1
EXHIBIT 10.36
Exhibit C
FORM OF 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 GROUP, INC.
10% Senior Subordinated Note
Due September 30, 2001
$ , 199
AURORA ELECTRONICS GROUP, INC., a California corporation
(hereinafter called the "Company"), for value received, hereby promises to pay
to (" "), or registered assigns, the principal sum
of DOLLARS ($ ), on September 30,
2001 and, subject to the provisions of Section 13 hereof, 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 ,
199 , until the principal amount hereof shall have become due and payable,
whether at maturity or by acceleration or otherwise, and thereafter at the rate
of 12% per annum on any overdue principal amount and (to the extent permitted by
applicable law) on any overdue interest until paid.
All payments of principal and interest on this Note shall be in such
coin or currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts.
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.
2
1. The Note. This Note is one of the Notes in the aggregate
principal amount of up to $12,000,000 issued pursuant to and subject to the
terms and provisions of the Financial Support Agreement dated as of September
20, 1996 (the "Financial Support Agreement"), among Aurora Electronics, Inc., a
Delaware corporation ("Aurora"), the Company, Welsh, Carson, Xxxxxxxx & Xxxxx
VII, L.P., a Delaware limited partnership ("WCAS VII"), and WCAS Capital
Partners II, L.P., a Delaware limited partnership ("WCAS XX XX") and the terms
of this Note include those stated in the Financial Support Agreement. As used
herein, the term "Note" or "Notes" includes the 10% Senior Subordinated Note due
Septem- ber 30, 2001 of the Company originally so issued pursuant to the
Financial Support Agreement and any 10% Senior Subordinated Note or Notes due
September 30, 2001 subsequently issued upon exchange or transfer thereof.
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
therewith), receive in exchange therefor a Note or Notes each in such
denomination or denominations (in integral multiples of $10,000) 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
3
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, whether or not this Note
shall be overdue. 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.
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 without penalty, as a whole at any time or in part from time to time
in amounts which shall be integral multiples of $10,000.
(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. Subject to any applicable restrictions contained in the Credit
Agreement (as hereinafter defined), 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.
(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
3
4
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 with respect to the
Company's ability to redeem, repurchase or otherwise make payments or
prepayments under or in respect of this Note:
(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 in
amounts which shall be in integral multiples of $10,000 pursuant to the offer
described below, at a purchase price equal to 100% of the principal 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
4
5
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 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, which unpurchased portion must be
equal to $1,000 in principal amount or a multiple thereof.
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
5
6
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; provided, that each such new Note will be in a
principal amount of $10,000 or an integral multiple thereof. 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 indirect, 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, as hereinafter defined), (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 Aurora or
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 Aurora's or
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 Aurora or the Company, as the case may be, 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 Aurora's or the
Company's, as the case may be, 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.
6
7
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 Aurora or 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 Aurora or the
Company, and (iv) the term "WCAS Group" shall mean WCAS VII, WCAS XX XX and any
general partners thereof.
7. Covenants Relating to the Note. The Company covenants and
agrees that so long as the Note shall be outstanding 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 Xxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000-0000.
(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
7
8
validity thereof to be questionable and the party to whom such tax, assessment,
charge, xxxx 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 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 the
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 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.
8
9
(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 310 of the General Corporation Law of
the State of California, or otherwise permitted by such Section , (iii) customer
transactions in the ordinary course of business and on arm's length terms and
(iv) the transactions contemplated by the Financial Support Agreement.
(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 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:
9
10
(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 Financial Support
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 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 13), (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
10
11
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 (other than the Convertible Preferred Stock (as hereinafter
defined)) 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, 2001.
(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
(W) distributions permitted by the Credit Agreement, (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 to Aurora for the
purpose of enabling Aurora to pay (I) dividends on account of Aurora's
Convertible Preferred Stock, $.01 par value (the "Convertible Preferred Stock")
or (II) interest on account of Xxxxxx's 10% Senior Subordinated Notes due 2001
in the principal amount of $10,000,000 (the "Aurora Subordinated Notes"), 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
11
12
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:
(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
12
13
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 at
maturity or at a date fixed for prepayment or repurchase (including
default of any 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
Financial Support 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 Financial Support 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 Aurora, 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 Aurora, 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 Aurora, 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 applicable federal
or state bankruptcy, insolvency or other similar laws, or the consent
by any of them to the
13
14
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of Aurora, 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
Aurora, 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
Aurora, 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 Aurora, 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
Aurora, the Company or any of its subsidiaries) for the payment of
money in excess of $500,000 shall be rendered against Aurora, 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, subject to any applicable restrictions contained in Section 13 hereof, 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, 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
14
15
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.
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) and (C), 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,
15
16
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); notwithstanding the foregoing, Senior Indebtedness shall
include only such 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 among the Company, Aurora
and other Guarantors named therein, the Lenders named therein and The Chase
Manhattan Bank (formerly known as Chemical Bank), as Agent (the "Agent"),
together with any agreement entered into in connection with the restatement,
renewal, extension, restructuring, refunding or refinancing of the Obligations
(under and as defined in such Credit Agreement).
(A) 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, before any
payment, whether on account of principal, interest or otherwise, is
made upon the Notes.
(B) In any of the proceedings referred to in paragraph (A)
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.
(C) Unless and until all Senior Indebtedness 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, (i) no payment shall be made, directly or
indirectly, on account of the Notes, (ii) no holder of the Notes may
accept or receive (in cash, property, stock or obligations or by
setoff, exercise of contractual or statutory rights or otherwise) from
the Company or any other source any payment of any kind of or on
account of the Notes and (iii) no holder of the Notes may take, demand,
sue for, accelerate or commence any
16
17
remedial proceedings with respect to any amount payable on account of
the Notes or any Event of Default or other default under any provision
of this Note.
(b) Subject to the payment in full in cash of all Senior
Indebtedness as aforesaid, 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 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
17
18
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 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
18
19
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 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)(A) 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.
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.
18. Assignment and Amendment. Unless and until all Senior
Indebtedness 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, (i) the holder of this Note shall not assign
this Note (other than to any member of the WCAS Group) without the prior written
consent of the Agent and the Lenders, and (ii) this Note shall not be amended or
otherwise modified without the prior written consent of the Agent and the
Lenders.
19
20
IN WITNESS WHEREOF, Aurora Electronics Group, 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 GROUP, INC.
By:____________________
20
