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EXHIBIT 10.44
SENIOR SUBORDINATED DEMAND NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THAT ACT OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.
AURORA ELECTRONICS, INC.
10% Senior Subordinated Demand Note
$1 December 5, 1997
AURORA ELECTRONICS, INC., a Delaware corporation (hereinafter
called the "Company"), for value received, hereby promises to pay to 2~, or
registered assigns, the principal sum of 3~, ON DEMAND (subject to applicable
restrictions set forth in Section 13 hereof), and to pay interest (computed on
the basis of a 360-day year consisting of twelve 30-day months) from the date
hereof on the unpaid principal amount hereof at the rate of 10% per annum
semi-annually in arrears on September 30 and March 31 of each year (each said
day being an "Interest Payment Date"), commencing on March 31, 1998, until the
principal amount hereof shall have become due and payable, whether on demand or
by acceleration or otherwise. Demand for payment shall be in writing, mailed by
first class registered or certified mail, postage prepaid, or sent by recognized
courier service to the Company addressed to it at its office or agency set forth
in paragraph (a) of Section 7 for purposes of notices hereunder, or sent by
facsimile to (000) 000-0000, confirmed by mail or courier as aforesaid.
All payments of principal and interest on this Note shall be in
such coin or currency of the United States of America
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as at the time of payment shall be legal tender for payment of public and
private debts.
On each Interest Payment Date, the Company shall pay interest on
said Interest Payment Date by issuing to the holder of this Note a note in
substantially the form hereof (and in any event containing subordination
provisions no less favorable to the holders of Senior Indebtedness (as defined
in Section 13(a) hereof) as those contained herein) (individually a "PIK Note"
and collectively the "PIK Notes") in a principal amount equal to the interest
payable to the holder of this Note on such Interest Payment Date.
If any payment on this Note is due on a day which is not a
Business Day, it shall be due on the next succeeding Business Day. For purposes
of this Note, "Business Day" shall mean any day other than a Saturday, Sunday or
a legal holiday or day on which banks are authorized or required to be closed in
Chicago or New York.
1. The Note. This Note is issued pursuant to and is subject to
the terms and provisions of the Senior Subordinated Note Purchase Agreement
dated as of December 4, 1997 (the "Purchase Agreement"), among the Company,
Welsh, Carson, Xxxxxxxx & Xxxxx VII, L.P., a Delaware limited partnership ("WCAS
VII") and the several other purchasers named on Schedule I thereto (WCAS VII and
such other purchases being herein sometimes referred to collectively as the
"Note Purchasers"). As used herein, the term "Note" or "Notes" includes the 10%
Senior Subordinated Demand Notes of the Company originally so issued and any 10%
Senior Subordinated Demand Note or Notes subsequently issued upon exchange or
transfer thereof or as PIK Notes.
2. Transfer, Etc. of Notes. The Company shall keep at its office
or agency maintained as provided in paragraph (a) of Section 7 a register in
which the Company shall provide for the registration of this Note and for the
registration of transfer and exchange of this Note. The holder of this Note may,
at its option, and either in person or by its duly authorized attorney,
surrender the same for registration of transfer or exchange at the office or
agency of the Company maintained as provided in Section 7 and, without expense
to such holder (except for taxes or governmental charges imposed in connection
there-
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with), receive in exchange therefor a Note or Notes each in such denomination or
denominations as such holder may request, dated as of the date to which interest
has been paid on the Note or Notes so surrendered for transfer or exchange, for
the same aggregate principal amount as the then unpaid principal amount of the
Note or Notes so surrendered for transfer or exchange, and registered in the
name of such person or persons as may be designated by such holder. Every Note
presented or surrendered for registration of transfer or exchange shall be duly
endorsed, or shall be accompanied by a written instrument of transfer,
satisfactory in form to the Company, duly executed by the holder of such Note or
its attorney duly authorized in writing. Every Note so made and delivered in
exchange for such Note shall in all other respects be in the same form and have
the same terms as such Note. No transfer or exchange of any Note shall be valid
(x) unless made in the foregoing manner at such office or agency and (y) unless
registered under the Securities Act of 1933, as amended, or any applicable state
securities laws or unless an exemption from such registration is available.
3. Loss, Theft, Destruction or Mutilation of Note. Upon receipt
of evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, and, in the case of any such loss, theft or
destruction, upon receipt of an affidavit of loss and an indemnity reasonably
acceptable in form and substance to the Company from the holder thereof, or, in
the case of any such mutilation, upon surrender and cancellation of this Note,
the Company will make and deliver, in lieu of this Note, a new Note of like
tenor and unpaid principal amount and dated as of the date to which interest has
been paid on this Note.
4. Persons Deemed Owners; Holders. The Company may deem and treat
the person in whose name this Note is registered as the owner and holder of this
Note for the purpose of receiving payment of principal of and interest on this
Note and for all other purposes whatsoever. With respect to any Note at any time
outstanding, the term "holder", as used herein, shall be deemed to mean the
person in whose name such Note is registered as aforesaid at such time.
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5. Prepayments.
(a) Optional Prepayment. Subject to any applicable restrictions
contained in the Credit Agreement (as hereinafter defined), upon notice given as
provided in Section 5(b), the Company may, at its option, prepay this Note, as a
whole at any time or in part from time to time, at the prepayment prices
(expressed as percentages of the principal amount so to be prepaid) set forth
below with respect to the periods indicated below, in each case, together with
any accrued and unpaid interest thereon through the date of such prepayment:
Period Percentage
------ ----------
Prepayment between December 4, 1997
and September 30, 1998 105.0%
Prepayment between October 1, 1998
and September 30, 1999 102.5%
Prepayment after September 30, 1999 100.0%.
(b) Notice of Prepayment. The Company shall give written notice
of any prepayment of this Note or any portion hereof pursuant to Section 5(a)
not less than 20 nor more than 60 days prior to the date fixed for such
prepayment. Such notice of prepayment and all other notices to be given to the
holder of this Note shall be given by registered or certified mail to the person
in whose name this Note is registered at its address designated on the register
maintained by the Company on the date of mailing such notice of prepayment or
other notice. Upon notice of prepayment being given as aforesaid, the Company
covenants and agrees that it will prepay, on the date therein fixed for
prepayment, this Note or the portion hereof, as the case may be, so called for
prepayment, at the prepayment price determined in accordance with Section 5(a)
hereof. A prepayment of less than all of the outstanding principal amount of
this Note shall not relieve the Company of its obligation to make scheduled
payments of interest payable in respect of the principal remaining outstanding
on the Interest Payment Dates.
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(c) Allocation of All Payments. In the event of any partial
payment of less than all of the interest then due on the Notes then outstanding
or any prepayment, purchase, redemption or retirement of less than all of the
outstanding Notes, the Company will allocate the amount of interest so to be
paid and the principal amount so to be prepaid, purchased, redeemed or retired
to each Note in proportion, as nearly as may be, to the aggregate principal
amount of all Notes then outstanding.
(d) Interest After Date Fixed for Prepayment. If this Note or a
portion hereof is called for prepayment as herein provided, this Note or such
portion shall cease to bear interest on and after the date fixed for such
prepayment unless, upon presentation for such purpose, the Company shall fail to
pay this Note or such portion, as the case may be, in which event this Note or
such portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest, shall bear interest on and after the date fixed for
such prepayment and until paid at the rate per annum provided herein.
(e) Surrender of Note; Notation Thereon. Upon any prepayment of a
portion of the principal amount of this Note, the holder hereof, at its option,
may require the Company to execute and deliver at the expense of the Company
(other than for transfer taxes, if any), upon surrender of this Note, a new Note
registered in the name of such person or persons as may be designated by such
holder for the principal amount of this Note then remaining unpaid, dated as of
the date to which the interest has been paid on the principal amount of this
Note then remaining unpaid, or may present this Note to the Company for notation
hereon of the payment of the portion of the principal amount of this Note so
prepaid.
6. Offer to Repurchase Upon a Change of Control. Subject to any
applicable restrictions in the Credit Agreement (as defined in Section 13(a)
hereof) with respect to paragraph (a) below:
(a) Upon the occurrence of a Change of Control (as hereinafter
defined), the holder of this Note shall have the right, at such holder's option,
to require the Company to repurchase all or any part of such holder's Note
pursuant to the offer described below, at a purchase price equal to 101% of the
princi-
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pal amount thereof so to be repurchased, plus accrued and unpaid interest, if
any, to the date of purchase (a "Change of Control Payment"). Within 10 Business
Days after the Company knows, or reasonably should know, of the occurrence of
any Change of Control, the Company shall make an irrevocable, unconditional
offer (except that such offer may be conditioned upon the closing of the
transaction constituting the Change of Control) (a "Change of Control Offer") to
all holders of the Notes to purchase all of the Notes for cash in an amount
equal to the Change of Control Payment by sending written notice (the "Change of
Control Notice") of such Change of Control Offer to each holder by registered or
certified mail to the person in whose name the Note is registered at its address
maintained by the Company on the date of the mailing of such notice. The Change
of Control Notice shall contain all instructions and materials required by
applicable law and shall contain or make available to the holder other
information material to such holder's decision to tender this Note pursuant to
the Change of Control Offer. The Change of Control Notice, which shall govern
the terms of the Change in Control Offer, shall state:
(i) that the Change of Control Offer is being made pursuant to
this Section 6, and that all Notes validly tendered will be accepted for
payment;
(ii) the Change of Control Payment (including the amount of
accrued and unpaid interest) and the purchase date, which will be no
later than 30 days from the date such notice is mailed (the "Change of
Control Payment Date");
(iii) that any Note not validly tendered will continue to accrue
interest;
(iv) that, unless the Company defaults in the payment of the
Change of Control Payment, any Note accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change
of Control Payment Date;
(v) that holders electing to have a Note, or portion thereof,
purchased pursuant to a Change of Control Offer will be required to
surrender the Note to the Company at the address specified in the notice
not later than the close of
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business on the Business Day prior to the Change of Control Payment
Date;
(vi) that holders will be entitled to withdraw their election if
the Company receives, not later than the close of business on the second
Business Day prior to the Change of Control Payment Date, a telegram,
facsimile transmission or letter setting forth the name of the holder,
the principal amount of the Note delivered for purchase and a statement
that such holder is withdrawing its election to have such principal
amount of Note purchased; and
(vii) that holders whose Notes are being purchased only in part
will be issued a new Note equal in principal amount to the unpurchased
portion of the Note surrendered.
On or before the Change of Control Payment Date, the Company
shall (i) accept for payment the Notes or portions thereof validly tendered
pursuant to the Change of Control Offer prior to the close of business on the
Change of Control Payment Date, (ii) promptly mail to the holders of Notes so
accepted payment in an amount equal to the Change of Control Payment (including
accrued and unpaid interest) for such Notes, and the Company shall promptly mail
or deliver to such holders a new Note equal in principal amount to any
unpurchased portion of the Note surrendered. Any Notes not so accepted shall be
promptly mailed or delivered by the Company to the holder thereof.
(b) In the event of a Change of Control, the Company will
promptly, in good faith, (i) seek to obtain any required consent of the holders
of any Senior Indebtedness (as defined herein) to permit the Change of Control
Offer and the Change of Control Payment contemplated by this Section 6, or (ii)
repay some or all of such Senior Indebtedness to the extent necessary
(including, if necessary, payment in full of such Senior Indebtedness and
payment of any prepayment premiums, fees, expenses or penalties) to permit the
Change of Control Offer and the Change of Control Payment contemplated hereby
without such consent. Failure to comply with the foregoing shall not relieve the
Company from its obligations pursuant to paragraph (a) above.
(c) For purposes of this Note "Change of Control" means (i) the
sale, lease or transfer, whether direct or indi-
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rect, of all or substantially all of the assets of the Company and its
subsidiaries, taken as a whole, in one transaction or a series of related
transactions, to any "person" or "group" (other than the WCAS Group), (ii) the
liquidation or dissolution of the Company or the adoption of a plan of
liquidation or dissolution of the Company, (iii) the acquisition of "beneficial
ownership" by any "person" or "group" (other than the WCAS Group) of voting
stock of the Company representing more than 50% of the voting power of all
outstanding shares of such voting stock, whether by way of merger or
consolidation or otherwise, or (iv) during any period of two consecutive years,
the failure of those individuals who at the beginning of such period constituted
the Company's Board of Directors (together with any new directors whose election
or appointment by such Board or whose nomination for election or appointment by
the shareholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) to constitute a majority of the Company's Board of Directors then in
office; provided, however, that in no event shall a foreclosure on any
collateral pledged by the Company in respect of obligations arising under or in
connection with the Credit Agreement constitute a Change of Control.
For purposes of this definition, (i) the terms "person" and
"group" shall have the meaning set forth in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
applicable, (ii) the term "beneficial owner" shall have the meaning set forth in
Rules 13d-3 and 13d-5 under the Exchange Act, whether or not applicable, except
that a person shall be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time or upon the occurrence of certain
events, (iii) any "person" or "group" will be deemed to beneficially own any
voting stock of the Company so long as such person or group beneficially owns,
directly or indirectly, in the aggregate a majority of the voting stock of a
registered holder of the voting stock of the Company, and (iv) the term "WCAS
Group" shall mean WCAS VII, WCAS Information Partners, L.P. and any general
partners thereof.
7. Covenants Relating to this Note. The Company covenants and
agrees that so long as this Note shall be outstand-
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ing and, in the case of paragraphs (k) through (n) below, so long as one million
dollars ($1,000,000) of aggregate principal amount of the Notes is outstanding:
(a) Maintenance of Office. The Company will maintain an office or
agency in such place in the United States of America as the Company may
designate in writing to the registered holder of this Note, where this Note may
be presented for registration of transfer and for exchange as herein provided,
where notices and demands to or upon the Company in respect of this Note may be
served and where this Note may be presented for payment. Until the Company
otherwise notifies the holder hereof, said office shall be the principal office
of the Company located at 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx
00000.
(b) Payment of Taxes. The Company will promptly pay and discharge
or cause to be paid and discharged, before the same shall become in default, all
material lawful taxes and assessments imposed upon the Company or any of its
subsidiaries or upon the income and profits of the Company or any of its
subsidiaries, or upon any property, real, personal or mixed, belonging to the
Company or any of its subsidiaries, or upon any part thereof by the United
States or any State thereof, as well as all material lawful claims for labor,
materials and supplies which, if unpaid, would become a lien or charge upon such
property or any part thereof; provided, however, that neither the Company nor
any of its subsidiaries shall be required to pay and discharge or to cause to be
paid and discharged any such tax, assessment, charge, levy or claim so long as
both (x) the Company has established adequate reserves for such tax, assessment,
charge, levy or claim and (y)(i) the Company or a subsidiary shall be contesting
the validity thereof in good faith by appropriate proceedings or (ii) the
Company shall, in its good faith judgment, deem the validity thereof to be
questionable and the party to whom such tax, assessment, charge, levy or claim
is allegedly owed shall not have made written demand for the payment thereof.
(c) Corporate Existence. The Company will do or cause to be done
all things necessary and lawful to preserve and keep in full force and effect
(i) its corporate existence and the corporate existence of each of its
subsidiaries and (ii) the material rights and franchises of the Company and each
of its subsidiaries under the laws of the United States or any state
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thereof, or, in the case of subsidiaries organized and existing outside the
United States, under the laws of the applicable jurisdiction; provided, however,
that nothing in this paragraph (c) shall prevent the abandonment or termination
of any rights or franchises of the Company, or the liquidation or dissolution
of, or a sale, transfer or disposition (whether through merger, consolidation,
sale or otherwise) of all or any substantial part of the property and assets of,
any subsidiary or the abandonment or termination of the corporate existence,
rights and franchises of any subsidiary if such abandonment, termination,
liquidation, dissolution, sale, transfer or disposition is, in the good faith
business judgment of the Company, in the best interests of the Company and not
disadvantageous to the holder of this Note.
(d) Maintenance of Property. The Company will at all times
maintain and keep, or cause to be maintained and kept, in good repair, working
order and condition (reasonable wear and tear excepted) all significant
properties of the Company and its subsidiaries used in the conduct of their
business, and will from time to time make or cause to be made all needful and
proper repairs, renewals, replacements, betterments and improvements thereto, so
that the business of the Company and its subsidiaries may be conducted at all
times in the ordinary course consistent with past practice.
(e) Insurance. The Company will, and will cause each of its
subsidiaries to, (i) keep adequately insured, by financially sound and reputable
insurers, all property of a character usually insured by corporations engaged in
the same or a similar business similarly situated against loss or damage of the
kinds customarily insured against by such corporations and (ii) carry, with
financially sound and reputable insurers, such other insurance (including
without limitation liability insurance) in such amounts as are available at
reasonable expense and to the extent believed advisable in the good faith
business judgment of the Company.
(f) Keeping of Books. The Company will at all times keep, and
cause each of its subsidiaries to keep, proper books of record and account in
which proper entries will be made of its transactions in accordance with
generally accepted accounting principles consistently applied.
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(g) Transactions with Affiliates. The Company shall not enter
into, or permit any of its subsidiaries to enter into, any transaction with any
of its or any subsidiary's officers, directors, employees or any person related
by blood or marriage to any such person or any entity in which any such person
owns any beneficial interest, except for (i) normal employment arrangements,
benefit programs and employee incentive option programs on reasonable terms,
(ii) any transaction approved by the Board of Directors of the Company in
accordance with the provisions of Section 144 of the Delaware General
Corporation Law, or otherwise permitted by such Section and (iii) customer
transactions in the ordinary course of business and on arm's length terms.
(h) Notice of Certain Events. The Company shall, immediately
after it becomes aware of the occurrence of (i) any Event of Default (as
hereinafter defined) or any event which, upon notice or lapse of time or both,
would constitute such an Event of Default, or (ii) any action, suit or
proceeding at law or in equity or by or before any governmental instrumentality
or agency which, if adversely determined, would materially impair the right of
the Company to carry on its business substantially as now or then conducted, or
would have a material adverse effect on the properties, assets, financial
condition, prospects, operating results or business of the Company and its
subsidiaries taken as a whole, give notice to the holder of this Note,
specifying the nature of such event.
(i) Payment of Principal and Interest on the Note. The Company
will use its best efforts, subject to the provisions of applicable credit
arrangements (including the Credit Agreement), contractual obligations of the
Company and/or its subsidiaries and any applicable law restricting the same, to
provide funds from its subsidiaries to the Company, by dividend, advance or
otherwise, sufficient to permit payment by the Company of the principal of and
interest on this Note in accordance with its terms. Subject to any applicable
provisions in the Credit Agreement and documents executed and delivered in
connection therewith, the Company will not, and will not permit any subsidiary
to, directly or indirectly create or otherwise cause to exist any encumbrance or
restriction on the ability of any subsidiary to pay dividends or make any other
distributions to
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the Company or any wholly-owned subsidiary of the Company in respect of its
capital stock.
(j) Consolidation, Merger and Sale. The Company will not
consolidate or merge with or into, or sell or otherwise dispose of all or
substantially all of its property in one or more related transactions to, any
other corporation or other entity, unless:
(i) the Company is the surviving corporation or the entity formed
by or surviving any such consolidation or merger (if other than the
Company) or to which such sale or other disposition shall have been made
is a corporation organized or existing under the laws of the United
States of any state thereof or the District of Columbia;
(ii) the surviving corporation or other entity (if other than the
Company) shall expressly and effectively assume in writing the due and
punctual payment of the principal of and interest on this Note,
according to its tenor, and the due and punctual performance and
observance of all the terms, covenants, agreements and conditions of
this Note to be performed or observed by the Company to the same extent
as if such surviving corporation had been the original maker of this
Note;
(iii) the Company or such other corporation or other entity shall
not otherwise be in default in the performance or observance of any
covenant, agreement or condition of this Note or the Purchase Agreement;
and
(iv) the holder of this Note shall have received, in connection
therewith, an opinion of counsel for the Company (or other counsel
satisfactory to the holder), in form and substance satisfactory to the
holder, to the effect that any such consolidation, merger, sale or
conveyance and any such assumption complies with the provisions of this
paragraph (j).
Notwithstanding anything to the contrary herein, in no event shall a foreclosure
on any collateral pledged by the Company in respect of obligations arising under
or in connection with the
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Credit Agreement be deemed to constitute a violation of the Company's
obligations pursuant to this paragraph (j).
(k) Limitation on Indebtedness and Disqualified Stock. The
Company will not, and will not permit any of its subsidiaries to, (i) incur or
permit to remain outstanding any indebtedness for money borrowed
("Indebtedness"), except (A) Senior Indebtedness (as defined in Section 14), (B)
Indebtedness existing on the date of original issuance of this Note, (C)
Indebtedness permitted to be incurred under the Credit Agreement as in effect
from time to time after the original issuance of this Note (other than
Indebtedness that is subordinate or junior in right of payment (to any extent)
to any Senior Indebtedness and senior or pari passu in right of payment (to any
extent) to the Notes), or (D) in the event that the Credit Agreement has
terminated, Indebtedness permitted to be incurred under any successor credit
agreement of the Company with respect to Senior Indebtedness, or if there exists
no such credit agreement, such Indebtedness as may be mutually agreed upon by
the Company and the holders of a majority of the aggregate principal amount of
the Notes then outstanding, or (ii) issue any capital stock ("Disqualified
Stock") of the Company or any of its subsidiaries which by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures, or is mandatorily
redeemable, whether pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to December 31, 1999.
(l) Restricted Payments. The Company will not, and will not
permit any of its subsidiaries to: (i) declare or pay any dividends on, or make
any other distribution or payment on account of, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, any shares of any class of stock of
the Company, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash,
property or in obligations of the Company or any of its subsidiaries, except for
(X) distributions of shares of the same class or of a different class of stock
pro rata to all holders of shares of a class of stock, (Y) the payment of cash
dividends on account of the Company's Convertible Preferred Stock, $.01 par
value, Series B Convertible Preferred Stock, $.01 par value, Series C
Convertible Preferred Stock, $.01 par value,
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and Series D Convertible Preferred Stock, $.01 par value, or (Z) dividends,
distributions or payments by any subsidiary to the Company or to any
wholly-owned subsidiary of the Company, or (ii), except as permitted under the
Credit Agreement, make any payments of principal of, or retire, redeem, purchase
or otherwise acquire any Indebtedness other than any Senior Indebtedness or the
Notes (such declarations, payments, purchases, redemptions, retirements,
acquisitions or distributions being herein called "Restricted Payments").
(m) Limitation on Liens. The Company shall not, and shall not
permit any of its subsidiaries to, directly or indirectly, create, incur, assume
or otherwise cause or suffer to exist any lien, pledge , charge, security
interest or encumbrance (collectively, "Liens") on any asset now owned or
hereafter acquired, or on any income or profits therefrom or assign or convey
any right to receive income therefrom, except for (i) Liens permitted under the
Credit Agreement, (ii) Liens for current taxes not yet due, (iii) landlord's
Liens, (iv) purchase money Liens and (v) xxxxxxx'x, materialman's,
warehouseman's and similar Liens arising by law or statute.
(n) Inspection of Property. The Company will permit the holder
hereof to visit and inspect any of the properties of the Company and any other
subsidiaries and their books and records and to discuss the affairs, finances
and accounts of any of such corporations with the principal officers of the
Company and such subsidiaries and their independent public accountants, all at
such reasonable times and as often as such holders may reasonably request.
8. Modification by Holders; Waiver. The Company may, with the
written consent of the holders of not less than a majority in principal amount
of the Notes then outstanding, modify the terms and provisions of this Note or
the rights of the holders of this Note or the obligations of the Company
hereunder, and the observance by the Company of any term or provision of this
Note may be waived with the written consent of the holders of not less than a
majority in principal amount of the Notes then outstanding; provided, however,
that no such modification or waiver shall:
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(i) change the maturity of any Note or reduce the principal
amount thereof or reduce the rate or extend the time of payment of
interest thereon without the consent of the holder of each Note so
affected; or
(ii) give any Note any preference over any other Note, including,
without limitation, by amending the allocation provisions of Section
5(c) hereof; or
(iii) reduce the percentage of principal amount outstanding under
any Note, the consent of the holder of which is required for any such
modification; or
(iv) amend the provisions of Section 13 hereof in any manner
adverse to the interests of the holder of this Note,
without the consent of the holder of each Note so affected.
Any such modification or waiver shall apply equally to each
holder of the Notes and shall be binding upon them, upon each future holder of
any Note and upon the Company, whether or not such Note shall have been marked
to indicate such modification or waiver, but any Note issued thereafter shall
bear a notation referring to any such modification or waiver. Promptly after
obtaining the written consent of the holders as herein provided, the Company
shall transmit a copy of such modification or waiver to the holders of the Notes
at the time outstanding.
9. Events of Default. If any one or more of the following events,
herein called "Events of Default," shall occur (for any reason whatsoever, and
whether such occurrence shall, on the part of the Company or any of its
subsidiaries, be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of a court of competent jurisdiction or any order, rule or regulation of
any administrative or other governmental authority) and such Event of Default
shall be continuing:
(i) default shall be made in the payment of the principal of this
Note when and as the same shall become due and payable, whether on
demand (to the extent demand is permitted to be made under Section 13
hereof) or at a date fixed for prepayment or repurchase (including
default of any
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optional prepayment in accordance with the requirements of Section 5 or
any Change of Control Payment in accordance with the requirements of
Section 6, as the case may be) or by acceleration or otherwise; or
(ii) default shall be made in the payment of any installment of
interest on this Note according to its terms when and as the same shall
become due and payable; or
(iii) default shall be made in the due observance or performance
of any covenant, condition or agreement on the part of the Company
contained in Section 7(j) hereof; or
(iv) default shall be made in the due observance or performance
of any other covenant, condition or agreement on the part of the Company
to be observed or performed pursuant to the terms hereof or of the
Purchase Agreement, and such default shall continue for 10 days after
written notice thereof, specifying such default and requesting that the
same be remedied; or
(v) any representation or warranty made by or on behalf of the
Company herein or in the Purchase Agreement shall prove to have been
false or incorrect in any material respect on the date on or as of which
made; or
(vi) the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Company or any of its
subsidiaries in any involuntary case under the federal bankruptcy laws,
as now constituted or hereafter amended, or any other applicable federal
or state bankruptcy, insolvency or other similar laws, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Company or any of its subsidiaries for any
substantial part of any of their property or ordering the winding-up or
liquidation of any of their affairs and the continuance of any such
decree or order unstayed and in effect for a period of 30 consecutive
days; or
(vii) the commencement by the Company or any of its subsidiaries
of a voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other
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applicable federal or state bankruptcy, insolvency or other similar
laws, or the consent by any of them to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or any of its
subsidiaries for any substantial part of any of their property, or the
making by any of them of any general assignment for the benefit of
creditors, or the failure of the Company or of any of its subsidiaries
generally to pay its debts as such debts become due, or the taking of
corporate action by the Company or any of its subsidiaries in
furtherance of or which might reasonably be expected to result in any of
the foregoing; or
(viii) a default or an event of default as defined in any
instrument evidencing or under which the Company or any of its
subsidiaries has outstanding at the time any Indebtedness in excess of
$500,000 in aggregate principal amount shall occur and as a result
thereof the maturity of any such Indebtedness shall have been
accelerated so that the same shall have become due and payable prior to
the date on which the same would otherwise have become due and payable
and such acceleration shall not have been rescinded or annulled within
20 days; or
(ix) final judgment (not reimbursed by insurance policies of the
Company or any of its subsidiaries) for the payment of money in excess
of $500,000 shall be rendered against the Company or any of its
subsidiaries and the same shall remain undischarged for a period of 30
days during which execution shall not be effectively stayed;
then the holders of at least 33-1/3% in aggregate principal amount of the Notes
at the time outstanding may, at their option, by a notice in writing to the
Company declare this Note to be, and this Note shall thereupon be and become
immediately due and payable together with interest accrued thereon, without
diligence, presentment, demand, protest or further notice of any kind, all of
which are expressly waived by the Company to the extent permitted by law.
At any time after any declaration of acceleration has been made
as provided in this Section 9, the holders of a majority in principal amount of
the Notes then outstanding may,
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by notice to the Company, rescind such declaration and its consequences,
provided, however, that no such rescission shall extend to or affect any
subsequent default or Event of Default or impair any right consequent thereon.
Without limiting the foregoing, the Company hereby waives any
right to trial by jury in any legal proceeding related in any way to this Note
and agrees that any such proceeding may, if the holder so elects, be brought and
enforced in the Supreme Court of the State of New York for New York County or
the United States District Court for the Southern District of New York and the
Company hereby waives any objection to jurisdiction or venue in any such
proceeding commenced in such court. The Company further agrees that any process
required to be served on it for purposes of any such proceeding may be served on
it, with the same effect as personal service on it within the State of New York,
by registered mail addressed to it at its office or agency set forth in
paragraph (a) of Section 7 for purposes of notices hereunder.
10. Suits for Enforcement. Subject to the provisions of Section
13 of this Note, in case any one or more of the Events of Default specified in
Section 9 of this Note shall happen and be continuing (subject to any applicable
cure period expressly set forth herein), the holder of this Note may proceed to
protect and enforce its rights by suit in equity, action at law and/or by other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Note or in aid of the exercise of any power granted
in this Note, or may proceed to enforce the payment of this Note or to enforce
any other legal or equitable right of the holder of this Note.
In case of any default under this Note, the Company will pay to
the holder hereof reasonable collection costs and reasonable attorneys' fees, to
the extent actually incurred.
11. Remedies Cumulative. No remedy herein conferred upon the
holder of this Note is intended to be exclusive of any other remedy and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
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12. Remedies Not Waived. No course of dealing between the Company
and the holder of this Note or any delay on the part of the holder hereof in
exercising any rights hereunder shall operate as a waiver of any right of the
holder of this Note.
13. Subordination. (a) Anything contained in this Note to the
contrary notwithstanding, the indebtedness evidenced by the Notes shall be
subordinate and junior, to the extent set forth in the following paragraphs (A),
(B), (C), (D) and (E), to all Senior Indebtedness of the Company. "Senior
Indebtedness" shall mean the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on, and
all reasonable fees, reimbursement and indemnity obligations, and all other
obligations arising in connection with, any indebtedness for borrowed money of
the Company, contingent or otherwise, now outstanding or created, incurred,
issued, assumed or guaranteed in the future, for which, in the case of any
particular indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
indebtedness shall not be subordinate in right of payment to any other
indebtedness of the Company. Without limiting the generality of the foregoing,
Senior Indebtedness shall include all Obligations under and as defined in the
Credit Agreement (the "Senior Credit Obligations"). Notwithstanding the
foregoing, Senior Indebtedness shall include only such Senior Credit Obligations
until such time as the same are paid in full in cash and all obligations to
provide financial accommodations under the Credit Agreement have terminated. For
purposes of this Note, "Credit Agreement" shall mean the Credit Agreement, dated
as of March 29, 1996, as amended or otherwise modified, among Aurora Electronics
Group, Inc., the Company, the Guarantors named therein, the Lenders named
therein and The Chase Manhattan Bank (formerly known as Chemical Bank, N.A.), as
Agent (the "Agent"), together with any agreement entered into in connection with
the restatement, renewal, extension, restructuring, refunding or refinancing of
the Obligations.
(A) Unless and until all Senior Indebtedness shall have been paid
in full in cash and all obligations to provide financial accommodations
under the Credit Agreement
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have terminated, the Company will not make, directly or indirectly, and
the holders of the Notes shall not be entitled to make demand for or
receive, any payment or prepayment on account of the Notes; provided,
however, that the Company shall be permitted to pay, and the holders of
the Notes shall be permitted to receive, regularly scheduled payments of
interest on the Notes made via the issuance of PIK Notes.
(B) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Company or its
creditors or its property, and in the event of any proceedings for
voluntary liquidation, dissolution or other winding up of the Company,
whether or not involving insolvency or bankruptcy proceedings, then all
Senior Indebtedness shall first be paid in full in cash and all
obligations to provide financial accommodations under the Credit
Agreement have terminated, before any payment, whether on account of
principal, interest or otherwise, is made upon the Notes.
(C) In any of the proceedings referred to in paragraph (B) above,
any payment or distribution of any kind or character, whether in cash,
property, stock or obligations which may be payable or deliverable in
respect of the Notes shall be paid or delivered directly to the holders
of Senior Indebtedness for application in payment thereof, unless and
until all Senior Indebtedness shall have been paid in full in cash and
all obligations to provide financial accommodations under the Credit
Agreement have terminated.
(D) Except for regularly scheduled payments of interest on the
Notes made via the issuance of PIK Notes, no payment shall be made,
directly or indirectly, on account of the Notes (i) upon maturity of any
Senior Indebtedness obligation, by lapse of time, acceleration (unless
waived), or otherwise, unless and until all principal thereof and
interest thereon and all other obligations in respect thereof shall
first be paid in full in cash and all obligations to provide financial
accommodations under the Credit Agreement have terminated, or (ii) upon
the happening of any default in payment of any principal of, premium, if
any, or
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interest on or any other amounts payable in respect of Senior
Indebtedness when the same becomes due and payable whether at maturity
or at a date fixed for prepayment or by declaration or otherwise (a
"Senior Payment Default"), unless and until such Senior Payment Default
shall have been cured or waived or shall have ceased to exist.
(E) Upon the happening of an event of default with respect to any
Senior Indebtedness permitting (after notice or lapse of time or both)
one or more holders of such Senior Indebtedness (or, in the case of the
Credit Agreement, the Agent) to declare such Senior Indebtedness due and
payable prior to the date on which it is otherwise due and payable (a
"Nonmonetary Default"), upon the occurrence of (i) receipt by the
holders of the Notes of written notice from the holders of said Senior
Indebtedness (or, in the case of the Credit Agreement, the Agent) of a
Nonmonetary Default (any such notice, a "Blockage Notice"), or (ii) if
such Nonmonetary Default results from the acceleration of the Notes, the
date of such acceleration; then (x) the Company will not make, directly
or indirectly, to the holder of the Notes any payment of any kind of or
on account of all or any part of the Notes, except for regularly
scheduled payments of interest on the Notes made via the issuance of PIK
Notes; (y) the holders of the Notes will not accept from the Company any
payment of any kind of or on account of all or any part of the Notes,
except for regularly scheduled payments of interest on the Notes made
via the issuance of PIK Notes and (z) the holders of the Notes may not
take, demand, receive, sue for, accelerate or commence any remedial
proceedings with respect to any amount payable under the Notes, unless
and until in each case described in clauses (x), (y) and (z) all such
Senior Indebtedness shall have been paid in full in cash and all
obligations to provide financial accommodations under the Credit
Agreement have terminated; provided, however, that if such Nonmonetary
Default shall have occurred and be continuing for a period (a "Blockage
Period") commencing on the earlier of the date of receipt of such
Blockage Notice or the date of the acceleration of the Notes and ending
179 days thereafter (it being understood that not more than one Blockage
Period may be commenced with respect to the Notes during any period of
360 consecutive days), and during such Blockage Period (i) such
Nonmonetary Default
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shall not have been cured or waived, (ii) the holder of such Senior
Indebtedness (or, in the case of the Credit Agreement, the Agent) shall
not have made a demand for payment and commenced an action, suit or
other proceeding against the Company and (iii) none of the events
described in subsection (A) above shall have occurred, then (to the
extent not otherwise prohibited by subsections (A), (B), (C) or (D)
above) the Company may, not less than 10 days after receipt by the
holders of such Senior Indebtedness or the Agent, as the case may be, of
written notice to such effect from the holders of the Notes, make and
the holders of the Notes may accept from the Company all past due and
current payments of any kind of or on account of the Notes, and such
holder may demand, receive, retain, sue for or otherwise seek
enforcement or collection of all amounts payable on account of principal
of or interest on the Notes.
(b) Subject to the payment in full in cash of all Senior
Indebtedness as aforesaid and the termination of all obligations to provide
financial accommodations under the Credit Agreement, the holders of the Notes
shall be subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions of any kind or character, whether in cash,
property, stock or obligations, which may be payable or deliverable to the
holders of Senior Indebtedness, until the principal of, and interest on, the
Notes shall be paid in full in cash, and, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the holders of the Notes, no
such payment or distribution made to the holders of Senior Indebtedness by
virtue of this Section 13 which otherwise would have been made to the holder of
the Notes shall be deemed a payment by the Company on account of the Senior
Indebtedness, it being understood that the provisions of this Section 13 are and
are intended solely for the purposes of defining the relative rights of the
holders of the Notes, on the one hand, and the holder of the Senior
Indebtedness, on the other hand. Subject to the rights, if any, under this
Section 13 of holders of Senior Indebtedness to receive cash, property, stock or
obligations otherwise payable or deliverable to the holders of the Notes,
nothing herein shall either impair, as between the Company and the holder of the
Notes, the obligation of the Company, which is unconditional and absolute, to
pay to the holder thereof the principal thereof and interest thereon in
accordance with its terms or prevent (except
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as otherwise specified therein) the holders of the Notes from exercising all
remedies otherwise permitted by applicable law or hereunder upon default
hereunder.
(c) If any payment or distribution of any character or any
security, whether in cash, securities or other property, shall be received by
any holders of the Notes in contravention of any of the terms hereof or before
all the Senior Indebtedness obligations have been paid in full in cash and all
obligations to provide financial accommodations under the Credit Agreement have
terminated, such payment or distribution or security shall be received in trust
for the benefit of, and shall be paid over or delivered and transferred to, the
holders of the Senior Indebtedness at the time outstanding in accordance with
the priorities then existing among such holders for application to the payment
of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all
such Senior Indebtedness in full in cash. In the event of the failure of any
such holder to endorse or assign any such payment, distribution or security,
each holder of any Senior Indebtedness is hereby irrevocably authorized to
endorse or assign the name.
(d) The rights under these subordination provisions of the
holders of any Senior Indebtedness as against any holders of the Notes shall
remain in full force and effect without regard to, and shall not be impaired or
affected by:
(i) any act or failure to act on the part of the Company; or
(ii) any extension or indulgence in respect of any payment or
prepayment of any Senior Indebtedness or any part thereof or in respect
of any other amount payable to any holder of any Senior Indebtedness; or
(iii) any amendment, modification or waiver of, or addition or
supplement to, or deletion from, or compromise, release, consent or
other action in respect of, any of the terms of any Senior Indebtedness
or any other agreement which may be made relating to any Senior
Indebtedness; or
(iv) any exercise or non-exercise by the holder of any Senior
Indebtedness of any right, power, privilege or remedy
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under or in respect of such Senior Indebtedness or these subordination
provisions or any waiver of any such right, power, privilege or remedy
or of any default in respect of such Senior Indebtedness or these
subordination provisions or any receipt by the holder of any Senior
Indebtedness of any security, or any failure by such holder to perfect a
security interest in, or any release by such holder of, any security for
the payment of such Senior Indebtedness; or
(v) any merger or consolidation of the Company or any of its
subsidiaries into or with any other person, or any sale, lease or
transfer of any or all of the assets of the Company or any of its
subsidiaries to any other person; or
(vi) absence of any notice to, or knowledge by, any holder of any
claim hereunder of the existence or occurrence of any of the matters or
events set forth in the foregoing clauses (i) through (v); or
(vii) any other circumstance.
(e) The holders of the Notes unconditionally waive (i) notice of
any of the matters referred to in Section 13(d); (ii) all notices which may be
required, whether by statute, rule of law or otherwise, to preserve intact any
rights of any holder of any Senior Indebtedness, including, without limitation,
any demand, presentment and protest, proof of notice of nonpayment under any
Senior Indebtedness or the Credit Agreement, and notice of any failure on the
part of the Company to perform and comply with any covenant, agreement, term or
condition of any Senior Indebtedness, (iii) any right to the enforcement,
assertion or exercise by any holder of any Senior Indebtedness of any right,
power, privilege or remedy conferred in such Senior Indebtedness or otherwise,
(iv) any requirements of diligence on the part of any holder of any of the
Senior Indebtedness, (v) any requirement on the part of any holder of any Senior
Indebtedness to mitigate damages resulting from any default under such Senior
Indebtedness and (vi) any notice of any sale, transfer or other disposition of
any Senior Indebtedness by any holder thereof.
(f) The obligations of the holder under these subordination
provisions shall continue to be effective, or be reinstated, as the case may be,
if at any time any payment in respect of
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any Senior Indebtedness, or any other payment to any holder of any Senior
Indebtedness in its capacity as such, is rescinded or must otherwise be restored
or returned by the holder of such Senior Indebtedness upon the occurrence of any
proceeding referred to in paragraph 13(a)(B) or upon or as a result of the
appoint of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Company or any substantial part of its property or otherwise,
all as though such payment had not been made.
(g) Notwithstanding anything to the contrary herein, the Company
shall not at any time offer (and the holder hereof shall not at any time accept)
(i) any pledge of collateral or (ii) any guaranty by any parent or subsidiary of
the Company, in each case with respect to the obligations of the Company under
this Note.
14. Covenants Bind Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Company shall bind its successors and assigns, whether so expressed or not.
15. Governing Law. This Note shall be governed by and construed
in accordance with the laws of the State of New York.
16. Headings. The headings of the sections and paragraphs of this
Note are inserted for convenience only and do not constitute a part of this
Note.
17. Third Party Beneficiaries. The provisions of Section 13 are
intended to be for the benefit of, and shall be enforceable directly by each
holder of, the Senior Indebtedness.
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IN WITNESS WHEREOF, Aurora Electronics, Inc. has caused this Note
to be signed in its corporate name by one of its officers thereunto duly
authorized and to be dated as of the day and year first above written.
AURORA ELECTRONICS, INC.
By:
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Xxx X. Xxxxxx
Chairman and Chief
Executive Officer
