Document:

Exhibit 4.1

 

Execution Version

 

SUPPLEMENTAL INDENTURE

 

Supplemental Indenture (this “Supplemental Indenture”), dated as of August 30, 2018, between Ascent Capital Group, Inc., a Delaware corporation (the “Company”), and U.S. Bank National Association, as trustee under the Indenture referred to below (the “Trustee”), to the Indenture (as defined below).  Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.

 

W I T N E S S E T H:

 

WHEREAS, the Company and the Trustee entered into an Indenture, dated as of July 17, 2013 (the “Indenture”), providing for the issuance of the Company’s 4.00% Convertible Senior Notes due 2020 (the “Notes”);

 

WHEREAS, pursuant to Section 9.01(f) of the Indenture, the Trustee and the Company may supplement the Indenture without the consent of any holders of the Notes to surrender any right or power conferred upon the Company;

 

WHEREAS, the Company intends to supplement the Indenture to surrender its right to elect to deliver shares of Common Stock or a combination of cash and shares of Common Stock upon conversion of any Note; and

 

WHEREAS, after the date of this Supplemental Indenture, the Company may satisfy its Conversion Obligation solely in cash; and

 

WHEREAS, the Company has heretofore delivered, or is delivering contemporaneously herewith to the Trustee, the Officers’ Certificate and Opinion of Counsel referred to in Section 9.05 of the Indenture.

 

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Notes as follows:

 

ARTICLE I

RELATION TO INDENTURE; GENERAL REFERENCES

 

SECTION 1.01                                           Relation to Indenture.  Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed, and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.  This Supplemental Indenture constitutes an integral part of the Indenture.

 

SECTION 1.02                                           General References.  All references in this Supplemental Indenture to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this Supplemental Indenture; and the terms “herein”, “hereof”, “hereunder” and any other words of similar import refer to this Supplemental Indenture.

 

 

ARTICLE II

 

AMENDMENTS

 

SECTION 2.01                                           Amendment of Section 1.01 of the Indenture.  Section 1.01 of the Indenture is hereby amended as follows:

 

(a)                               The following definitions are hereby deleted in their entirety: “Daily Measurement Value”, “Daily Settlement Amount”, “Settlement Method”, “Settlement Notice” and “Specified Dollar Amount”.

 

(b)                              The definition of “outstanding” is hereby amended and restated in its entirety to read as follows:

 

““outstanding,” when used with reference to Notes, shall, subject to the provisions of Section 8.04, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except:

 

(a)                               Notes theretofore canceled by the Trustee or accepted by the Trustee for cancellation;

 

(b)                              Notes that have been paid pursuant to Section 2.08 or Notes in lieu of which, or in substitution for which, other Notes shall have been authenticated and delivered pursuant to the terms of Section 2.06 unless proof satisfactory to the Trustee is presented that any such Notes are held by protected purchasers in due course;

 

(c)                               Notes that have become due and payable, whether at the Maturity Date, any Fundamental Change Repurchase Date, upon conversion or otherwise, for which the Company has deposited with the Trustee or delivered to Noteholders, as applicable, cash sufficient to pay all of the outstanding Notes and all other sums due payable under this Indenture by the Company; and

 

(d)                             Notes converted pursuant to Article 12.”

 

(c)                           The definition of “Reference Property” is hereby amended and restated in its entirety to read as follows:

 

““Reference Property” means, with respect to a Merger Event, the kind and amount of shares of stock, securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such transaction would have owned or been entitled to receive (subject to Section 12.02).”

 

2

 

SECTION 2.02                                           Amendment of Section 2.06 of the Indenture.  The second paragraph of Section 2.06 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“The Trustee or such authenticating agent may authenticate any such substituted Note and deliver the same upon the receipt of such security or indemnity as the Trustee, the Company and, if applicable, such authenticating agent may require.  Upon the issuance of any substitute Note, the Company or the Trustee may require the payment by the holder of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith.  In case any Note that has matured or is about to mature or has been tendered for repurchase upon a Fundamental Change or is about to be converted into cash shall become mutilated or be destroyed, lost or stolen, the Company may, in its sole discretion, instead of issuing a substitute Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or connected with such substitution, including without limitation if a Note is replaced and subsequently presented or claimed for payment and, in every case of destruction, loss or theft, evidence satisfactory to the Company, the Trustee and, if applicable, any Paying Agent or Conversion Agent evidence of their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.”

 

SECTION 2.03                                           Amendment of Section 3.01 of the Indenture.  Section 3.01 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“Section 3.01.                                                     Satisfaction and Discharge.  This Indenture shall upon request of the Company contained in an Officers’ Certificate cease to be of further effect, and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) (i) all Notes theretofore authenticated and delivered (other than (x) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.06 and (y) Notes for whose payment money has theretofore been irrevocably deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 4.04(d)) have been delivered to the Trustee for cancellation; or (ii) the Company has irrevocably deposited with the Trustee or delivered to Noteholders, as applicable, after the Notes have become due and payable, whether at the Maturity Date, any Fundamental Change Repurchase Date, upon conversion or otherwise, cash sufficient to pay all of the outstanding Notes and all other sums due and payable under this Indenture by the Company; and (b) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.  Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.06 shall survive.”

 

SECTION 2.04                                           Amendment of Section 6.01 of the Indenture.  Section 6.01(f) of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“(f)                         the failure to comply with the obligation to convert the Notes into cash upon exercise of a holder’s conversion right;”

 

3

 

SECTION 2.05                                           Amendment of Section 6.02 of the Indenture.  The second paragraph of Section 6.02 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“If an Event of Default specified in Section 6.01(h) occurs and is continuing, the principal of all the Notes and accrued and unpaid interest and accrued and unpaid Additional Interest, if any, shall be immediately due and payable.  This provision, however, is subject to the conditions that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay installments of accrued and unpaid interest and accrued and unpaid Additional Interest, if any, upon all Notes and the principal of any and all Notes that shall have become due otherwise than by acceleration (with interest on overdue installments of accrued and unpaid interest and accrued and unpaid Additional Interest, if any (to the extent that payment of such interest is enforceable under applicable law), and on such principal at the rate borne by the Notes at such time) and amounts due to the Trustee pursuant to Section 7.06, and if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) any and all Events of Defaults under this Indenture, other than the nonpayment of principal of and accrued and unpaid interest and accrued and unpaid Additional Interest, if any, on Notes that shall have become due solely by such acceleration, shall have been cured or waived pursuant to Section 6.09, then and in every such case the holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and to the Trustee, may waive all Defaults or Events of Default with respect to the Notes (other than a Default or an Event of Default resulting from a failure to repurchase any Notes when required upon a Fundamental Change or a failure to deliver, upon conversion, cash due upon conversion) and rescind and annul such declaration and its consequences (other than a declaration or consequences, as the case may be, resulting from a failure to repurchase any Notes when required upon a Fundamental Change or a failure to deliver, upon conversion, cash due upon conversion) and such Default (other than a Default resulting from a failure to repurchase any Notes when required upon a Fundamental Change or a failure to deliver, upon conversion, cash due upon conversion) shall cease to exist, and any Event of Default arising therefrom (other than a Default resulting from a failure to repurchase any Notes when required upon a Fundamental Change or a failure to deliver, upon conversion, cash due upon conversion) shall be deemed to have been cured for every purpose of this Indenture; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent Default or Event of Default, or shall impair any right consequent thereon.”

 

SECTION 2.06                                           Amendment of Section 6.05 of the Indenture.  The fourth paragraph of Section 6.05 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“Third, in case the principal of the outstanding Notes shall have become due, by declaration or otherwise, and be unpaid to the payment of the whole amount including the payment of the Fundamental Change Repurchase Price and cash in settlement of the Conversion Obligation then owing and unpaid upon the Notes for principal and interest, including Additional Interest, if any, with interest on the overdue principal and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the rate borne by the Notes at such time, and in case such monies shall be insufficient to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of such principal and interest without

 

4

 

preference or priority of principal over interest, or of interest over principal or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal and accrued and unpaid interest, and Additional Interest, if any; and”

 

SECTION 2.07                                           Amendment of Section 6.09 of the Indenture.  Section 6.09 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“Section 6.09.                                                     Direction of Proceedings and Waiver of Defaults by Majority of Noteholders.  The holders of a majority in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to Notes; provided, however, that (a) such direction shall not be in conflict with any rule of law or with this Indenture, and (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction.  The Trustee may refuse to follow any direction that it determines is unduly prejudicial to the rights of any other holder or that would involve the Trustee in personal liability.  The holders of a majority in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 may on behalf of the holders of all of the Notes waive any past Default or Event of Default hereunder and its consequences except (i) a default in the payment of accrued and unpaid interest or accrued and unpaid Additional Interest, if any, on, or the principal (including any Fundamental Change Repurchase Price) of, the Notes when due that has not been cured pursuant to the provisions of Section 6.01, (ii) a failure by the Company to deliver cash upon conversion of the Notes or (iii) a default in respect of a covenant or provision hereof which under Article 9 cannot be modified or amended without the consent of each holder of an outstanding Note affected.  Upon any such waiver the Company, the Trustee and the holders of the Notes shall be restored to their former positions and rights hereunder; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.  Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 6.09, said Default or Event of Default shall for all purposes of the Notes and this Indenture be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.”

 

SECTION 2.08                                           Amendment and Restatement of Section 12.02 of the Indenture.  Section 12.02 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“Section 12.02.                                             Conversion Procedure.

 

(a)                         Subject to this Section 12.02, upon any conversion of any Note, the Company shall deliver to converting Noteholders, in respect of each $1,000 principal amount of Notes being converted, solely cash (the “Settlement Amount”) as set forth in this Section 12.02.

 

(i)                            [Reserved.]

 

(ii)                        [Reserved.]

 

(iii)                    [Reserved.]

 

5

 

(iv)                    The Settlement Amount in respect of any conversion of Notes shall be computed as follows: the Company shall pay to the converting Noteholder, cash in an amount per $1,000 principal amount of Notes being converted equal to the sum of the Daily Conversion Values for each of the sixty consecutive Trading Days during the related Cash Settlement Averaging Period.

 

(v)                        [Reserved.]

 

(vi)                    The Daily Conversion Values shall be determined by the Company promptly following the last day of the Cash Settlement Averaging Period.  Promptly after such determination of the Daily Conversion Values, the Company shall notify the Trustee and the Conversion Agent of the Daily Conversion Values.  The Trustee and the Conversion Agent shall have no responsibility for any such determination.

 

(b)                        Before any holder of a Note shall be entitled to convert the same as set forth above, such holder shall (i) in the case of a Global Note, comply with the procedures of the Depositary in effect at that time and, if required, pay funds equal to the amount of interest and Additional Interest, if any, payable on the next Interest Payment Date to which such holder is not entitled as set forth in Section 12.02(g) and, if required, all transfer or similar taxes, if any, and (ii) in the case of a Note issued in certificated form, (1) complete and manually sign and deliver an irrevocable notice to the Conversion Agent in the form on the reverse of such certificated Note (or a facsimile thereof) (Exhibit B hereto) (a “Notice of Conversion”) at the office of the Conversion Agent and shall state in writing therein the principal amount of Notes to be converted, (2) surrender such Notes, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the office of the Conversion Agent, (3) if required, pay funds equal to interest (including any Additional Interest) payable on the next Interest Payment Date to which such holder is not entitled as set forth in Section 12.02(g), (4) if required, furnish appropriate endorsements and transfer documents, and (5) if required, pay all transfer or similar taxes, if any as set forth in Section 12.02(e).  The Trustee (and if different, the relevant Conversion Agent) shall notify the Company of any conversion pursuant to this Article 12 on the date of such conversion.  No Notice of Conversion with respect to any Notes may be surrendered by a holder thereof if such holder has also delivered a Fundamental Change Repurchase Notice to the Company in respect of such Notes and not validly withdrawn such Fundamental Change Repurchase Notice in accordance with Section 13.02, unless the Company defaults in the payment of the Fundamental Change Repurchase Price.

 

If more than one Note shall be surrendered for conversion at one time by the same holder, the Conversion Obligation with respect to such Notes, if any, that shall be payable upon conversion shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted thereby) so surrendered.

 

(c)                   A Note shall be deemed to have been converted immediately prior to the close of business on the date (the “Conversion Date”) that the holder has complied with the requirements set forth in clause (b) of this Section 12.02.  The Company shall pay and deliver the cash due in respect of its Conversion Obligation on the third Trading Day immediately following the last

 

6

 

Trading Day of the Cash Settlement Averaging Period; provided, however, if, prior to the Conversion Date, the Common Stock has been replaced by Reference Property consisting solely of cash pursuant to Section 12.06, the Company will deliver such cash due in respect of its Conversion Obligation on the tenth Trading Day immediately following the relevant Conversion Date.  Notwithstanding the foregoing, if any information required in order to calculate the amount of cash due in respect of the Company’s Conversion Obligation will not be available as of the applicable delivery date, the Company will make delivery of the additional consideration resulting from such adjustment on the third Trading Day after the earliest Trading Day on which such calculation can be made.

 

(d)                       In case any Note shall be surrendered for partial conversion, the Company shall execute and the Trustee shall authenticate and deliver to or upon the written order of the holder of the Note so surrendered, without charge to such holder, a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note.

 

(e)                         Nothing herein shall preclude any tax withholding required by law or regulations.

 

(f)                          Upon the conversion of an interest in a Global Note, the Trustee, or the Custodian at the direction of the Trustee, shall make a notation on such Global Note as to the reduction in the principal amount represented thereby.  The Company shall notify the Trustee in writing of any conversion of Notes effected through any Conversion Agent other than the Trustee.

 

(g)                        Upon conversion, a Noteholder shall not receive any additional cash payment for accrued and unpaid interest and Additional Interest, if any, except as set forth below.  The Company’s settlement of the Conversion Obligations pursuant to Section 12.02 shall be deemed to satisfy its obligation to pay the principal amount of the Note and accrued and unpaid interest and Additional Interest, if any, to, but not including, the Conversion Date.  As a result, accrued and unpaid interest and Additional Interest, if any, to, but not including, the Conversion Date shall be deemed to be paid in full rather than cancelled, extinguished or forfeited.  Notwithstanding the preceding sentence, if Notes are converted after the close of business on an Interest Record Date, holders of such Notes as of the close of business on the Interest Record Date will receive the interest and Additional Interest, if any, payable on such Notes on the corresponding Interest Payment Date notwithstanding the conversion.  Notes surrendered for conversion during the period from the close of business on any Interest Record Date to the opening of business on the corresponding Interest Payment Date must be accompanied by payment of an amount equal to the interest and Additional Interest, if any, payable on the Notes so converted; provided, however, that no such payment shall be required (1) if the Company has specified a Fundamental Change Repurchase Date that is after an Interest Record Date but on or prior to the corresponding Interest Payment Date, (2) to the extent of any Defaulted Interest, if any, existing at the time of conversion with respect to such Note or (3) if the Notes are surrendered for conversion after the close of business on the Interest Record Date immediately preceding the Maturity Date.  Except as set forth in this Section 12.02(g), no payment or adjustment will be made for accrued and unpaid interest and Additional Interest, if any, on converted Notes.

 

7

 

(h)                        Upon conversion of Notes, such Person shall no longer be a Noteholder.

 

(i)                            [Reserved.]”

 

SECTION 2.09                                           Amendment of Section 12.03 of the Indenture.  Section 12.03 of the Indenture is hereby amended as follows:

 

(a)                               Section 12.03(a)(v) of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“(v)                       in no event will the Conversion Rate exceed 12.6454 per $1,000 principal amount of Notes, subject to adjustment in the same manner as the Conversion Rate pursuant to Section 12.04.”

 

(b)                              Section 12.03(a)(vi) of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“(vi)                   If any Noteholder converts such holder’s Notes prior to or following the Make-Whole Fundamental Change Period, such holder will not be entitled to receive the increased Conversion Rate resulting from the Make-Whole Conversion Rate Adjustment in connection with such conversion.”

 

SECTION 2.10                                           Amendment of Section 12.04 of the Indenture.  Section 12.04 of the Indenture is hereby amended as follows:

 

(a)                               The penultimate paragraph of Section 12.04(d) of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“For the avoidance of doubt, for purposes of this Section 12.04(d), in the event of any reclassification of the Common Stock, as a result of which the Notes become convertible into cash based on the value of more than one series of Common Stock, if an adjustment to the Conversion Rate is required pursuant to this Section 12.04(d), references in this Section to one share of Common Stock or Last Reported Sale Prices of one share of Common Stock shall be deemed to refer to a unit or to the price of a unit consisting of the number of shares of each series of Common Stock based on which the Notes are then convertible equal to the numbers of shares of such series issued in respect of one share of Common Stock in such reclassification.  The above provisions of this paragraph shall similarly apply to successive reclassifications.”

 

(b)                              Section 12.04(g) of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“(g)                       Notwithstanding this Section 12.04 or any other provision of this Indenture or the Notes, if any Conversion Rate adjustment becomes effective, or any Ex-Dividend Date for any issuance, dividend or distribution (relating to a required Conversion Rate adjustment) occurs, during the period beginning on, and including, the open of business on a Conversion Date and ending on, and including, the close of business on the last Trading Day of a related Cash Settlement Averaging Period, the Board of Directors shall make adjustments to the Conversion Rate and the amount of cash payable upon conversion of the Notes as are necessary or

 

8

 

appropriate to effect the intent of this Section 12.04 and the other provisions of this Article 12 and to avoid unjust or inequitable results, as determined in good faith by the Board of Directors.  Any adjustment made pursuant to this Section 12.04(g) shall apply in lieu of the adjustment or other term that would otherwise be applicable.”

 

(c)                               Section 12.04(o) of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“(o)                       [Reserved.]”

 

(d)                             Section 12.04(p) of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“(p)                       [Reserved.]”

 

SECTION 2.11                                           Amendment and Restatement of Section 12.05 of the Indenture.  Section 12.05 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“Section 12.05.                                             [Reserved.]”

 

SECTION 2.12                                           Amendment and Restatement of Section 12.06 of the Indenture.  Section 12.06 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“Section 12.06.                                             Effect of Reclassification, Consolidation, Merger or Sale.  Upon the occurrence of (i) any reclassification or change of the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a split, subdivision or combination covered by Section 12.04(a)), (ii) any consolidation, merger, combination or binding share exchange involving the Company, or (iii) any sale or conveyance of all or substantially all of the property and assets of the Company to any other Person, in each case as a result of which holders of Common Stock shall be entitled to receive cash, securities or other property or assets with respect to or in exchange for such Common Stock (any such event a “Merger Event”), then:

 

(a)                               the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force at the date of execution of such supplemental indenture if such supplemental indenture is then required to so comply) permitted under Section 9.01(g) providing for the conversion and settlement of the Notes as set forth in this Indenture.  Such supplemental indenture shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 12.  If, in the case of any Merger Event, the Reference Property includes shares of stock or other securities and assets of a corporation other than the successor or purchasing corporation, as the case may be, in such reclassification, change, consolidation, merger, combination, sale or conveyance, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the holders of the Notes as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including to the extent required by the

 

9

 

Board of Directors and practicable the provisions providing for the repurchase rights set forth in Article 13 herein.

 

In the event the Company shall execute a supplemental indenture pursuant to this Section 12.06, the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the reasons therefor, the kind or amount of cash, securities or property or asset that will comprise the Reference Property after any such Merger Event, any adjustment to be made with respect thereto and that all conditions precedent have been complied with, and shall promptly mail notice thereof to all Noteholders and make such notice available on its website.  The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Noteholder, at its address appearing on the Note Register provided for in this Indenture, within twenty days after execution thereof.  Failure to deliver such notice and make such notice available on the Company’s website shall not affect the legality or validity of such supplemental indenture.

 

(b)                              Notwithstanding the provisions of Section 12.02(b), and subject to the provisions of Section 12.01 and Section 12.03, at and after the effective time of such Merger Event, the related Conversion Obligation shall be settled as set forth under clause (c) below, it being understood and agreed that for purposes of Section 12.01(a), references therein to “the Last Reported Sale Price of the Common Stock” shall be deemed at and after the effective time of such Merger Event to be references to “the Last Reported Sale Price of a unit of Reference Property comprised of the kind and amount of shares of stock, securities or other property or assets (including cash or any combination thereof) that a holder of one share of Common Stock immediately prior to such Merger Event would have owned or been entitled to receive based on the Weighted Average Consideration” and references therein to “the Daily VWAP of the Common Stock” shall be deemed at and after the effective time of such Merger Event to be references to “the Daily VWAP of a unit of Reference Property comprised of the kind and amount of shares of stock, securities or other property or assets (including cash or any combination thereof) that a holder of one share of Common Stock immediately prior to such Merger Event would have owned or been entitled to receive based on the Weighted Average Consideration.”  The Company shall not become a party to any Merger Event unless its terms are consistent with this Section 12.06.  None of the foregoing provisions shall affect the right of a holder of Notes to convert its Notes into cash as set forth in Section 12.01 and Section 12.02 prior to the effective date of such Merger Event.

 

(c)                               (i)  With respect to each $1,000 principal amount of Notes surrendered for conversion after the effective date of any such Merger Event, the Company’s Conversion Obligation shall be settled in cash in accordance with Section 12.02(a) as follows: the Company shall pay to the converting Noteholder cash in an amount, per $1,000 principal amount of Notes equal to the sum of the Daily Conversion Values for each of the sixty consecutive Trading Days during the related Cash Settlement Averaging Period, such Daily Conversion Values determined as if the reference to “the Daily VWAP of the Common Stock” in the definition thereof were instead a reference to “the Daily VWAP of a unit of Reference Property comprised of the kind and amount of shares of stock, securities or other property or assets (including cash or any combination thereof) that a

 

10

 

holder of one share of Common Stock immediately prior to such Merger Event would have owned or been entitled to receive based on the Weighted Average Consideration”.

 

(ii)                              [Reserved.]

 

(iii)                          The Daily Conversion Values shall be determined by the Company promptly following the last day of the Cash Settlement Averaging Period.

 

(iv)                          For purposes of this Section 12.06, the “Weighted Average Consideration” shall mean the weighted average of the types and amounts of consideration received by the holders of the Common Stock entitled to receive cash, securities or other property or assets with respect to or in exchange for such Common Stock in any Merger Event who affirmatively make such an election.

 

(v)                              The Company shall notify the holders of the Notes of the Weighted Average Consideration as soon as practicable after the Weighted Average Consideration is determined.

 

(d)                             The above provisions of this Section shall similarly apply to successive Merger Events.”

 

SECTION 2.13                                           Amendment of Section 12.07 of the Indenture.  Section 12.07 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“Section 12.07.                                             [Reserved.]”

 

SECTION 2.14                                           Amendment of Section 12.08 of the Indenture.  Section 12.08 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“Section 12.08.                                             Responsibility of Trustee.  The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Noteholder to determine the Conversion Rate (or any adjustment thereto) or whether any facts exist that may require any adjustment (including any increase) of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same.  The Trustee and any other Conversion Agent shall not be accountable with respect to the amount of any cash that may at any time be issued or delivered upon the conversion of any Note; and the Trustee and any other Conversion Agent make no representations with respect thereto.  Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to transfer or deliver any cash upon the surrender of any Note for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article.  Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 12.06 relating either to the amount of cash receivable by Noteholders upon the conversion of their Notes after any event referred to in such Section 12.06 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 7.01, may accept (without any

 

11

 

independent investigation) as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers’ Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.  Neither the Trustee nor the Conversion Agent shall be responsible for determining whether any event contemplated by Section 12.01(b) has occurred that makes the Notes eligible for conversion or no longer eligible therefor until the Company has delivered to the Trustee and the Conversion Agent the notices referred to in Section 12.01(b) with respect to the commencement or termination of such conversion rights, on which notices the Trustee and the Conversion Agent may conclusively rely, and the Company agrees to deliver such notices to the Trustee and the Conversion Agent immediately after the occurrence of any such event or at such other times as shall be provided for in Section 12.01(b).”

 

SECTION 2.15                                           Amendment of Section 12.10 of the Indenture.  Section 12.10 of the Indenture is hereby amended and restated in its entirety to read as follows:

 

“Section 12.10.                                             Stockholder Rights Plans.  To the extent that the Company has a stockholder rights plan or another rights plan in effect upon conversion of the Notes if, prior to the time of conversion, the rights have separated from the shares of Common Stock in accordance with the provisions of the applicable stockholder rights agreement, the Conversion Rate will be adjusted at the time of separation as if the Company has distributed to all holders of Common Stock, shares of Capital Stock of the Company, evidence of indebtedness or assets as provided in Section 12.04(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.”

 

SECTION 2.16                                           Amendment of Exhibit A of the Indenture.  Exhibit A to the Indenture is hereby amended to delete all references to the phrase “, shares of Common Stock of the Company or a combination of cash and shares of Common Stock, as applicable” and to delete all references to the phrase “, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable,”.

 

SECTION 2.17                                           Amendment of Exhibit B of the Indenture.  Exhibit B to the Indenture is hereby amended and restated in its entirety to read as follows:

 

“EXHIBIT B

 

[FORM OF NOTICE OF CONVERSION]

 

To: ASCENT CAPITAL GROUP, INC.

 

The undersigned registered owner of this Note hereby exercises the option to convert this Note, or the portion hereof (that is $1,000 principal amount or an integral multiple thereof and does not result in the undersigned’s ownership of Notes in other than a Permitted Denomination) below designated, into cash, in accordance with the terms of the Indenture referred to in this Note, and directs that any cash comprising the Daily Conversion Values for each of the sixty Trading Days during the Cash Settlement Averaging Period, and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below.  If any portion of this Note not converted is to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto.  Any amount required to be paid to the undersigned on account of interest accompanies this Note.

 

	
Dated:
    	
 
    	
 
    	
 
    

 

12

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature(s)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature Guarantee
    	
 
    	
 
    

 

Signature(s) must be guaranteed
 by an eligible Guarantor Institution
 (banks, stock brokers, savings and
 loan associations and credit unions) 
 with membership in an approved
 signature guarantee medallion program
 pursuant to Securities and Exchange
 Commission Rule 17Ad-15 if
 Notes to be delivered, other than
 to and in the name of the registered holder.

 

Fill in for registration of Notes if to
 be delivered, other than to and in the
 name of the registered holder:

 

	
 
    	
 
    	
 
    
	
(Name)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Street Address)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(City, State and Zip   Code)
    	
 
    	
 
    
	
Please print name and   address
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Principal amount to be converted (if less than all):   $               ,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
NOTICE: The above signature(s) of the   holder(s) hereof must correspond with the name as written upon the face   of the Note in every particular without alteration or enlargement or any   change whatever.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Social Security or Other Taxpayer Identification   Number”
    

 

 

SECTION 2.18                                           References in the Indenture. Any references in the Indenture to Section 12.10 of the Indenture are hereby deleted in their entirety.

 

SECTION 2.19                                           Effect of Amendments.  The Notes are hereby amended to be consistent with the other amendments to the Indenture effected by this Supplemental Indenture.  The parties hereto hereby agree that the Company shall not be required under Section 9.04 of the Indenture to issue a new Global Note reflecting the terms amended in accordance with this

 

13

 

Supplemental Indenture.  The parties further agree that any Notes issued after the date hereof shall reflect the terms of the Indenture as amended by this Supplemental Indenture and any subsequent amendments or supplemental indentures.

 

ARTICLE III

 

MISCELLANEOUS

 

SECTION 3.01                                           Governing Law.  THIS SUPPLEMENTAL INDENTURE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO AND TO BE PERFORMED IN SUCH STATE.

 

SECTION 3.02                                           Trustee Makes No Representation.  The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture.

 

SECTION 3.03                                           Purpose.  For the avoidance of doubt, the sole purpose, intent and effect of this Supplemental Indenture is to eliminate the Company’s right to elect to deliver shares of Common Stock or a combination of cash and shares of Common Stock upon conversion of any Note, and this Supplemental Indenture shall be construed consistently therewith.

 

SECTION 3.04                                           Severability. In the event any provision in this Supplemental Indenture or in the Notes as amended by this Supplemental Indenture shall be invalid, illegal or unenforceable, then (to the extent permitted by law) the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired.

 

SECTION 3.05                                           Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

 

SECTION 3.06                                           Successors. All the agreements of the Company and Trustee contained in this Supplemental Indenture shall bind each of their successors and assigns whether so expressed or not.

 

SECTION 3.07                                           Effect of Headings.  The article and section headings herein have been inserted for convenience of reference only and are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

 

[Rest of Page Intentionally Left Blank]

 

14

 

IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to be duly executed as of the date first written above.

 

	
 
    	
ASCENT CAPITAL GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ William E. Niles
    
	
 
    	
 
    	
Name:
    	
William E. Niles
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer,   General Counsel and Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
U.S. BANK NATIONAL ASSOCIATION, as Trustee
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ K. Wendy Kumar
    
	
 
    	
 
    	
Name:
    	
K. Wendy Kumar
    
	
 
    	
 
    	
Title:
    	
Vice President
    

 

Signature Page to Supplemental IndentureExhibit
10.1

 

UNANIMOUS
WRITTEN CONSENT 

IN LIEU OF A SPECIAL MEETING OF 

THE BOARD OF DIRECTORS OF 

QUANTUM ENERGY INC.

 

The
undersigned being all of the Board of Directors of Quantum Energy Inc., a Nevada Corporation (the “Corporation”),
in lieu of holding a special meeting of the Board of Directors of the Corporation and pursuant the Nevada Revised Statutes, which
authorizes the taking of action by written consent of the Board of Directors without a meeting, hereby consent to the corporate
actions specified below and adopt the following resolutions by written consent, without a meeting and waiving all notice of such
a meeting:

 

RESOLVED,
that Jeffrey J. Mallmes and Andrew J. Kacic are hereby authorized and directed to become signatories on the Corporation’s
bank accounts and shall take all action necessary to become signatories on the Corporation’s bank accounts; and it is 

 

FURTHER
RESOLVED, that Jeffrey J. Mallmes and Andrew J. Kacic are hereby authorized and directed to obtain from one or more reputable
insurance companies, proposals for Directors’ and Officers’ liability insurance for the directors and officers of
the Corporation; and it is  

 

FURTHER
RESOLVED, that the appropriate officers of the Corporation are hereby authorized and directed to review copies of all material
agreements of the Corporation, including, but not limited to, all subscription agreements and warrant agreements; and it is

 

FURTHER
RESOLVED, that section 1.5 of the Corporation’s Bylaws is hereby amended to read in its entirety as follows:

 

Section
1.5. Action by Shareholders Without a Meeting. Any action required by law, these Bylaws, or the Articles of Incorporation
of this Corporation, to be taken at any Annual or Special Meeting of shareholders of this Corporation or any action which may
be taken at any Annual or Special Meeting of such shareholders, may be taken without a meeting, without prior notice, and without
a vote, if consented to in writing. The written consent shall set forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at
a meeting at which all shares are entitled to vote thereon were present and voted. If any class of shares is entitled to vote
thereon as a class, such written consent shall be required of the holders of a majority of the shares of each class of shares
entitled to vote as a class thereon and of the total shares entitled to vote thereon.

 

Within
ten (10) days after obtaining such authorization by written consent, notice shall be given to those shareholders who have not
consented in writing. The notice shall fairly summarize the material features of the authorized action, and, if the action be
a merger, consolidation, or sale, or exchange of assets for which dissenters’ rights are provided under the Nevada Revised
Statutes, the notice shall contain a clear statement of the right of shareholders dissenting therefrom to be paid the fair value
of their shares upon compliance with further provisions of this act regarding the rights of dissenting shareholders.

 

         Page 1 of 5

    

    

  

FURTHER
RESOLVED, that the appropriate officers of the Corporation are hereby authorized and directed to direct State Agent and Transfer
Syndicate Inc., the Corporation’s Registered Agent in Nevada, that, effective immediately, the Corporation’s contact
person for the Transfer Agent is Jerold N. Siegan, Esq. and to direct all communications to Jerold N. Siegan; and it is

 

FURTHER
RESOLVED, the Board hereby establishes an Audit Committee, to be initially composed of Jeffrey J. Mallmes and Andrew J.
Kacic plus not less than two (2) additional directors who qualify as independent directors, and who may be elected or
appointed in the future, and hereby adopts as the charter of the Audit Committee the Audit Committee Charter attached hereto
as Exhibit A. The Audit Committee shall be constituted, shall conduct its activities, and shall have those powers and
responsibilities, in each case as set forth in the Audit Committee Charter and not less than 2 members of the audit committee
shall be independent directors; and it is

 

FURTHER
RESOLVED, the Board hereby establishes a Compensation Committee, to be initially composed of Jeffrey J. Mallmes and Andrew
J. Kacic, and hereby adopts as the charter of the Compensation Committee the Compensation Committee Charter attached hereto as
Exhibit B. The Compensation Committee shall be constituted, shall conduct its activities, and shall have those powers
and responsibilities, in each case as set forth in the Compensation Committee Charter; and it is

 

FURTHER
RESOLVED, the Board hereby establishes a Nominating and Corporate Governance Committee, to be initially composed of Jeffrey
J. Mallmes and Andrew J. Kacic, and hereby adopts as the charter of the Nominating and Corporate Governance Committee Charter
attached hereto as Exhibit C. The Nominating and Corporate Governance Committee shall be constituted, shall conduct
its activities, and shall have those powers and responsibilities, in each case as set forth in the Nominating and Corporate Governance
Committee Charter; and it is

 

FURTHER
RESOLVED, the Board hereby adopts and approves the Code of Business Conduct and Ethics attached hereto as Exhibit D;
and it is

 

FURTHER
RESOLVED, that the Board of Directors believes it to be in the best interest of the Corporation for the Corporation to effect
pursuant to Regulation S promulgated under the Securities Act of 1933, as amended, an exempt offering (the “Offering”)
of up to $2,000,000 of investment units (“Units”) each Unit consisting of (i) one share of the Corporation’s
common stock (par value $0.001 per share) for a price of $0.25 per share plus, (ii) a 2 year warrant to purchase 1 share of the
Corporation’s common stock at a price of $1.00 per share; and it is

 

FURTHER
RESOLVED, that Board hereby ratifies and confirms that the officers of the Corporation are authorized, empowered and directed
to prepare all documents necessary to effect such Regulation S exempt offering including a term sheet, and form of subscription
agreement; and it is

 

         Page 2 of 5

    

    

 

FURTHER
RESOLVED, that the officers of the Corporation are authorized, empowered and directed, in the name and on behalf of the Corporation,
to make or cause to be made, and to execute and deliver all such additional agreements, documents, instruments and certifications
and to do or cause to be done all such acts and things, and to take all such steps and to make all such payments and remittances,
as any one or more of such officers may at any time or times deem necessary or desirable in connection with, or in furtherance
of, the Offering and otherwise in order to carry out the full intent and purposes of the foregoing resolutions; and it is

 

FURTHER
RESOLVED, that a sufficient number of shares of Common Stock be and they hereby are reserved for issuance upon exercise of
the Warrants and that such shares of Common Stock and Warrants, when issued pursuant to the terms of the Regulation S exempt offering
of the Units against receipt by the Corporation of the consideration therefor, shall be duly authorized and validly issued and,
in the case of shares of Common Stock of the Corporation, fully said and non-assessable; and it is

 

FURTHER
RESOLVED, that the Warrant Shares so set aside, reserved and kept available for issuance are hereby allotted to the holder
of the Warrant who exercises the purchase rights appertaining to the Warrant, and upon such exercise and subject to the limitations
contained in the Warrant, the Warrant Shares to be issued in accordance with the terms of the Warrant as a result of such exercise
shall, when issued in accordance with the terms of the Warrant, be validly issued, fully paid and non-assessable shares of Common
Stock; and it is

 

FURTHER
RESOLVED, that upon acceptance of a subscription and receipt of full payment of the consideration from each of the investors
in the Common Stock, the Secretary of the Corporation shall issue to such individual a certificate representing the number of
shares set forth opposite his name and the shares shall be deemed fully-paid and non-assessable shares of Common Stock, the form
of which certificate is attached hereto; and it is

 

FURTHER
RESOLVED, that the officers of the Corporation be, and each of them hereby is, authorized, empowered and directed for and
on behalf of the Corporation, to pay all fees incidental to or in connection with making the aforementioned securities filings
and such other expenses of the Offering, as are allocated to the Corporation by any agreements entered into with the placement
agent of the Offering; and it is

 

FURTHER
RESOLVED, that the officers of the Corporation be, and each of them hereby is, authorized, empowered and directed for and
on behalf of the Corporation, to pay all legal fees and accounting fees incurred by the Corporation in connection with the preparation
of the confidential Regulation S offering memorandum and any filings required to be made in connection with the Offering; and
it is

 

FURTHER
RESOLVED, that the officers of the Corporation, on behalf of the Corporation, disengage from and terminate the attorney client
relationship with Brunson Chandler & Jones, 175 South Main Street, Suite 1410, Salt Lake City, Utah 84111 effective immediately;
and it is

 

         Page 3 of 5

    

    

 

FURTHER
RESOLVED, that the Corporation demand a refund from Brunson Chandler & Jones, 175 South Main Street, Suite 1410, Salt
Lake City, Utah 84111 of the legal fees paid by the Corporation to said law firm in connection with the preparation and filing
of the Form S-1 registration statement that was filed on March 3, 2017; and it is

 

FURTHER
RESOLVED, that the Board herby approves and authorizes the preparation of an amendment to the Form S-1 filed by the
Corporation on March 3, 2017 and directs the officers to engage an attorney to prepare such amendment and to engage a new
auditing firm to prepare the audited financial statements for filing with the Amendment to the S-1 and to pay such legal fees
and accounting fees in connection with the preparation and filing of the amendment S-1; and it is

 

FURTHER
RESOLVED, that this Consent may be executed in two or more counterparts, each of which shall be deemed an original for all
purposes, and together shall constitute one and the same consent notwithstanding that all parties are not signatory to the same
counterpart. The delivery of copies of this Consent and of signature pages by electronic mail or facsimile transmission shall
constitute effective execution and delivery of this Consent as to the parties and may be used in lieu of the original Consent
for all purposes. Signatures of the parties transmitted by electronic mail or facsimile shall be deemed to be their original signatures
for all purposes; and it is

 

FURTHER
RESOLVED, that this Action by Written Consent shall be filed with the minutes of the meetings of the Corporation’s Board
of Directors, and shall have the same force and effect as the vote of the Directors as a duly called and noticed meeting of the
Board of Directors.

 

FURTHER
RESOLVED, that in addition to and without limiting the foregoing, the proper officers of the Corporation be, and each of them
hereby is, authorized, empowered and directed to take, or cause to be taken, such further action, to execute and deliver, or cause
to be delivered, for and in the name and on behalf of the Corporation, all such instruments and documents as such officer may
deem appropriate in order to effect the purpose or intent of the foregoing resolutions, including such other actions as may be
necessary or appropriate to effect the consummation of the Regulation S Offering (as conclusively evidenced by the taking of such
action or the execution and deliver of such instruments, as the case may be).

 

[The
remainder of this page is blank. The executions are on the following page.]

 

         Page 4 of 5

    

    

 

EXECUTION
PAGE FOR THE 

UNANIMOUS WRITTEN CONSENT OF 

THE BOARD OF DIRECTORS OF 

QUANTUM ENERGY INC.

 

IN WITNESS
WHEREOF, the undersigned have executed the foregoing Consent effective as of November 8, 2017.

	 	 
	 	 
	Jeffrey J. Mallmes	
	 	 
	 	 
	Andrew J. Kacic	 
	 	 
	 	 
	 	 
	Stanley F. Wilson	 
	 	 
	 	 
	Keith Stemler	 

 

BEING
ALL THE DIRECTORS OF THE CORPORATION

 

         Page 5 of 5

    

    

 

Audit
Committee Charter

Purpose

 

The
Audit Committee is the principal agent of the Board of Directors in overseeing the Company’s accounting and financial reporting
processes and audits of the Company’s financial statements and internal controls, including:

 

		•	Assisting
                                         in the Board’s oversight of the (i) the integrity of the Company’s financial
                                         statements, (ii) the Company’s compliance with ethical, legal and regulatory requirements
                                         (iii) the Company’s independent accountants’ qualifications and independence,
                                         (iv) the qualifications, independence and performance of the Company’s independent
                                         accountants; and (v) the qualifications and performance of the Company’s internal
                                         audit function; and

		•	Preparing
                                         the report required to be prepared by the Committee pursuant to the rules of the Securities
                                         and Exchange Commission for inclusion in the Company’s proxy statement.

 

The
Committee’s responsibility is oversight, and it recognizes that the Company’s management is responsible for preparing
the Company’s financial statements. Additionally, the Committee recognizes that financial management (including the Internal
Audit staff), as well as the independent accountants, have more knowledge and more detailed information about the Company than
do the members of the Committee, who are not employees of the Company; consequently, in carrying out its oversight responsibilities
the Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional
certification as to the independent accountants’ work.

 

Committee
Composition

 

The
membership of the Committee shall consist of at least three members of the Board of Directors, one of whom shall be appointed
by the Board to serve as Chair of the Committee. The Committee shall be comprised solely of members who are independent Directors
as determined by the Board under the standards set forth in the Board’s Corporate Governance Guidelines and the New York
Stock Exchange Listing Standards. The members shall be appointed or removed by a majority of the Board of Directors. No member
of the Committee may receive any compensation, consulting, advisory or other fee from the Company, other than Board compensation,
as determined in accordance with applicable Securities and Exchange Commission (SEC) and New York Stock Exchange (NYSE) rules.
Members serving on the Audit Committee are limited to serving on two other audit committees of public companies, unless the Board
of Directors evaluates and determines that these other commitments would not impair his or her effective service to the Company.
In accordance with NYSE and SEC rules, all members shall be “financially literate” and at least one member shall be
an “audit committee financial expert” with “accounting or related financial management expertise.”

 

Primary
Committee Responsibilities

 

1.
Financial Reporting

 

		1.	Review
                                         and discuss with management and the Company’s independent accountants the annual
                                         audited financial statements and quarterly unaudited financial statements, including
                                         disclosures under Management’s Discussion and Analysis of Financial Condition and
                                         Results of Operations, prior to the filing of the Company’s Annual Report on Form
                                         10-K and Quarterly Reports on Form 10-Q with the SEC, and recommend to the Board that
                                         the audited financial statements be included in the Company’s Form 10-K filing.

 

         

    

    

 

		2.	Direct
                                         the independent accountants to review before filing with the SEC the Company’s
                                         interim financial statements included in the Quarterly Reports on Form 10-Q, using applicable
                                         professional standards and procedures for conducting such review.

		3.	Discuss
                                         with management and the independent accountants (1) all critical accounting policies
                                         and practices used, (2) any significant financial reporting issues and judgments made
                                         in connection with the preparation of the Company’s financial statements, including
                                         analyses of the effects of alternative accounting methods under GAAP that have been discussed
                                         with management and the treatment preferred by the independent accountants, (3) the effect
                                         of regulatory and accounting initiatives and off balance sheet structures on the Company’s
                                         financial statements, and (4) any other reports required by law to be delivered by the
                                         independent accountants, including any management letter or schedule of unadjusted differences.

		4.	Review
                                         on a regular basis with the Company’s independent accountants any problems or difficulties
                                         encountered by the independent accountants in the course of any audit work, including
                                         management’s response with respect thereto, any restrictions on the scope of the
                                         independent accountants’ activities or on access to requested information, and
                                         any significant disagreements between management. The Committee will resolve any disagreements
                                         between management and the independent accountants regarding financial reporting.

		5.	Review
                                         earnings press releases, as well as financial information and earnings guidance provided
                                         by the Company to analysts and rating agencies prior to public disclosure. Such discussions
                                         may be general (consisting of discussing the types of information to be disclosed and
                                         the types of presentations to be made), and each earnings release or each instance in
                                         which the Company provides earnings guidance need not be discussed in advance.

 

Independent
Accountants

 

		6.	Be
                                         directly responsible for the appointment, retention and oversight of an independent registered
                                         public accounting firm to act as the Company’s independent accountants and has
                                         the sole authority to retain or terminate. The independent accountants shall report directly
                                         to the Committee.

		7.	Review
                                         and, in its sole discretion, approve in advance the engagement of the independent accountants
                                         on an annual basis, including the proposed fees, as well as all audit and non-audit engagements
                                         and relationships between the Company and the independent accountants.

		8.	Appoint,
                                         retain, compensate, oversee and terminate, if necessary, any other registered public
                                         accounting firm engaged for the purpose of preparing or issuing an audit report or performing
                                         other audit, review or attest services for Teradata Corporation.

		9.	Pre-approve
                                         all auditing and non-auditing services provided to the Company by its independent accountants
                                         and, if necessary, any other registered public accounting firm engaged for the purpose
                                         of preparing or issuing an audit report or performing other audit, review or attest services
                                         for Teradata Corporation, to the extent required by applicable law. The Committee may
                                         delegate the authority to grant pre-approval of auditing or permitted non-audit services
                                         to one or more members of the Committee. Any pre-approvals granted by such Committee
                                         member(s) will be presented to the full Committee at its next regularly scheduled meeting
                                         for ratification.

		10.	At
                                         least annually, obtain and review a report by the Company’s independent accountants
                                         describing (1) the firm’s internal quality-control procedures, (2) any material
                                         issues raised by the most recent internal quality-control review (or peer review) of
                                         the firm, or by any inquiry or investigation by governmental or professional authorities,
                                         within the preceding five years, regarding one or more independent audits carried out
                                         by the firm, and any steps taken to deal with any such issues, and (3) all relationships
                                         between the independent accountants and the Company or any of its subsidiaries.

		11.	At
                                         least annually, evaluate the qualifications, performance and independence of the Company’s
                                         independent auditors, including an evaluation of the lead audit partner; and assure that
                                         a process is in place regarding the regular rotation of the lead audit partner at the
                                         Company’s independent accountants and consider rotation of the accounting firm
                                         serving as the Company’s independent accountants.

		12.	Establish
                                         and maintain a policy regarding the Company’s hiring of individuals employed or
                                         formerly employed by the Company’s independent accountants.

 

         

    

    

 

Annual
Audits

 

		13.	Review
                                         the annual audit plan of the independent accountants, including the scope of audit activities,
                                         and monitor the audits’ progress and results.

		14.	Review
                                         with the independent accountants the results of the annual audits and obtain assurance
                                         from the independent accountants that the audits were conducted in a manner consistent
                                         with Section 10A of the Securities Exchange Act of 1934.

		15.	Discuss
                                         with the Company’s independent accountants the matters required to be discussed
                                         under applicable accounting and auditing professional standards or applicable regulations,
                                         including auditing standards adopted by the Public Company Accounting Oversight Board
                                         which shall include PCAOB Auditing Standards Nos. 16 and 18.

 

Internal
Controls and Risk Assessment

 

		16.	Review
                                         annually the charter, structure, resources, budget, audit scope and plan of the internal
                                         auditors and compliance with the Institute of Internal Auditor’s Standards for
                                         Professional Practice of Internal Auditing. Oversee the selection and replacement of
                                         the lead internal auditor with responsibility for the internal audit function of the
                                         Company who shall report administratively to the Company’s Chief Finance Officer
                                         and functionally to the Audit Committee.

		17.	Review
                                         with the independent accountants, the internal auditors, and management as appropriate,
                                         the internal audit scope and plan, the results of internal audit activities, and the
                                         adequacy of internal controls and the Company’s financial accounting and reporting
                                         processes, which shall include a review of major issues regarding accounting principles
                                         and financial statement presentations, including any significant changes in the Company’s
                                         selection and application of accounting principles and major issues as to the adequacy
                                         of the Company’s internal controls and any special audit steps adopted in light
                                         of identified deficiencies.

		18.	Review
                                         management’s report assessing the adequacy and effectiveness of the Company’s
                                         internal controls prior to the inclusion of such report in the Company’s Annual
                                         Report on Form 10-K.

		19.	Review
                                         with management and independent counsel, accountants or advisors, as appropriate, the
                                         status of any legal and regulatory matters that may have a material impact on the Company’s
                                         financial statements, including compliance issues, threatened, pending, or ongoing litigation
                                         and outstanding matters with regulatory agencies.

		20.	Review
                                         and discuss with management the Company’s guidelines and policies regarding financial
                                         and enterprise risk management and risk appetite including major risk exposures such
                                         as, for example, financial, cyber security, IT, data privacy, business continuity, and
                                         legal and regulatory risks, and regularly discusses management’s plans related
                                         to these areas and the steps management has taken to monitor and control such exposures,
                                         except as to those risks for which oversight has been assigned to other committees of
                                         the Board or retained by the Board.

		21.	Establish
                                         procedures for processing and addressing the receipt and handling of complaints regarding
                                         accounting, internal controls, or auditing matters, and the confidential, anonymous submission
                                         by Company employees of concerns regarding questionable accounting or auditing matters.

 

Ethics
and Compliance Program Oversight

 

		22.	Review
                                         managements’ monitoring and enforcement of the Company’s Code of Conduct,
                                         which includes the code of ethics for its senior financial officers.

		23.	Oversee
                                         the Company’s program for monitoring compliance with laws and regulations and the
                                         Company’s ethical standards and receive reports on significant ethics and compliance
                                         investigations or matters.

 

Reporting
Responsibilities

 

		24.	Report
                                         at the next meeting of the Board of Directors, or sooner if appropriate, summarizing
                                         any issues that arise relating to the Committee’s oversight responsibilities and
                                         all significant items discussed at any Audit Committee meeting and describing all actions
                                         taken, and make recommendations to the Board as appropriate.

 

         

    

    

 

		25.	Review
                                         and approve the Committee report and any other audit committee disclosure required by
                                         the SEC to be included in the Company’s proxy statement.

		26.	Receive
                                         periodic reports from management and the Company’s independent accountants to assess
                                         the impact on the Company’s significant accounting or financial reporting developments
                                         that may have a bearing on the Company.

		27.	Receive
                                         periodic reports from the internal auditors on findings of fraud as well as significant
                                         findings regarding the design and/or operation of internal controls as well as management
                                         responses. Review reports on the results of significant findings from audits and special
                                         projects conducted by the internal auditors as appropriate. Internal Audit shall also
                                         report any difficulties encountered in the course of its audits, such as any restrictions
                                         on the scope of its work or access to required information.

 

Other
Responsibilities and Authority

 

		28.	Perform
                                         such other oversight functions that from time to time may be assigned to it by the Board
                                         of Directors.

		29.	Conduct
                                         or authorize investigations into or studies of any matters within its scope of responsibilities
                                         and retain independent counsel, accountants or other professionals as necessary to assist
                                         in the conduct of any investigations.

		30.	Engage,
                                         set the compensation of and, where appropriate, replace independent counsel and other
                                         advisors as it deems necessary to carry out its duties. The Company shall provide for
                                         appropriate funding, as determined by the Audit Committee, for payment of compensation
                                         to its independent accountants for the purpose of rendering or issuing an audit report,
                                         to any advisors employed by the Audit Committee and ordinary administrative expenses
                                         of the Audit Committee that are necessary or appropriate in carrying out its duties.

		31.	Review
                                         and reassess the adequacy of the Audit Committee charter periodically.

		32.	Annually
                                         evaluate the performance of the Committee. The Committee shall conduct this evaluation
                                         in such manner as it deems appropriate.

		33.	The
                                         Committee may request that members of management and/or representatives of the independent
                                         accountants be present at its meetings as it may deem desirable and appropriate. The
                                         Committee shall have all of the resources and authority to discharge its duties and responsibilities.

 

Structure
and Operations

 

		34.	The
                                         Audit Committee may form and delegate authority to one or more subcommittees (including
                                         a subcommittee consisting of a single member), as it deems appropriate in its sole discretion
                                         from time to time under the circumstances. Any decision of a subcommittee to pre-approve
                                         audit and permitted nonaudit and tax services and take any other actions shall be presented
                                         to the full Audit Committee at its next regularly scheduled meeting.

		35.	The
                                         Audit Committee shall hold meetings at least four times each year and at any additional
                                         time as the Committee Chair or Teradata’s Chief Financial Officer deems necessary.
                                         The meetings will generally be held in January, April, July and November/December.

		36.	At
                                         least quarterly, the Committee will have the opportunity to meet in separate private
                                         sessions with management, the E&C Officer of the Company, the independent accountants
                                         and the lead internal auditor with responsibility for the internal audit function. The
                                         Committee may also meet periodically as needed in private sessions with other members
                                         of management such as the General Counsel or other persons as determined by the Committee.

		37.	A
                                         majority of the Committee members shall constitute a quorum, present in person or by
                                         telephone or through other telecommunications.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00287-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00287-of-00352.parquet"}]]