Document:

<PAGE>

                                                                     EXHIBIT 4.7

                                                                         ANNEX A

                             SECURED PROMISSORY NOTE

$2,500,000

                                                              New York, New York
                                                               October 29, 2001

         FOR VALUE RECEIVED, the undersigned, AMPEX DATA SYSTEMS CORPORATION, a
Delaware corporation ("Borrower"), hereby promises to pay to the order of
SHERBORNE & COMPANY INCORPORATED, a Delaware corporation ("Lender"), at the
office of Lender at 135 East 57th Street, New York, New York 10022, on March 31,
2002, the aggregate unpaid principal amount of all loans advanced by Lender to
Borrower pursuant to the Loan Agreement, dated as of October 29, 2001 (the "Loan
Agreement"), between Lender and Borrower, in lawful money of the United States
of America in immediately available funds, and to pay interest from the date
hereof on such principal amount hereof from time to time outstanding, in like
funds, at said office, at a rate or rates per annum and payable on such dates as
determined pursuant to the Loan Agreement. The principal amount outstanding
hereunder may be prepaid by Borrower at any time without premium or penalty.

         This Note is secured by a lien and security interest in certain
"Collateral" owned by Borrower and more fully specified in the Security
Agreement, of even date herewith, between Borrower and Lender, and is
unconditionally guaranteed by Ampex Corporation, a Delaware corporation and the
corporate parent of Borrower ("Guarantor"), pursuant to a Guarantee Agreement,
of even date herewith, between Lender and Guarantor.

         This Note shall become immediately due and payable without any further
action by Lender upon the occurrence and continuance beyond any applicable grace
period of any Event of Default (as defined in the Loan Agreement).

         Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever; the non-exercise by the holder of any of its
rights hereunder in any particularly instance shall not constitute a waiver
thereof in that or any subsequent instance. Borrower hereby waives any rights
which it may have hereunder to setoff its obligations to Lender hereunder
against any other obligations of Lender from time to time owed to Borrower.

         All loans evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be endorsed by

<PAGE>

the holder hereof on the schedule attached hereto and made a part hereof, or on
a continuation thereof which shall be attached hereto and made part hereof, but
failure to make any such endorsement shall not affect Borrower's obligation to
repay all loans hereunder.

         Borrower agrees to pay or reimburse Lender for any and all costs and
expenses which Lender may incur in the collection or enforcement of this Note
upon an Event of Default including reasonable attorneys fees and disbursements.

         All notices, requests, demands and other communications to any party
provided for or permitted hereunder shall, unless otherwise stated herein, be in
writing and shall be sent by certified mail, postage prepaid and return receipt
requested, by telex, telegram or facsimile; by nationally recognized overnight
courier service; or by hand delivery, in each case to such party at its address
set forth in the Loan Agreement, or at such other address as such party may
designate by written notice to the other in accordance with this provision, and
shall be deemed to have been given or made: if by certified mail, return receipt
requested, five (5) days after mailing; if by telex, telegram or facsimile,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
business day, one (1) business day after sending; and if by hand, immediately
upon personal delivery.

         In case any provision of this Note shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

         BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, CLAIM, DEMAND OR CAUSE OF ACTION BY
LENDER ARISING UNDER, IN CONNECTION WITH OR OTHERWISE RELATING TO THIS NOTE,
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE. BORROWER HEREBY AGREES AND CONSENTS THAT LENDER MAY FILE AN
ORIGINAL COUTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THIS CONSENT BY BORROWER TO THE WAIVER OF ITS RIGHTS TO TRIAL BY
JURY.

         Borrower hereby irrevocably submits to the jurisdiction of any New York
State or Federal court sitting in the Borough of Manhattan, The City of New
York, in any action or proceeding arising out of or relating to this Note, and
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such New York State or Federal court.
Borrower hereby irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. Borrower also irrevocably consents to the service of copies of the
summons and complaint and any other process which may be served in any such
action or proceeding by the mailing or delivery of a copy of such

                                       2

<PAGE>

process to such party at its address for notice specified herein by certified
mail, return receipt requested. Nothing contained in this paragraph shall affect
the rights of Borrower or Lender to serve legal process in any other manner
permitted by law or to bring any action or proceeding against the other party or
its property in the courts of any other jurisdictions.

         The validity, interpretation and enforcement of this Note shall be
governed by the internal laws of the State of New York (without giving effect to
principles of conflicts of law).

                                            AMPEX DATA SYSTEMS CORPORATION

                                            By: /s/Craig L. McKibben
                                                --------------------------------
                                                Name:  Craig L. McKibben
                                                Title: Vice President

                                       3

<PAGE>

                              Advances and Payments
                              ---------------------

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Date         Advance       Principal     Interest    of Note        Notation
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                                       4<PAGE>

                                                                     EXHIBIT 4.8

                                                                         ANNEX B

                               SECURITY AGREEMENT

          SECURITY AGREEMENT dated as of October 29, 2001 (the "Agreement") by
AMPEX DATA SYSTEMS CORPORATION, a Delaware corporation (the "Borrower") in favor
of SHERBORNE & COMPANY INCORPORATED, a Delaware corporation, (the "Secured
Party").

          PRELIMINARY STATEMENTS.

          (1)  The Borrower has entered into a Loan Agreement dated the date
hereof providing for Loans (as defined therein) to be made by the Secured Party
from time to time in an aggregate amount up to $2,500,000 (as amended, modified
or supplemented from time to time, the "Loan Agreement,"), which Loans are to be
evidenced by a Secured Promissory Note dated the date hereof (the "Note").

          (2)  As a condition precedent for the Secured Party to make any Loans
under the Loan Agreement, the Borrower is entering into this Security Agreement
to secure the due and punctual performance of the Secured Obligations (as
defined below).

          Section 1.  Grant of Security.
                      -----------------

          The Borrower hereby assigns, conveys, pledges, grants and transfers to
the Secured Party, a lien on and a security interest in, all of the Borrower's
right, title and interest in and to the following personal property and assets
of the Borrower, whether now owned or hereafter acquired, now or hereafter
existing, wherever located, excluding the Excluded Property (defined below)
(collectively, the "Collateral"):

               (1)    All goods, now owned or hereafter acquired by the Borrower
and wherever located, which are held for sale or lease or are to be furnished
under any contract of service or which are leased or so furnished or which are
raw materials, work in process, or materials used or consumed in the business of
the Borrower, including, without limitation, all "inventory" (as such term is
defined in the Uniform Commercial Code (or any successor statute) of the State
of New York or of any other state the laws of which are required by Section
9-301, Section 9-304 and Section 9-306 of the Uniform Commercial Code of the
State of New York to be applied in connection with the perfection of a security
interest in favor of the Secured Party under this Agreement or any other loan
document (the "Code")) and goods the sale or other disposition of which has
given rise to Receivables (as defined below) and which have been returned to or
repossessed or stopped in transit by the Borrower, and all accessions thereto
and products thereof and documents therefor (any and all such goods, accessions,
products and documents being the "Inventory");

               (2)    All of the following (collectively, the "Account
Collateral"): all deposit accounts (general or special) with, and all other
rights and claims now or hereafter existing against, all financial institutions,
in each case, together with all funds held therein and all certificates

<PAGE>

and instruments, if any, from time to time representing or evidencing such
accounts; all collateral investments from time to time and all certificates and
instruments, if any, from time to time representing or evidencing the collateral
investments; and all notes, certificates of deposit, deposit accounts, checks
and other instruments from time to time hereafter delivered to or otherwise
possessed by the Secured Party for or on behalf of the Borrower in substitution
for or in addition to any or all of the then existing Account Collateral; and
all interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the then existing Account Collateral;

               (3)    All cash, accounts (including, without limitation, any
"account" as such term is defined in the Code), accounts receivable, other
receivables, letters of credit, contract rights (including, but not limited to,
all rights of the Borrower to receive moneys due and to become due under or
pursuant to such accounts, accounts receivable, other receivables, letters of
credit and contract rights and all of the Borrower's rights to terminate, and to
perform, compel performance and otherwise exercise all remedies under, such
accounts, accounts receivable, other receivables, letters of credit and contract
rights (including, without limitation, unpaid seller's rights of rescission,
replevin, reclamation and stoppage in transit and rights to returned, reclaimed
or repossessed goods)) , chattel paper, instruments, documents, notes and other
obligations of any kind (in each case excluding the Excluded Property), now or
hereafter existing, whether or not arising out of or in connection with the sale
or lease of goods or rendering of services, and all rights now or hereafter
existing in and to all mortgages, deeds of trust, security agreements, leases
and other contracts (including, but not limited to, any amendments, supplements,
modifications, renewals, extensions, replacements and substitutions thereto)
securing or otherwise relating to any such cash, accounts, accounts receivable,
other receivables, letters of credit, contract rights, chattel paper,
instruments, documents, notes or other obligations (any and all such cash,
accounts, accounts receivable, other receivables, letters of credit, contract
rights, chattel paper, documents, notes, instruments and obligations being the
"Receivables", any and all such mortgages, deeds of trust, leases, security
agreements and other contracts being the "Related Contracts"; and any Person who
is or may become obligated to the Borrower under, with respect to, or on account
of, any Receivable being an "Account Debtor");

               (4)    All "general intangibles" (as such term is defined in the
Code), whether existing or hereafter arising and wherever arising, including,
but not limited to, (A) all rights of the Borrower to receive for its account
proceeds of any insurance, indemnity, warranty or guaranty with respect to any
Inventory, Account Collateral, Receivables, Related Contracts or otherwise, and
(B) claims of the Borrower for damages arising out of or for breach of or
default or misrepresentation under any Related Contracts or any documents,
instruments or opinions delivered pursuant thereto.

               (5)    All cash and noncash proceeds and products of any and all
of the foregoing Collateral, and of the Excluded Property upon a sale thereof to
Ampex Finance (defined below) under the RSSA (defined below), including, without
limitation, proceeds which constitute property of the types described in
subsections (a) through (d) of this Section 1, and, to the extent not otherwise
included, all payments under insurance (whether or not the Secured Party is the
loss payee thereof), or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral, and all cash, wherever located.

               (6)    The following personal property and assets of Borrower
shall be excluded from the Collateral (hereinafter, the "Excluded Property"):
(A) all accounts receivable and

<PAGE>

other related assets of Borrower that are sold to Ampex Finance Corporation
("Ampex Finance") pursuant to the Amended and Restated Receivables Sale and
Servicing Agreement dated as of May 5, 1994, as amended through, and in effect
on, the date hereof (the "RSSA"), among Ampex Corporation, the Borrower,
MicroNet Technology, Inc., and Ampex Finance, except that the Excluded Property
shall not include (and the Collateral shall include) all products and proceeds
thereof received or receivable by Borrower thereunder; (B) any contract,
license, permit or franchise that prohibits the creation by Borrower of a
security interest in such contract, license, permit or franchise, except that
the Excluded Property shall not include (and the Collateral shall include) all
products and proceeds thereof received or receivable by Borrower thereunder to
the extent not so prohibited and, in each case, to the extent any such
prohibition is legally enforceable; and (C) any of Borrower's property or assets
of the type securing, as of the date hereof, any of Borrower's obligations under
the Discount Notes (as defined in the Loan Agreement ) and any proceeds thereof.

          Section 2.  Security for Obligations.
                      ------------------------

          The security interest granted by the Borrower hereunder secures the
prompt and complete payment and performance when due (whether at stated
maturity, upon acceleration or otherwise) of all obligations of the Borrower
owing or to be owing to the Secured Party now or hereafter existing, whether
matured or unmatured, contingent or liquidated, including all future advances,
under the Loan Agreement or the Note or this Agreement, including any
extensions, modifications, substitutions, amendments and renewals thereof,
whether for principal, interest, premium, fees, expenses, indemnification or
otherwise.

          All such obligations of the Borrower secured hereby are referred to
herein as the "Secured Obligations".
               -------------------

          Section 3.  Borrower Remains Liable.
                      -----------------------

               (1)    Anything herein to the contrary notwithstanding, (i) the
Borrower shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (ii) the exercise by the Secured Party of any of its rights hereunder
shall not release the Borrower from any of its duties or obligations in
connection with the general intangibles and under the contracts and agreements
included in the Collateral, (iii) the Secured Party shall not have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall it be obligated to perform any
of the obligations or duties of the Borrower thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder, and (iv) the
Secured Party shall not assume any liability or obligation whatsoever with
respect to any partnership interest of any partnership included in the
Collateral, nor shall it become a substituted partner of any such partnership
solely by virtue of this Agreement.

               (2)    The Secured Party shall have the right to make test
verifications of the Receivables and physical verifications of the Inventory in
any manner and through any medium that it considers advisable, and the Borrower
agrees to furnish all such assistance and information as the Secured Party may
require in connection therewith.

          Section 4.  Delivery of Account Collateral.
                      ------------------------------

<PAGE>

          All certificates or instruments representing or evidencing Account
Collateral shall, promptly upon the request of the Secured Party, be delivered
to and held by or on behalf of the Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed
undated instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Secured Party. The Secured Party shall have the
right, at any time in its discretion and without notice to the Borrower, to
transfer to or to register in the name of the Secured Party or any of its
nominees any or all of the instruments and certificates representing the Account
Collateral. In addition, the Secured Party shall have the right at any time to
exchange certificates or instruments representing or evidencing the Account
Collateral for certificates or instruments of smaller or larger denominations.

          Section 5.  Representations and Warranties.
                      ------------------------------

          The Borrower hereby represents and warrants to Secured Party as
follows:

               (1)    it is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is duly qualified as a
foreign corporation and is in good standing in each jurisdiction as to which the
location of its assets or the nature of its business makes qualification
necessary or in which the failure to so qualify would have a material adverse
effect on its condition or operations, financial or otherwise, and has all
corporate power and authority to conduct its business and to own or hold under
lease its assets and properties, and to execute, deliver and perform all of its
obligations under this Agreement;

               (2)    the execution, delivery and performance by it of this
Agreement have been duly authorized by all necessary corporate action, do not
contravene its charter, by-laws, or any applicable laws, rules, regulations,
orders, writs, judgments, injunctions, decrees, determinations or awards, and do
not and will not result in a breach of, or constitute a default under, or
require any consent (other than consents which have been duly obtained and are
in effect and other consents with respect to which Borrower's failure to obtain
such consents will not result in a material adverse effect on Borrower or its
business) under, any indenture or other agreement or instrument to which it is a
party or by which it or its properties may be bound or affected;

               (3)    no authorization or approval by, and no notice to or
filing with, any governmental authority or regulatory body is required to be
obtained or made either (i) for the grant by it of the security interest granted
hereby or for the execution, delivery or performance of this Agreement, or (ii)
except for the filing of a financing statement in the State of Delaware, for the
perfection of the security interests of or the exercise by the Secured Party of
his rights and remedies hereunder;

               (4)    this Agreement constitutes the legal, valid and binding
obligation of the Borrower enforceable against it in accordance with its terms,
except as such enforceability shall be subject to bankruptcy, reorganization,
insolvency, moratorium and other similar laws affecting creditors' rights
generally and to general principles of equity;

               (5)    there is no pending or threatened action or proceeding
affecting it before any court, governmental agency or arbitrator which may
materially adversely affect its ability to perform its obligations hereunder or
which purports to affect the legality, validity or enforceability of this
Agreement or such other loan document;

<PAGE>

               (6)    Part I of Schedule 5(f) sets forth each location at which
                                -------------
Inventory owned by Borrower is located. The chief place of business and chief
executive office of the Borrower and the office where it keeps its records
concerning the Receivables, and the original copies of the Related Contracts
owned by it and in its possession and of all chattel paper that evidences
Collateral owned by it, are located at the addresses set forth on Part II of
Schedule 5(f) hereto. The federal tax identification number of the Borrower is
-------------
set forth in Part III of Schedule 5(f);
                         -------------

               (7)    it is the legal and beneficial owner of the Collateral
purported to be granted by it hereunder free and clear of any lien, except for
the following (collectively, the "Permitted Liens"): (i) the security interest
created by this Agreement; (ii) liens on any of Borrower's property in favor or
for the benefit of DDJ Capital Management, LLC, as agent for holders of the
Borrower's outstanding Senior Discount Notes, or in favor or for the benefit of
such holders, or any refinancing thereof, (iii) liens for taxes, assessments or
similar charges not yet delinquent or which are being contested in good faith;
(iv) liens to secure payment of workmen's compensation or other insurance or
types of social security; (v) statutory liens, such as those in favor of
mechanics, materialmen, warehousemen, carriers or similar liens incurred in good
faith in the ordinary course of business for sums which are not yet delinquent
or are being contested in good faith by negotiation or by appropriate
proceedings which suspend the collection thereof; (vi) good faith deposits in
connection with tenders, contracts (other than contracts for the payment of
money) or leases; (vii) deposits to secure public or statutory obligations, or
in lieu of surety or appeal bonds, (viii) any interest or title of a lessor or
lessee under any lease of property (including any lien granted by such lessor or
lessee); and (ix) liens in favor of customers and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with the
importation of goods. No effective financing statement or other instrument
similar in effect covering all or any part of such Collateral is on file in any
recording office, except such as may have been filed in favor of the Secured
Party relating to this Agreement or such as may have been filed in connection
with the Permitted Liens. The trade names, if any, of the Borrower are set forth
on Part IV of Schedule 5(f);
              -------------

               (8)    except as indicated in Schedule 5(f) hereto, it has
                                             -------------
exclusive possession and control of the Inventory owned by it; and

               (9)    this Agreement, together with the filing of financing
statements with respect hereto, creates, subject to the Permitted Liens, a valid
and perfected first priority lien on and security interest in the Collateral
owned by it with respect to which a lien and security interest may be perfected
by filing pursuant to the Code, securing the payment of the Secured Obligations.

          Section 6.  Further Assurances.
                      ------------------

               (1)    The Borrower agrees that from time to time, at its own
expense, it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, the Borrower
will: (i) at the request of the Secured Party, mark conspicuously each document
and each chattel paper included in the Receivables and each Related Contract and
each of its records pertaining to the Collateral with a legend, in form and
substance satisfactory to the Secured Party, indicating that such document,
chattel paper, Related

<PAGE>

Contract or Collateral is subject to the security interest granted hereby; (ii)
if any Receivable shall be evidenced by a promissory note or other instrument or
chattel paper, at the request of the Secured Party, deliver and pledge to the
Secured Party hereunder such note, instrument or chattel paper duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Secured Party; and (iii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Secured
Party may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby; provided that neither the failure of
the Secured Party to make such request nor the failure of the Borrower to comply
with such request will impair or affect the validity of the grant affected by
this Agreement.

               (2)    The Borrower hereby authorizes the Secured Party to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of the
Borrower where permitted by law. A carbon, photographic or other reproduction of
this Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.

               (3)    The Borrower will furnish to the Secured Party from time
to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Secured Party may reasonably request, all in reasonable detail.

               (4)    If requested by the Secured Party, the Borrower will
furnish to the Secured Party from time to time an opinion of counsel acceptable
to the Secured Party to the effect that all financing or continuation statements
have been filed, and all other action has been taken, to perfect and validate
continuously from the date hereof the security interests granted hereby.

          Section 7.  Special Covenants With Respect to Inventory.  Borrower
                      -------------------------------------------
shall:

               (1)    advise the Secured Party of the removal of any Inventory
from the states and counties listed in Schedule 5(f) hereof to a state or county
                                       -------------
not so listed therein;

               (2)    if any Inventory is in possession or control of any of
Borrower's agents or processors, if the aggregate book value of all such
Inventory exceeds $100,000 and in any event upon the occurrence of an Event of
Default (as defined in the Loan Agreement), instruct such agent or processor to
hold all such Inventory for the account of the Secured Party and subject to the
instructions of the Secured Party; and

               (3)    promptly upon the issuance and delivery to Grantor of any
document of title, deliver such document of title to the Secured Party.

          Section 8.  As to Receivables and Related Contracts.
                      ---------------------------------------

               (1)    The Borrower shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning its
Receivables and the original copies of the Related Contracts, and all chattel
paper which evidences or constitutes Receivables, at the locations therefor
specified in Schedule 5(f) or, upon 30 days' prior written notice to the Secured
             -------------
Party, at such other locations in a jurisdiction where all actions required by
Section 6 shall have been taken with respect to the Receivables, the Related
Contracts and such chattel paper. The Borrower will hold and preserve such
records, Receivables, Related Contracts and chattel paper and

<PAGE>

will permit representatives of the Secured Party at any time during normal
business hours to inspect and make abstracts therefrom.

               (2)    The Borrower shall continue to collect, at its own
expense, all amounts due or to become due under the Receivables and the Related
Contracts. In connection with such collections, the Borrower shall take such
action as the Secured Party may deem necessary or advisable to enforce
collection of the Receivables and the Related Contracts; provided, however, that
the Secured Party shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default, to notify the Account Debtors or
obligors under any Receivables and Related Contracts of the assignment of such
Receivables and Related Contracts to the Secured Party and to direct such
Account Debtors or obligors to make payment of all amounts due or to become due
to the Borrower thereunder directly to the Secured Party and, at the expense of
the Borrower, to enforce collection of any such Receivables or Related
Contracts, and to adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as the Borrower might have done. Upon
receipt by the Borrower of any amounts and proceeds (including instruments) in
respect of the Receivables and the Related Contracts or, with respect to the
Borrower, upon the occurrence and during the continuance of an Event of Default,
(i) all amounts and proceeds (including instruments) received by the Borrower in
respect of the Receivables and the Related Contracts shall be received in trust
for the benefit of the Secured Party hereunder, shall be segregated from other
funds of the Borrower and shall be forthwith paid directly in the form as so
received (with any necessary indorsement) to be held as Collateral hereunder.
Upon request of the Secured Party, the Borrower will execute a collateral
assignment of any Related Contract and cause any counterparty to such Related
Contract to acknowledge such collateral assignment.

          Section 9.  Prohibition on Other Liens.
                      --------------------------

          The Borrower shall not create or suffer to exist any lien or security
interest upon or with respect to any of the Collateral, except for the security
interest created by this Agreement and except for Permitted Liens.

          Section 10. License of Patents, Trademarks, Copyrights, etc.
                      ------------------------------------------------

          Grantor hereby assigns, transfers and conveys to the Secured Party,
effective upon the occurrence of any Event of Default, the nonexclusive right
and license to use all trademarks, tradenames, copyrights, patents or technical
processes owned or used by Grantor that relate to the Collateral and any other
collateral granted by Grantor as security for the Secured Obligations, together
with any goodwill associated therewith, all to the extent necessary to enable
the Secured Party to use, possess and realize on the Collateral and to enable
any successor or assign to enjoy the benefits of the Collateral. This right and
license shall inure to the benefit of all successors, assigns and transferees of
the Secured Party and its successors, assigns and transferees, whether by
voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed
in lieu of foreclosure or otherwise. Such right and license is granted free of
charge, without requirement that any monetary payment whatsoever be made to
Grantor.

<PAGE>

          Section 11.   Secured Party Appointed Attorney-in-Fact.
                        ----------------------------------------

          The Borrower hereby irrevocably appoints Secured Party as its
attorney-in-fact, with full authority in the place and stead of the Borrower and
in the name of the Borrower or otherwise, at any time, to take any action and to
execute any instrument which the Secured Party may deem necessary or advisable
to accomplish the purposes of this Agreement, including, without limitation:

                        (1)   to obtain and adjust insurance required to be paid
     to the Secured Party,

                        (2)   to ask, demand, collect, sue for, recover,
     compromise, receive and give acquittance and receipts for moneys due and to
     become due under or in respect of any of the Collateral,

                        (3)   to receive, indorse, and collect any drafts or
     other instruments, documents and chattel paper, in connection with clause
     (i) or (ii) above, and

                        (4)   to file any claims or take any action or institute
     any proceedings which the Secured Party may deem necessary or desirable for
     the collection of any of the Collateral or otherwise to enforce the rights
     of the Secured Party with respect to any of the Collateral.

          Section 12.   Secured Party May Perform.
                        -------------------------

          If the Borrower fails to perform any agreement contained herein, the
Secured Party may itself perform, or cause performance of, such agreement, and
the expenses of the Secured Party incurred in connection therewith shall be
payable by the Borrower under Section 15(b) hereof.

          Section 13.   The Secured Party's Duties.
                        --------------------------

          The powers conferred on the Secured Party hereunder are to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Secured Party
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining to
any Collateral.

          Section 14.   Remedies.
                        --------

          If an Event of Default shall have occurred and be continuing:

                  (1)   The Secured Party may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Code (whether or not the Code applies to the affected
Collateral) and also may (i) require the Borrower to, and the Borrower hereby
agrees that it will at its expense and upon request of the Secured Party
forthwith, assemble all or part of the Collateral owned by it as directed by the
Secured Party and make it available to the Secured Party at a place to be
designated by the Secured Party which is reasonably convenient to each party and
(ii) without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Secured
Party's offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Secured Party may deem commercially

<PAGE>

reasonable. The Borrower agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to the Borrower of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.

                (2)    The Secured Party may exercise any and all rights and
remedies of the Borrower under or in connection with the Related Contracts or
otherwise in respect of the Collateral, including, without limitation, any and
all rights of the Borrower to demand or otherwise require payment of any amount
under, or performance of any provision of, the Receivables or the Related
Contracts.

                (3)    All payments received by the Borrower under or in
connection with the Receivables or the Related Contracts or otherwise in respect
of the Collateral shall be received in trust for the benefit of the Secured
Party, shall be segregated from other funds of the Borrower and shall be
forthwith paid over to the Borrower in the same form as so received (with any
necessary indorsement).

                (4)    All cash proceeds received by the Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral of the Borrower may, in the discretion of the Secured
Party, be held by the Secured Party as collateral for, and/or then or at any
time thereafter applied in whole or in part by the Secured Party against, all or
any part of the Secured Obligations. Any surplus of such cash or cash proceeds
held by the Secured Party and remaining after payment in full of all such
Secured Obligations shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive such surplus.

        Section 15.    Indemnity and Expense.
                       ---------------------

                (1)    Each of the parties hereto agrees to indemnify the other
party from and against any and all claims, losses and liabilities growing out of
or resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting from such
indemnified person's gross negligence or willful misconduct. The obligations of
Borrower and Secured Party under this Section 15(a) shall survive the
termination of this Agreement.

                (2)    The Borrower will upon demand pay to the Secured Party
the amount of any and all expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Secured
Party may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Secured Party hereunder or (iv) the
failure by the Borrower to perform or observe any of the provisions hereof.

<PAGE>

        Section 16.   Continuing Security Interest; Transfer of Rights and
                      ----------------------------------------------------

Obligations.
------------

        This Agreement shall create a continuing security interest in the
Collateral and shall remain in full force and effect until the indefeasible
payment in full of the Secured Obligations. The Secured Party may assign or
otherwise transfer, all or any portion of its rights and obligations under the
Senior Note to any other person, and such other person shall thereupon become
vested with all the benefits in respect thereof granted to the Secured Party
herein or otherwise.

        Section 17.   Security Interest Absolute.
                      --------------------------

        All rights of the Secured Party and security interests hereunder, and
all obligations of the Borrower hereunder, shall be absolute and unconditional
irrespective of:

                (1)   any lack of validity or enforceability of the Note, any
other loan document, or any other agreement or instrument relating thereto;

                (2)   any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Loan Agreement,
the Note or any other loan document;

                (3)   any taking and holding of Collateral or additional
guarantees for all or any of the Secured Obligations, or any amendment,
alteration, exchange, substitution, transfer, enforcement, waiver,
subordination, termination or release of any Collateral or such guarantees, or
non-perfection of any Collateral, or any consent to departure from any guaranty,
for all or any of the Secured Obligations;

                (4)   any manner of application of Collateral, or proceeds
thereof, to all or any of the Secured Obligations, or the manner of sale of any
Collateral;

                (5)   any consent by the Secured Party or any other person to
the change, restructure or termination of the corporate structure or existence
of the Borrower and any corresponding restructure of the Secured Obligations, or
any other restructure or refinancing of the Secured Obligations or any portion
thereof;

                (6)   any modification, compounding, compromise, settlement,
release by the Secured Party or any other person (or by operation of law or
otherwise), collection or other liquidation of the Secured Obligations or the
liability of the Borrower or any guarantor, or of the Collateral, in whole or in
part, and any refusal of payment by any Secured Party or any other Person, in
whole or in part, from any obligor or guarantor in connection with any of the
Secured Obligations, whether or not with notice to, or further assent by, or any
reservation of rights against, the Borrower; or

                (7)   any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower.

        Without limiting the generality of the foregoing, the Borrower hereby
consents to, and hereby agrees, that the rights of the Secured Party hereunder,
and the liability of the Borrower hereunder, shall not be affected by any and
all releases of any Collateral from the liens created by any loan document,
whether for purposes of sales or other dispositions of assets or for any other
purpose. This Agreement shall continue to be effective or be reinstated, as the
case may be, if at any

<PAGE>

time any payment of any of the Secured Obligations is rescinded or must
otherwise be returned by the Secured Party or any other person upon the
insolvency, bankruptcy or reorganization of the Borrower, or otherwise, all as
though such payment had not been made.

        Section 18.    Waivers.
                       -------

               (1)     The Borrower hereby waives:

                       (1)     promptness, diligence, notice of acceptance and
      any other notice with respect to any of the Secured Obligations and this
      Agreement;

                       (2)     any requirement that the Secured Party or any
      other person protect, secure, protect or insure any lien or any property
      subject thereto or exhaust any right or take any action against the
      Borrower or any other person or any Collateral; and

                       (3)     any defense arising by reason of any claim or
      defense based upon an election of remedies by the Secured Party or any
      other Person which in any manner impairs, reduces, releases or otherwise
      adversely affects its subrogation or reimbursement rights or other rights
      to proceed against the Borrower or any other person or any Collateral.

               (2)     The Borrower agrees that if all or a portion of the
Secured Obligations are at any time secured by a deed of trust or mortgage
covering interests in real property, the Secured Party, in its sole discretion,
without notice or demand and without affecting the liability of the Borrower
under this Agreement, may foreclose the deed of trust or mortgage and the
interests in real property secured thereby by nonjudicial sale; and the Borrower
hereby waives any defense to the recovery by the Secured Party, or any other
person against the Borrower of any deficiency after a nonjudicial sale.

          Section 19.  Notices. All notices, requests, demands and other
                       -------
communications to a party provided for or permitted hereunder shall, unless
otherwise stated herein, be in writing and shall be sent to a party by certified
mail, postage prepaid and return receipt requested; by telex, telegram or
facsimile; by nationally recognized overnight courier service; or by hand
delivery, in each case to such party at its address set forth below, or at such
other address as such party may designate by written notice to the other in
accordance with this provision, and shall be deemed to have been given or made:
if by certified mail, return receipt requested, five (5) days after mailing; if
by telex, telegram or facsimile, immediately upon sending and upon confirmation
of receipt; if by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business day after
sending; and if by hand, immediately upon personal delivery.

          Section 20.  Amendments; Waivers. No amendment or waiver of any
                       -------------------
provision of this Agreement, nor consent to any departure by either party
herefrom, shall in any event be effective unless the same shall be in writing
and signed by such party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.

          Section 21.  Successors and Assigns. This Agreement, and the terms,
                       ----------------------
covenants and conditions hereof,  shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.

<PAGE>

        Section 22.     Severability. In case any provision of this Agreement
                        -------------
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

        Section 23.     Waiver of Right to Trial by Jury. BORROWER AND SECURED
                        --------------------------------
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, SUIT, CLAIM, DEMAND OR CAUSE OF ACTION BY THE OTHER PARTY
HERETO ARISING UNDER, IN CONNECTION WITH OR OTHERWISE RELATING TO THIS AGREEMENT
OR ANY OTHER AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE. BORROWER AND SECURED PARTY HEREBY
AGREE AND CONSENT THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THIS CONSENT BY BORROWER
AND SECURED PARTY TO THE WAIVER OF THEIR RESPECTIVE RIGHT TO TRIAL BY JURY.

        Section 24.     Consent to Jurisdiction.
                        -----------------------

        (a) Each of Borrower and Secured Party hereby irrevocably submits to the
jurisdiction of any New York State or Federal court sitting in the Borough of
Manhattan, The City of New York, in any action or proceeding arising out of or
relating to this Agreement, and hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such New
York State or Federal court. Each of Borrower and Secured Party hereby
irrevocably waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding. Each
of Borrower and Secured Party also irrevocably consents to the service of copies
of the summons and complaint and any other process which may be served in any
such action or proceeding by the mailing or delivery of a copy of such process
to such party at its address for notice specified herein by certified mail,
return receipt requested.

        (b) Nothing contained in this Section shall affect the right of Borrower
or Secured Party to serve legal process in any other manner permitted by law or
to bring any action or proceeding against the other party or its property in the
courts of any other jurisdictions.

        SECTION 16.             Governing Law. The validity, interpretation and
                                -------------
enforcement of this Agreement shall be governed by the internal laws of the
State of New York (without giving effect to principles of conflicts of law).
Unless otherwise defined herein or in the Loan Agreement, terms used in Article
9 of the Code are used herein as therein defined.

        SECTION 17.             Counterparts.  This Agreement may be executed in
                                -------------
any number of counterparts, all of which together shall constitute one and the
same instrument. Any of the parties hereto may execute this Agreement by signing
any such counterpart.

<PAGE>

                                 Signature Page
                                 --------------

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.

                                        BORROWER:

                                        AMPEX DATA SYSTEMS CORPORATION

                                        By /s/Craig L. McKibben
                                           -------------------------------------
                                           Name: Craig L. McKibben
                                           Title Vice President

                                        Address:
                                        -------
                                        500 Broadway
                                        Redwood City, CA 94063

                                        SECURED PARTY:

                                        SHERBORNE & COMPANY INCORPORATED

                                        By /s/Edward J. Bramson
                                           -------------------------------------
                                           Name:  Edward J. Bramson
                                           Title: President

                                        Address:
                                        -------
                                        135 East 57th Street
                                        New York, NY  10022

<PAGE>

                                  Schedule 5(f)
                                  -------------

Part I:   Location of Inventory.

     500 Broadway, Redwood City, CA
     600 Wooten, Colorado Springs, CO
     Loan and consignment inventory at various customer locations
     Miscellaneous inventory with service technicians at various locations

Part II:  Location of Chief Place of Business, Chief Executive Office,
Receivables Records, Related Contracts and Chattel Paper.

     Chief Place of Business:    500 Broadway, Redwood City, CA
     Chief Executive Office:     500 Broadway, Redwood City, CA
     Receivable Records:         500 Broadway, Redwood City, CA
     Related Contracts:          500 Broadway, Redwood City, CA
                                 600 Wooten, Colorado Springs, CO (1995 & older)
     Chattel Paper:              None

Part III: Federal Tax ID Number.

     94-3112575

Part IV:  Trade Names.

     Ampex Data Systems Corporation

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