EXHIBIT 10.4
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT
COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT dated as of October 3, 2008, by and among AMPEX CORPORATION, a Delaware corporation (the " Borrower" ), THE SUBSIDIARIES OF THE BORROWER PARTY HERETO (the " Subsidiary Guarantors" ), HILLSIDE CAPITAL INCORPORATED (" Hillside" ), in its capacity as collateral agent for the First Lien Claimholders and the Second Lien Claimholders (each as defined below) (together with its successors and assigns in such capacity, the " Collateral Agent" ), U.S. BANK NATIONAL ASSOCIATION, in its capacity as indenture trustee under the First Lien Indenture (as defined below) (together with its successors and assigns in such capacity, the " First Lien Trustee" ) and Hillside, in its capacity as the lender under the Second Lien Credit Agreement (as defined below) (together with its successors and assigns in such capacity, the " Second Lien Lender" ). Capitalized terms used in this introductory paragraph and the in recitals below but not otherwise defined herein or therein have the meanings set forth in Section 1 below.
RECITALS
WHEREAS, the Borrower, the Subsidiary Guarantors and the First Lien Trustee have entered into that certain amended and restated indenture, dated as of the date hereof, providing for the issue of the First Lien Notes (as defined below) (as amended, restated, supplemented, modified or refinanced from time to time in accordance with the terms hereof, the " First Lien Indenture" );
WHEREAS, the Borrower, the Subsidiary Guarantors and the Second Lien Lender have entered into that certain credit agreement, dated as of the date hereof, providing for certain loan facilities (as amended, restated, supplemented, modified or Refinanced from time to time in accordance with the terms hereof, the " Second Lien Credit Agreement" );
WHEREAS, the Borrower, certain Subsidiary Guarantors of the Borrower and the Second Lien Lender are entering into the Hillside-Ampex/Sherborne Agreement (as defined herein), providing for, inter alia, the issuance of Series A Preferred Stock (as defined herein) by the Borrower to the Second Lien Lender and its affiliates, and guarantees by certain Subsidiary Guarantors of the Loans under the Second Lien Credit Agreement and of the Borrower' s obligations to make payments to the Second Lien Lender and its affiliates in respect of the Series A Preferred Stock of the Borrower; WHEREAS, the Borrower, the Subsidiary Guarantors and the Collateral Agent party thereto, have entered into that certain security agreement, dated as of the date hereof, under which security interests over substantially all of the assets of the Borrower and the Subsidiary Guarantors are granted in favor of the Collateral Agent, acting on behalf of the First Lien Trustee and the Second Lien Lender (as amended, restated, supplemented or modified from time to time, the " Security Agreement" );
WHEREAS, pursuant to ( i ) Article XII of the First Lien Indenture, the Subsidiary Guarantors have agreed to guarantee the First Lien Notes (the " First Lien Guaranty" ); ( ii ) Article III of the Second Lien Credit Agreement, the Subsidiary Guarantors have agreed to guarantee the Loans referred to therein (the " Second Lien Guaranty" ); and ( iii ) pursuant to the Hillside-Ampex/Sherborne Agreement, the Subsidiary Guarantors have agreed to guarantee the Loans and the Series A Preferred Stock;
WHEREAS, the obligations of the Borrower under the First Lien Indenture and the obligations of the Subsidiary Guarantors under the First Lien Guaranty will be secured on a first priority basis by liens on substantially all the assets (other than the Excluded Collateral, as defined in the Security Agreement) of the Borrower and the Subsidiary Guarantors, respectively, pursuant to the terms of the Security Agreement;
WHEREAS, the obligations of the Borrower under the Second Lien Credit Agreement and the obligations of the Subsidiary Guarantors under the Second Lien Guaranty will be secured on a second priority basis by liens on substantially all the assets (other than the Excluded Collateral, as defined in the Security Agreement) of the Borrower, and the Subsidiary Guarantors, respectively, pursuant to the terms of the Security Agreement;
WHEREAS, the First Lien Credit Documents and the Second Lien Credit Documents provide, among other things, that the parties thereto shall set forth in this Agreement their respective rights and remedies with respect to the Collateral; and WHEREAS, in order to induce the holders of the First Lien Notes to enter into the transactions contemplated by the First Lien Indenture, the Second Lien Lender has agreed to the subordination, intercreditor and other provisions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. Definitions .
1.1 Defined Terms . Capitalized terms used but not defined herein shall have the meanings provided therefor in the Second Lien Credit Agreement. As used in the Agreement, the following terms shall have the following meanings:
" Accounts" means any and all deposit accounts and securities investment accounts of the Grantors.
" Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
" Agreement" means this Collateral Agency and Intercreditor Agreement, as amended, renewed, extended, supplemented or otherwise modified from time to time in accordance with the terms hereof.
" Bankruptcy Code" means Title 11 of the United States Code entitled " Bankruptcy," as now and hereafter in effect, or any successor statute.
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" Bankruptcy Law" means the Bankruptcy Code and any similar federal, state or foreign law for the relief of debtors.
" Borrower" has the meaning assigned to that term in the Preamble hereto. " Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.
" Claimholders" means, collectively, the First Lien Claimholders and the Second Lien Claimholders.
" Collateral" means all of the assets and property of any Grantor, whether real, personal or mixed, constituting both First Lien Collateral and Second Lien Collateral.
" Collateral Agent" has the meaning assigned to that term in the Preamble hereto.
" Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. " Controlling" and " Controlled" have meanings correlative thereto. " Control Agreements" means control agreements covering Accounts entered into by the Collateral Agent, the Borrower or any Grantor and a depository bank or securities intermediary, as applicable, which shall secure both the First Lien Secured Obligations and the Second Lien Secured Obligations in the aggregate. " DIP Financing" means a financing obtained by the Borrower or any other Grantor, whether from the First Lien Claimholders or any other entity under Section 363 or Section 364 of the Bankruptcy Code or any similar Bankruptcy Law.
" Discharge of First Lien Secured Obligations" means, without duplication and except to the extent otherwise provided in Section 5.6, and subject at all times to Section 6.4, ( a ) payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest would be allowed in such Insolvency or Liquidation Proceeding) and premium, if any, on all First Lien Notes and ( b ) payment in full in cash of all other First Lien Secured Obligations that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid. " Disposition" has the meaning set forth in Section 5.1(a)(ii). " Enforcement Action" means (a) to take from or for the account of any Borrower or Subsidiary Guarantor, by set-off or in any other manner, the whole or any part of any moneys which may now or hereafter be owing by such Borrower or Subsidiary Guarantor to any First Lien Claimholder, (b) to notify account debtors or directly collect accounts receivable or other payment rights of any Borrower or Subsidiary Guarantor, (c) take any action under the provisions of any state or federal law, including, without limitation, the Uniform Commercial Code, or under any contract or agreement, to enforce, foreclose upon, take possession of or sell any Collateral, or (d) declare immediately due and payable by acceleration the First Lien Notes; provided that the issuance of a notice of Default or Event of Default, reservation of rights letter or other similar notice shall not be deemed to be an Enforcement Action.
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" Event of Default" means an Event of Default under (and as defined in) either the First Lien Indenture or the Second Lien Credit Agreement.
" First Lien Claimholders" means, at any relevant time, the holders of First Lien Secured Obligations at such time, including without limitation the First Lien Trustee and the First Lien Noteholders or any Affiliate of the First Lien Trustee or any such holder. " First Lien Collateral" has the meaning assigned to that term in the Security Agreement. " First Lien Credit Documents" means the First Lien Indenture, the First Lien Notes, the Security Agreement and each of the other agreements, documents and instruments providing for or evidencing any other First Lien Secured Obligation, and any other document or instrument executed or delivered at any time in connection with any First Lien Secured Obligations, including any intercreditor or joinder agreement among holders of First Lien Secured Obligations, to the extent such are effective at the relevant time, as each may be modified from time to time in accordance with the terms of this Agreement; provided that any such modification does not increase the principal amount of First Lien Secured Obligations permitted under this Agreement.
" First Lien Guaranty" has the meaning assigned to that term in the Recitals hereto.
" First Lien Indenture" has the meaning set forth in the Recitals hereto.
" First Lien Noteholders" means the holder of any note issued under the First Lien Indenture.
" First Lien Notes" means the Borrower' s 12% Senior Secured Notes due 2009 issued under the First Lien Indenture.
" First Lien Secured Obligations" means the First Lien Notes in an aggregate principal amount at any one time outstanding of up to $3,658,080, as such principal amount may be increased by amendments complying with Section 5.3(a) hereof, and all other obligations, liabilities and indebtedness of every kind, nature and description owing by the Grantors to the First Lien Claimholders and/or any of their respective affiliates under or in connection with the First Lien Credit Documents (as in effect on the date hereof or amended in accordance with the terms hereof), including interest, charges, fees, costs, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the commencement of an Insolvency or Liquidation Proceeding (including the payment of interest and other amounts which would accrue and become due but for the commencement of such Insolvency or Liquidation Proceeding, whether or not such amounts are allowed or allowable in whole or in part in such Insolvency or Liquidation Proceeding), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, and however acquired by the First Lien Claimholders. To the extent any payment with respect to
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the First Lien Secured Obligations (whether by or on behalf of any Grantor, as proceeds of security, enforcement of any right of set-off or otherwise) is declared to be fraudulent or preferential in any respect, set aside or required to be paid to a debtor in possession, trustee, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred.
" First Lien Security Interest" means any Lien on the First Lien Collateral granted in favor of the Collateral Agent for the benefit of the First Lien Claimholders, including under Section 3(i) of the Security Agreement. " First Lien Trustee" has the meaning set forth in the Preamble hereto. " GAAP" means generally accepted accounting principles in the United States of America, applied on a consistent basis. " Governmental Authority" means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
" Grantors" means the Borrower and each of the Subsidiary Guarantors that have executed and delivered, or may from time to time hereafter execute and deliver, a Security Document.
" Hillside-Ampex/Sherborne Agreement" means the amended and restated agreement dated October 3, 2008, among (i) Ampex Corporation and each other member of the Ampex Group (as therein defined), (ii) Hillside and each other member of the Limited Hillside Group (as therein defined), and (iii) Sherborne Holdings Incorporated and each other member of the Sherborne Group (as therein defined). " Insolvency or Liquidation Proceeding" means ( a ) any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to any Grantor, ( b ) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to a material portion of their respective assets, ( c ) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or ( d ) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Grantor.
" Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.
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" Majority Claimholders" means, at any time, (a) Claimholders holding in excess of 50% of the aggregate principal amount of First Lien Secured Obligations at such time and (b) Claimholders holding in excess of 50% of the aggregate principal amount of the Second Lien Secured Obligations at such time. " Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
" Pledged Collateral" has the meaning set forth in Section 5.5 hereof.
" Recovery" has the meaning set forth in Section 6.4 hereof. " Refinance" means, in respect of any indebtedness, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other indebtedness, in exchange or replacement for, such indebtedness in whole or in part. " Refinanced" and " Refinancing" shall have correlative meanings. " Required Claimholders" means, at any time during the Standstill Period, the holders of the First Lien Secured Obligations and thereafter, the holders of the Second Lien Secured Obligations.
" Second Lien Claimholders" means, at any relevant time, the holders of Second Lien Secured Obligations at such time, including without limitation the Second Lien Lender or any Affiliate of the Second Lien Lender under the Second Lien Credit Agreement. " Second Lien Collateral" has the meaning assigned to that term in the Security Agreement. " Second Lien Credit Agreement" has the meaning set forth in the Recitals hereto. " Second Lien Credit Documents" means the Second Lien Credit Agreement, the Security Agreement, the Hillside-Ampex/Sherborne Agreement, the other Loan Documents and each of the other agreements, documents and instruments providing for or evidencing any other Second Lien Secured Obligation, and any other document or instrument executed or delivered at any time in connection with any Second Lien Secured Obligations, including any intercreditor or joinder agreement among holders of Second Lien Secured Obligations, to the extent such are effective at the relevant time, as each may be modified or Refinanced from time to time in accordance with the terms hereof; provided that any such modification does not increase the principal amount thereof beyond the aggregate principal amount of Second Lien Secured Obligations permitted under this Agreement on the date hereof.
" Second Lien Guaranty" has the meaning assigned to that term in the Recitals hereto. " Second Lien Lender" means the " Lender" under and as defined in the Second Lien Credit Agreement.
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" Second Lien Secured Obligations" means all " Loans" outstanding under and as defined in the Second Lien Credit Agreement and the other Second Lien Credit Documents, an aggregate principal amount at any one time outstanding of up to $25,000,000, as such principal amount may be increased by amendments complying with Section 5.3(b) hereof, the Series A Preferred Stock, the guarantees by the Subsidiary Guarantors of the Loans and of the Series A Preferred Stock contained in the Hillside-Ampex/Sherborne Agreement executed and delivered in connection with the Second Lien Credit Agreement, and all other obligations, liabilities and indebtedness of every kind, nature and description owing by the Grantors to the Second Lien Claimholders and/or any of their respective affiliates under or in connection with the Second Lien Credit Documents (as in effect on the date hereof or amended in accordance with the terms thereof and hereof), including interest, charges, fees, costs, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Second Lien Credit Agreement or after the commencement of an Insolvency or Liquidation Proceeding (including the payment of interest and other amounts which would accrue and become due but for the commencement of such Insolvency or Liquidation Proceeding, whether or not such amounts are allowed or allowable in whole or in part in such Insolvency or Liquidation Proceeding), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured, and however acquired by the Second Lien Claimholders. To the extent any payment with respect to the Second Lien Secured Obligations (whether by or on behalf of any Grantor, as proceeds of security, enforcement of any right of set-off or otherwise) is declared to be fraudulent or preferential in any respect, set aside or required to be paid to a debtor in possession, trustee, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred.
" Second Lien Security Interest" means any Lien on the Second Lien Collateral granted in favor of the Collateral Agent for the benefit of the Second Lien Claimholders, including under Section 3(ii) of the Security Agreement.
" Security Agreement" has the meaning set forth in the Recitals hereto.
" Security Documents" means, collectively, the Security Agreement and all Uniform Commercial Code financing statements required by the Security Agreement to be filed with respect to the security interests in personal property and fixtures created pursuant to the Security Agreement.
" Series A Preferred Stock" has the meaning assigned to such term in the Hillside-Ampex/Sherborne Agreement.
" Standstill Period" means the period of 60 days after the date on which the principal of the First Lien Notes is accelerated pursuant to Section 7.02 of the First Lien Note Indenture.
" Subsidiary" means, with respect to any Person (the " parent" ) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent' s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the
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equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless otherwise specified, " Subsidiary" means a Subsidiary of the Borrower.
" Subsidiary Guarantors" has the meaning set forth in the Preamble hereto.
" Transaction Documents" means, the First Lien Credit Documents, the Second Lien Credit Documents and the Plan of Reorganization.
" Uniform Commercial Code" or " UCC" means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.
1.2 Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words " include" , " includes" and " including" shall be deemed to be followed by the phrase " without limitation." The word " will" shall be construed to have the same meaning and effect as the word " shall" . Unless the context requires otherwise ( a ) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified, ( b ) any reference herein to any Person shall be construed to include such Person' s successors and assigns, ( c ) the words " herein" , " hereof" and " hereunder" , and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, ( d ) all references herein to Exhibits or Sections shall be construed to refer to Exhibits or Sections of this Agreement and ( e ) the words " asset" and " property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
Section 2. Lien Priorities .
2.1 Relative Priorities . Notwithstanding the date, manner or order of grant, attachment or perfection of any Liens securing the Second Lien Secured Obligations granted on the Collateral, or of any Liens securing the First Lien Secured Obligations granted on the Collateral and notwithstanding any provision of the UCC or any other applicable law or the provisions of the Second Lien Credit Documents or any other circumstance whatsoever (including, without limitation, the time, order or method of grant, attachment, recording or perfection of any financing statements or other security interests, assignments, pledges, deeds, mortgages and other liens, charges or encumbrances or any defect or deficiency or alleged defect or deficiency in any of the foregoing, or the fact that any such Liens securing First Lien Secured Obligations are at any time (x) subordinated to any Lien securing any obligation of any Person or to any Indebtedness in favor of any Person or (y) otherwise subordinated, voided, avoided, invalidated or lapsed), the Second Lien Lender, for itself and on behalf of the Second Lien Claimholders, hereby agrees that: ( a ) any Lien on the Collateral securing any First Lien Secured Obligations now or hereafter held by or on behalf of the First Lien Trustee or any First Lien Claimholders or any agent or trustee therefor, regardless of how acquired, whether by grant,
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possession, statute, operation of law, subrogation or otherwise, shall be senior in all respects and prior to any Lien on the Collateral securing any Second Lien Secured Obligations; and ( b ) any Lien on the Collateral now or hereafter held by or on behalf of any Second Lien Claimholders or any agent or trustee therefor, regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Collateral securing any First Lien Secured Obligations. All Liens on the Collateral securing any First Lien Secured Obligations shall be and remain senior in all respects and prior to all Liens on the Collateral securing any Second Lien Secured Obligations for all purposes, regardless of the time, order or method of grant, attachment, recording or perfection of any financing statements or other security interests, assignments, pledges, deeds, mortgages and other liens, charges or encumbrances or any defect or deficiency or alleged defect or deficiency in any of the foregoing, or the fact that any such Liens in favor of any First Lien Trustee are (x) subordinated to any Lien securing any obligation of any Person or to any Indebtedness in favor of any Person or (y) otherwise subordinated, voided, avoided, invalidated or lapsed. 2.2 Prohibition on Contesting Liens . Each of the Second Lien Lender, for itself and on behalf of each Second Lien Claimholder, and the First Lien Trustee, for itself and on behalf of each First Lien Claimholder, agrees that it shall not (and hereby waives any right to) contest, or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the priority, validity or enforceability of a Lien held by or on behalf of any of the First Lien Claimholders in the First Lien Collateral or by or on behalf of any of the Second Lien Claimholders in the Second Lien Collateral, as the case may be; provided that nothing in this Agreement shall be construed to prevent or impair the rights of the First Lien Trustee or any First Lien Claimholder to enforce this Agreement, including the priority of the Liens securing the First Lien Secured Obligations as provided in Sections 2.1 and 3.1, the application of proceeds of Collateral in Section 4.1, the turnover of payments in Section 4.2 and the release of the Liens encumbering the Collateral as provided in Section 5.
2.3 No New Liens . So long as the Discharge of First Lien Secured Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Borrower or any Subsidiary Guarantor, the parties hereto agree that the Borrower shall not, and shall not permit any Subsidiary Guarantor to, ( i ) grant or permit any additional Liens on any asset or property to secure any Second Lien Secured Obligation by the Borrower, a Subsidiary Guarantor or any Subsidiary thereof unless such entity has granted a Lien on such asset or property to secure the First Lien Secured Obligations, ( ii ) grant or permit any additional Liens on any asset or property to secure any First Lien Secured Obligations by the Borrower, a Subsidiary Guarantor or any Subsidiary thereof unless such entity has granted a Lien on such asset or property to secure the Second Lien Secured Obligations, (iii) cause a Subsidiary to guarantee any Second Lien Secured Obligations unless it has caused such Subsidiary to guarantee the First Lien Secured Obligations on the same terms hereof and (iv) cause a Subsidiary to guarantee any First Lien Secured Obligations unless it has caused such Subsidiary to guarantee the Second Lien Secured Obligations on the same terms hereof. To the extent t
