fulfillment before or at the
Closing of each of the following conditions, any of which Buyer may waive, in
whole or in part.
(a) Representations and Warranties True. All the
representations and warranties of Sellers contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as if made on and as of the Closing Date except as
affected by the transactions herein contemplated.
(b) Covenants and Agreements Performed. Sellers, before or at
the Closing, shall have performed and complied in all material respects with all
the covenants, terms, conditions and agreements required by this Agreement to be
performed or complied with by Sellers before or at the Closing.
(c) Legal Matters Satisfactory. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated
herein and all related legal matters shall have been reasonably satisfactory to
and approved by counsel for Buyer, and such counsel shall have been furnished
with such certified copies of actions and proceedings and such
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other instruments and documents as they shall have reasonably requested.
(d) No Litigation. No action or proceeding shall have been
instituted against Buyer, Sellers or the Company before any court or other
governmental body, seeking to restrain or prohibit the consummation of the
transactions contemplated hereby, which in the reasonable judgment of Buyer
makes it inadvisable to proceed with the transaction contemplated hereby.
(e) Certificate. Sellers shall have delivered to Buyer a
certificate executed by Sellers, dated as of the Closing Date, certifying the
fulfillment of the matters specified in Sections 7(a) and (b).
(f) Audited Financial Statements. Sellers shall have delivered
to Buyer the combined balance sheets, statements of operations, statements of
net capital deficiency and statements of cash flows for the Company and its
Subsidiaries as at December 31, 1996 and 1997 and for the three years ended
December 31, 1997, audited by Ernst & Young LLP. Such financial statements shall
be prepared in accordance with GAAP on a basis consistent with the audited
Company Financial Statements, shall be accompanied by a certificate of the Chief
Financial Officer to the effect provided in Section 3(e) and shall otherwise be
in form and substance satisfactory to Buyer.
(g) Certain Financial Conditions. At the Closing:
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(i) (A) the aggregate amount of borrowings by the Company under
the CIT Loan Agreement, including accrued interest and fees (the "CIT Loan"), as
of the Closing Date, shall not exceed $6 million, (B) the outstanding amount of
the CIT Loan shall not exceed the amount of accounts receivable of the Company
(net of accounts receivable arising in connection with the shipment of inventory
on approval, for evaluation or subject to similar contingencies), computed in a
manner consistent with the Interim Balance Sheet included in the Company
Financial Statements, by more than $1.4 million (as such amount may be adjusted
in the manner specified in subsection (g(ii) below), as of the Closing Date, and
(C) no default or event which with notice or lapse of time or both would
constitute a default shall have occurred and be continuing under the CIT Loan
Agreement;
(ii) the Company's outstanding accounts payable and accrued
liabilities, computed in accordance with GAAP in a manner consistent with the
Interim Balance Sheet included in the Company Financial Statements (but
excluding any accrual for warranty expense under GAAP for potential claims
related to component products manufactured by Micropolis (USA), Inc., a Delaware
corporation ("Micropolis"), shall not exceed $3 million in the aggregate, of
which not more than $2.5 million shall consist of accounts payable; provided,
however, that if the amount (if any) by which the outstanding CIT Loan exceeds
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outstanding accounts receivable (determined as provided in clause (B) of
subsection (g(i) above) (the "A/R Excess") is more or less than $1.4 million as
of the Closing Date, then the amount of such accounts payable, as of the Closing
Date, shall not exceed an adjusted amount, which adjusted amount shall be $2.5
million minus the amount by which the A/R Excess is greater than $1.4 million or
plus the amount by which the A/R Excess is less than $1.4 million; provided
further, however, that notwithstanding any such adjustment, in no event shall
the Company's accounts payable and accrued liabilities, as of the Closing Date,
exceed $3.5 million in the aggregate, of which not more than $3 million shall
consist of accounts payable; and
(iii) the amount of the Company's inventories, valued in a manner
consistent with the Interim Balance Sheet included in the Company Financial
Statements, shall not be less than $3.5 million.
(iv) Solely for purposes of making the calculations contemplated
by this Section 7(g), accounts receivable of the Company shall be deemed to
include confirmed sales orders outstanding at the Closing Date, identified to
Buyer's reasonable satisfaction, providing for deferral of shipments until after
the Closing Date but on or prior to July 31, 1998; and loans or advances made by
Parent or Buyer, directly to the Company or through arrangements with CIT, to
fund
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working capital requirements of the Company relating to such deferred sales
orders, shall be added to the balance of the CIT Loan outstanding at the Closing
Date.
(v) Buyer shall have received a certificate of the Chief
Financial Officer of the Company, dated the Closing Date, setting forth in
reasonable detail the foregoing calculations, and such other documentation as it
may reasonably request in order to verify satisfaction with the conditions
specified in this Section 7(g).
(h) Contribution of Indebtedness by Sellers. On or prior to the
Closing, Sellers shall have contributed to the capital of the Company and
cancelled all outstanding indebtedness of the Company or its Subsidiaries owing
to Sellers or their affiliates, together with all accrued interest, fees and
other claims, if any, with respect to such indebtedness, and all notes and other
evidences of such indebtedness shall have been surrendered to the Company; and
Buyer shall have received such evidence thereof as it may reasonably request.
(i) Cancellation of Stock Options and Warrants. On or prior to Closing
all outstanding stock options, warrants and similar instruments covering shares
of the Company's common stock shall have been cancelled, and the holders thereof
shall have surrendered such options to the Company without payment by the
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Company of any consideration therefor; and Buyer shall have received such
evidence thereof as it may reasonably request.
(j) Accountants' Report. Buyer shall have received a report, from
Coopers & Lybrand, LLP, independent public accountants, satisfactory in form and
substance to Buyer, as to the Company's operations and financial statements.
(k)Opinion of Counsel. Buyer shall have received an opinion, dated the
Closing date, of Troop Meisinger Steuber & Pasich, LLP, counsel for Sellers, in
form and substance satisfactory to Battle Fowler LLP, counsel for Buyer, to the
effect that:
(i) The Company is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware, has full
corporate power to carry on its business as, to the knowledge of such counsel,
such business is now conducted and to own, lease and operate the property and
assets now owned or leased and operated by it; and is qualified to do business
as a foreign corporation in each jurisdiction in which it has certified to such
counsel that it owns or leases real or personal property or permanently
maintains assets or employees, except where the failure to be so qualified would
not have a material adverse effect on the Company;
(ii) The Company's authorized and outstanding capital stock is as
stated in Section 3(b);
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(iii) Each of the Sellers is the holder of record of that number
of Shares set forth opposite his name in Exhibit A of this Agreement and, to the
best of the knowledge of such counsel, owns all of such shares free and clear of
all liens, claims, charges, restrictions, equities or encumbrances of any kind
and, to the best of such counsel's knowledge, has full power and the legal right
to sell such shares to Buyer pursuant to this Agreement;
(iv) Each of this Agreement, the Escrow Agreement and the
Registration Rights Agreement has been duly executed and delivered by each of
the Sellers and is a legal, valid and binding obligation of each of the Sellers
enforceable against the Sellers in accordance with its terms, except as the same
may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent
conveyance or other laws or equitable principles relating to or affecting the
enforcement of creditors' rights generally; (b) general principles of equity,
whether considered in a proceeding in equity or at law; and (c) other conditions
specified therein, which shall be reasonably satisfactory to Buyer's counsel;
(v) The execution and delivery of this Agreement by each of the
Sellers and the consummation of the transactions provided for in this Agreement
will not violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of
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the Company or, to the best knowledge of such counsel, result in any breach of
any Material Contract;
(vi) No authorization, approval or consent of, or any action by,
or filing with, any United States federal or state court or regulatory authority
or by or with any court or regulatory authority of any foreign jurisdiction that
has not been obtained, taken or made, is required for the execution, delivery or
performance of this Agreement by Sellers (other than state security or blue sky
laws as to which such counsel need express no opinion);
(vii) By delivery of a certificate or certificates representing
the Shares, the Sellers will transfer to the Buyer who has purchased such Shares
pursuant to the Agreement (without notice of any defect in the title of Sellers
and who is otherwise a bona fide purchaser for purposes of the Uniform
Commercial Code) valid and marketable title to such Shares, free and clear of
any pledge, lien, security interest, charge, claim, equity or encumbrance of any
kind;
(viii) Such counsel knows of no litigation, proceeding or
investigation pending, threatened or proposed in any manner involving any Seller
or the Company or any of the properties or assets of any of them or which
questions the validity of this Agreement or any action taken or to be taken by
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any Seller under this Agreement except as disclosed in Schedule 3( ); and
(ix) Assuming the due authorization, execution and delivery by
the Creditors named therein and due payment by the Company of the Settlement
Payment specified therein, each of the Releases will be valid and binding
obligations of the Company and the Creditors, enforceable in accordance with its
terms subject to same exceptions referenced in (iv).
In rendering the opinion described above, Seller's counsel may rely on
an opinion or opinions, copies of which shall be furnished to Buyer, of local
counsel satisfactory to Buyer with respect to the laws of jurisdictions other
than the United States of America and the State of California, and as to matters
of fact, upon certificates of public officials and officers of the Company. The
opinion described in (ix) above may be rendered by Lobel & Opera, special
counsel to the Company.
(l) Resignations of Directors. The directors of the Company shall have
executed and delivered to Buyer their resignations as directors of the Company
effective at the Closing.
(m) The Note payable by the Company to Micropolis in the principal
amount of $577,068, described in Schedule 3(d) of the Disclosure Schedule, shall
have been paid in full or otherwise satisfied by Sellers on terms reasonably
satisfactory
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to Buyer not involving any cost to the Company; or (i) Sellers shall have
expressly agreed to assume the defense of, and fully indemnify Buyer and the
Company against, all claims and expenses relating to such Note in accordance
with Section 11(b) hereof, and (ii) 265,000 shares of Class A Stock shall have
been deposited in escrow under the Escrow Agreement, in addition to the shares
to be deposited pursuant to Section 2(a) hereof, in order to secure Buyer and
the Company against the incurrence of any obligation or expense in respect of
such Note.
(n) The claims of William Long against the Company, described in
Schedule 3(f) of the Disclosure Schedule, shall have been settled on terms
reasonably satisfactory to Buyer not involving any cost to the Company; or
Sellers shall have expressly agreed to assume the defense of, and indemnify
Buyer and the Company against, claims and expenses relating to such suit in
accordance with Section 11(b) hereof.
(o) The stipulated judgment relating to the claims of The Irvine
Company, in the form of Exhibit C to Schedule 3(f) of the Disclosure Schedule,
shall have been executed by the Company and duly filed with the applicable
court, and all claims of The Irvine Company referred to therein shall have been
settled and released to the reasonable satisfaction of Buyer in accordance with
the terms of such stipulated judgment.
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8. Sellers' Closing Conditions. Sellers' obligations to sell and deliver the
Shares pursuant to this Agreement are subject to the fulfillment before or at
the Closing of each of the following conditions, any of which Sellers may waive,
in whole or in part.
(a) Representations and Warranties True. All the representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as if made on and as of the Closing Date, except as affected by the transactions
contemplated herein.
(b) Covenants and Agreements Performed. Buyer, before or at the
Closing, shall have performed and complied in all material respects with all the
covenants, terms, conditions and agreements required by this Agreement to be
performed by it before or at the Closing.
(c) Legal Matters Satisfactory. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated herein and all
related legal matters shall have been reasonably satisfactory to and approved by
counsel for Sellers, and such counsel shall have been furnished with such
certified copies of actions and proceedings and such other instruments and
documents as they shall have reasonably requested.
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(d) No Litigation. No action or proceeding shall have been instituted
by any governmental authority against Buyer, Sellers or the Company before any
court or other governmental body, seeking to restrain or prohibit the
consummation of the transactions contemplated hereby, which in the reasonable
judgment of Sellers makes it inadvisable for Sellers to proceed with the
transactions contemplated hereby.
(e) Certificate. Buyer shall have delivered to Sellers a certificate
executed by its President or any Vice-President, dated as of the Closing Date,
as to the fulfillment of the matters specified in Sections 8(a) and (b).
(f) Opinion of Counsel. Sellers shall have received an opinion of
Battle Fowler LLP, counsel for Buyer and Parent, dated the Closing Date, as to
the following matters:
(i) Each of Buyer and Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power to carry on its business as, to the knowledge of
such counsel, now conducted and to acquire and own the Shares;
(ii) Each of this Agreement, the Escrow Agreement and the
Registration Rights Agreement has been duly authorized, executed and delivered
by Buyer and Parent and is a valid and binding obligation of Buyer and Parent
enforceable against Buyer and Parent in accordance with its terms, except (a) as
the same
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may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance
or other laws or equitable principles relating to or affecting the enforcement
of creditors' rights generally, (b) general principles of equity, whether
considered in a proceeding in equity or at law and (c) other customary
conditions specified therein, which shall be reasonably satisfactory to counsel
to Sellers;
(iii) The issuance and delivery of the shares of Class A Stock
issuable to Sellers pursuant to Section 1(a) has been duly authorized by all
necessary corporate action on behalf of Parent and, upon issuance and delivery
in accordance with this Agreement, such shares of Class A Stock will be validly
issued and outstanding, fully-paid and non-assessable and not subject to any
preemptive or other similar rights of the stockholders of Parent;
(iv) All corporate proceedings required to be taken by Buyer and
Parent at or before the Closing in connection with this Agreement and the
transactions contemplated hereby have been duly taken; and
(v) The execution and delivery of this Agreement and the
consummation of the transactions provided for in this Agreement will not violate
or conflict with any provision of the Certificate of Incorporation or By-Laws of
Buyer or Parent or, to the best of the knowledge of such counsel, result in any
breach
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of any contract or agreement known to such counsel to which Buyer or Parent is a
party or by which Buyer or Parent is bound or to which the properties or assets
of Buyer or Parent are subject.
In rendering the opinion described above, Battle Fowler LLP may rely
on an opinion or opinions, copies of which shall be furnished to Sellers, of
local counsel satisfactory to Sellers with respect to the laws of jurisdictions
other than the United States of America and the States of New York and Delaware
(with respect only to the General Corporation Law of Delaware), and as to
matters of fact upon certificates of public officials and officers of Buyer.
9. Closing and Closing Date. The closing contemplated by this Agreement (the
"Closing") shall be held at the offices of Battle Fowler LLP, 75 East 55th
Street, New York, New York 10022 at 10:00 a.m., local time, on July 15, 1998 or
at such other time, place or date as the parties may agree (the "Closing Date");
provided,however, that if any of the conditions provided in Sections 7 and 8
hereof to the obligations of any party hereunder shall not have been met or
waived by such party by such date, then the party which has been unable to meet
such condition or conditions will be entitled to postpone the Closing for up to
one month by giving notice to the other party to such effect, but in no event
will any party be entitled to postpone the scheduled date of the Closing beyond
July 31, 1998. At the Closing,
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Sellers shall deliver to Buyer all certificates representing the Shares in
proper form for transfer to Buyer, together with all requisite stock transfer
stamps or cash in lieu thereof, Buyer shall pay the consideration specified in
Section l(a) for the Shares, and the related transactions specified in Sections
1 and 2 shall have been completed.
10. Survival of Representations and Warranties. The parties agree that the
representations and warranties contained in this Agreement or in any
certificate, document or instrument delivered in connection herewith, shall
survive the execution and delivery of this Agreement and the Closing hereunder
for the period ending March 31, 1999, regardless of any investigation made by
the parties except for the representations and warranties contained (i) in
Section 3(b), which shall survive the Closing indefinitely, (ii) in Section 3(g)
hereof, which shall survive until the expiration of all applicable Federal,
state, local, foreign or other statutes of limitations and (iii) in Section 3(x)
hereof, which shall survive until June 30, 2000. No claims for indemnity under
Section 11 shall be made after the expiration of the applicable survival periods
of Sellers' representations and warranties.
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11. Indemnification of Buyer.
------------------------
(a) Subject to the provisions of Section 10 and subsection 11(c),
Sellers agree jointly and severally to indemnify and hold Buyer harmless from
and against:
(i) Any and all liabilities, obligations, damages, deficiencies
and expenses resulting from the breach of any representation or warranty of
Sellers contained in this Agreement or non-fulfillment of any agreement on the
part of Sellers under the terms of this Agreement; and
(ii) All actions, suits, proceedings, demands, assessments,
judgments, costs and expenses incident to the foregoing.
(b) If any legal proceedings are instituted or any claim or demand is
asserted by any person in respect of which Buyer may seek indemnification from
Sellers under this Section 11, Buyer shall promptly cause written notice of the
assertion of any claim of which it has knowledge and which is covered by this
indemnity to be forwarded to Sellers. Sellers shall have the right, at Sellers'
option and expense, to defend such proceeding, claim or demand with a single
counsel of their choice, which counsel must be reasonably satisfactory to Buyer,
and to defend against, negotiate, settle or otherwise deal with any proceeding,
claim or demand which relates to any loss, liability, damage or deficiency
indemnified against hereunder; provided, however, that
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no settlement shall be made without the prior written consent of Buyer unless
Buyer is unconditionally released from all liability relating to the action
which is the subject of such settlement; and provided further, that Buyer may
participate in any such proceeding with counsel of its choice and at its
expense. To the extent Sellers elect not to defend such proceeding, claim or
demand and Buyer defends against, settles or otherwise deals with any such
proceeding, claim or demand, which settlement may be made without the consent of
Sellers, Buyer will act reasonably and in accordance with its good faith
business judgment. The parties agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such legal
proceeding, claim or demand.
(c) Notwithstanding anything contained herein to the contrary, the
indemnity provided for in this Section 11(i) shall be Buyer's exclusive remedy
for monetary damages against Sellers or any of them, and (ii) shall not be
enforceable except to the extent that the aggregate amount of claimed losses,
liabilities, damages or deficiencies exceeds the sum of Fifty Thousand Dollars
($50,000), and then only to the extent of such excess, and (iii) with respect to
monetary damages, shall be limited to the rights of Buyer to recover against the
property of Sellers which is subject to the Escrow Agreement.
(d) For purposes of this Section 11:
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(i) the indemnification by Sellers provided for in Section
11(a)(i) shall be deemed to include, without limitation, product warranty claims
relating to products manufactured and sold by the Company prior to the Closing
Date, to the extent the aggregate amount of such claims incurred by the Company
prior to June 30, 2000, exceeds the Warranty Reserve referred to in Section
3(x), notwithstanding any disclosures contained in Schedule 3(x) or elsewhere in
the Disclosure Schedule; and
(ii) the indemnification by Sellers provided for in Section 7(m)
and 7(n) shall continue in effect until satisfaction by Sellers of the
respective claims covered thereby, notwithstanding the limitations with respect
to assertion of claims for indemnification contained in the last sentence of
Section 10 hereof.
12. Closing Date Balance Sheet.
(a) Promptly following the Closing Date, Sellers shall prepare an
unaudited balance sheet of the Company as of the close of business on the
Closing Date, which balance sheet is herein referred to as the Closing Date
Balance Sheet. Sellers and their independent public accountants shall have
access to, and be permitted to retain copies of, the Company's books and records
after Closing and the reasonable assistance of the Company's employees, for the
purpose of preparing such Closing Date Balance
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Sheet. Sellers shall keep the information contained in such books and records
confidential and shall not disclose the same to others except for the purposes
contemplated hereby or as required by law. Except to the extent specifically
provided for herein, the Closing Date Balance Sheet shall be prepared on the
same basis as the Interim Balance Sheet and shall be delivered to Buyer as soon
as reasonably possible after the Closing Date. The Closing Date Balance Sheet
shall be subject to verification by Buyer and its independent public accountants
during the 30-day period following delivery thereof to Buyer.
Unless Buyer delivers written notice to Sellers on or prior to the
30th day after Buyer's receipt of the Closing Date Balance Sheet of Buyer's
objection to the Closing Date Balance Sheet and specifying in reasonable detail
all disputed items and the basis therefor, Buyer shall be deemed to have
accepted and agreed to the Closing Date Balance Sheet. If Buyer so notifies
Sellers of its objection to the Closing Date Balance Sheet, Buyer and Sellers
shall, within 30 days following such notice (the "Resolution Period"), attempt
to resolve their differences and any resolution by them as to any disputed
amounts shall be final, binding and conclusive.
(b) If, at the conclusion of the Resolution Period, one or more items
remain in dispute, then the disputed items shall be submitted to KMPG Peat
Marwick LLP (the "Neutral
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Auditors"). Each party agrees to execute, if requested by the Neutral Auditors,
a reasonable engagement letter. All fees and expenses relating to the work, if
any, to be performed by the Neutral Auditors shall be borne equally by Sellers
and Buyer. The Neutral Auditors' determination shall be made within 30 days of
their selection, whether or not such presentations by Sellers and Buyer have
been made within such period, and shall be set forth in a written statement
delivered to Sellers and Buyer and shall be final, binding and conclusive. The
term "Adjusted Closing Date Balance Sheet," as hereinafter used, shall mean the
definitive Closing Date Balance Sheet agreed to by Buyer and Sellers in
accordance with Section 12(a) or the definitive Closing Date Balance Sheet
resulting from the determinations made by the Neutral Auditors in accordance
with this Section 12(b) (in addition to those items theretofore agreed to by
Sellers and Buyer).
(c) The Purchase Price shall be decreased (but not increased), dollar
for dollar, to the extent the aggregate amount of accounts receivable or
inventories of the Company reflected in the Adjusted Closing Date Balance Sheet
are less than the aggregate amounts thereof reflected in the certificate
delivered pursuant to Section 7(f) or the amounts of the CIT Loan, accounts
payable or accrued liabilities are greater than the applicable amounts so
certified. The amount of any reduction of the
713283.7
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<PAGE>
Purchase Price pursuant to this Section 12(c) shall be withdrawn from the number
of shares of Class A Stock deposited in escrow pursuant to Section 1.6 and
returned to Purchaser, within ten business days after the Adjusted Closing Date
Balance Sheet is agreed to or any remaining disputed items are ultimately
determined by the Neutral Auditors. Any matter which forms a basis of an
adjustment in the Purchase Price pursuant to this Section 12(c) shall not give
rise to a separate claim for indemnification under Section 11 hereof or any
breach by Sellers of any of their representations, warranties or covenants under
this Agreement.
13. Brokerage; Expenses. The parties represent and warrant to each other that
there are no valid claims for brokerage commissions or finder's fees in
connection with the negotiation of this Agreement and the performance of the
transactions contemplated hereby resulting from any action taken by them, except
for a fee payable to Kibel, Green Inc., which shall be payable solely by
Sellers. The parties agree to indemnify, defend, and hold harmless each other
against any and all losses and expenses sustained by the other as a result of
liability or alleged liability to any other broker or finder on the basis of any
arrangement, agreement or acts relating to or arising out of the transactions
contemplated by this Agreement made or performed by the other party. Except as
otherwise specifically provided
713283.7
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<PAGE>
elsewhere herein, each party hereto shall pay its own expenses incident to the
negotiation, preparation, execution, delivery and performance of this Agreement
and related documents, including the expenses of its respective counsel and
accountants.
14. Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns but shall not
confer any rights upon any other person. This Agreement may not be assigned by
any party without the other's consent.
15. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York without giving effect to any
conflicts of laws principles.
16. Further Assurances. The parties agree to execute such other documents or
agreements as may be necessary or desirable for the implementation of this
Agreement and the consummation of the transactions contemplated hereby.
17. Termination.
-----------
(a) This Agreement may be terminated and abandoned at any time prior
to Closing:
(i) by the mutual consent of Sellers and Buyer;
(ii) by Buyer, without liability to Sellers, (x) at any time on
or prior to the Closing Date if Sellers shall default in the above performance
or observance of any of the terms hereof to be performed by Sellers and the same
have not
713283.7
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<PAGE>
been cured prior to the Closing Date, (y) at Buyer's election, by written notice
given to Sellers on or prior to the Closing Date, if Buyer has become aware of
any event or condition which, in Buyer's sole judgment, materially and adversely
affects or may affect the business, properties, revenues, operations or
prospects of the Company and (z) subject to Section 9 hereof, on July 31, 1998
if any of the conditions precedent to the performance of Buyer's obligations at
the Closing shall not have been fulfilled on or prior to that date;
(iii) by Sellers, without liability to Buyer, (x) at any time on
or prior to the Closing Date if Buyer shall default in the due performance or
observance of any of the terms hereof to be performed by Buyer and the same have
not been cured on or prior to the Closing Date and (y) subject to Section 9
hereof, on July 31, 1998, if any of the conditions precedent to Sellers'
obligations at the Closing shall not have been fulfilled by, on or prior to that
date; or
(iv) by either Sellers or Buyer in the event any court or
governmental agency of competent jurisdiction shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree or
ruling or other action shall have become final and non-appealable.
713283.7
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<PAGE>
(b) Procedure and Effect of Termination. In the event of termination
and abandonment of this Agreement by Sellers or Buyer pursuant to this Section
17, written notice thereof shall forthwith be given to the other party. If the
transactions contemplated by this Agreement are terminated as provided herein:
(i) Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same;
(ii) All confidential information received by Buyer with respect
to the business of the Company or Sellers shall be treated in accordance with
the provisions of the Confidentiality Agreement, dated as of March 18, 1998,
between Purchaser and Kibel, Green Inc. (the "Confidentiality Agreement"), which
shall survive the termination of this Agreement; and
(iii) No party to this Agreement will have any liability under
this Agreement to the other except (x) as stated in subparagraphs (i) and (ii)
of this Section 17(b) and (y) for any liability resulting from such party's
breach of any provision of this Agreement and (z) as provided in the
Confidentiality Agreement.
713283.7
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<PAGE>
18. Consent to Service. Sellers, Buyer and Parent each hereby consent to the
jurisdiction of the United States District Court for the District of Los Angeles
and of any of the courts of the State of California in any action, suit or
proceeding arising under this Agreement, the Escrow Agreement or the
Registration Agreement and agree further that service of process or notice in
any such action, suit or proceeding shall be effective if given the manner set
forth in Section 21 hereof.
19. Entire Agreement; Amendments. This Agreement and any other documents
delivered on the date hereof in connection with the transactions contemplated
hereby constitute the entire agreement between the parties relating to the
subject matter hereof and supersede all prior negotiations and agreements
between the parties relating thereto. No supplement, modification, waiver or
amendment of this Agreement shall be binding unless executed in writing by the
parties and no waiver shall be deemed a continuing waiver or a waiver of any
subsequent breach or default, either of a similar or different nature, unless
expressly so stated in writing.
20. Notices. All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given when:
(a) served personally on the party to whom notice is to be given, (b) one
business day after being delivered to a nationally recognized overnight air
713283.7
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<PAGE>
courier, (c) five business days after being sent by first-class mail, registered
or certified, postage prepaid, or (d) when sent by telecopier (with written
confirmation of receipt by recipient's telecopier), and properly addressed as
follows:
(a) To Sellers at their respective addresses set forth in Exhibit A
hereto:
With a copy to:
Scott Alderton, Esq.
Troop Meisinger Steuber & Pasich, LLP
10940 Wilshire Boulevard
Los Angeles, California 90024
Telecopier No. (310) 443-8569
(b) To Buyer and Parent at:
500 Broadway
Redwood City, California 94063
Telecopier No. (650) 367-3440
Attention: General Counsel
With a copy to:
David D. Griffin, Esq.
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Telecopier No. (212) 856-7816
Any party may change its address for the receipt of notice by notifying the
other parties to this Agreement in the manner provided above.
21. Designated Subsidiary. It is understood and agreed among the parties that
with the prior written consent of the Sellers, which consent shall not be
unreasonably withheld, Parent may
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<PAGE>
cause one or more Subsidiaries other than Buyer designated by Parent to carry
out all or part of the transactions contemplated by this Agreement.
22. Miscellaneous. The headings contained in this Agreement are for reference
only and shall not in any way affect the meaning or interpretation of this
Agreement. References to a schedule or an exhibit are, unless otherwise
specified, to a schedule or an exhibit to this Agreement, and references to a
section or subsection are, unless otherwise specified, references to a section
or subsection of this Agreement. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
[END OF TEXT]
713283.7
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
AMPEX CORPORATION
By:
------------------------------
Title:
------------------------------
AMPEX HOLDINGS CORPORATION
By:
------------------------------
Title:
------------------------------
SELLERS:
-----------------------------------
Name: Jason Barzilary
-----------------------------------
Name: Beny Alagem
-----------------------------------
Name: Alex Sandel
-----------------------------------
Name: Sara Sandel
-----------------------------------
Name: Chloe Holdings, Inc.
KLINE HAWKES MICRONET PARTNERS LLC
By:
------------------------------
Title:
------------------------------
713283.7
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<PAGE>
EXHIBIT A
LIST OF SELLERS
A-1
<PAGE>
EXHIBIT A
Shares of Class A Common Stock Owned by Sellers
Jason Barzilay 6,666
Beny Alagem 6,666
Alex Sandel 3,668
Sara Sandel 1,500
Chloe Holdings, Inc. 645
Shares of Class B Common Stock Owned by Sellers
Kline Hawkes MicroNet
Partners LLC 30,150
Pledge Agreements pursuant to which certificates of deposits are pledged to CIT:
Third Party Pledge Agreements, dated as of November 25, 1997 and December 18,
1997, by Kline Hawkes California SBIC, L.P. in favor of the CIT Group/Credit
Finance, Inc.
Third Party Pledge Agreement dated as of December 20, 1996 by Jason Barzilay in
favor of the The CIT Group/Credit Finance, Inc.
Preferred Stock
Preferred Stockholder Preferred Shares Currently Held
Klein Hawkes MicroNet 3,500 shares of Series A
Partners LLC Redeemable Preferred Stock
Jason Barzilay 1,500 shares of Series B
Redeemable Exchangeable
Preferred Stock
Beny Alagem 1,500 shares of Series B
Redeemable Exchangeable
Preferred Stock
Alex Sandel 1,500 shares of Series B
Redeemable Exchangeable
Preferred Stock
741117.1
<PAGE>
Notice Addresses of the Sellers:
Jason Barzilay 12840 Hanover
Los Angeles, California 90049
Telecopier No.: (818) 341-8100
Beny Alagem 12840 Hanover
Los Angeles, California 90049
Telecopier No.: (818) 341-8100
Alex Sandel 1001 North Crescent Drive
Beverly Hills, California 90210
Telecopier No.: (310) 709-4200
Sara Sandel 607 North Crescent Drive
Beverly Hills, California 90210
Telecopier No.: (310) 205-0078
Chloe Holdings, Inc 833 17th Street, Suite 6
Santa Monica, California 90403
Attention: Diana Maranon
Telecopier No.: (310) 453-7002
Kline Hawkes MicroNet
Partners LLC 11726 San Vicente Boulevard, Ste. 300
Los Angeles, California 40049
Attention: J. Jay Ferguson
Telecopier No.: (310) 442-4707
741117.1
<PAGE>
EXHIBIT B
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
B-1
<PAGE>
EXHIBIT B
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF THE
8% NONCUMULATIVE JUNIOR PREFERRED STOCK, SERIES A
(Par Value $0.001 Per Share)
of
MICRONET TECHNOLOGY, INC.
------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
--------------------------------------------------
MicroNet Technology, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), does hereby certify:
That, pursuant to authority conferred on the Board of Directors of the
Corporation by the Restated Certificate of Incorporation of said Corporation,
and pursuant to the provisions of Section 151 of Title 8 of the Delaware Code of
1953, as amended, said Board of Directors, at a meeting duly convened and held
on , 1998, adopted the following resolution:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with provisions of the Restated
Certificate of Incorporation of the Corporation, a series of preferred stock,
par value $0.001 per share ("Preferred Stock") of the Corporation known as 8%
Noncumulative Junior Preferred Stock, Series A, be, and it hereby is, created,
classified, authorized and the issuance thereof provided for, and that the
designation and number of shares, and relative rights, preferences and
limitations thereof, shall be as set forth in the form appended hereto.
Section 1. Designation and Amount.
The shares of this series of Preferred Stock shall be designated as "8%
Noncumulative Junior Preferred Stock, Series A" (herein referred to as the
"Series A Junior Preferred Stock"). The number of shares constituting such
series shall be fixed at Three Thousand Five Hundred Shares (3,500), and cannot
be increased except with the consent of the holders thereof given as provided in
Section 9 hereof. The relative rights, preferences, restrictions and
707096.5
<PAGE>
other matters relating to the Series A Junior Preferred Stock are contained in
this Certificate of Designations.
Section 2. Definitions. As used in this Certificate of Designations,
the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or under common control with
such Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Ampex" means Ampex Corporation, a Delaware corporation and its
successors.
"Annual Dividend Rate" has the meaning set forth in Section 4(a)
hereof.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York, New York are authorized
or obligated by law or executive order to close.
"Capital Stock" means any and all shares, rights to purchase, warrants,
options, participations or other equivalents of or interests (other than
security interests) in (however designated and whether voting or nonvoting)
corporate stock.
"Certificate of Designations" means this Certificate of Designations,
Rights and Preferences establishing the Series A Junior Preferred Stock pursuant
to Section 151 of the General Corporation Law of the State of Delaware, as the
same may be amended, supplemented or modified from time to time in accordance
with the terms hereof and pursuant to applicable law.
"Common Stock" means the Common Stock, par value $0.001 per share, and
all shares hereafter authorized of any class of common stock, of the
Corporation.
"Consolidated Net Income" means, for any period, the aggregate net
income of the Corporation and its Subsidiaries for such period on a consolidated
basis, determined in accordance with generally accepted accounting principles
consistently applied, after provision for all dividends accruing on any
outstanding shares of any other series of Preferred Stock having cumulative
dividend rights ranking prior to the shares of Series A Junior Preferred Stock
provided that there shall be excluded from Consolidated Net Income any charge
during
707096.5
2
<PAGE>
such period representing litigation or other expenses relating to or arising out
of a dispute relating to that certain Acquisition Agreement, dated , 1998, among
Ampex, Ampex Holdings Corporation, a Delaware corporation, and the initial
Holders of the Series A Junior Preferred Stock.
"Default" has the meaning set forth in Section 4(c) hereof.
"Dividend Payment Date" has the meaning set forth in Section 4(a)
hereof.
"Dividend Period" has the meaning set forth in Section 4(a) hereof.
"Holder" means the person in whose name shares of Series A Junior
Preferred Stock are registered on the books of the Corporation.
"Issue Date" means the date of the initial issuance of shares of the
Series A Junior Preferred Stock.
"Junior Stock" means all classes of Common Stock, and any other class
or series of Capital Stock of the Corporation now or hereafter issued and
outstanding that by its terms expressly ranks junior as to dividends and/or upon
liquidation, dissolution or winding up of the Corporation to the Series A Junior
Preferred Stock.
"Liquidation Preference" means, with respect to each share of Series A
Junior Preferred Stock, the sum of $1,000.00 (as adjusted to reflect any stock
dividend, subdivision, reclassification, distribution or similar event relating
to the Series A Junior Preferred Stock).
"Mandatory Redemption Obligation" has the meaning set forth in Section
6(a) hereof.
"Person" means an individual, a corporation, a partnership, a joint
venture, an association, a joint-stock company, a trust, a business trust, a
government or any agency or any political subdivision, any unincorporated
organization, or any other entity.
"Preferred Stock" has the meaning set forth above.
"Redemption Date" means any date on which shares of Series A Junior
Preferred Stock are to be redeemed pursuant to Section 6 hereof.
"Redemption Price" has the meaning set forth in Section 6(a) hereof.
"Subsidiary" means (i) a corporation a majority of the Voting Stock of
which is, at the time, directly or indirectly owned by the Corporation, by a
Subsidiary or Subsidiaries of the Corporation (as the case may be) or by the
Corporation and a Subsidiary or Subsidiaries of the
707096.5
3
<PAGE>
Corporation (as the case may be), or (ii) any other Person (other than a
corporation) in which the Corporation, one or more Subsidiaries of the
Corporation (as the case may be), or the Corporation and one or more of its
Subsidiaries (as the case may be), directly or indirectly, at the date of
determination thereof, has at least majority ownership interest.
"Voting Stock" means, with respect to any Person, all classes of
Capital Stock of such Person then outstanding and normally entitled to vote for
the election of directors of such Person. Any reference to a percentage of
Voting Stock shall refer to the percentage of votes eligible to be cast for the
election of directors which are attributable to the applicable shares of Voting
Stock.
Section 3. Rank. All shares of Series A Junior Preferred Stock shall,
as to payment of dividends and/or as to distributions of assets upon
liquidation, dissolution or winding up of the Corporation, rank (i) junior to,
or on a parity with, as the case may be, any other series of the Preferred Stock
established by the Board of Directors, the terms of which shall specifically
provide that such series shall rank senior to, or on a parity with, as the case
may be, the Series A Junior Preferred Stock with respect to dividend rights
and/or rights on liquidation, dissolution or winding up of the Corporation, and
(ii) prior to all of the Corporation's now or hereafter issued and outstanding
Junior Stock.
Section 4. Dividends.
(a) Payment of Dividends. The Holders of the Series A Junior
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, in its sole discretion, out of funds legally available
therefor, cash dividends at the rate per annum of 8% (the "Annual Dividend
Rate") on the Liquidation Preference.
Dividends on the Series A Junior Preferred Stock declared by the Board
of Directors shall be payable quarterly, in arrears, on March 31, June 30,
September 30, and December 31 of each year commencing September 30, 1998 (each
such date, a "Dividend Payment Date"); provided that if any such date is not a
Business Day, then such dividend shall be paid on the next succeeding Business
Day. Each such dividend shall be payable to Holders of record on the record date
established by the Board of Directors which shall be not more than 60 days prior
to the date fixed for payment thereof. Quarterly dividend periods (each a
"Dividend Period") shall commence on and include the first day of January,
April, July and October of each year and shall end on and include the next
Dividend Payment Date; provided, however, that the first Dividend Period shall
commence on the Issue Date and shall end on and include September 30, 1998. The
amount of dividends payable per share of Series A Junior Preferred Stock for
each full Dividend Period shall be computed by applying the Dividend Rate to the
Liquidation Preference and dividing such amount by four (4)(the "Dividend
Amount"). The Dividend Amount payable for the initial Dividend Period and any
period shorter than a full Dividend Period shall be computed on the basis of
actual days elapsed and a 360-day year consisting of twelve 30-day months.
707096.5
4
<PAGE>
(b) Distribution of Dividend Payments. All payments of
dividends on the Series A Junior Preferred Stock shall be distributed ratably
among the Holders thereof based upon the aggregate number of shares of Series A
Junior Preferred Stock held by each Holder.
(c) Additional Dividends. In the event that (i) the
Corporation shall fail to comply with its obligations under Section 4(d) below,
(ii) the Corporation shall fail to discharge a Mandatory Redemption Obligation
for any reason other than the insufficiency of legally available funds therefor,
or (iii) the Corporation shall fail to comply with any of its obligations under
Section 7 below and such failure shall continue uncured for a period of 30 days
(each such event, a "Default"), then from the date of such Default and so long
as such Default shall continue to exist unwaived or uncured, the Annual Dividend
Rate applicable to the Series A Junior Preferred Stock shall be increased to a
rate per annum of 10% on the Liquidation Preference.
(d) Limitations on Certain Payments. (i) So long as any shares
of Series A Junior Preferred Stock shall be outstanding, the Corporation shall
not declare or pay or set apart for payment any dividends or make any other
distributions on, or make any payment on account of the purchase, redemption,
exchange or other retirement of, any Junior Stock with respect to any Dividend
Period, except any dividend or distribution payable solely in shares of Junior
Stock, or the purchase, redemption, exchange or other retirement of shares of
Junior Stock in exchange solely for shares of Common Stock, unless the
Corporation shall have paid to the Holders of the Series A Junior Preferred
Stock the Dividend Amount with respect to such Dividend Period.
(ii) If at any time the Corporation shall have failed to pay
all dividends which have accrued on any outstanding shares of any other series
of Preferred Stock of the Corporation having cumulative dividend rights ranking
prior to or on a parity with the shares of Series A Junior Preferred Stock at
the times such dividends are payable, no cash dividends shall be declared by the
Board of Directors or paid or set apart for payment by the Corporation on any
shares of the Series A Junior Preferred Stock unless prior to or concurrently
with such declaration, payment or setting apart for payment, all accrued and
unpaid dividends on all outstanding shares of such other series of Preferred
Stock shall have been or be declared, paid or set apart for payment.
Section 5. Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
the holders of the Series A Junior Preferred Stock shall be entitled to receive
out of assets of the Corporation available for distribution to shareholders an
amount equal to all declared and unpaid dividends on such shares plus a sum
equal to the Liquidation Preference for each share of Series A Junior Preferred
Stock then held by them, before any payment shall be made or any assets
distributed to the holders of Junior Stock, provided, however, that the Holders
of outstanding shares of the Series A Junior Preferred Stock shall not be
entitled to receive such liquidation payment until the liquidation payments on
all outstanding shares of any other series of the Preferred
707096.5
5
<PAGE>
Stock having liquidation rights ranking prior to the shares of the Series A
Junior Preferred Stock shall have been paid in full. If the assets and funds
thus distributed among the holders of the Series A Junior Preferred Stock shall
be insufficient to permit the payment to such holders of the full preferential
amount described above, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed among the holders of the
Series A Junior Preferred Stock in proportion to the shares of Series A Junior
Preferred Stock then held by them before any distribution is made to holders of
Junior Stock and until such holders have received such full preferential amount.
The consolidation or merger of the Corporation with another entity shall not be
deemed a voluntary liquidation or involuntary liquidation, dissolution or
winding up of the Corporation and shall not give rise to any right provided for
in this Section 5.
Section 6. Redemption.
(a) Mandatory Redemption. The Corporation shall redeem, out of
funds legally available therefor, outstanding shares of Series A Junior
Preferred Stock, at a price per share in cash equal to 100% of the Liquidation
Preference thereof plus all declared but unpaid dividends on such shares (the
"Redemption Price"), (i) annually, on each March 31, commencing on March 31,
2000, and ending on the earlier of March 31, 2003 or the date that all shares of
Series A Junior Preferred Stock have been so redeemed, but only to the extent of
50% of Consolidated Net Income of the Corporation for the fiscal year ending on
the December 31 next preceding the applicable redemption date less the sum of
(x) all dividends actually declared and paid on the Series A Junior Preferred
Stock during such period plus (y) all optional redemption payments thereon made
pursuant to Section 6(b) hereof during such period, and (ii) on March 31, 2004,
shall redeem any and all remaining shares of Series A Junior Preferred Stock to
the extent of 100% of cumulative Consolidated Net Income of the Corporation for
the period from January 1, 1999 to December 31, 2003 (treated as a single
accounting period and giving effect to any deficit in Consolidated Net Income
recorded in such period). If the Corporation shall fail at any time to discharge
its obligation to redeem shares of Series A Junior Preferred Stock pursuant to
this Section 6 (a) (a "Mandatory Redemption Obligation"), the Corporation shall
discharge such Mandatory Redemption Obligation as soon as the Corporation is
legally able to do so. If and for so long as any Mandatory Redemption Obligation
shall not fully be discharged, the Corporation shall not (except out of shares
of Junior Stock), directly or indirectly, purchase, redeem or discharge any
mandatory redemption, sinking fund or other similar obligation in respect of, or
declare or pay any dividend or make any distribution on, any Preferred Stock
ranking on a parity with the Series A Junior Preferred Stock with respect to
dividends and/or rights upon liquidation, dissolution or winding up of the
Corporation or any Junior Stock .
(b) Optional Redemption. The Corporation may, at its option on
any date set by the Board of Directors, redeem, out of funds legally available
therefor, shares of Series A Junior Preferred Stock in whole at any time or in
part from time to time, for an amount in cash equal to the Redemption Price.
Notwithstanding the foregoing, the Corporation shall not
707096.5
6
<PAGE>
redeem less than all outstanding shares of Series A Junior Preferred Stock until
all declared and unpaid dividends on all outstanding shares of Series A Junior
Preferred Stock shall have been or shall concurrently be paid in full.
(c) Procedures for Redemption.
(i) If fewer than all outstanding shares of Series
A Junior Preferred Stock are to be redeemed, the number of shares of
Series A Junior Preferred Stock to be redeemed from each Holder thereof
shall be the number of shares determined by multiplying the total
number of shares of Series A Junior Preferred Stock to be redeemed by a
fraction, the numerator of which shall be the total number of shares of
Series A Junior Preferred Stock held by such Holder and the denominator
of which shall be the total number of shares of Series A Junior
Preferred Stock then outstanding. Upon surrender of a stock certificate
evidencing shares of Series A Junior Preferred Stock that are redeemed
in part, the Corporation shall issue and deliver or cause to have
issued and delivered to a Holder (at the Corporation's expense) a new
stock certificate evidencing the unredeemed shares.
(ii) At least 30 days but not more than 60 days
before the applicable Redemption Date, the Corporation or, at the
Corporation's request, the Corporation's transfer agent (the "Transfer
Agent"), shall mail a notice of redemption by first-class mail postage
prepaid to each Holder, addressed to each such Holder at its last
address shown on the stock transfer books of the Corporation. Such
notice shall identify the shares of Series A Junior Preferred Stock to
be redeemed and shall, among other things, state:
(A) the Redemption Date;
(B) the Redemption Price;
(C) that the shares of Series A Junior
Preferred Stock called for redemption must be surrendered to
the Corporation to collect the Redemption Price;
(D) if fewer than all of the outstanding shares
of Series A Junior Preferred Stock are to be redeemed,
the identification and amounts of the shares of Series A
Junior Preferred Stock to be redeemed, and that after the
applicable Redemption Date, upon surrender of the stock
certificate or certificates evidencing such shares, a new
stock certificate equal to the unredeemed portion will be
issued; and
707096.5
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<PAGE>
(E) the section of the Certificate of
Designation pursuant to which the shares of Series A Junior
Preferred Stock called for redemption are being redeemed.
Failure to give notice or any defect in the notice to any
Holder shall not affect the validity of the notice given to
any other Holder.
(iii) No later than one Business Day prior to the
applicable Redemption Date, the Corporation shall deposit with the
Transfer Agent funds sufficient to pay the Redemption Price for all
shares of Series A Junior Preferred Stock to be redeemed.
(iv) As long as the Corporation has complied with
the requirements set forth in this Section 6(c), from and after the
applicable Redemption Date, shares of Series A Junior Preferred Stock
so redeemed shall be cancelled and shall no longer be deemed to be
outstanding, and, to the extent the Holders thereof no longer hold any
Capital Stock, all rights of such Holders as stockholders of the
Corporation (except the right to receive from the Corporation the
Redemption Price) shall cease.
Section 7. Certain Covenants.
(a) The Corporation shall not and shall not permit any
Subsidiary to enter into any transaction or series of related transactions
(including the purchase, sale, lease, exchange of any property or the rendering
of any service but excluding the payment of reasonable compensation or the grant
of stock options to, or similar compensatory transactions with, officers and
directors of the Corporation or a Subsidiary in the ordinary course of business
or the payment of any dividend or distribution on shares of Capital Stock not
otherwise prohibited by any of the terms of this Certificate of Designations)
having a total value in excess of $50,000 per transaction or series of related
transactions with any Affiliate (other than a wholly-owned Subsidiary), unless
the terms of such transaction or series of transactions are at least as
favorable to the Corporation or such Subsidiary as terms that would be
reasonably obtainable at the same time for a comparable transaction or series of
similar transactions in arm's length dealings with an unrelated third person as
reasonably determined in good faith by the Board of Directors, provided that the
foregoing shall not prohibit (i) the payment by the Corporation or any
Subsidiary of amounts due to its parent corporation under a tax consolidation
agreement on a separate return basis, (ii) payment by the Corporation or any
Subsidiary to an Affiliate of reasonable charges for services or facilities
provided by such Affiliate or (iii) the payment of dividends on shares of
Preferred Stock of the Corporation at a rate not exceeding 8% per annum of the
liquidation preference thereof or the payment of interest on debt securities of
the Corporation at a rate not exceeding 12% per annum.
707096.5
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(b) The Corporation shall at all times perform its obligations
under this Certificate of Descriptions in good faith with due regard to its
obligations to the Holders of the Series A Junior Preferred Stock .
Section 8. Voting Rights of Preferred Stock.
(a) General. Except as set forth in this Section 9 or as is
otherwise required by law, the shares of Series A Junior Preferred Stock shall
have no voting rights, and consent of the Holders of Series A Junior Preferred
Stock shall not be required for taking any corporate action. In connection with
any right to vote, each Holder of a share of Series A Junior Preferred Stock
shall have one vote for each share held. Any shares of Series A Junior Preferred
Stock owned, directly or indirectly, by the Corporation or any of its
Subsidiaries shall not have voting rights hereunder and shall not be counted in
determining the presence of a quorum.
(b) Certain Amendments. So long as any shares of Series A
Junior Preferred Stock remain outstanding:
(i) the affirmative vote of the Holders of 100% of
the outstanding shares of Series A Junior Preferred Stock, voting
together as a separate class, shall be required in order to change (A)
the amount of the Liquidation Preference or the dividend rate of, or
any provision of Section 4 hereof relating to the calculation of the
dividend on, the Series A Junior Preferred Stock, or (B) any provision
of subsection 6(a) or subsection 6(b) hereof adversely affecting the
rights of Holders of Series A Junior Preferred Stock or this Section 8;
and
(ii) the affirmative vote of the Holders of at least
51% of the outstanding shares of Series A Junior Preferred Stock,
voting together as a separate class, shall be required in order to (A)
increase the authorized number of shares of Series A Junior Preferred
Stock or reclassify the Series A Junior Preferred Stock, or to amend,
alter or repeal any of the provisions of the Restated Certificate of
Incorporation of the Corporation, as amended to date, or this
Certificate of Designations, so as to adversely affect any right,
preference or voting power of the holders of Series A Junior Preferred
Stock.
The foregoing voting provisions shall not apply if,
at or prior to the time when the action with respect to which such vote would
otherwise be required to be effected, all outstanding shares of Series A Junior
Preferred Stock shall have been redeemed or notice of redemption shall have been
provided and sufficient funds (and, if applicable, shares of Ampex Common Stock)
shall have been delivered to the Transfer Agent to effect such redemption.
Section 9. Transfers; Replacement of Certificates.
(a) Transfers. Subject to any restrictions on transfer under
applicable securities or other laws, shares of Series A Junior Preferred Stock
may be transferred on the books of
707096.5
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the Corporation by the surrender to the Corporation of the certificate therefor
properly endorsed or accompanied by a written assignment and power of attorney
properly executed, with transfer stamps (if necessary) affixed, and such proof
of the authenticity of signature as the Corporation or the Transfer Agent may
reasonably require.
(b) Replacement of Certificates. If any mutilated certificate
representing shares of Series A Junior Preferred Stock is surrendered to the
Corporation, or if a Holder claims the certificate representing shares of Series
A Junior Preferred Stock has been lost, destroyed or willfully taken, the
Corporation shall issue a replacement certificate of like tenor and date if (i)
the Holder provides an indemnity bond or other security sufficient, in the
reasonable judgment of the Corporation, to protect the Corporation and any
authenticating agent and any of their officers, directors, employees or
representatives from any loss which any of them may suffer if a certificate
representing shares of Series A Junior Preferred Stock is replaced, and (ii) the
Holder satisfies any other reasonable requirements of the Corporation.
Section 10. Reacquired Shares. Any shares of Series A Junior Preferred
Stock which are purchased, redeemed or otherwise acquired by the Corporation,
shall be retired and canceled by the Corporation promptly thereafter. No such
shares shall upon their cancellation be reissued.
707096.5
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IN WITNESS WHEREOF, Micronet Technology, Inc. has caused this
Certificate of Designations to be duly signed by , its Vice President, and
attested by , its Assistant Secretary, this ____ day of __________, 1998.
MICRONET TECHNOLOGY, INC.
By:____________________________
Title: Vice President
Attest:
By:____________________________
Title: Assistant Secretary
707096.5
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<PAGE>
EXHIBIT C
ESCROW AGREEMENT
C-1
<PAGE>
EXHIBIT C
ESCROW AGREEMENT
ESCROW AGREEMENT, dated June , 1998, by and among AMPEX HOLDINGS
CORPORATION, a Delaware corporation ("Buyer"), AMPEX CORPORATION, a Delaware
corporation ("Parent"), each of the shareholders named below ("Sellers"), and
IBJ SCHRODER BANK & TRUST COMPANY, as escrow agent (the "Escrow Agent").
Concurrently herewith, pursuant to an Acquisition Agreement, dated June
, 1998 (the "Acquisition Agreement"), by and among Buyer, Parent, and Sellers,
Buyer is purchasing all of the issued and outstanding shares of common stock of
MicroNet Technology, Inc., a Delaware corporation (the "Company") owned by
Sellers. Except as defined herein, all capitalized terms used herein shall have
the same meanings ascribed to them in the Acquisition Agreement.
This Escrow Agreement is being entered into pursuant to Section 2(a) of
the Acquisition Agreement for the purpose of securing to Buyer the right to be
indemnified by Sellers from and against claims against the Company (hereinafter,
"Claims") in accordance with the terms and conditions set forth in this Escrow
Agreement and Section 11 of the Acquisition Agreement.
In consideration of the execution of the Acquisition Agreement and the
agreements and covenants contained herein, Sellers, Parent and Buyer agree, and
in consideration of the agreements and covenants contained herein, the Escrow
Agent agrees, as follows:
705573.6
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I. ESCROWED FUND
1.01 Concurrently with the execution of this Escrow Agreement, Buyer is
delivering to the Escrow Agent [____] shares of Parent's Class Common Stock (the
"Class A Stock") and 3,500 shares of the 8% Noncumulative Junior Preferred
Stock, Series A (the "Preferred Stock" and, collectively with the shares of
Class A Stock, the "Shares") of the Company (the "Escrowed Fund"), the receipt
of which is hereby acknowledged by the Escrow Agent.
1.02 Subject to the provisions of this Escrow Agreement, the Escrow
Agent will from time to invest all cash proceeds held in the Escrow Fund
(including, without limitation, dividends and other distributions received on or
in respect of the Shares ("the "Escrowed Income") in such direct obligations of
the United States Government, or in certificates of deposit issued by the Escrow
Agent or any United States bank or trust company having a combined capital and
surplus of at least $100,000,000, as Sellers shall instruct, provided, however,
that the Escrow Agent shall not be required to invest or reinvest the Escrowed
Income if such amount to be invested or reinvested is less than $25,000.
Upon delivery of any Shares pursuant to this Escrow Agreement, the
recipient thereof shall also receive a portion of the Escrowed Income determined
by multiplying the then existing Escrowed Income by a fraction the numerator of
which equals the number of such Shares delivered and the denominator of which
equals the total of all Shares then held in the Escrowed Fund.
1.03 Sellers and Buyer and the Escrow Agent agree that the Escrow Agent
will hold the Escrowed Fund in its possession, under the provisions of this
Escrow Agreement, until authorized hereunder to deliver the Escrowed Fund or any
specified portion thereof as follows:
705573.6
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<PAGE>
(a) In the event that, and from time to time but on or prior
to June 30, 2000 (the "Last Claim Date"), Buyer reasonably determines that a
Claim is or may be chargeable against the Escrowed Fund, Buyer will promptly
notify the Escrow Agent and Sellers in writing of the Claim, identifying such
Claim with reasonable specificity based on the information then available to
Buyer, and stating the amount or a reasonably estimated amount thereof and the
manner in which such amount is to be delivered to Buyer and under which Section
of the Acquisition Agreement the Claim is being made. Promptly upon receipt by
the Escrow Agent of the notice of Buyer of the existence of a Claim, the Escrow
Agent shall notify Sellers thereof, and unless the Escrow Agent receives notice
from Sellers pursuant to Section 1.03(c) hereof within a thirty day period
following the giving by the Escrow Agent of such notice (which period shall
exclude the day Escrow Agent sends notice to Sellers but include the thirtieth
day) (the "Thirty Day Notice Period"), the Escrow Agent will release and deliver
to Buyer that portion of the Escrowed Fund equal to a number of shares of Class
A Stock from the Escrowed Fund determined by dividing the amount of the Claim by
the Closing Stock Price (as defined below), or if there are no remaining shares
of Class A Stock in the Escrowed Fund, a number of shares of Preferred Stock
determined by dividing the amount of the Claim by $1,000. The term "Closing
Stock Price" shall mean the average of the closing prices of the Class A Stock
as reported on the American Stock Exchange for the five business day period
ending on the second business day before the date of determination.
(b) Notwithstanding anything to the contrary herein, none of
the Escrowed Fund will be released and delivered to Buyer pursuant to any Claim
except to the extent that
705573.6
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<PAGE>
the aggregate amount of all Claims exceeds the sum of $50,000 (the "Basket
Amount"), and then only to the extent of such excess.
(c) Sellers will have the right to reasonably dispute the
asserted Claim by delivering to the Escrow Agent, within the Thirty Day Notice
Period, written notice that it disputes the matters set forth in such notice
from Buyer either with respect to the validity or the amount of the Claim in
question. Such notice shall describe with reasonable specificity based on the
information then available to Sellers, the basis of Sellers' dispute. Upon
receipt of such notice from Sellers, the Escrow Agent shall set aside in a
separate fund (the "Disputed Fund") the Shares which it would have delivered to
Buyer had such notice from Sellers not been received. The Escrow Agent shall
distribute the Shares held in the Disputed Fund only upon delivery of, and in
accordance with, joint written notice of Sellers and Buyer providing
instructions therein.
(d) Sellers and Buyer hereby agree that, unless otherwise
agreed to by Sellers and Buyer, upon obtaining a Final Determination (as
hereinafter defined) with respect to any dispute concerning Shares held in the
Disputed Fund, Sellers and Buyer shall promptly deliver joint written notice to
the Escrow Agent instructing the Escrow Agent to release such Shares in
accordance with the terms of said Final Determination. The term "Final
Determination" shall mean a settlement between Buyer and Sellers, entry of a
final order, decree or judgment by a court of competent jurisdiction in the
United States of America (the time for appeal therefrom having expired and no
appeal having been perfected), or consent to entry of any judgment concerning a
Claim. If, in accordance with the terms of the Final Determination any Shares to
be released from the Disputed Fund are not to be delivered to
705573.6
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<PAGE>
Buyer, Sellers and Buyer shall deliver written notice to the Escrow Agent
instructing the Escrow Agent to cause such Shares to be held in the Escrowed
Fund until released pursuant to this Section 1.03; provided, however, that, at
the time of such release of Shares from the Disputed Fund which are not to be
delivered to Buyer, if there are outstanding any Claims, made in a timely manner
hereunder, which are not secured by the Disputed Fund, the joint written notice
of Sellers and Buyer shall instruct the Escrow Agent to retain Shares in the
Escrowed Fund necessary to secure such outstanding Claim. In the event that
either party shall refuse to deliver such written notice to the Escrow Agent
within fifteen days following the receipt of a final order, decree or judgment
by a court of competent jurisdiction in the United States of America, the Escrow
Agent shall be entitled to act on the basis of such final order, decree or
judgment duly authenticated by such court.
(e) If the Shares necessary to satisfy any disputed Claim,
that has been ultimately determined pursuant to a Final Determination in the
manner herein provided, is in excess of the Shares held in the Disputed Fund
with respect thereto, additional Shares necessary to satisfy such Claim shall be
delivered from the Escrowed Fund to Buyer. However, in the absence of sufficient
Shares in the Escrowed Fund, no additional Shares shall be paid by Sellers to
Buyer.
(f) On September 30, 1998 (or such later date as the Adjusted
Closing Date Balance Sheet shall have been finally determined in accordance with
Section 12 of the Acquisition Agreement), the Escrow Agent shall release and
deliver to Sellers [insert a number of shares of Class A Stock equal to one-half
of the shares issued to Sellers pursuant to Section 1(a) of the Acquisition
Agreement] reduced by (i) the number of shares of Class A Stock, if
705573.6
5
<PAGE>
any, theretofore released to Buyer in satisfaction of any Claim in accordance
with this Agreement and (ii) the number of shares of Class A Stock, if any, then
held in the Disputed Fund. On March 31, 1999, the Escrow Agent shall release and
deliver to Sellers all shares of Preferred Stock then held in the Escrowed Fund
(except for shares of Preferred Stock, if any, then held in the Disputed Fund).
Shares released and delivered to Sellers shall thereafter no longer be subject
to any claims by Buyer. Any Shares from the Disputed Fund not released and
delivered to Buyer after the Final Determination pursuant thereto shall be
released and delivered to Sellers on the Last Claim Date.
(g) On the Last Claim Date, the Escrow Agent shall deliver to
Sellers the Shares remaining in the Escrowed Fund, except for such amounts
relating to Claims with respect to which Buyer has given notice to the Escrow
Agent and to Sellers as provided in Section 1.03(a) hereof and any Shares held
in the Disputed Fund. With respect to any Claims that are not resolved as of the
Last Claim Date, the provisions of this Escrow Agreement shall continue in full
force and effect and govern the rights of the parties with respect to all such
Claims, except that on the date of any Final Determination regarding Claims for
which amounts are held in the Disputed Fund, to the extent that any dispute is
resolved in favor of Buyer as provided in Article II hereof, the Shares held in
the Disputed Fund shall be distributed to Buyer and to the extent that any
dispute is resolved in favor of Sellers as provided in Article II hereof, the
Shares held in the Disputed Fund shall be distributed to Sellers. If after the
Final Determination of all Claims, any amounts remain in the Escrowed Fund or in
the Disputed Fund, such Shares shall be distributed to Sellers as soon
thereafter as practicable.
705573.6
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<PAGE>
1.04 This Escrow Agreement shall remain in full force and effect until,
and shall terminate upon, the release of all amounts held in the Escrowed Fund
pursuant to Section 1.03 hereof.
1.05 Shares held in the Escrowed Fund may be voted by the registered
holders thereof until delivered to Buyer pursuant to this Escrow Agreement.
1.06 Buyer and Parent agree that at any time and from time to time
after the second anniversary of the Closing, Sellers may, upon not less than 10
business days' written notice to the Escrow Agent and Buyer, substitute for the
Shares then held in the Escrowed Fund, including any Shares in the Disputed
Fund, collateral of a type constituting permissible investments under Section
1.02 hereof. Any such collateral shall have an aggregate principal amount,
valued at the lower of cost or market on the business day preceding the date of
substitution, of not less than the total of the Closing Stock Price multiplied
by the number of Shares being withdrawn by Sellers. All questions concerning the
valuation of substitute collateral, and the form and methods of effectuating
such substitution shall be determined in the reasonable judgment of Buyer.
II. SETTLEMENT OF DISPUTES.
Any dispute which may arise with respect to the Escrowed Fund shall be
settled either by mutual agreement of the parties concerned (evidenced by
appropriate instructions in writing to the Escrow Agent signed by the parties
concerned) or by entry of a final order, decree or judgment by a court of
competent jurisdiction in the United States of America (the time for appeal
therefrom having expired and no appeal having been perfected). Subject to the
provisions of Section 4.07 hereof, Sellers, on the one hand, and Buyer, on the
other hand,
705573.6
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<PAGE>
shall each bear all of the fees and expenses incurred by it in resolving any
dispute arising under this Agreement. The Escrow Agent shall be under no duty to
institute or defend any such proceedings and none of the costs and expenses of
any such proceeding shall be borne by the Escrow Agent. Prior to the settlement
of any dispute as provided in this Article II, the Escrow Agent is authorized
and directed to retain in its possession, without liability to anyone, such
portion of the Escrowed Fund, including the Disputed Fund, which is the subject
of or involved in the dispute.
III. CONCERNING THE ESCROW AGENT.
3.01 The Escrow Agent shall be entitled to reasonable compensation for
its services hereunder and shall be reimbursed for all reasonable expenses,
disbursements and advances (including reasonable attorneys' fees and expenses)
incurred or made by it in performance of its duties hereunder. Buyer and Sellers
shall each pay one-half of all such reasonable compensation, disbursements,
expenses and advances, which, until so paid, will constitute, along with any
amounts due under Section 3.04 hereof, a first lien against the Escrowed Fund.
3.02 The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving notice of such resignation to Sellers and Buyer
specifying a date (not less than 30 days after the giving of such notice) when
such resignation shall take effect. Promptly after such notice, Sellers and
Buyer shall appoint a successor escrow agent, such successor escrow agent to be
the Escrow Agent hereunder upon the resignation date specified in such notice.
If Sellers and Buyer are unable to agree upon a successor escrow agent within 30
days after such notice, the Escrow Agent shall be entitled to either appoint its
successor or, at the joint and several expense of Sellers, on the one hand, and
Buyer, on the other hand, petition
705573.6
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<PAGE>
any court of competent jurisdiction to appoint its successor. The Escrow Agent
shall continue to serve until its successor accepts the escrow and receives the
Escrowed Fund. Sellers and Buyer may agree at any time to substitute a new
escrow agent by giving 15 days' notice thereof to the Escrow Agent then acting.
The Escrow Agent and any successor thereto appointed hereunder shall be a bank
or trust company located in New York, New York which has a combined capital and
surplus of at least $100,000,000.
3.03 The Escrow Agent undertakes to perform only such duties as are
specifically set forth herein, and specifically with respect to Section 1.02
hereof shall have no responsibility thereunder other than to invest the Escrowed
Fund held hereunder in the amounts and as specified in the instructions provided
for therein. The Escrow Agent, acting or refraining from acting in good faith,
shall not be liable for any mistake of fact or error of judgment by it or for
any acts or omissions by it of any kind unless caused by willful misconduct or
gross negligence, and shall be entitled to rely, and shall be fully protected in
doing so, upon (i) any written notice, instrument or other document provided for
herein or signature believed by it to be genuine and to have been signed or
presented by the proper party or parties duly authorized to do so, and (ii) the
advice of counsel (which may be of the Escrow Agent's own choosing, but shall
not be counsel to any other party hereto). The Escrow Agent shall not be liable
either for any lost interest on the Escrowed Fund which results from the failure
of Sellers to provide adequate instruction pursuant to Section 1.02 hereof or
for any loss incurred in connection with the investment of the Escrowed Fund
pursuant to instruction of Seller or, as provided in Section 1.02 hereof,
changes in investments which are necessary to make distributions of the Escrowed
Fund.
705573.6
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<PAGE>
3.04 Sellers, on the one hand, and Buyer, on the other hand, agree
jointly and severally to indemnify the Escrow Agent and hold it harmless against
any and all losses, liabilities, expenses (including attorney's fees and
expenses, claims, or demands (collectively, "Losses") arising out of or in
connection with the performance of its obligations in accordance with the
provisions of this Agreement, except for Losses resulting from the gross
negligence or willful misconduct of the Escrow Agent. The foregoing
indemnification shall survive the resignation of the Escrow Agent or the
termination of this Agreement.
IV. MISCELLANEOUS
4.01 This Agreement will be binding upon, inure to the benefit of, and
be enforceable by the respective beneficiaries, representatives, successors and
permitted assigns of the parties hereto, but neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except
with respect to the Escrow Agent as provided in Article III hereof.
4.02 This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof, and may be amended only by a written
instrument duly executed by Sellers, Buyer and the Escrow Agent.
4.03 All notices, claims, requests, demands and other communications
hereunder shall be in writing and shall be given as follows:
If to Buyer or Parent:
Ampex Corporation
500 Broadway
Redwood City, California 94063
Attention: General Counsel
705573.6
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<PAGE>
Copy to:
Battle Fowler LLP
75 East 55 Street
New York, New York 10022
Attention: David D. Griffin, Esq.
If to Sellers:
Kibel, Green Inc.
2001 Wilshire Boulevard, Suite 420
Santa Monica, California 90403
Attention: Adam Michelin
Copy to:
Troop Meisinger Steuber & Pasich, LLP
10940 Wilshire Boulevard
Los Angeles, California 90024
Telecopier No. (310) 443-8569
Attention: Scott Alderton, Esq.
If to the Escrow Agent:
IBJ Schroder Bank & Trust Company
One State Street Plaza - 11th Floor
New York, NY 10004
Attention: Corporate Trust & Agencies Dept.
or to such other address as the persons to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth below,
provided that notices of changes of address shall only be effective upon
receipt. A notice given in accordance with the preceding sentence shall be
deemed to have been duly given if personally delivered or on the date of receipt
or refusal indicated on the return receipt if delivered or mailed (registered or
certified mail, postage prepaid, return receipt requested). Any notice delivered
by Sellers or
705573.6
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<PAGE>
Buyer to the Escrow Agent pursuant hereto shall be executed by the President,
any Vice President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of said party. Sellers, on the one hand, and Buyer, on the
other hand, shall be obligated to deliver to the other party a copy of each
notice delivered to the Escrow Agent hereunder concurrently with the delivery of
such notice to the Escrow Agent. The Escrow Agent shall be required to give each
of Sellers and Buyer at least forty-eight hours' written notice prior to the
release of any portion of the Escrowed Fund to any party hereunder.
4.04 Adam Michelin is hereby appointed the agent (the "Sellers' Agent")
of the Sellers for the purposes of receiving all notices, giving all notices,
giving all approvals and doing all other things and exercising all other rights
of the Sellers hereunder. If at any time while this Escrow Agreement is still in
effect, the Sellers' Agent (including any successor thereto) should cease to act
as Sellers' Agent for any reason, then a substitute agent (the "Substitute
Sellers' Agent") shall immediately become the Sellers' Agent without further
action by the Sellers and the Sellers shall promptly appoint a new Substitute
Sellers' Agent by an instrument in writing delivered to Buyer and the Escrow
Agent. [ ] is hereby appointed the initial Substitute Sellers' Agent. Sellers
and the Escrow Agent may continue to deal with said Sellers' Agent until Sellers
have received notice that he has ceased so to act and that the Substitute
Sellers' Agent is then acting. Buyer and the Escrow Agent are entitled to rely
upon any agreement, certificate or other notice from the Sellers' Agent as being
binding upon the Sellers.
705573.6
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<PAGE>
4.05 This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without regard to its
conflicts of law rules.
4.06 This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
4.07 Article headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
4.08 The Escrow Agreement Terms and Conditions are attached hereto as
Exhibit A and are made a part hereof.
[END OF TEXT]
705573.6
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<PAGE>
IN WITNESS WHEREOF, this Escrow Agreement has been duly executed and
delivered by and on behalf of Sellers, Buyer, Parent and the Escrow Agent on the
date first above written.
AMPEX HOLDINGS CORPORATION
By:-------------------------------------
Title: Vice President
AMPEX CORPORATION
By:-------------------------------------
Title: Vice President
SELLERS:
----------------------------------
Name:
----------------------------------
Name:
----------------------------------
Name:
705573.6
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<PAGE>
Exhibit A
ESCROW AGREEMENT
TERMS AND CONDITIONS
These following Terms and Conditions are incorporated into and form a part of
the Escrow Agreement to which this Exhibit A is attached, as entered into by and
among IBJ Schroeder Bank & Trust Company, a banking corporation organized under
the laws of the State of New York (the "Escrow Agent"), Ampex Holdings
Corporation, a Delaware corporation ("Buyer"), Ampex Corporation, a Delaware
corporation ("Parent" and, together with Buyer, "Ampex"), and each of the
selling shareholders named in the Escrow Agreement ("Sellers").
A. It is understood and agreed that the duties of the Escrow
Agent are purely ministerial in nature. It is further agreed
that:
1. the Escrow Agent shall not be responsible for the
performance of Ampex or Sellers under this Escrow
Agreement or any other agreement;
2. the Escrow Agent may conclusively rely and shall be
protected in acting or refraining from acting upon
any document, instrument, certificate, instruction or
signature believed by it to be genuine and may assume
and shall be protected in assuming that any person
purporting to give any notice or instructions in
accordance with this Escrow Agreement or in
connection with any transaction to which this Escrow
Agreement relates has been duly authorized to do so.
The Escrow Agent shall not be obligated to make any
inquiry as to the authority, capacity, existence or
identity of any person purporting to have executed
any such document or instrument or have made any such
signature or purporting to give any such notice or
instructions;
3. in the event any party to this agreement instructs
the Agent to disburse funds from the Escrow to any
party other than Ampex or Sellers (i) the Agent shall
disburse such funds by mailing a check to such party
at the address set forth in the instruction; or (ii)
if the Agent is instructed to transfer funds from the
Escrow to any bank for the account of any other
party, the Escrow Agent may refuse to comply unless
the Escrow Agent can verify to its satisfaction that
the instruction is authentic and correct or the party
issuing the instruction has previously agreed to
other appropriate security procedures relating
thereto;
4. the Escrow Agent undertakes to perform only such
duties as are expressly set forth in the Escrow
Agreement and shall not be bound in any way by any
agreement between Ampex and Sellers (whether or not
the Escrow Agent has knowledge thereof);
705573.6
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5. the Escrow Agent shall not be liable for any action
taken by it in good faith and believed by it to be
authorized or within the rights or powers conferred
upon it by the Escrow Agreement, and may consult with
counsel of its own choice and shall have full and
complete authorization and protection for any action
taken or suffered by it hereunder in good faith and
in accordance with the opinion of such counsel; and
6. the Escrow Agent shall not assume any responsibility
or liability for the completeness, correctness or
accuracy of the Escrow or for any transactions
between Ampex and Sellers.
B. Ampex and Sellers agree to indemnify the Escrow Agent, its
directors, officers, agents and employees and any person who
"controls" the Escrow Agent within the meaning of Section 15
of the Securities Act of 1933, as amended (collectively the
"Indemnified Parties") against, and hold them harmless from,
any and all loss, liability, cost, damage and expense,
including, without limitation, costs of investigation and
reasonable counsel fees and expenses, which any of the
Indemnified Parties may suffer or incur by reason of any
action, claim or proceeding brought against any of the
Indemnified Parties, arising out of or relating in any way to
this Escrow Agreement or any transaction to which this Escrow
Agreement relates, other than any action, claim or proceeding
resulting from the gross negligence or willful misconduct of
such Indemnified Party. The provisions of this paragraph shall
survive the termination of this Escrow Agreement.
C. This Escrow Agreement may be altered, amended or terminated
only with the written consent of Ampex, Sellers and the Escrow
Agent. Should Ampex and Sellers attempt to change this Escrow
Agreement in a manner which, in the Escrow Agent's sole
opinion, is undesirable, the Escrow Agent may resign as Escrow
Agent upon two weeks' written notice to Ampex and Sellers;
otherwise, notwithstanding any provision hereof to the
contrary, it may resign as Escrow Agent at any time upon 60
days' written notice to Ampex and Sellers.
In the case of the Escrow Agent's resignation, its only duty
shall be to hold and dispose of the Escrow in accordance with
the original provisions of this Escrow Agreement until a
successor Escrow Agent shall be appointed by Ampex and Sellers
and a written notice of the name and address of such successor
escrow agent shall be given to the Escrow Agent by Ampex and
Sellers, whereupon the Escrow Agent's only duty shall be to
turn over, in accordance with the written instructions of
Ampex and Sellers, to the successor escrow agent the Escrow.
In the event that a successor escrow agent shall not have been
appointed and the Escrow Agent shall not have turned over to
the successor escrow agent the Escrow within the time
705573.6
<PAGE>
periods specified above, of the Escrow Agent's written notice
of resignation, as the case may be, the Escrow Agent may
deposit the Escrow with the Clerk of the United States
District Court for the Southern District of New York or with
the clerk or registry of any other court of competent
jurisdiction, at which time the Escrow Agent's duties
hereunder shall terminate.
D. The Escrow Agent shall be entitled to an acceptance fee of
$____________ upon execution of this Escrow Agreement. In
addition, the Escrow Agent shall receive a fee of
$____________ per year, or part thereof (payable in advance)
as well as reasonable expenses incurred in connection with the
preparation or performance of this Escrow Agreement,
including, but not limited to, reasonable counsel fees.
E. This Escrow Agreement shall be binding upon the parties hereto
and their respective successors and assigns; provided,
however, that any assignment or transfer by any party of its
rights under this Escrow Agreement or with respect to the
Escrow shall be void as against the Escrow Agent unless:
1. written notice thereof shall be given to the Escrow
Agent; and
2. the Escrow Agent shall have consented, in writing, to
such assignment or transfer.
705573.6
<PAGE>
SCHEDULE A
Upon receipt of disbursement instructions from Ampex directing the Escrow Agent
to release Shares or disburse amounts from the Escrow Funds, the Escrow Agent
will confirm the instructions set forth in such notice with one of the
authorized individual(s) listed below at an authorized telephone number
appearing opposite such individual's name:
Authorized Individual(s) Authorized Telephone
of the Ampex Numbers(s)
------------------------ --------------------
Edward J. Bramson 212-759-6301
Craig L. McKibben 212-759-6301
David D. Griffin 212-856-7076
705573.6
<PAGE>
SCHEDULE B
Upon receipt of disbursement instructions from the Sellers directing the Escrow
Agent to release Shares or disburse amounts from the Escrow Funds, the Escrow
Agent will confirm the instructions set forth in such notice with one of the
authorized individual(s) listed below at an authorized telephone number
appearing opposite such individual's name:
Authorized Individual(s) Authorized Telephone
of the Sellers Numbers(s)
----------------------- ---------------------
Adam Michelin 310-829-0255
Scott Alderton, Esq. 310-443-7569
705573.6
<PAGE>
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
D-1
713283.7
<PAGE>
Exhibit D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated July 15, 1998, among AMPEX
CORPORATION, a Delaware corporation ("Parent"), and the shareholders named below
("Sellers").
This Registration Rights Agreement is being entered into pursuant to
Section 2 (b) of an Acquisition Agreement, dated June 24, 1998 (the "Acquisition
Agreement"), among Parent, Ampex Holdings Corporation, a Delaware corporation
("Buyer) and Sellers, pursuant to which Buyer is purchasing from Sellers all the
issued and outstanding shares of Common Stock of MicroNet Technology, Inc., a
Delaware corporation (the "Company") in exchange for, among other consideration,
$720,000 shares (the "Shares") of Class A Common Stock, par value $0.01 per
share, of Parent, in order to provide for the registration of the Shares with
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act").
In consideration of the execution of the Acquisition Agreement and the
agreements and covenants contained herein, Parent agrees with Sellers, for the
benefit of the holders of the shares (including Sellers, herein the "Holders")as
follows:
1. Registration Rights. Subject to the restrictions on resale of the
Shares contained in Section 6 hereof, Parent agrees to (i) prepare and file with
the SEC within one hundred twenty days of the date hereof one shelf registration
statement on the appropriate form for the registration of the Shares pursuant to
the Securities Act and use its best efforts to cause such registration statement
to become effective within one hundred eighty days of the date hereof in order
that the Holders may sell or distribute the Shares; (ii) prepare and file with
the SEC such amendments and post-effective amendments to such registration
statement and supplements to the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for a period of 24
months following the date on which such registration statement is declared
effective by the SEC (subject to extension as provided below) and to comply with
the provisions of the Securities Act with respect to the offer or distribution
of the Shares covered by the registration statement during the period permitted
for sale or distribution of such Shares; (iii) comply with the rules of any
exchange on which the Shares are listed; and (iv) furnish to Holders such number
of copies of the prospectus (including any preliminary prospectus or
supplemented or amended prospectus) as Holders may reasonably request in order
to facilitate the sale or distribution of the Shares. Notwithstanding the
foregoing, Parent's obligation to maintain such registration statement in
705692.3
<PAGE>
effect shall expire on the earlier of the date all the Shares have been sold by
Holders or the date the Shares become eligible for resale without registration
pursuant to Rule 144 of the SEC under the Securities Act. In addition, Parent's
obligation to maintain such registration statement in effect may be suspended
for a period of up to 120 days in any 12 month period if the Parent, in good
faith and for valid business reasons including, without limitation in connection
with the acquisition or divestiture of assets or a business, determines that it
is in the best interests of the Parent and its stockholders to suspend such
registration obligation, provided that, within such 120 day period the Parent
complies with the requirements of Section 4(b) hereof.
2. Expenses. Parent will bear all expenses in connection with any
registration statements under this Agreement, other than (i) transfer taxes and
(ii) expenses of Holders, including attorneys' fees.
3. Assurances. (a) Parent will notify Holders promptly, and will confirm
such advice in writing, (1) when any registration statement under Section 1
hereof covering such Shares has become effective and when any post-effective
amendment thereto becomes effective, (2) of any request by the SEC for
amendments to the registration statements or supplements to the related
prospectuses or for additional information, (3) of the issuance by the SEC of
any stop order suspending the effectiveness of the registration statements or
the initiation of any proceedings for that purpose, (4) of the receipt by the
Parent of any notification with respect to the suspension of the qualification
of any of the registered Shares for sale in any jurisdiction or the initiation
of any proceedings for that purpose and (5) of the happening of any event during
the period mentioned in paragraph (d) below which makes any statement made in
the registration statements or the prospectuses untrue or which requires the
making of any changes in the registration statements or the prospectuses in
order to make the statements therein not misleading. If at any time the SEC
shall issue any order suspending the effectiveness of the registration
statements, Parent will make every reasonable effort to obtain the withdrawal of
such order as soon as practicable.
(b) Parent will furnish to Holders without charge, one signed copy
of any registration statement and any post-effective amendment thereto,
including financial statements and schedules and all exhibits (including those
incorporated therein by reference to the extent not previously furnished to
Holders).
(c) Parent will give Holders advance notice of its intention to
file any amendment to any registration statement or any amendment or supplement
to any prospectus, and will not
2
705692.3
<PAGE>
file any such amendment or supplement to which Holders shall reasonably object
in writing in light of the requirements of the Securities Act and any other
applicable laws and regulations.
(d) Parent consents, in connection with the offering and sale of
any Shares covered by any prospectus or any amendment or supplement thereto and
for any such period of time thereafter as such prospectus is required by law to
be delivered in connection therewith, to the use of such prospectus or such
amendment or supplement thereto by Holders. If during such period of time any
event shall occur which should be set forth in any prospectus in order to make
the statements therein not misleading in the light of the circumstances under
which they were made, or if it is necessary to supplement or amend any
prospectus to comply with law, Parent will forthwith prepare and duly file with
the SEC (subject to Section 3(c) hereof) an appropriate supplement or amendment
thereto, and will deliver to the selling Holders, without charge, such number of
copies thereof as they may reasonably request.
(e) Prior to any public offering or distribution of any Shares
pursuant to this Agreement, Parent will cooperate with Holders in connection
with the registration or qualification of such Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as Holders may reasonably
request in writing, provided that in no event shall Parent be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to general service of process in any
jurisdiction where it is not now so subject. Parent will pay all fees and
expenses (including counsel fees and expenses) relating to the qualification of
the Shares under such securities or Blue Sky laws.
(f) Parent will make generally available to its security holders a
consolidated earnings statement (which need not be audited) for the first twelve
month period after any registration statement filed hereunder becomes effective
as soon as it is reasonably practicable after the end of such period, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
(g) Parent may require Holders to furnish to Parent such
information regarding the distribution of such Shares as Parent may from time to
time reasonably request in writing.
4. Representations and Warranties
(a) Parent represents and warrants to Holders that each
preliminary prospectus filed as part of the registration statements as
originally filed or as part of any amendment thereto, or filed pursuant to Rule
424 under the Securities Act, will comply when so filed in all material respects
with the
705692.3
3
<PAGE>
Securities Act, and when the registration statements become effective and at all
times subsequent thereto, the registration statements and the prospectuses, and
any supplements or amendments thereto, will fully comply with the provisions of
the Securities Act and the rules of any exchange on which the Shares are listed,
and the registration statements and the prospectuses at all such times will not
contain an 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 not
misleading, except that this representation and warranty does not apply to
statements or omissions in any registration statement or any prospectus or any
preliminary prospectus made in reliance upon information furnished to Parent in
writing by Holders expressly for use therein. Holders agree that all information
furnished to Parent for inclusion in any of the foregoing will not contain an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
(b) Holders represent and warrant to Parent that, upon receipt of
any notice from Parent of the happening of any event of the kind described in
the last sentence of Section 1 hereof, or Section 3(a)(2), 3(a)(3), 3(a)(4), or
3(a)(5) hereof, Holders will forthwith discontinue disposition of such Shares
covered by such registration statement or prospectus until Holders' receipt of
the copies of the supplemented or amended prospectus contemplated by Section
3(a)(1) hereof, or until advised in writing by the Parent that the use of the
applicable prospectus may be resumed, and have received copies of any additional
or supplemental filings which are incorporated by reference in such prospectus,
and, if so directed by Parent, Holders will deliver to Parent (at Parent's
expense) all copies, other than permanent file copies then in Holders'
possession, of the prospectus covering such shares current at the time of
receipt of such notice. Any such period during which Holders are required to
discontinue disposition of Shares is referred to as a "Suspension Period." A
Suspension Period shall commence on and include the date that Parent gives
notice that the shelf registration statement is no longer effective or the
prospectus included therein is no longer usable for offers and sales of Shares
and shall end on the date when each Holder of Shares covered by such
registration statement either receives the copies of the supplemented or amended
prospectus contemplated hereby may be resumed. If one or more Suspension Periods
occur, the shelf registration period referred to in Section 1 shall be extended
by the number of days included in each such Suspension Period.
5 (a). Indemnification. (a) In the event of any registration of
Shares under the Securities Act pursuant to this Agreement, Parent shall
indemnify and hold harmless Holders, each of its directors and officers, each
agent and representative of such Holder, any underwriter of such Holder and each
other
705692.3
4
<PAGE>
person, if any, who controls any Holder (collectively, the "Indemnified
Persons"), against any losses, claims, damages, liabilities or expenses, joint
or several, to which any Indemnified Person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages, expenses
or liabilities (or actions in respect thereof) arise out of, or are based upon,
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement or preliminary prospectus or final or summary
prospectus contained therein, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
made therein not misleading, and will reimburse such Indemnified Person, as
incurred, for any legal or other expenses, reasonably incurred by them in
connection with investigating or defending any such action or claim, excluding
any amounts paid in settlement of any litigation, commenced or threatened, if
such settlement is effected without the prior written consent of Parent;
provided that Parent need not indemnify any such person for any such loss,
claim, damage, liability or expense which arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
therein made in reliance upon and in conformity with written information
furnished to Parent by such person or its affiliates or representatives
specifically for use in the preparation thereof.
(b) The indemnity provisions in Section 5(a) above are subject to
the condition that, insofar as they relate to any untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in a preliminary
prospectus or prospectus but eliminated or remedied in the amended prospectus on
file with the SEC at the time the registration statement becomes effective or
any amended prospectus filed with the SEC pursuant to Rule 424(b) or 424(c) (the
"Final Prospectus"), such indemnity provisions shall not inure to the benefit of
Holders, if Parent has previously delivered copies of such Final Prospectus to
Holders and if a copy of the Final Prospectus was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act.
(c) In the event of any registration of Shares under the
Securities Act pursuant to this Agreement, Holders shall furnish to Parent in
writing such information as Parent shall reasonably request for use in
connection with any registration statement or prospectus and agrees to indemnify
and hold harmless Parent, each of its directors and officers and each other
person, if any, who controls Parent within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
Parent or any such director, officer or controlling person may become subject
under
705692.3
5
<PAGE>
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities, joint or several (or actions in respect thereof) arise out of, or
are based upon, any untrue statement or alleged untrue statement of any material
fact provided by Holders to Parent in writing and contained in such registration
statement or preliminary prospectus or final or summary prospectus contained
therein, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state in such written information
provided by Holders to Parent for inclusion in such registration statement or
prospectus a material fact required to be stated therein or necessary to make
the statements made therein not misleading, and will reimburse Parent, each such
director, officer and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such action or claim, excluding any amounts paid in settlement of any
litigation, commenced or threatened, if such settlement is effected without the
prior written consent of such person; but in all such cases only if, and to the
extent that, any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission therein made in reliance upon and in conformity with written
information furnished to Parent by such person or its affiliates or
representatives specifically for use in the preparation thereof and provided,
however, that such person shall not be obligated to indemnify Parent if the
information supplied by such person for use in a preliminary prospectus contains
an untrue statement (or alleged untrue statement) or omission (or alleged
omission) and such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is corrected or eliminated prior to being contained in a
Final Prospectus.
(d) Promptly after receipt by a party entitled to indemnification
under this Section 5 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 5, notify the indemnifying party in
writing of the commencement thereof. In case any such action is brought against
the indemnified party and it shall so notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it so chooses, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party, and, after notice
from the indemnifying party that it so chooses, such indemnifying party shall
not be liable for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof; provided, however,
that if the indemnifying party fails to take reasonable steps necessary to
diligently defend such claim within twenty (20) days after receiving notice from
the indemnified party that the indemnified party believes the indemnifying party
has failed to take such
705692.3
6
<PAGE>
steps, the indemnified party may assume its own defense and the indemnifying
party shall be liable for any expenses therefor. The indemnity agreements in
this Section 5 shall be in addition to any liabilities which the indemnifying
parties may have pursuant to law.
(e) If a claim by an indemnified party for indemnification under
this Section 5 is unenforceable even though the express provisions hereof
provide for indemnification in such case, then each applicable indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such loses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions,
statements or omissions that resulted in such losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such indemnifying party
or indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 10(f) of the Securities Act) shall be entitled to any contribution
from any person who was not guilty of such fraudulent misrepresentation.
6. Restrictions on Transfer of the Shares.
(a) Holders may only transfer, sell or distribute the Shares
pursuant to (i) an effective registration statement under the Securities Act,
(ii) Rule 144 promulgated under the Securities Act if such rule is available, or
(iii) any other legally available means of transfer, subject to the conditions
specified in this Section 6.
(b) Each certificate for the Shares will be imprinted with a
legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT.
(c) In connection with the transfer of any Shares (other than a
transfer referred to in Sections 6(a)(i)and/or (ii) above), Holders will deliver
written notice to Parent describing in reasonable detail the transfer or
proposed transfer, together
705692.3
7
<PAGE>
with an opinion, in form and content reasonably satisfactory to Parent's
counsel, of counsel to Holders which (to Parent's reasonable satisfaction) is
knowledgeable in securities law matters, to the effect that such transfer of
Shares may be effected without registration of such shares under the Securities
Act and under any applicable state securities laws. In addition, if Holders
deliver to Parent an opinion of such counsel that no subsequent transfer of such
Shares will require registration under the Securities Act or under any
applicable state securities laws, Parent will promptly upon such contemplated
transfer deliver new certificates for such Shares which do not bear the legend
set forth in Section 6 (b)hereof.
(d) Notwithstanding anything in this Agreement to the contrary, in
the event of any registration of Shares pursuant to this Agreement, Parent or
its transfer agent will as promptly as practicable deliver to Holders or
Holders' designee or designees new certificates not bearing the legend set forth
in Section 6 hereof.
7. Rule 144. At all times so long as any of the Holders hold Shares the
certificates for which bear the legend set forth in Section 6(b) hereof, the
Company will file reports required to be filed by it under the Securities
Exchange Act of 1934, as amended, and will take such further action as may be
required to enable Holders to sell such Shares pursuant to Rule 144 of the SEC
under the Securities Act.
8. Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns but
shall not confer any rights upon any other person. This Agreement may not be
assigned by any party without the other's consent.
9. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York without regard to principles
of conflict of law.
10. Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Parent has obtained the
written consent of Holders of at least a majority of the Shares. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of the Holders whose
Shares are being sold pursuant to a registration statement and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the shares being sold by such Holders pursuant
to such registration statement.
705692.3
8
<PAGE>
11. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing overnight delivery:
(1) If to a Holder, at the most current address given by such
Holder to the Parent in accordance with the provisions of this
Section 11, which address initially is, with respect to each
Holder, the address of such Holder maintained by the transfer agent
for the Class A Common Stock of the Parent; and
(2) If to the Parent, initially at the address of the Parent set
forth in the Acquisition Agreement.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered by a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if telecopied.
12. Miscellaneous. The headings contained in this Agreement are for
reference only and shall not in any way affect the meaning or interpretation of
this Agreement. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
[END OF TEXT]
705692.3
9
<PAGE>
IN WITNESS WHEREOF, this Registration Rights Agreement has been
duly executed and delivered by and on behalf of Holders Buyer and Parent on the
date first above written.
AMPEX CORPORATION
By:
-----------------------
Title: Vice President
HOLDERS:
-----------------------
Name: Jason Barzilary
-----------------------
Name: Beny Alagem
-----------------------
Name: Alex Sandel
-----------------------
Name: Sara Sandel
-----------------------
Name: Chloe Holdings, Inc.
KLINE HAWKES MICRONET PARTNERS LLC
By:
--------------------
Title:
705692.3
10
<PAGE>
EXHIBIT E
DISCLOSURE SCHEDULE
E-1
713283.7
<PAGE>
Exhibit E
DISCLOSURE SCHEDULE
-------------------
[Omitted]
741130.1
Exhibit 4.4
SUPPLEMENT TO ACQUISITION AGREEMENT
This Supplement, dated June 30, 1998, to Acquisition Agreement, dated
June 24, 1998 (the "Agreement"), among AMPEX CORPORATION, a Delaware corporation
("Parent"), AMPEX HOLDINGS CORPORATION, a Delaware corporation ("Buyer") and the
several selling stockholders ("Sellers") of Micronet Technology, Inc., a
Delaware corporation (the "Company").
Capitalized terms used but not otherwise defined in this Supplement
shall have the meanings ascribed to such terms in the Agreement.
WHEREAS, Buyer desires to account for the acquisition of the Company
effective from and after July 1, 1998;
ACCORDINGLY, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. Waiver of Closing Condition. Buyer hereby waives, effective on and
as of July 1, 1998, the condition to Buyer's obligations contained in Sections 3
(f) (i) and (ii) of the Agreement that there has been no material adverse change
in the business, properties, revenues, operations or condition of the Company,
and no material damage, destruction or loss of property of the Company, prior to
the consummation of the Closing, and modifies the condition contained in Section
7 (e) of the Agreement such that the certificate referred to therein will be as
of the close of business on June 30, 1998. Accordingly, all references to the
"Closing Date" in Section 7(a) of the Agreement referring to the representations
and warranties of Sellers shall be deemed to refer to the close of business on
June 30, 1998, and Buyer shall have no right to terminate the Agreement by
reason of adverse changes occurring on or after such date. In addition, solely
for the purposes of making the calculations contemplated by Section 7(g) of the
Agreement, all references to the "Closing Date" shall be deemed to refer to the
close of business on June 30, 1998; provided, (a) all amounts as of such date
shall be subject to normal accrual adjustments, (b) accounts payable at such
date shall be adjusted to reflect agreements, waivers and releases entered into
during the period from such date through and including the Closing Date between
the Company and the payees of such accounts, and (c) any amounts tendered by the
Company to the payees of such accounts which are returned to the Company or to
Buyer until June 30, 2000 for any reason shall inure to the benefit of the
Sellers (and any liability that Buyer may suffer or incur as a result of
returning such amounts to Sellers may be offset against the property of Sellers
which is subject to the
726111.6
<PAGE>
Escrow Agreement pursuant to Section 11 of the Agreement, provide that Buyer
shall have given Sellers 30 days notice of, and an opportunity to resolve such
claim).
2. Representation and Warranty with respect to Certain Closing
Conditions. Sellers hereby jointly and severally represent and warrant to Buyer
that, as of the close of business on June 30, 1998, (a) none of the Company's
indebtedness to Sellers to which Section 7(h) of the Agreement applies has been
assigned to any third-party and (b) that the Closing Condition at Section 7(i)
of the Agreement (except with respect to options held by Sellers, which shall be
canceled on the Closing Date) has been satisfied.
3. Change in Certain Additional Terms. Sellers and Buyer also agree to
modify the phrase "at the Closing" in Section 5(f) of the Agreement shall be
modified to the close of business on June 30, 1998.
4. No Other Waiver. Nothing contained in this Supplement shall
constitute a waiver of and condition to closing set forth in Section 7 of the
Agreement except as expressly set forth in paragraph 1 hereof.
5. Ratification. Except as expressly supplemented or amended hereby,
the parties ratify and confirm the Agreement in all respects.
[SIGNATURES ON FOLLOWING PAGE]
726111.6
<PAGE>
IN WITNESS WHEREOF, the parties have executed this instrument in
counterpart as of the date first above written.
AMPEX CORPORATION
By:_______________________
Title:____________________
AMPEX HOLDINGS CORPORATION
By:_______________________
Title:____________________
SELLERS:
__________________________
Name: Jason Barzilay
__________________________
Name: Beny Alagem
__________________________
Name: Alex Sandel
__________________________
Name: Sara Sandel
__________________________
Name: Chloe Holdings, Inc.
KLINE HAWKES MICRONET PARTNERS LLC
By:_______________________
Title:____________________
726111.6
Exhibit 4.5
SECOND SUPPLEMENT TO ACQUISITION AGREEMENT
This Supplement, dated July 17, 1998, to Acquisition Agreement, dated
June 24, 1998, as supplemented and amended by Supplement to Acquisition
Agreement, dated June 30, 1998 (collectively, the "Agreement"), among AMPEX
CORPORATION, a Delaware corporation ("Parent"), AMPEX HOLDINGS CORPORATION, a
Delaware corporation ("Buyer") and the several selling stockholders ("Sellers")
of Micronet Technology, Inc., a Delaware corporation (the "Company").
Capitalized terms used but not otherwise defined in this Supplement
shall have the meanings ascribed to such terms in the Agreement.
WHEREAS, the parties desire to supplement and amend the Agreement in
certain respects as more fully provided below;
ACCORDINGLY, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. Undertaking to Issue Stock Certificates. As promptly as possible
following the Closing taking place today, Sellers shall deliver to Parent the
written instructions with respect to the issuance of shares of Class A Stock
contemplated by Section 1 (a) of the Agreement. Parent undertakes and agrees
that, as promptly as possible following receipt of such instructions signed by
all Sellers, Parent will cause the transfer agent for the Class A Stock to
issue, and Parent will deliver, certificates, in proper form, representing such
shares in the denominations and registered in the names of the Sellers or their
permitted designees in accordance with such instructions and said Section 1 (a)
of the Agreement. Sellers acknowledge that Parent shall have no obligation to
issue or deliver any shares of Class A Stock to any person or entity who is not
an "accredited investor" and that all such shares of Class A Stock shall be
deposited in escrow under the Escrow Agreement.
2. Chloe Holdings, Inc.. Chloe Holdings, Inc. ("Chloe") undertakes and
agrees to deliver the certificate(s) representing 625 shares of the Class A
Common Stock of the Company owned by Chloe and being sold to Buyer pursuant to
the Agreement as promptly as possible following the Closing taking place today,
and agrees to indemnify and hold Parent and Buyer harmless from
735565.1
<PAGE>
and against all costs, expenses and liabilities which may be incurred by Parent
or Buyer by reason of Chloe's failure to deliver such certificates. Parent shall
have no obligation to deliver any Class A Stock to or on behalf of Chloe
pursuant to the Agreement unless and until the certificate(s) representing the
shares of Class A Common Stock of the Company owned by Chloe have been delivered
to Parent or Buyer in transferable form.
3. Micropolis Claim. At the date of this Supplement, the Micropolis
claim referred to in Section 7 (m) of the Agreement has not been finally
settled. Accordingly, Sellers jointly and severally agree to defend, and to
indemnify and hold harmless Parent, Buyer and the Company from and against, such
claim in accordance with Section 11 of the Agreement and further agree that
265,000 shares of the Class A Stock issuable to Sellers pursuant to the
Agreement shall be held in escrow under the Escrow Agreement as collateral
security for Sellers indemnity obligations with respect to such claim until (i)
final settlement or discharge of such claim at no cost to the Company and
otherwise on terms reasonably satisfactory to Parent or (ii) release thereof to
Parent in accordance with the terms of the Escrow Agreement.
4. Further Assurances. The parties agree to execute such other
documents or agreements as may be necessary or desirable for the implementation
of the Agreement and this Supplement and the consummation of the transactions
contemplated thereby and hereby.
5. Counterparts;Effectiveness. This Supplement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument. This
Agreement shall become effective, as between Parent and Buyer, on the one hand,
and a Seller, on the other, upon execution and delivery of a counterpart hereof
by Parent, Buyer and such Seller.
6. Ratification. Except as expressly supplemented or amended
hereby, the parties ratify and confirm the Agreement in all
respects.
[SIGNATURES ON FOLLOWING PAGE]
735565.1
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Certificate in counterpart this 17th day of July, 1998.
SELLING SHAREHOLDERS:
-----------------------------
Name: Jason Barzilay
-----------------------------
Name: Beny Alagem
-----------------------------
Name: Alex Sandel
-----------------------------
Name: Sara Sandel
-----------------------------
Name: Chloe Holdings, Inc.
KLINE HAWKES MICRONET PARTNERS LLC
By:
-----------------------------
Title:
-----------------------------
735565.1
