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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8 - K
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CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 23, 1999
STC BROADCASTING, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
333-29555 75-2676358
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(Commission File Number) (I.R.S. Employer Identification No.)
720 2nd Avenue South
St. Petersburg, Florida 33701
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(Address of Principal Executive Offices) (Zip Code)
(727) 821-7900
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
Sale of WROC-TV
On March 3, 1999, the Company, STC License Company, a subsidiary of
the Company, and Nexstar Broadcasting of Rochester, Inc., ("Nexstar") entered
into an asset purchase agreement (the "Rochester Agreement") to sell to Nexstar
the television broadcast license and operating assets of WROC-TV, Rochester,
New York for approximately $46.0 million subject to adjustment for certain
customary proration amounts. On April 1, 1999, the Company completed the
non-license sale of WROC assets to Nexstar for $43.0 million and entered into a
Time Brokerage Agreement with Nexstar under which Nexstar programmed most of
the available time of WROC and retained the revenues from the sale of
advertising time. On December 23, 1999, the Company completed the sale of the
license assets to Nexstar. The Company will record an approximate gain of $4.5
million during the fourth quarter of 1999 on the sale of WROC-TV.
Sale of Redeemable Preferred Stock Series B
On December 30, 1999, the Company sold to Sunrise Television Corp.
("Sunrise") 25,000 shares of Redeemable Preferred Stock Series B with an
aggregate liquidation preference of $25.0 million. Each share is entitled to
quarterly dividends that will accrue at a 14% rate per annum. The Company's
Senior Credit Agreement and Senior Subordinated Notes prohibit the payment of
cash dividends until May 31, 2002.
The Redeemable Preferred Stock Series B is subject to mandatory
redemption in whole on February 28, 2008 at a price equal to the then effective
liquidation preference per share plus an amount in cash equal to all accumulated
and unpaid dividends per share. Prior to February 28, 2008, the Company can
redeem the Redeemable Preferred Stock Series B at the then effective liquidation
preference per share plus an amount in cash equal to all accumulated and unpaid
dividends per share. In the event of a Change of Control (as defined in the
Certificate of Designation for the Redeemable Preferred Stock Series B), the
Company must offer to purchase all outstanding shares at the then effective
liquidation preference per share plus an amount in cash equal to all accumulated
and unpaid dividends per share.
With respect to dividends and distributions upon liquidation,
winding-up and dissolution of the Company, the Redeemable Preferred Stock
Series B ranks senior to all classes of common stock of the Company and the
Redeemable Preferred Stock Series A of the Company.
Holders of the Redeemable Preferred Stock Series B have no voting
rights, except as otherwise required by law or as expressly provided in the
Certificate of Designation for the Redeemable Preferred Stock Series B; however,
the holders of the Redeemable Preferred Stock Series B, voting together as a
single class, shall have the right to elect the lesser of two directors or 25%
of the total number of directors constituting the Board of Directors of the
Company upon the occurrence of certain events, including but not limited to, the
failure by the Company on or after February 28, 2002, to pay cash dividends in
full on the Redeemable Preferred Stock Series B for six or more quarterly
dividend periods or the failure by the Company to discharge any mandatory
redemption or repayment obligation with respect to the Redeemable Preferred
Stock Series B or the breach or violation of
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one or more of the covenants contained in the Certificate of Designation, or
the failure by the Company to repay at final stated maturity, or the
acceleration of the final stated maturity of, certain indebtedness of the
Company.
The Certificate of Designation for the Redeemable Preferred Stock
Series B contains covenants customary for securities comparable to the
Redeemable Preferred Stock Series B, including covenants that restrict the
ability of the Company and its subsidiaries to incur additional indebtedness,
pay dividends and make certain other restricted payments, to merge or
consolidate with any other person or to sell, assign, transfer, lease, convey,
or otherwise dispose of all or substantially all of the assets of the Company.
Such covenants are substantially identical to those covenants contained in the
Senior Subordinated Notes.
Interest Rate Swap
On February 9, 1999, the Company entered into a two-year interest rate
swap agreement, which was extendable by either party for an additional two
years, to reduce the impact of changing interest rates on $40.0 million of its
floating rate borrowings from the Senior Credit Agreement. The interest rate
was fixed at 5.06% plus applicable borrowing margin. Due to the issuance by the
Company on December 30, 1999 of $25.0 million of Redeemable Preferred Stock
Series B to Sunrise and the subsequent reduction in outstanding balances under
the Senior Credit Agreement, the Company was forced to terminate the swap
agreement, but simultaneously entered into a new swap agreement that fixed the
interest rate on $25.0 million of its floating rate borrowings for 18 months at
5% plus the applicable borrowing margin (currently 2.125%).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
None
(b) Pro Forma Financial Information.
None
(c) Exhibits.
2.1 Asset Purchase Agreement by and among STC Broadcasting, Inc. and STC
License Company and Nexstar Broadcasting of Rochester, Inc. dated
March 3, 1999. (1)
3.1 Certificate of Elimination with respect to the Preferred Stock, Series
B of STC Broadcasting, Inc. dated December 28, 1999. (2)
3.2 Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optical and Other Special Rights of Preferred Stock,
Series B and Qualifications, Limitations and Restrictions thereof of
STC Broadcasting, Inc. dated December 28, 1999. (2)
10.1 Fourth Amendment to the Amended and Restated Credit Agreement dated as
of December 21, 1999. (2)
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10.2 Preferred Stock Purchase Agreement dated December 30, 1999 by and
between Sunrise Television Corp. and STC Broadcasting, Inc. (2)
10.3 Senior Subordinated Note Purchase Agreement by and among Sunrise
Television Corp. and Hicks, Muse, Tate & Furst Equity Fund III, L.P.,
HM3 Coinvestors, L.P. and Chase Equity Associates, L.P. dated December
30, 1999. (2)
10.4 Stock Purchase Warrant dated December 30, 1999 for the purchase of
Sunrise Television Corp. stock by Hicks, Muse, Tate & Furst Equity Fund
III, L.P. by Sunrise Television Corp. (2)
10.5 Stock Purchase Warrant dated December 30, 1999 for the purchase of
Sunrise Television Corp. stock by HM 3 Coinvestors, L.P. by Sunrise
Television Corp. (2)
10.6 Stock Purchase Warrant dated December 30, 1999 for the purchase of
Sunrise Television Corp. stock by Chase Equity Associates, L.P. by
Sunrise Television Corp. (2)
(1) Incorporated by reference to the Form 10-K of STC Broadcasting, Inc.
for the period January 1, 1998 to December 31, 1998.
(2) Filed Herewith
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
STC BROADCASTING, INC.
Date: January 6, 2000 By: /s/ DAVID A. FITZ
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David A. Fitz
Senior Vice President and
Chief Financial Officer
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Exhibit 3.1
CERTIFICATE OF ELIMINATION WITH RESPECT
TO THE PREFERRED STOCK, SERIES B
OF
STC BROADCASTING, INC.
PURSUANT TO SECTION 151(g)
In accordance with Section 151(g) of the General Corporation Law of
the State of Delaware, STC Broadcasting, Inc., a Delaware corporation (the
"Corporation"), does hereby certify that the following resolutions with respect
to its Preferred Stock, Series B were duly adopted by the Corporation's Board
of Directors:
WHEREAS, pursuant to Section 151 of the General Corporation Law of the
State of Delaware, the Corporation duly filed a Certificate of Designation of
the Powers Preferences and Relative, Participating, Optional and other Special
Rights of the Preferred Stock, Series B, and Qualifications, Limitations and
Restrictions Thereof (the "Certificate of Designation") with the Secretary of
State of the State of Delaware on February 5, 1999, with respect to its
Preferred Stock, Series B par value $0.01 per share (the "Preferred Stock,
Series B"); and
WHEREAS, there are no shares of Preferred Stock, Series B outstanding,
nor will any more be issued subject to the Certificate of Designation.
NOW, THEREFORE, BE IT RESOLVED, that no shares of the Corporation's
Preferred Stock, Series B are outstanding and that no shares of the Preferred
Stock, Series B will be issued subject to the Certificate of Designation
previously filed with respect to the Preferred Stock, Series B: and
RESOLVED FURTHER, that the officers of the Corporation are directed to
file with the Secretary of State of the State of Delaware a certificate
pursuant to Section 151(g) of the General Corporation Law of the State of
Delaware setting forth these resolutions in order to eliminate from the
Corporation's Restated Certificate of Incorporation all matters set forth in
the Certificate of Designation with respect to the Preferred Stock, Series B.
IN WITNESS WHEREOF, STC Broadcasting, Inc. has caused this certificate
to be executed by the undersigned as of this 28th day of December, 1999.
STC BROADCASTING, INC.
By: /s/ David A. Fitz
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Name: David A. Fitz
Title: Executive Vice President
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IN WITNESS WHEREOF, STC Broadcasting, Inc has caused this Certificate
to be signed by the undersigned, its Secretary, this 28th day of December,
1999.
STC BROADCASTING, INC.
By: /s/ David A. Fitz
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Name: David A. Fitz
Title: Secretary
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Exhibit 3.2
STC BROADCASTING, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF
PREFERRED STOCK, SERIES B
AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
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Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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STC Broadcasting, Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, (i) the board of directors of the Corporation (the "Board
of Directors") previously created, authorized and provided for the issuance of
Preferred Stock, Series B, par value $0.01 per share, of the Corporation (the
"Old Series B Preferred Stock"), (ii) all previously outstanding shares of such
Old Series B Preferred Stock have been redeemed and cancelled by the
Corporation, (iii) pursuant to the Certificate of Designation of the Powers,
Preferences and Relative, Participating, Optional and Other Special Rights of
the Old Series B Preferred Stock and Qualifications, Limitations and
Restrictions Thereof, redeemed shares of Old Series B Preferred Stock become
authorized and unissued shares of Preferred Stock undesignated as to series and
may be redesignated and reissued as part of any series of Preferred Stock, (iv)
a Certificate of Elimination with respect to the Old Series B Preferred Stock
was filed with the Secretary of the State of Delaware on December 28, 1999, and
(v) pursuant to authority conferred upon the Board of Directors by its
Certificate of Incorporation, as amended (hereinafter referred to as the
"Certificate of Incorporation"), and pursuant to the provisions of Section 151
of the General Corporation Law of the State of Delaware, said Board of
Directors, by unanimous written consent dated December 28, 1999, duly approved
and adopted the following resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in
the Board of Directors by its Certificate of Incorporation,
the Board of Directors does hereby create, authorize and
provide for the issuance of a new series of Preferred Stock,
Series B, par value $0.01 per share, with a liquidation
preference of $1,000.00 per share, consisting initially of
100,000 shares, having the designations, preferences,
relative, participating, optional and other special rights
and the qualifications, limitations and restrictions thereof
that are set forth in the Certificate of Incorporation and in
this Resolution as follows:
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(a) Designation. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Corporation a class of Preferred
Stock designated as "Preferred Stock, Series B". The number of shares
constituting such class shall be no more than 100,000. Shares may only be
issued after the date of the above-referenced resolution pursuant to (i) the
Preferred Stock Purchase Agreement or (ii) dividends paid on the Preferred
Stock, Series B "in-kind" in accordance with Section (c) hereof. The initial
liquidation preference of the Preferred Stock, Series B shall be $1,000.00 per
share.
(b) Rank. The Preferred Stock, Series B shall, with respect to
dividends and distributions upon the liquidation, winding-up and dissolution of
the Corporation, rank senior to (i) all classes of common stock of the
Corporation, and each other class of Capital Stock or series of Preferred Stock
hereafter created which does not expressly provide that it ranks senior to or
on a parity with, the Preferred Stock, Series B as to dividends and
distributions upon the liquidation, winding-up and dissolution of the
Corporation and (ii) the 14% Preferred Stock (the "Series A Preferred Stock"),
designated pursuant to the Certificate of Designation of the Corporation dated
February 27, 1997, as the same may be amended (collectively, "Junior Stock").
The Preferred Stock, Series B shall, with respect to dividends and
distributions upon the liquidation, winding-up and dissolution of the
Corporation, rank on a parity with any class of Capital Stock or series of
Preferred Stock hereafter created which expressly provides that it ranks on a
parity with the Preferred Stock, Series B as to dividends and distributions
upon the liquidation, winding-up and dissolution of the Corporation ("Parity
Stock"), provided that any such Parity Stock that was not approved by the
Holders in accordance with paragraph (f)(ii)(A) hereof shall be deemed to be
Junior Stock and not Parity Stock. The Preferred Stock, Series B shall, with
respect to dividends and distributions upon the liquidation, winding-up and
dissolution of the Corporation, rank junior to each class of Capital Stock or
series of Preferred Stock hereafter created which has been approved by the
Holders in accordance with paragraph (f)(ii)(B) and which expressly provides
that it ranks senior to the Preferred Stock, Series B as to dividends or
distributions upon the liquidation, winding-up and dissolution of the
Corporation ("Senior Stock").
(c) Dividends.
(i) Beginning on the applicable Issue Date, the Holders of
the outstanding shares of Preferred Stock, Series B being issued on
such Issue Date shall be entitled to receive, when, as and if declared
by the Board of Directors, out of funds legally available therefor,
distributions in the form of cash dividends on each share of Preferred
Stock, Series B, at a rate per annum equal to 14% of the liquidation
preference per share of the Preferred Stock, Series B, payable
quarterly in arrears, on each Dividend Payment Date. No interest shall
be payable in respect of any dividends which may be in arrears. All
dividends shall be cumulative, whether or not earned or declared, from
the date of issuance of the Preferred Stock, Series B and shall
compound to the extent not paid on the next succeeding Dividend
Payment Date, and shall be payable in arrears on each Dividend Payment
Date, commencing on the first Dividend Payment Date after the
applicable Issue Date. At the option of the Corporation, any dividend
payable on any Dividend Payment Date, may be paid in additional whole
shares of Preferred Stock, Series B (calculated by dividing (x) the
amount of the cash dividend payable to each holder of record of the
Preferred Stock, Series B on the basis of all shares held of record
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by such holder, whether evidenced by one or more certificates, by (y)
$1,000.00, with amounts in respect of any partial shares to be paid in
cash by the Corporation) on such Dividend Payment Date; provided, the
Corporation shall not have such option if with respect to any
concurrent or substantially concurrent dividend on any Parity Stock or
Junior Stock, a dividend on such Parity Stock or Junior Stock is or
will be paid in cash (excluding cash dividends payable in respect of
fractional shares). Each dividend shall be payable to Holders of
record as they appear on the stock books of the Corporation on the
Dividend Record Date immediately preceding the related Dividend
Payment Date.
(ii) All dividends paid with respect to shares of the
Preferred Stock, Series B pursuant to paragraph (c)(i) shall be paid
pro rata to the Holders entitled thereto. The Corporation shall not
pay any dividend on the Preferred Stock, Series B "in-kind" pursuant
to the provisions of Section (c)(i) unless it declares a similar and
pro rata dividend in kind on all then outstanding shares of Preferred
Stock, Series B.
(iii) Dividends on account of arrears for any past Dividend
Period (including any dividends compounding thereon) and dividends in
connection with any optional redemption pursuant to paragraph (e)(i)
may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to Holders of record on such date, not more
than forty-five (45) days prior to the payment thereof, as may be
fixed by the Board of Directors of the Corporation.
(iv) No full dividends shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on any
Parity Stock for any period unless full cumulative dividends have been
or contemporaneously are declared and paid in full, or declared and,
if payable in cash, a sum in cash set apart sufficient for such
payment on the Preferred Stock, Series B for all Dividend Periods
terminating on or prior to the date of payment of such full dividends
on such Parity Stock. If any dividends are not so paid, all dividends
declared upon shares of the Preferred Stock, Series B and any other
Parity Stock shall be declared pro rata so that the amount of
dividends declared per share on the Preferred Stock, Series B and such
Parity Stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Preferred Stock, Series B and such
Parity Stock bear to each other.
(v) (A) Holders of shares of the Preferred Stock, Series B
shall be entitled to receive the dividends provided for in paragraph
(c)(i) hereof in preference to and in priority over any dividends upon
any of the Junior Stock.
(B) So long as any share of the Preferred Stock, Series B is
outstanding, the Corporation shall not declare, pay or set apart for
payment any dividend on any of the Junior Stock or make any payment on
account of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or other retirement of, any
of the Junior Stock or any warrants, rights, calls or options
exercisable for or convertible into any of the Junior Stock whether in
cash, obligations or shares of the Corporation or other property
(other than dividends in Junior Stock to the holders of Junior Stock),
and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of
the Junior Stock or any such warrants, rights,
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calls or options unless full cumulative dividends determined in
accordance herewith on the Preferred Stock, Series B have been paid in
full.
(C) So long as any share of the Preferred Stock, Series B is
outstanding, the Corporation shall not make any payment on account of,
or set apart for payment money for a sinking or other similar fund
for, the purchase, redemption or other retirement of, any of the
Parity Stock or any warrants, rights, calls or options exercisable for
or convertible into any of the Parity Stock, and shall not permit any
corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any of the Parity Stock or any such
warrants, rights, calls or options unless full cumulative dividends
determined in accordance herewith on the Preferred Stock, Series B
have been paid in full.
(vi) Dividends payable on the Preferred Stock, Series B for
any period less than a year shall be computed on the basis of a
360-day year of twelve 30-day months and the actual number of days
elapsed in the period for which payable.
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the
Holders of shares of Preferred Stock, Series B then outstanding shall
be entitled to be paid out of the assets of the Corporation available
for distribution to its stockholders an amount in cash equal to the
liquidation preference for each share outstanding, plus, without
duplication, an amount in cash equal to accumulated and unpaid
dividends thereon (including any compounded dividends and breakage
fees) to the date fixed for liquidation, dissolution or winding up
(including an amount equal to a prorated dividend for the period from
the last Dividend Payment Date to the date fixed for liquidation,
dissolution or winding up) before any payment shall be made or any
assets distributed to the holders of any of the Junior Stock
including, without limitation, common stock of the Corporation. Except
as provided in the preceding sentence, Holders of Preferred Stock,
Series B shall not be entitled to any distribution in the event of any
liquidation, dissolution or winding up of the affairs of the
Corporation. If the assets of the Corporation are not sufficient to
pay in full the liquidation payments payable to the Holders of
outstanding shares of the Preferred Stock, Series B and all Parity
Stock, then the holders of all such shares shall share equally and
ratably in such distribution of assets in proportion to the full
liquidation preference, including, without duplication, all accrued
and unpaid dividends to which each is entitled.
(ii) For the purposes of this paragraph (d), neither the
sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Corporation nor the consolidation or merger
of the Corporation with or into one or more entities shall be deemed
to be a liquidation, dissolution or winding up of the affairs of the
Corporation.
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(e) Redemption.
(i) Optional Redemption. (A) The Corporation may, at the
option of the Board of Directors, upon three business days' written
notice to the Holders, redeem at any time, subject to contractual and
other restrictions with respect thereto and from any source of funds
legally available therefor, in whole or in part, in the manner
provided in paragraph (e)(iii) hereof, any or all of the shares of the
Preferred Stock, Series B, at a redemption price equal to 100% of the
then liquidation preference per share plus, without duplication, an
amount in cash equal to all accumulated and unpaid dividends per share
(including any compounded dividends and breakage fees, if any)
(including an amount in cash equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date) (the "Redemption Price").
(B) In the event of a redemption pursuant to paragraph
(e)(i)(A) hereof of only a portion of the then outstanding shares of
the Preferred Stock, Series B, the Corporation shall effect such
redemption pro rata according to the number of shares held by each
Holder of the Preferred Stock, Series B.
(ii) Mandatory Redemption. On February 28, 2008, the
Corporation shall redeem, to the extent of funds legally available
therefor, in the manner provided in paragraph (e)(iii) hereof, all of
the shares of the Preferred Stock, Series B then outstanding at the
Redemption Price.
(iii) Procedures for Redemption. (A) No less than ten (10)
days prior to the date fixed or anticipated for any redemption of the
Preferred Stock, Series B, written notice (the "Redemption Notice")
shall be given by the Corporation via first class mail, postage
prepaid, to each Holder of record on the record date fixed for such
redemption of the Preferred Stock, Series B at such Holder's address
as the same appears on the stock books of the Corporation, provided
that no failure to give such notice nor any deficiency therein shall
affect the validity of the procedure for the redemption of any shares
of Preferred Stock, Series B to be redeemed except as to the Holder or
Holders to whom the Corporation has failed to give said notice or
except as to the Holder or Holders whose notice was defective. The
Redemption Notice shall state:
(1) whether the redemption is pursuant to paragraph
(e)(i)(A) or (e)(ii) hereof;
(2) the Redemption Price,
(3) whether all or less than all the outstanding
shares of the Preferred Stock, Series B redeemable are to be
redeemed and the total number of shares of the Preferred
Stock, Series B being redeemed;
(4) the date fixed for redemption;
(5) that the Holder is to surrender to the
Corporation, at the place or places where certificates for
shares of Preferred Stock, Series B are to be surrendered for
redemption, in the manner and at the price designated, his
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certificate or certificates representing the shares of
Preferred Stock, Series B to be redeemed; and
(6) that dividends on the shares of the Preferred
Stock, Series B to be redeemed shall cease to accumulate on
such Redemption Date unless the corporation defaults in the
payment of the Redemption Price.
(B) Each Holder of Preferred Stock, Series B shall surrender
the certificate or certificates representing such shares of Preferred
Stock, Series B to the Corporation, duly endorsed (or otherwise in
proper form for transfer, as determined by the Corporation), in the
manner and at the place designated in the Redemption Notice, and on
the Redemption Date the Redemption Price may be, for such shares shall
be payable in cash to the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
shall be canceled and retired. In the event that less than all of the
shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(C) On and after the Redemption Date, unless the Corporation
defaults in the payment in full of the applicable redemption price,
dividends on the Preferred Stock, Series B called for redemption shall
cease to accumulate on the Redemption Date, and all rights of the
Holders of redeemed shares shall terminate with respect thereto on the
Redemption Date, other than the right to receive the Redemption Price
without interest; provided, however, that if a notice of redemption
shall have been given as provided in paragraph (e)(iii)(A) above and
the funds necessary for redemption (including an amount in respect of
all dividends that will accrue to the Redemption Date) shall have been
irrevocably deposited in trust for the equal and ratable benefit for
the Holders of the shares to be redeemed, then, at the close of
business on the day on which such funds are segregated and set aside,
the Holders of the shares to be redeemed shall cease to be
stockholders of the Corporation and shall be entitled only to receive
the Redemption Price without interest.
(f) Voting Rights. (i) The Holders of Preferred Stock, Series B,
except as required under Delaware law or as set forth in paragraphs (ii), (iii)
and (iv) below, shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the stockholders of the Corporation.
(ii) (A) So long as any shares of the Preferred Stock, Series
B are outstanding, the Corporation shall not authorize any class of
Parity Stock without the affirmative vote or consent of Holders of at
least a majority of the then outstanding shares of Preferred Stock,
Series B, voting or consenting, as the case may be, as one class,
given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting.
(B) So long as any shares of the Preferred Stock, Series B
are outstanding, the Corporation shall not authorize any class of
Senior Stock without the affirmative vote or consent of Holders of at
least a majority of the outstanding shares of Preferred Stock,
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Series B, voting or consenting, as the case may be, as one class,
given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting.
(C) So long as any shares of Preferred Stock, Series B are
outstanding, the Corporation shall not amend this Certificate of
Designation so as to affect adversely the specified rights,
preferences, privileges or voting rights of the shares of Preferred
Stock, Series B or to authorize the issuance of any additional shares
of Preferred Stock, Series B without the affirmative vote or consent
of Holders of at least a majority of the issued and outstanding shares
of Preferred Stock, Series B, voting or consenting, as the case may
be, as one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
(D) Except as set forth in paragraph (f)(ii)(A), (f)(ii)(B)
and (f)(ii)(C) above, (x) the creation, authorization or issuance of
any shares of any Junior Stock, Parity Stock or Senior Stock,
including the designation thereof within the existing class of
Preferred Stock, Series B or (y) the increase or decrease in the
amount of authorized Capital Stock of any class, including Preferred
Stock, shall not require the consent of Holders of Preferred Stock,
Series B and shall not be deemed to affect adversely the rights,
preferences, privileges or voting rights of Holders of Preferred
Stock, Series B.
(iii) Without the affirmative vote or consent of Holders of a
majority of the issued and outstanding shares of Preferred Stock,
Series B, voting or consenting, as the case may be, as one class,
given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting, the Corporation shall not, in
a single transaction or series of related transactions, consolidate or
merge with or into, or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its assets to, any
Person or adopt a plan of liquidation unless: (i) either (1) the
Corporation is the surviving or continuing Person or (2) the Person
(if other than the Corporation) formed by such consolidation or into
which the Corporation is merged or the Person which acquires by
conveyance, transfer or lease the properties and assets of the
Corporation substantially as an entirety or in the case of a plan of
liquidation, the Person to which assets of the Corporation have been
transferred, shall be a corporation, partnership or trust organized
and existing under the laws of the United States or any State thereof
or the District of Columbia; (ii) the Preferred Stock, Series B shall
be converted into or exchanged for and shall become shares of such
successor, transferee or resulting Person, having in respect of such
successor, transferee or resulting Person the same powers, preferences
and relative participating, optional or other special rights and the
qualifications, limitations or restrictions thereon, that the
Preferred Stock, Series B had immediately prior to such transaction;
(iii) immediately after giving effect to such transaction and the use
of the proceeds therefrom (on a pro forma basis), including giving
effect to any Indebtedness incurred or anticipated to be incurred in
connection with such transaction, the Corporation (in the case of
clause (1) of the foregoing clause (i)) or such Person (in the case of
clause (2) of the foregoing clause (i)) shall be able to incur at
least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) under paragraph (1)(i) hereof; (iv) immediately after
giving effect to such transactions, no Voting Rights Triggering Event
shall have occurred or be continuing; and (v) the Corporation has
delivered to the transfer agent for the Preferred Stock, Series B
prior to the
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consummation of the proposed transaction an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger or
transfer complies with this Certificate of Designation and that all
conditions precedent in this Certificate of Designation relating to
such transaction have been satisfied. Upon completion of any such
transactions, the Person (if other than the Corporation) formed by
such consolidation or into which the Corporation is merged, or the
Person which acquires by conveyance, transfer or lease the properties
and assets of the Corporation substantially as an entirety, or in the
case of a plan of liquidation the Person to which the assets of the
Corporation have been transferred, shall thereupon be the
"Corporation" for all purposes of this Certificate of Designation.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of related transactions)
of all or substantially all of the properties or assets of one or more
Subsidiaries of the Corporation, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Corporation shall be
deemed to be the transfer of all or substantially all of the properties and
assets of the Corporation.
(iv) (A) If (w) dividends on the Preferred Stock, Series B
are in arrears and unpaid for six or more Dividend Periods (whether or
not consecutive) (a "Dividend Default") or; (x) the Corporation fails
to redeem all of the then outstanding shares of Preferred Stock,
Series B on February 28, 2008 or otherwise fails to discharge any
redemption obligation with respect to the Preferred Stock, Series B or
fails to make an offer to purchase all of the outstanding shares of
Preferred Stock, Series B following a Change of Control if such offer
to purchase is required by paragraph (i) hereof (a "Redemption
Default"); or (y) the Corporation breaches or violates one of the
provisions set forth in any of paragraphs (k)(i), (k)(ii) or (k)(iii)
hereof and the breach or violation continues for a period of 30 days
or more (a "Restriction Default"); or (z) the Corporation fails to pay
at the final stated maturity (giving effect to any extensions thereof)
the principal amount of any Indebtedness of the Corporation or any
Subsidiary of the Corporation, or the final stated maturity of any
such Indebtedness is accelerated (a "Payment Default"), if the
aggregate principal amount of such Indebtedness, together with the
aggregate principal amount of any other such Indebtedness in default
for failure to pay principal at the final stated maturity (giving
effect to any extensions thereof) or which has been accelerated,
aggregates $5,000,000 or more at one time, in each case, after a
10-day period during which such default shall not have been cured or
such acceleration rescinded, then the number of directors constituting
the Board of Directors shall be adjusted by the number, if any,
necessary to permit the Holders of the Preferred Stock, Series B,
together with the holders of any Parity Stock then having the right to
elect directors, voting as one class, to elect the lesser of two
directors or 25% of the members of the Board of Directors. Holders of
a majority of the issued and outstanding shares of Preferred Stock,
Series B, together with the holders of any Parity Stock then having
the right to elect directors, voting as one class, shall have the
exclusive right to elect the lesser of two directors or 25% of the
members of the Board of Directors at a meeting therefor called upon
occurrence of such Dividend Default, Redemption Default, Restriction
Default, or Payment Default, as the case may be, and at every
subsequent meeting at which the terms of office of the directors so
elected expire (other than as described in (f)(iv)(B) below). Each
such event described in (w), (x), (y) and (z) is a
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"Voting Rights Triggering Event." The voting rights provided herein
shall be the exclusive remedy at law or in equity of the holders of
the Preferred Stock, Series B for any Dividend Default, Redemption
Default, Payment Default or Restriction Default.
(B) The right of the Holders of Preferred Stock, Series B to
elect members of the Board of Directors as set forth in subparagraph
(f)(iv)(A) above shall continue until such time as (x) in the event
such right arises due to a Dividend Default, all accumulated dividends
that are in arrears on the Preferred Stock, Series B are paid in full
in cash; and (y) in all other cases, the failure, breach or default
giving rise to such Voting Rights Triggering Event is remedied or
waived by the holders of at least a majority of the shares of
Preferred Stock, Series B then outstanding and entitled to vote
thereon, at which time (I) the special right of the Holders of
Preferred Stock, Series B so to vote for the election of directors and
(II) the term of office of the directors elected by the Holders of the
Preferred Stock, Series B shall terminate (unless such directors were
elected by the Holders of the Preferred Stock, Series B and by the
holders of any Parity Stock, and as to such Parity Stock the event
giving rise to the right to elect directors has not been cured,
remedied or waived as provided in the instrument governing such Parity
Stock) and the directors elected by the holders of Common Stock shall
constitute the entire Board of Directors. At any time after voting
power to elect directors shall have become vested and be continuing in
the Holders of Preferred Stock, Series B pursuant to paragraph (f)(iv)
hereof, or if vacancies shall exist in the offices of directors
elected by the Holders of Preferred Stock, Series B, a proper officer
of the Corporation may, and upon the written request of the Holders of
record of at least twenty-five percent (25%) of the shares of
Preferred Stock, Series B (and, if applicable, Parity Stock) then
outstanding addressed to the secretary of the Corporation shall, call
a special meeting of the Holders of Preferred Stock, Series B (and, if
applicable, Parity Stock), for the purpose of electing the directors
which such Holders are entitled to elect. If such meeting shall not be
called by a proper officer of the Corporation within twenty (20) days
after personal service of said written request upon the secretary of
the Corporation, or within twenty (20) days after mailing the same
within the United States by certified mail, addressed to the secretary
of the Corporation at its principal executive offices, then the
Holders of record of at least twenty-five percent (25%) of the
outstanding shares of Preferred Stock, Series B (and, if applicable,
Parity Stock) may designate in writing one of their number to call
such meeting at the expense of the Corporation, and such meeting may
be called by the Person so designated upon the notice required for the
annual meetings of stockholders of the Corporation and shall be held
at the place for holding the annual meetings of stockholders. Any
Holder of Preferred Stock, Series B so designated shall have, and the
Corporation shall provide, access to the lists of stockholders to be
called pursuant to the provisions hereof.
(C) At any meeting held for the purpose of electing directors
at which the Holders of Preferred Stock, Series B shall have the right
to elect directors as aforesaid, the presence in person or by proxy of
the Holders of at least a majority of the outstanding shares of
Preferred Stock, Series B shall be required to constitute a quorum of
such Preferred Stock, Series B.
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(D) Any vacancy occurring in the office of a director elected
by the Holders of Preferred Stock, Series B may be filled by the
remaining directors elected by the Holders of Preferred Stock, Series
B unless and until such vacancy shall be filled by the Holders of
Preferred Stock, Series B.
(v) In any case in which the Holders of Preferred Stock,
Series B shall he entitled to vote pursuant to this paragraph (f) or
pursuant to Delaware law, each Holder of Preferred Stock, Series B
entitled to vote with respect to such matter shall be entitled to one
vote for each share of Preferred Stock, Series B held.
(g) Reissuance of Preferred Stock, Series B. Shares of Preferred
Stock, Series B that have been issued and reacquired in any manner, including
shares purchased or redeemed, shall (upon compliance with any applicable
provisions of the laws of Delaware) have the status of authorized and unissued
shares of Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of Preferred Stock, provided that any issuance
of such shares as Preferred Stock, Series B must be in compliance with the
terms hereof.
(h) Business Day. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately
succeeding Business Day.
(i) Change of Control.
(i) In the event of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Corporation shall
notify the Holders of the Preferred Stock, Series B, in writing of
such occurrence and shall make an offer to purchase (the "Change of
Control Offer"), on a Business Day (the "Change of Control Payment
Date") not later than 60 days following the Change of Control Date,
all then outstanding shares of Preferred Stock, Series B at a purchase
price of 100% of the liquidation preference thereof plus, without
duplication, an amount in cash equal to all accumulated and unpaid
dividends per share (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately
prior to the Change of Control Payment Date to the Change of Control
Payment Date).
(ii) Within 30 days following the Change of Control Date, the
Corporation shall send, by first class mail, postage prepaid, a notice
to each Holder of Preferred Stock, Series B, which notice shall govern
the terms of the Change of Control Offer. The notice to the Holders
shall contain all instructions and materials necessary to enable such
Holders to tender Preferred Stock, Series B, pursuant to the Change of
Control Offer. Such notice shall state:
(1) that a Change of Control has occurred, that the
Change of Control Offer is being made pursuant to this paragraph (i)
and that all Preferred Stock, Series B, validly tendered and not
withdrawn will be accepted for payment;
(2) the purchase price (including the amount of
accrued dividends, if any) and the purchase date (which shall be no
earlier than 30 days nor later
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than 45 days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date");
(3) that any shares of Preferred Stock, Series B not
tendered will continue to accrue dividends;
(4) that, unless the Corporation defaults in making
payment therefor, any share of Preferred Stock, Series B accepted for
payment pursuant to the Change of Control Offer shall cease to accrue
dividends after the Change of Control Payment Date;
(5) that Holders electing to have any shares of
Preferred Stock, Series B purchased pursuant to a Change of Control
Offer will be required to surrender the certificate or certificates
representing such shares, properly endorsed for transfer together with
such customary documents as the Corporation and the transfer agent may
reasonably require, in the manner and at the place specified in the
notice prior to the close of business on the Business Day prior to the
Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their
election if the Corporation receives, not late than five Business Days
prior to the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the number of shares of Preferred Stock, Series B, the Holder
delivered for purchase and a statement that such Holder is withdrawing
his election to have such shares of Preferred Stock, Series B
purchased;
(7) that Holders whose shares of Preferred Stock,
Series B, are purchased only in part will be issued a new certificate
representing the unpurchased shares of Preferred Stock, Series B; and
(8) the circumstances and relevant facts regarding
such Change of Control.
(iii) The Corporation will comply with any securities laws
and regulations, to the extent such laws and regulations are
applicable to the repurchase of the Preferred Stock, Series B, in
connection with a Change of Control.
(iv) On the Change of Control Payment Date, the Corporation
shall (A) accept for payment the shares of Preferred Stock, Series B
validly tendered pursuant to the Change of Control Offer, (B) pay to
the Holders of shares so accepted the purchase price therefor and (C)
cancel and retire each surrendered certificate. Unless the Corporation
defaults in the payment for the shares of Preferred Stock, Series B,
tendered pursuant to the Change of Control Offer, dividends will cease
to accrue with respect to the shares of Preferred Stock, Series B,
tendered and all rights of Holders of such tendered shares will
terminate, except for the right to receive payment therefor on the
change of Control Payment Date.
(v) If the purchase of the Preferred Stock, Series B, would
violate or constitute a default under the Credit Agreement or other
Indebtedness of the Corporation
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or any certificate of designation for Senior Stock of the Corporation,
then, notwithstanding anything to the contrary contained above, prior
to complying with the foregoing provisions, but in any event within 30
days following the Change of Control Date, the Corporation shall
either repay all such Indebtedness or Senior Stock and terminate all
commitments outstanding under the Credit Agreement or obtain the
requisite consents, if any, under the Credit Agreement or such
Indebtedness or Senior Stock required to permit the repurchase of
Preferred Stock, Series B, required by this paragraph (i). Until the
requirements of the immediately preceding sentence are satisfied, the
Corporation shall not make, and shall not be obligated to make, any
Change of Control Offer.
(j) Conversion or Exchange. The Holders of shares of Preferred Stock,
Series B, shall not have any rights hereunder to convert such shares into or
exchange such shares for shares of any other class or classes or of any other
series of any class or classes of Capital Stock of the Corporation.
(k) Certain Additional Provisions.
(i) Limitation on Incurrence of Additional Indebtedness and
Issuance of Disqualified Capital Stock. The Corporation shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (other than Permitted
Indebtedness) and the Corporation and its Subsidiaries shall not issue
any Disqualified Capital Stock; provided, however, that the
Corporation and its Subsidiaries may incur Indebtedness or issue
shares of Disqualified Capital Stock if, in either case, the
Corporation's Leverage Ratio at the time of incurrence of such
Indebtedness or the issuance of such Disqualified Capital Stock, as
the case may be, after giving pro forma effect to such incurrence or
issuance as of such date and to the use of proceeds therefrom is less
than 7.0 to 1.
(ii) Limitation on Restricted Payments.
(A) Neither the Corporation nor any of its Subsidiaries
shall, directly or indirectly, make any Restricted Payment if at the
time of such Restricted Payment and immediately after giving effect
thereto:
(1) any Voting Rights Triggering Event shall have
occurred and be continuing; or
(2) the Corporation is not able to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in
compliance with paragraph (k)(i) above; or
(3) the aggregate amount of Restricted Payments made
subsequent to the Issue Date (the amount expended for such purposes,
if other than in cash, being the fair market value of such property as
determined by the Board of Directors of the Corporation in good faith)
exceeds the sum of (a) (x) 100% of the aggregate Consolidated EBITDA
of the Corporation (or, in the event such Consolidated
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EBITDA shall be a deficit, minus 100% of such deficit) accrued
subsequent to the Issue Date to the most recent date for which
financial information is available to the Corporation, taken as one
accounting period, less (y) 1.4 times Consolidated Interest Expense
for the same period, plus (b) 100% of the aggregate net proceeds,
including the fair market value of property other than cash as
determined by the Board of Directors in good faith, received
subsequent to December 30, 1999 by the Corporation from any Person
(other than a Subsidiary of the Corporation) from the issuance and
sale subsequent to December 30, 1999 of Qualified Capital Stock of the
Corporation (excluding (i) any net proceeds from issuances and sales
financed directly or indirectly using funds borrowed from the
Corporation or any Subsidiary of the Corporation, until and to the
extent such borrowing is repaid, but including the proceeds from the
issuance and sale of any securities convertible into or exchangeable
for Qualified Capital Stock to the extent such securities are so
converted or exchanged and including any additional proceeds received
by the Corporation upon such conversion or exchange, and (ii) any net
proceeds received from issuances and sales that are used to consummate
a transaction described in clauses (2) and (3) of paragraph (b)
below), plus (c) without duplication of any amount included in clause
(iii)(b) above, 100% of the aggregate net proceeds, including the fair
market value of property other than cash (valued as provided in clause
(iii)(b) above), received by the Corporation as a capital contribution
subsequent to December 30, 1999, plus (d) the amount equal to the net
reduction in Investments (other than Permitted Investments) made by
the Corporation or any of its Subsidiaries in any Person resulting
from (i) repurchases or redemptions of such Investments by such
Person, proceeds realized upon the sale of such Investment to an
unaffiliated purchaser and repayments of loans or advances or other
transfers of assets by such Person to the Corporation or any
Subsidiary of the Corporation or (ii) the redesignation of
Unrestricted Subsidiaries as Subsidiaries (valued in each case as
provided in the definition of "Investment") not to exceed, in the case
of any Subsidiary, the amount of Investments previously made by the
Corporation or any Subsidiary in such Unrestricted Subsidiary, which
amount was included in the calculation of Restricted Payments;
provided, however, that no amount shall be included under this clause
(d) to the extent it is already included in Consolidated EBITDA, plus
(e) the aggregate net cash proceeds received by a Person in
consideration for the issuance of such Person's Capital Stock (other
than Disqualified Capital Stock) that are held by such Person at the
time such Person is merged with and into the Corporation in accordance
with paragraph (k)(iii) subsequent to the Issue Date; provided,
however, that concurrently with or immediately following such merger
the Corporation uses an amount equal to such net cash proceeds to
redeem or repurchase the Corporation's Capital Stock, plus (f)
$2,500,000.
(B) Notwithstanding the foregoing, these provisions will not
prohibit: (1) the payment of any dividend or the making of any
distribution within 60 days after the date of its declaration if such
dividend or distribution would have been permitted on the date of
declaration; (2) the purchase, redemption or other acquisition of any
Capital Stock of the Corporation or any warrants, options or other
rights to acquire shares of any class of such Capital Stock either (x)
solely in exchange for shares of Qualified Capital Stock or other
rights to acquire Qualified Capital Stock or (y) through the
application of the net proceeds of a substantially concurrent sale for
cash (other than to a Subsidiary of the Corporation) of shares of
Qualified Capital Stock or warrants, options or other rights to
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acquire Qualified Capital Stock or (z) in the case of Disqualified
Capital Stock, solely in exchange for, or through the application of
the net proceeds of a substantially concurrent sale for cash (other
than to a Subsidiary of the Corporation) of, Disqualified Capital
Stock that has a redemption date no earlier than, and requires the
payment of current dividends or distributions in cash no earlier than,
in each case, the Disqualified Capital Stock being purchased, redeemed
or otherwise acquired or retired; (3) payments by the Corporation to
repurchase Capital Stock or other securities from employees of the
Corporation or Holding in an aggregate amount not to exceed
$2,000,000; (4) payments to enable Holding to redeem or repurchase
stock purchase or similar rights in an aggregate amount not to exceed
$500,000; (5) payments, not to exceed $100,000 in the aggregate, to
enable the Corporation or Holding to make cash payments to holders of
its Capital Stock in lieu of the issuance of fractional shares of its
Capital Stock; (6) payments made pursuant to any merger, consolidation
or sale of assets effected in accordance with paragraph (1)(iii);
provided, however, that no such payment may be made pursuant to this
clause (6) unless, after giving effect to such transaction (and the
incurrence of any Indebtedness in connection therewith and the use of
the proceeds thereof), the Corporation would be able to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in
compliance with paragraph (k)(i) above such that after incurring that
$1.00 of additional Indebtedness, the Leverage Ratio would be less
than 6.0 to 1; and (7) payments to enable Holdings or the Corporation
to pay dividends on their common stock after the first Public Equity
offering in an annual amount not to exceed 6.0% of the gross proceeds
(before deducting underwriting discounts and commissions and other
fees and expenses of the offering) received from shares of common
stock sold for the account of the issuer thereof (and not for the
account of any stockholder) in such initial Public Equity offering
(but only to the extent such proceeds shall have been contributed as
capital to the Corporation by Holdings, if Holdings shall have made
such Public Equity offering); provided, however, that in the case of
clauses (3), (4), (5), (6) and (7), no Voting Rights Triggering Event
shall have occurred or be continuing at the time of such payment or as
a result thereof. In determining the aggregate amount of Restricted
Payments made subsequent to the Issue Date, amounts expended pursuant
to clauses (1), (3), (4), (5), (6) and (7) shall be included in such
calculation.
(iii) Reports. So long as any of the Preferred Stock, Series
B is outstanding, the Corporation shall provide to the Holders of the
Preferred Stock, Series B, within 15 days after it files the same with
the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission by rule or regulation prescribes) that the
Corporation files with the Commission pursuant to Sections 13 or 15(d)
of the Exchange Act.
(l) Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Acquired Indebtedness" means Indebtedness of a Person or any
of its Subsidiaries existing at the time such Person becomes a
Subsidiary of the Corporation or at the time it merges or consolidates
with the Corporation or any of its Subsidiaries or is assumed in
connection with the acquisition of assets from such Person and not
incurred
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by such Person in connection with, or in anticipation or contemplation
of, such Person becoming a Subsidiary of the Corporation or such
acquisition, merger or consolidation.
"Affiliate" means a Person who, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Corporation. The term "control"
means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or
otherwise.
"Asset Acquisition" means (i) an Investment by the
Corporation or any Subsidiary of the Corporation in any other Person
pursuant to which such Person shall become a Subsidiary of the
Corporation or shall be consolidated or merged with the Corporation or
any Subsidiary of the Corporation or (ii) the acquisition by the
Corporation or any Subsidiary of the Corporation of assets of any
Person comprising a division or line of business of such Person.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into
in the ordinary course of business), assignment or other transfer for
value by the Corporation or any of its Subsidiaries (including any
Sale and Leaseback Transaction or any pledge of assets or stock by the
Corporation or any of its Subsidiaries) to any Person other than the
Corporation or a Wholly Owned Subsidiary of the Corporation of (i) any
Capital Stock of any Subsidiary of the Corporation or (ii) any other
property or assets of the Corporation or any Subsidiary of the
corporation.
"Board of Directors" shall have the meaning ascribed to it in
the first paragraph of this Resolution.
"Business Day" means any day except a Saturday, a Sunday, or
any day on which banking institutions in New York, New York are
required or authorized by law or other governmental action to be
closed.
"Capital Stock" means (i) with respect to any Person that is
a corporation, any and all shares, interests, participations or other
equivalents (however designated) of capital stock of such Person and
(ii) with respect to any Person that is not a corporation, any and all
partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligation of such Person to pay rent or other amounts under a lease
to which such Person is a party that is required to be classified and
accounted for as a capital lease obligation under GAAP, and for
purposes of this definition, the amount of such obligation at any date
shall be the capitalized amount of such obligation at such date,
determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States
Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within
one year from the date of acquisition thereof; (ii) marketable direct
obligations
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issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at
the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation or Moody's
Investors Service, Inc.; (iii) commercial paper maturing no more than
one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from Standard & Poor's
Corporation or at least P-1 from Moody's Investors Service, Inc.; (iv)
certificates of deposit or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any commercial
bank organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of a
foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $200,000,000; (v) repurchase
obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (iv)
above; and (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in
clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of
the following events: (i) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or
substantially all of the assets of the Corporation to any Person or
group of related Persons for purposes of Section 13(d) of the Exchange
Act (a "Group") (whether or not otherwise in compliance with the
provisions of this Certificate of Designation), other than to Hicks,
Muse, Tate & Furst Incorporated or any of its Affiliates, officers and
directors or Robert N. Smith or any of his Affiliates (the "Permitted
Holders"); or (ii) a majority of the Board of Directors of the
Corporation or Holding shall consist of Persons who are not Continuing
Directors; or (iii) the acquisition by any Person or Group (other than
the Permitted Holders or any direct or indirect Subsidiary of any
Permitted Holder, including, without limitation, Holding) of the
power, directly or indirectly, to vote or direct the voting of
securities having more than 50% of the ordinary voting power for the
election of directors of the Corporation.
"Change of Control Date" shall have the meaning ascribed to
it in paragraph (i) hereof.
"Change of Control Payment Date" shall have the meaning
ascribed to it in paragraph (i) hereof.
"Change of Control Offer" shall have the meaning ascribed to
it in paragraph (i) hereof.
"Commission" means the Securities and Exchange Commission.
"Commodity Agreement" means any commodity futures contract,
commodity option or other similar agreement or arrangement entered
into by the Corporation or any of its Subsidiaries designed to protect
the Corporation or any of its Subsidiaries against fluctuations in the
price of commodities actually used in the ordinary course of business
of the Corporation and its Subsidiaries.
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"Consolidated EBITDA" means, with respect to any Person, for
any period, the sum (without duplication) of (i) Consolidated Net
Income and (ii) to the extent Consolidated Net Income has been reduced
thereby, (A) all income taxes of such Person and its Subsidiaries paid
or accrued in accordance with GAAP for such period (other than income
taxes attributable to extraordinary or nonrecurring gains or losses),
(B) Consolidated Interest Expense and (C) Consolidated Non-Cash
Charges, all as determined on a consolidated basis for such Person and
its Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" means, with respect to any
Person for any period, without duplication, the sum of (i) the
interest expense of such Person and its Subsidiaries for such period
as determined on a consolidated basis in accordance with GAAP,
including, without limitation, (a) any amortization of debt discount,
(b) the net cost under Interest Swap Obligations (including any
amortization of discounts), (c) the interest portion of any deferred
payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit, bankers' acceptance
financing or similar facilities, and (e) all accrued interest and (ii)
the interest component of Capitalized Lease Obligations paid or
accrued by such Person and its Subsidiaries during such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" of any Person means, for any
period, the aggregate net income (or loss) of such Person and its
Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP; provided that there shall be excluded therefrom,
without duplication, (a) gains and losses from Asset Sales (without
regard to the $500,000 limitation set forth in the definition
thereof), or abandonments or reserves relating thereto and the related
tax effects, (b) items classified as extraordinary or nonrecurring
gains and losses, and the related tax effects according to GAAP, (c)
the net income (or loss) of any Person acquired in a pooling of
interests transaction accrued prior to the date it becomes a
Subsidiary of such first referred to Person or is merged or
consolidated with it or any of its Subsidiaries, (d) the net income of
any Subsidiary to the extent that the declaration of dividends or
similar distributions by that Subsidiary of that income is restricted
by contract, operation of law or otherwise, (e) the net income of any
Person, other than a Subsidiary, except to the extent of the lesser of
(x) dividends or distributions paid to such first referred to Person
or its Subsidiary by such Person and (y) the net income of such Person
(but in no event less than zero), and the net loss of such Person
shall be included only to the extent of the aggregate Investment of
the first referred to Person or a consolidated Subsidiary of such
Person and (f) any non-cash expenses attributable to grants or
exercises of employee stock options.
"Consolidated Non-Cash Charges" means, with respect to any
Person for any period, the aggregate depreciation, amortization and
other non-cash expenses of such Person and its Subsidiaries (excluding
any such charges constituting an extraordinary or nonrecurring item)
reducing Consolidated Net Income of such Person and its Subsidiaries
for such period, determined on a consolidated basis in accordance with
GAAP.
"Continuing Director" means, as of the date of determination,
any Person who (i) was a member of the Board of Directors of the
Corporation or Holding on the Issue
17
<PAGE> 18
Date, (ii) was nominated for election or elected to the Board of
Directors of the Corporation or Holding with the affirmative vote of a
majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election, or (iii) is a
representative of a Permitted Holder.
"Corporation" shall have the meaning ascribed to it in the
recitals hereof, subject to the provisions of f(iii) hereof.
"Credit Agreement" means the Credit Agreement, dated on or
about February 28, 1997, among STC Broadcasting, Inc., the lenders
from time to time party thereto, NationsBank of Texas, N.A., as
documentation agent, and The Chase Manhattan Bank, as administrative
agent, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents), in each
case as such agreements may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to
time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including by way of adding
additional borrowers or guarantors thereunder) all or any portion of
the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group
of lenders.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement
designed to protect the Corporation or any of its Subsidiaries against
fluctuations in currency values.
"Disqualified Capital Stock" means any Capital Stock which,
by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of
any event, matures (excluding any maturity as the result of an
optional redemption by the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the sole option of the holder thereof (except, in each
case, upon the occurrence of a Change of Control), in whole or in
part, on or prior to February 28, 2008.
"Dividend Payment Date" means the last day of each Dividend
Period commencing with the first to occur after the initial Issue
Date.
"Dividend Period" means one calendar quarter for the period
ending on March 31, 2000 and a quarterly period of three months
thereafter (i.e., March 31, 2000 to June 30, 2000, etc.).
"Dividend Record Date" means the fifteenth day of the month
in which the relevant Dividend Payment Date occurs.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America as of the Issue Date.
18
<PAGE> 19
"Holder" means a holder of shares of Preferred Stock, Series
B as reflected in the stock books of the Corporation.
"Holding" means Sunrise Television Corp., a Delaware
corporation, and its successors.
"Indebtedness" means with respect to any Person, without
duplication, any liability of such Person (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or other similar instruments,
(iii) constituting Capitalized Lease obligations, (iv) incurred or
assumed as the deferred purchase price of property, or pursuant to
conditional sale obligations and title retention agreements (but
excluding trade accounts payable arising in the ordinary course of
business), (v) for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction, (vi) for
Indebtedness of others guaranteed by such Person, (vii) for Interest
Swap Obligations, Commodity Agreements and Currency Agreements and
(viii) for Indebtedness of any other Person of the type referred to in
clauses (i) through (vii) which is secured by any Lien on any property
or asset of such first referred to Person, the amount of such
Indebtedness being deemed to be the lesser of the value of such
property or asset or the amount of the Indebtedness so secured. The
amount of Indebtedness of any Person at any date shall be the
outstanding principal amount of all unconditional obligations
described above, as such amount would be reflected on a balance sheet
prepared in accordance with GAAP, and the maximum liability at such
date of such Person for any contingent obligations described above.
"Interest Swap Obligations" means the obligations of any
Person under any interest rate protection agreement, interest rate
future, interest rate option, interest rate swap, interest rate cap or
other interest rate hedge or arrangement.
"Investment" means (i) any transfer or delivery of cash,
stock or other property of value in exchange for Indebtedness, stock
or other security or ownership interest in any Person by way of loan,
advance, capital contribution, guarantee or otherwise and (ii) an
investment deemed to have been made by the Corporation at the time any
entity which was a Subsidiary of the Corporation ceases to be such a
Subsidiary in an amount equal to the value of the loans and advances
made, and any remaining ownership interest in, such entity immediately
following such entity ceasing to be a Subsidiary of the Corporation.
The amount of any non-cash Investment shall be the fair market value
of such Investment, as determined conclusively in good faith by
management of the Corporation unless the fair market value of such
Investment exceeds $1,000,000, in which case the fair market value
shall be determined conclusively in good faith by the Board of
Directors of the Corporation at the time such Investment is made.
"Issue Date" means the date of original issuance of shares of
Preferred Stock, Series B.
"Junior Stock" shall have the meaning ascribed to it in
paragraph (b) hereof.
19
<PAGE> 20
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof and any agreement to give any security interest).
"Leverage Ratio" shall mean the ratio of (i) the aggregate
outstanding amount of Indebtedness of the Company and its Subsidiaries
as of the date of calculation on a consolidated basis in accordance
with GAAP to (ii) the Consolidated EBITDA of the Corporation for the
four full fiscal quarters (the "Four Quarter Period") ending on or
prior to the date of determination.
For purposes of this definition, the aggregate outstanding
principal amount of Indebtedness of the Person and its Subsidiaries
for which such calculation is made shall be determined on a pro forma
basis as if the Indebtedness giving rise to the need to perform such
calculation had been incurred and the proceeds therefrom had been
applied, and all other transactions in respect of which such
Indebtedness is being incurred had occurred, on the last day of the
Four Quarter Period. In addition to the foregoing, for purposes of
this definition, "Consolidated EBITDA" shall be calculated on a pro
forma basis after giving effect to (i) the incurrence of the
Indebtedness of such Person and its Subsidiaries (and the application
of the proceeds therefrom) giving rise to the need to make such
calculation and any incurrence (and the application of the proceeds
therefrom) or repayment of other Indebtedness, other than the
incurrence or repayment of Indebtedness pursuant to working capital
facilities, at any time subsequent to the beginning of the Four
Quarter Period and on or prior to the date of determination, as if
such incurrence (and the application of the proceeds thereof), or the
repayment, as the case may be, occurred on the first day of the Four
Quarter Period, (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of such Person or one of its
Subsidiaries (including any Person that becomes a Subsidiary as a
result of such Asset Acquisition) incurring, assuming or otherwise
becoming liable for Indebtedness) at any time on or subsequent to the
first day of the Four Quarter Period and on or prior to the date of
determination, as if such Asset Sale or Asset Acquisition (including
the incurrence, assumption or liability for any such Indebtedness and
also including any Consolidated EBITDA associated with such Asset
Acquisition) occurred on the first day of the Four Quarter Period and
(iii) cost savings resulting from employee terminations, facilities
consolidations and closings, standardization of employee benefits and
compensation practices, consolidation of property, casualty and other
insurance coverage and policies, standardization of sales
representation commissions and other contract rates, and reductions in
taxes other than income taxes (collectively, "Cost Savings Measures"),
which cost savings the Company reasonably believes in good faith would
have been achieved during the Four Quarter Period as a result of such
Asset Acquisitions (regardless of whether such cost savings could then
be reflected in pro forma financial statements under GAAP, Regulation
S-X promulgated by the Commission or any other regulation or policy of
the Commission), provided that both (A) such cost savings and Cost
Savings Measures were identified and such cost savings were quantified
in an officer's certificate prepared at the time of the consummation
of the Asset Acquisition and (B) with respect to each Asset
Acquisition completed prior to the 90th day preceding
20
<PAGE> 21
such date of determination, actions were commenced or initiated by the
Company within 90 days of such Asset Acquisition to effect the Cost
Savings Measures identified in such officer's certificate (regardless,
however, of whether the corresponding cost savings were ultimately
achieved). Furthermore, in calculating "Consolidated Interest Expense"
for purposes of the calculation of "Consolidated EBITDA," (i) interest
on Indebtedness determined on a fluctuating basis as of the date of
determination (including Indebtedness actually incurred on the date of
the transaction giving rise to the need to calculate the Leverage
Ratio) and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness as in effect on the date of
determination and (ii) notwithstanding (i) above, interest determined
on a fluctuating basis, to the extent such interest is covered by
Interest Swap Obligations, shall be deemed to accrue at the rate per
annum resulting after giving effect to the operation of such
agreements.
"Parity Stock" shall have the meaning ascribed to it in
paragraph (b) hereof.
"Permitted Indebtedness" means, without duplication, (i)
Indebtedness outstanding on the Issue Date; (ii) Indebtedness of the
Corporation incurred pursuant to the Credit Agreement in an aggregate
principal amount at any time outstanding not to exceed the sum of the
aggregate commitments pursuant to the Credit Agreement as in effect on
the Issue Date; (iii) Interest Swap Obligations; provided that such
Interest Swap Obligations are entered into to protect the Corporation
from fluctuations in interest rates of its Indebtedness; (iv)
additional Indebtedness of the Corporation or any of its Subsidiaries
not to exceed $10,000,000 in principal amount outstanding at any time
(which amount may, but need not, be incurred under the Credit
Agreement); (v) Refinancing Indebtedness; (vi) Indebtedness owed by
the Corporation to any Wholly Owned Subsidiary of the Corporation or
by any Subsidiary of the Corporation to the Corporation or any Wholly
Owned Subsidiary of the Corporation; and (vii) guarantees by
Subsidiaries of any Indebtedness permitted to be incurred pursuant to
the Certificate of Designation; (viii) Indebtedness in respect of
performance bonds, bankers' acceptances and surety or appeal bonds
provided by the Company or any of its Subsidiaries to their customers
in the ordinary course of their business; (ix) Indebtedness arising
from agreements providing for indemnification, adjustment of purchase
price or similar obligations, or from guarantees or letters of credit,
surety bonds or performance bonds securing any connection with the
disposition of any business assets or Subsidiaries of the Company
(other than guarantees of Indebtedness or other obligations incurred
by any Person acquiring all or any portion of such business assets or
Subsidiaries of the Company for the purpose of financing such
acquisition) in a principal amount not to exceed the gross proceeds
actually received by the Company or any of its Subsidiaries in
connection with such disposition; provided, however, that the
principal amount of any Indebtedness incurred pursuant to this clause
(ix), when taken together with all Indebtedness incurred pursuant to
this clause (ix) and then outstanding, shall not exceed $7,500,000;
and (x) Indebtedness represented by Capitalized Lease Obligations,
mortgage financings or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property used in a
related business or incurred to
21
<PAGE> 22
refinance any such purchase price or cost of construction or
improvement of property used in a related business or incurred to
refinance any such purchase price or cost of construction or
improvement, in each case incurred no later than 365 days after the
date of such acquisition or the date of completion of such
construction or improvement; provided, however, that the principal
amount of any Indebtedness incurred pursuant to this clause (x) shall
not exceed $3,000,000 at any time outstanding.
"Permitted Investments" means (i) Investments by the
Corporation or any Subsidiary to acquire the stock or assets of any
Person (or Acquired Indebtedness acquired in connection with a
transaction in which such Person becomes a Subsidiary of the
Corporation) engaged in the broadcast business or businesses
reasonably related thereto; provided that if any such Investment or
series of related Investments involves an Investment by the
Corporation in excess of $5,000,000, the Corporation is able, at the
time of such investment and immediately after giving effect thereto,
to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with paragraph (k)(i) hereof,
(ii) Investments received by the Corporation or its Subsidiaries as
consideration for a sale of assets, (iii) Investments by the
Corporation or any Wholly Owned Subsidiary of the Corporation in any
Wholly Owned Subsidiary of the Corporation (whether existing on the
Issue Date or created thereafter) or any Person that after such
Investments, and as a result thereof, becomes a wholly owned
Subsidiary of the Corporation and Investments in the Corporation by
any Wholly Owned Subsidiary of the Corporation, (iv) cash and Cash
Equivalents, (v) Investments in securities of trade creditors,
wholesalers or customers received pursuant to any plan of
reorganization or similar arrangement and (vi) loans or advances to
employees of the Company or any Subsidiary thereof for purposes of
purchasing the Company's Capital Stock and other loans and advances to
employees made in the ordinary course of business consistent with past
practices of the Company or such Subsidiary and (vii) additional
Investments in an aggregate amount not to exceed $1,000,000 at any
time outstanding.
"Person" means an individual, partnership, corporation,
limited liability company, unincorporated organization, trust or joint
venture, or a governmental agency or political subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights over any other Capital Stock
of such Person with respect to dividends or redemptions or upon
liquidation.
"Preferred Stock, Series B" shall have the meaning ascribed
to it in paragraph (a) hereof.
"Preferred Stock Purchase Agreement" means that certain
Preferred Stock Purchase Agreement, date as of December 30, 1999, by
and among the Corporation and the Purchaser named therein.
"pro forma" means, unless otherwise provided herein, with
respect to any calculation made or required to be made pursuant
hereto, a calculation in accordance with Article 11 of Regulation S-X
under the Securities Act.
22
<PAGE> 23
"Public Equity offering" means an underwritten public
offering of Capital Stock (other than Disqualified Capital Stock) of
the Corporation or Holding (to the extent, in the case of Holding,
that the net cash proceeds thereof are contributed to the common or
non-redeemable preferred equity capital of the Corporation) pursuant
to an effective registration statement filed with the Commission in
accordance with the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Redemption Date," with respect to any shares of Preferred
Stock, Series B, means the date on which such shares of Preferred
Stock, Series B are redeemed by the Corporation.
"Redemption Notice" shall have the meaning ascribed to it in
paragraph (e) hereof.
"Refinancing Indebtedness" means any refinancing by the
Corporation of Indebtedness of the Corporation or any of its
Subsidiaries incurred in accordance with paragraph (k)(i) hereof
(other than pursuant to clause (ii) or (iv) of the definition of
Permitted Indebtedness) that does not (i) result in an increase in the
aggregate principal amount of Indebtedness (such principal amount to
include, for purposes of this definition, any premiums, penalties or
accrued interest paid with the proceeds of the Refinancing
Indebtedness) of such Person or (ii) create Indebtedness with (A) a
Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Indebtedness being refinanced or (B) a
final maturity earlier than the final maturity of the Indebtedness
being refinanced.
"Restricted Payment" means (i) the declaration or payment of
any dividend or the making of any other distribution (other than
dividends or distributions payable in Qualified Capital Stock or in
options, rights or warrants to acquire Qualified Capital Stock) on
shares of the Corporation's Junior Stock, (ii) the purchase,
redemption, retirement or other acquisition for value of any Junior
Stock, or any warrants, rights or options to acquire shares of Junior
Stock, other than through the exchange of such Junior Stock or any
warrants, rights or options to acquire shares of any class of such
Junior Stock for Qualified Capital Stock or warrants, rights or
options to acquire Qualified Capital Stock, or (iii) the making of any
Investment (other than a Permitted Investment).
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party,
providing for the leasing to the Corporation or a Subsidiary of any
property, whether owned by the Corporation or any Subsidiary at the
Issue Date or later acquired, which has been or is to be sold or
transferred by the Corporation or such Subsidiary to such Person or to
any other Person from whom funds have been or are to be advanced by
such Person on the security of such property.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
23
<PAGE> 24
"Senior Stock" shall have the meaning ascribed to it in
paragraph (b) hereof.
"Subsidiary" with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a
majority of the votes entitled to be cast in the election of directors
under ordinary circumstances shall at the time be owned, directly or
indirectly, by such Person or (ii) any other Person of which at least
a majority of the voting interest under ordinary circumstances is at
the time, directly or indirectly, owned by such Person; provided,
however, that notwithstanding the foregoing, Smith Acquisition Company
shall be deemed to be a "Subsidiary" of the Corporation.
Notwithstanding anything in this Certificate of Designation to the
contrary, all references to the Corporation and its consolidated
Subsidiaries or to financial information prepared on a consolidated
basis in accordance with GAAP shall be deemed to include the
Corporation and its Subsidiaries as to which financial statements are
prepared on a combined basis in accordance with GAAP and to financial
information prepared on such a combined basis. Notwithstanding
anything herein to the contrary, an Unrestricted Subsidiary shall not
be deemed to be a Subsidiary for purposes hereof.
"Unrestricted Subsidiary" means a Subsidiary of the
Corporation created after the Issue Date and so designated by a
resolution adopted by the Board of Directors of the Corporation,
provided that (a) neither the Corporation nor any of its other
Subsidiaries (other than Unrestricted Subsidiaries) (1) provides any
credit support for any Indebtedness of such Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness) or
(2) is directly or indirectly liable for any Indebtedness of such
Subsidiary and (b) at the time of designation of such Subsidiary, such
Subsidiary has no property or assets (other than de minimis assets
resulting from the initial capitalization of such Subsidiary). The
Board of Directors may designate any Unrestricted Subsidiary to be a
Subsidiary; provided, however, that immediately after giving effect to
such designation (x) the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with
paragraph (k)(i) and (y) no Voting Rights Triggering Event shall have
occurred or be continuing. Any designation pursuant to this definition
by the Board of Directors shall be evidenced by a resolution of the
Board of Directors giving effect to such designation.
"Voting Rights Triggering Event" shall have the meaning
ascribed to it in paragraph (f)(iv) hereof.
"Weighted Average Life to Maturity" means, when applied to
any Indebtedness at any date, the number of years obtained by dividing
(a) the then outstanding aggregate principal amount of such
Indebtedness into (b) the total of the product obtained by multiplying
(i) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including
payment at final maturity, in respect thereof, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary
of such Person of which all the outstanding voting securities (other
than directors' qualifying shares) which normally have the right to
vote in the election of directors are owned by such
24
<PAGE> 25
Person or any Wholly-owned Subsidiary of such Person; provided,
however, that "Wholly Owned Subsidiary" shall also include Smith
Acquisition company and any other Restricted Subsidiary of which in
excess of 95% of the common equity securities are owned by the Company
or another Wholly-owned Subsidiary and which is organized for the
purpose of facilitating the acquisition of any broadcasting business
that, but for the formation of such Person, the Company and its
Restricted Subsidiaries could not acquire under applicable laws
related to the ownership of broadcast businesses.
25
<PAGE> 26
IN WITNESS WHEREOF, STC Broadcasting, Inc. has caused this Certificate
to be signed by the undersigned, its Secretary, this 28th day of December,
1999.
STC BROADCASTING, INC.
By: /s/ David A. Fitz
----------------------------------
Name: David A. Fitz
Title: Secretary
<PAGE> 1
Exhibit 10.1
Fourth Amendment, dated as of December 21, 1999 (this "Fourth Amendment") to
the Amended and Restated Credit Agreement, dated as of July 2, 1998 (as amended
by the First Amendment and Assignment and Acceptance, dated as of July 27,
1998, the Second Amendment, dated as of January 29, 1999, the Third Amendment,
dated as of June 29, 1999, and as may be further amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among (i)
SUNRISE TELEVISION CORP. ("Holdings"); (ii) STC BROADCASTING, INC. (the
"Borrower"); (iii) the several banks and other financial institutions from time
to time parties thereto, (individually, a "Lender," and collectively, the
"Lenders"); (iv) NATIONSBANK, N.A., as documentation agent (in such capacity,
the "Documentation Agent"); (v) CITICORP USA, INC. (formerly known as Salomon
Brothers Holding Company Inc), as syndication agent (in such capacity, the
"Syndication Agent") and (vi) THE CHASE MANHATTAN BANK, as administrative agent
for the Lenders thereunder (in such capacity, the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement the Lenders have agreed to
make, and have made, certain Loans to the Borrower;
WHEREAS, Holdings and the Borrower have requested that the Lenders
amend, and the Lenders have agreed to amend, certain of the provisions of the
Credit Agreement upon the terms and subject to the conditions set forth below;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. (a) General. Capitalized terms used herein and not otherwise
defined are used herein as defined in the Credit Agreement.
(b) Addition of Definitions. Subsection 1.1 of the Credit Agreement is
hereby amended by adding thereto the following defined term in the appropriate
alphabetical order:
"Special Subordinated Debt Issuance": the issuance by Holdings of
pay-in-kind subordinated Indebtedness to infuse additional capital
into the Borrower through the purchase of Capital Stock by Holdings in
an aggregate amount not to exceed $25,000,000, the proceeds of which
are used by the Borrower to prepay the Revolving Credit Loans as
described in subsection 2.9(a). Such Indebtedness will be issued to
HMTF in the approximate amount of $22,500,000 and to Chase Equity
Associates, L.P. in the approximate amount of $2,500,000. The terms of
such subordinated Indebtedness shall be reasonably satisfactory to the
Administrative Agent.
<PAGE> 2
1. Amendment to Subsection 2.9(a). Subsection 2.9(a) of the Credit Agreement is
hereby amended by adding at the end thereof immediately prior to the period the
following:
"provided, further, notwithstanding the foregoing provisions of
this subsection 2.9, 100% of the Net Cash Proceeds from the Special
Subordinated Debt Issuance and the related purchase by Holdings of
Capital Stock of the Borrower shall be applied on the date of such
issuance toward the prepayment of the Revolving Credit Loans"
1. Amendment to Subsection 2.9(d). Subsection 2.9(d) of the Credit Agreement is
hereby amended by adding at the end of the first sentence thereof immediately
prior to the period the following:
"provided, that, notwithstanding the foregoing provisions of this
subsection 2.9(d), 100% of the Net Cash Proceeds from the Special
Subordinated Debt Issuance and the related purchase by Holdings of
Capital Stock of the Borrower shall be applied on the date of such
issuance toward the prepayment of the Revolving Credit Loans"
1. Amendment to Subsection 4.16. Subsection 4.16 of the Credit Agreement is
hereby amended by adding at the end thereof and immediately prior to the period
the following:
"provided, that a portion of the Revolving Credit Loans may be
used to make the Restricted Payments described in, and in accordance
with the terms of, subsection 7.6(a)(vi)"
1. Amendment to Subsection 7.2. Subsection 7.2 of the Credit Agreement is
hereby amended by adding thereto the following new paragraph (n):
"(n) Indebtedness of Holdings arising under the Special
Subordinated Debt Issuance."
1. Amendment to Subsection 7.6. Subsection 7.6 of the Credit Agreement is
hereby amended by (a) deleting the reference to "clause (vi)" in the second
line of paragraph (a) and substituting in lieu thereof a reference to "clause
(iv)", (b) deleting the word "and" at the end of paragraph (a)(iv) thereof, (c)
deleting the period at the end of paragraph (a)(v) and substituting in lieu
thereof the following: "; and", (d) adding thereto the following new paragraph
(a)(vi):
"(vi) the proceeds of which are used by Holdings to make payments
on account of the Special Subordinated Debt Issuance; provided, that
(x) the aggregate amount of such Restricted Payments made by the
Borrower to Holdings in reliance on this clause (vi) shall not exceed
the amount of the proceeds contributed by Holdings to the Borrower in
connection with the Special Subordinated Debt Issuance and (y) prior
to making any such Restricted Payments in reliance on this clause (vi)
the Borrower shall have presented evidence to the Administrative Agent
in reasonably satisfactory detail (including supporting calculations)
demonstrating that the Borrower was in compliance with each of the
financial condition covenants contained in subsection 7.1 as of the
end of the one
<PAGE> 3
fiscal quarter most recently concluded prior to the making of any
such Restricted Payment and would be so in compliance after giving
effect to the making of any such Restricted Payment, with such
compliance being determined on a pro forma basis assuming that the
Net Cash Proceeds from the Special Subordinated Debt Issuance had
not been applied toward the prepayment of the Revolving Credit
Loans."
1. Fees. In consideration of the agreement of the Lenders to consent to the
amendments contained herein, the Borrower agrees to pay to each Lender which so
consents on or prior to December 21, 1999, an amendment fee in an amount equal
to 0.10% of the amount of such Lender's Commitment, payable on the date hereof
in immediately available funds.
1. Effectiveness. This Fourth Amendment shall become effective on the date on
which the following conditions precedent shall have been satisfied (such date,
the "Effective Date"):
(a) the Administrative Agent shall have received counterparts of
this Fourth Amendment, duly executed and delivered by Holdings, the
Borrower, the Required Lenders, the Majority Committed Term Facility
Lenders and the Majority Facility Lenders in respect of the
Incremental Term Loan Facility ;
(b) all corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the
transactions contemplated by this Fourth Amendment shall be
satisfactory in form and substance to the Administrative Agent; and
(c) the Borrower shall have paid the fees referred to in paragraph
6 of this Fourth Amendment.
1. Representations and Warranties. On and as of the date hereof after giving
effect to this Fourth Amendment, each of Holdings and the Borrower hereby
represents and warrants to the Lenders that:
(a) Each of its representations and warranties contained in
Section 4 of the Credit Agreement or in any certificate, document or
financial or other statement furnished at any time under or in
connection therewith are true and correct in all material respects on
and as of such date as if made on and as of such date, except to the
extent that such representations and warranties specifically relate to
an earlier date, in which case such representations and warranties
shall be true and correct in all material respects as of such earlier
date; provided that the references to the Credit Agreement therein
shall be deemed to include this Fourth Amendment; and
(a) No Default or Event of Default has occurred and is continuing.
1. Continuing Effect; No Other Amendments. Except as expressly amended or
waived hereby, all of the terms and provisions of the Credit Agreement and the
other Loan Documents are and shall remain in full force and effect. The
amendments and waivers contained herein shall not constitute an amendment or
waiver of any other provision of the Credit Agreement or the other Loan
Documents or for any purpose except as expressly set forth herein.
1. Additional Assurances. Each of Holdings and the Borrower agrees to take such
action as may reasonably be requested by the Administrative Agent for Holdings
to pledge the Capital Stock of the Borrower acquired by Holdings with the
proceeds of the Special Subordinated Debt Issuance to the Administrative Agent
under the Amended and Restated Guarantee and Collateral Agreement (including,
without limitation, by the delivery to the Administrative Agent, with undated
stock powers duly executed in blank, of any certificates representing such
capital stock).
1. GOVERNING LAW; Counterparts. (a) THIS FOURTH AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
(b) This Fourth Amendment may be executed in any number of
counterparts, all of which counterparts, taken together, shall
constitute one and the same instrument. This Fourth Amendment may be
delivered by facsimile transmission of the relevant signature pages
hereof.
<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this Fourth Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
SUNRISE TELEVISION CORP.
By: /s/ David A. Fitz
-------------------------------------
Title: CFO & Executive Vice President
STC BROADCASTING, INC.
By: /s/ David A. Fitz
-------------------------------------
Title: CFO & Executive Vice President
THE CHASE MANHATTAN BANK, as Administrative Agent and as a Lender
By: Tracey Navin Ewing
-------------------------------------
Title:Vice President
NATIONSBANK, N.A., as Documentation Agent and as a Lender
By: Jennifer Zydney
-------------------------------------
Title: Managing Director
CITICORP USA, INC., as Syndication Agent and as a Lender
By: /s/ Mark R. Floyd
-------------------------------------
Title: Attorney-in-Fact
<PAGE> 5
FINOVA CAPITAL CORPORATION,
as a Lender
By: /s/ Andrew Pluta
-------------------------------------
Title: Vice President
THE CIT GROUP/EQUIPMENT FINANCING, INC., as a Lender
By: /s/ J.E. Palmer
-------------------------------------
Title: Assistant Vice President
PARIBAS, as a Lender
By: /s/ Todd Rodgers
-------------------------------------
Title: Assistant Vice President
By: /s/ Thomas G. Brandt
-------------------------------------
Title: Managing Director
NATEXIS BANQUE BFCE, as a Lender
By: /s/ Claudia V. Padron
-------------------------------------
Title: Associate
By: /s/ Cynthia E. Sachs
-------------------------------------
Title: VP Group Manager
GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender
By: /s/ Thomas P. Waters
-------------------------------------
Title: Duly Authorized Signatory
SUMMIT BANK, as a Lender
By: /s/ Donald Oberg
-------------------------------------
Title: Vice President
BANK OF HAWAII, as a Lender
By: /s/ James Polk
-------------------------------------
Title: Vice President
<PAGE> 6
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH, as a Lender
By: /s/ Doug W. Zylstra
-------------------------------------
Title: Senior Vice President
By: /s/ Pieter Kodde
-------------------------------------
Title: Senior Vice President
THE FUJI BANK, LIMITED,
NEW YORK BRANCH,
as a Lender
By: /s/ John Doyle
-------------------------------------
Title: Vice President and Manager
FIRST HAWAIIAN BANK, as a Lender
By: /s/ Travis Ruetenik
-------------------------------------
Title: Asst. Vice President
BHF (USA) CAPITAL CORPORATION,
as a Lender
By: /s/ Michael Pellerita
-------------------------------------
Title: Assistant Vice President
By: /s/ Christopher Dodger
-------------------------------------
Title: Associate
<PAGE> 1
Exhibit 10.2
PREFERRED STOCK PURCHASE AGREEMENT
THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of December 30, 1999, by and between Sunrise Television Corp.,
a Delaware corporation ("Purchaser"), and STC Broadcasting, Inc. a Delaware
corporation and a subsidiary of Purchaser ("Seller").
R E C I T A L S:
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
25,000 shares (the "Shares") of Preferred Stock, Series B, par value $0.01 per
share (the "Series B Preferred Stock"), of Seller for an aggregate purchase
price of $25 million, upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
PURCHASE OF SHARES
1.1 Purchase and Sale of Shares. Concurrently herewith and upon the
terms set forth herein, Seller is selling and delivering the Shares to
Purchaser, and Purchaser is purchasing and accepting the Shares, free and clear
of all mortgages, liens, pledges, security interests, charges, claims,
restrictions, and encumbrances of any nature whatsoever (collectively,
"Liens").
1.2 Purchase Price. In consideration of the transfer of the Shares
pursuant to Section 1.1, concurrently herewith Purchaser is paying to Seller,
by wire transfer of immediately available funds to the account of Seller, an
aggregate cash purchase price of Twenty Five Million Dollars ($25,000,000) (the
"Purchase Price").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Seller. Seller makes the
following representations and warranties to Purchaser, each of which is true
and correct as of the date hereof and shall be unaffected by an investigation
heretofore made by Purchaser:
2.1.1 Corporate Organization. Seller is a corporation duly
organized and validly existing under the laws of the State of
Delaware, and has the requisite corporate power and authority to own,
lease, or otherwise hold its properties and assets and to carry on its
business as presently conducted.
<PAGE> 2
2.1.2 Authorization and Effect of Agreement. Seller has the
requisite corporate power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery by Seller of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action of Seller. This Agreement has been duly
executed and delivered by Seller and, assuming the due execution and
delivery of this Agreement by Purchaser, constitutes a valid and
binding obligation of Seller, enforceable against Seller in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting the
enforcement of creditors' rights in general and subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
2.1.3 No Restriction Against Sale of the Shares; Required
Consents. The execution and delivery of this Agreement by Seller does
not, the performance by Seller of the transactions contemplated hereby
to be performed by it will not, and the transfer of the Shares by
Seller pursuant to this Agreement will not (a) conflict with, or
result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation, or acceleration of any obligation or to
loss of a benefit under, any contract, permit, order, judgment, or
decree to which Seller is a party, (b) conflict with or result in a
violation of, or constitute a default under, the Certificate of
Incorporation or Bylaws of Seller, (c) constitute a violation of any
domestic or foreign law, statute, ordinance, rule, or regulation
("Law") applicable to Seller, or (d) result in the creation of any
Liens upon any of the Shares. No consent, approval, order, or
authorization of, or registration, declaration, or filing with, any
third person or domestic or foreign court, government or governmental
agency, authority, entity, or instrumentality (each a "Governmental
Entity") is required to be obtained or made by or with respect to
Seller in connection with the execution and delivery of this Agreement
by Seller, the performance by Seller of the transactions contemplated
hereby, or the transfer of the Shares by Seller pursuant to this
Agreement, other than those that have already been obtained or made.
2.1.4 Capital Stock. The authorized capital stock of Seller
consists of: (a) 1,000 shares of common stock, par value $0.01 per
share, of which all such shares are issued and outstanding and (b)
1,000,000 shares of preferred stock, of which (i) 600,000 shares are
designated as 14% Redeemable Preferred Stock ("Series A Preferred
Stock"), par value $0.01 per share, of which 300,000 shares are issued
and outstanding and (ii) 100,000 Shares will be designated as Series B
Preferred Stock as of the date hereof, of which 25,000 Shares will be
issued and outstanding upon consummation of the transactions
contemplated hereby. All of the issued and outstanding shares of
capital stock of Seller have been duly authorized and validly issued,
are fully paid and nonassessable with no personal liability attaching
thereto and were not issued in violation of any preemptive
2
<PAGE> 3
rights or securities Laws. Except for rights contained in the Series A
Preferred, there are no outstanding securities, rights (preemptive or
other), subscriptions, calls, warrants, options, or other agreements
(except for this Agreement) that give any person the right to
purchase, subscribe for, or otherwise receive or be issued any shares
of capital stock of Seller or any security convertible into or
exchangeable or exercisable for any shares of capital stock of Seller.
Except for rights contained in (a) the certificate of designation for
the Series A Preferred Stock and (b) the Certificate of Designation,
there are no proxies, stockholder agreements, voting trusts, or other
agreements or understandings to which Seller is a party or by which it
is bound relating to the voting of any shares of capital stock of
Seller and there are no rights to participate in the equity, income,
or election of directors or officers of Seller.
2.1.5 Authorization of Shares. The issuance, sale and delivery of
the Shares have been duly authorized by all requisite corporate action
of Seller; and the Shares will, upon the filing of the Certificate of
Designation (as defined herein) with the Secretary of State of the
State of Delaware, be duly authorized and duly reserved for issuance
pursuant to this Agreement, and when issued, sold and delivered in
accordance with the terms of this Agreement and the Certificate of
Designation the Shares will be validly issued and outstanding, fully
paid and nonassessable and will not be subject to preemptive or other
similar rights of the stockholders of Seller or others and, except as
set forth in this Agreement, will be free and clear of all Liens.
2.1.6 Securities Offerings.
(a) Subject to the accuracy of Purchaser's representations
and warranties made in Section 2.2 hereof to Seller, the offer, sale and
issuance of the Shares to Purchaser in conformity with the terms of this
Agreement, constitutes a transaction exempt from the registration requirements
of Section 5 of the Securities Act of 1933, as amended (the "Securities Act")
and the registration or qualification requirements of any applicable state
securities or "blue sky" laws.
(b) With respect to each offering, sale and issuance of
securities heretofore made by Seller, each such offering, sale and issuance of
securities constituted a transaction exempt from the registration requirements
of Section 5 of the Securities Act, and the registration or qualification
requirements of any applicable state securities or "blue sky" laws. Each such
offering, sale and issuance was undertaken in compliance with all applicable
securities laws.
2.2 Representations and Warranties of Purchaser. Purchaser makes the
following representations and warranties to Seller, each of which is true and
correct as of the date hereof and shall be unaffected by any investigation
heretofore made by Seller:
2.2.1 Corporate Organization. Purchaser is a corporation duly
organized and validly existing under the laws of the State of Delaware
and has the requisite
3
<PAGE> 4
corporate power and authority to own, lease, or otherwise hold its
properties and assets and to carry on its business as presently
conducted.
2.2.2 Authorization and Effect of Agreement. Purchaser has the
requisite corporate power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery by Purchaser of this Agreement and the consummation by it of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and, assuming the due execution
and delivery of this Agreement by Seller, constitutes a valid and
binding obligation of Purchaser, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
2.2.3 No Conflicts. The execution and delivery of this Agreement
by Purchaser does not, and the performance by it of the transactions
contemplated hereby to be performed by it will not (a) conflict with
its Certificate of Incorporation or Bylaws, (b) conflict with, or
result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, any contract, permit, order,
judgment, or decree to which it is a party or by which any of its
material properties is bound, or (c) constitute a violation of any
domestic or foreign Law applicable to it. No consent, approval, order,
or authorization of, or registration, declaration, or filing with, any
Governmental Entity is required to be obtained or made by or with
respect to Purchaser in connection with the execution and delivery of
this Agreement by Purchaser or the performance by Purchaser of the
transactions contemplated hereby, other than those that have already
been obtained or made.
2.2.4 Investment Intent. Purchaser is acquiring the Shares for
investment and not with a view to, or for resale in connection with,
any distribution thereof, nor with any present intention of
distributing or reselling the same or any part thereof.
2.2.5 Restricted Securities. Purchaser understands (i) that the
Shares have not been and will not be registered under the Securities
Act or registered or qualified under any applicable state or
securities or "blue-sky" laws by reason of their issuance in
transactions exempt from the registration requirements of the
Securities Act or registration or qualification requirements any
applicable state securities or "blue-sky" laws, (ii) that the Shares
must be held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or registered or qualified under
any applicable state securities or "blue-sky" laws or is exempt from
such registration, (iii) that Seller is under no obligation to so
register any Shares and (iv) that the certificate(s) evidencing the
Shares will be
4
<PAGE> 5
imprinted with a legend that prohibits the transfer thereof unless
they are registered or such registration is not required.
2.2.6 Access to Information; Experience. Purchaser has been
furnished with or has had access during the course of this transaction
to all information necessary to enable Purchaser to evaluate the
merits and risks of a prospective investment in Seller and Purchaser
has had an opportunity to discuss with representatives of Seller the
business and financial affairs of Seller and the terms and conditions
of the offering and to obtain such additional information, to the
extent that Seller possesses such information or could acquire it
without unreasonable effort or expense, necessary to verify the
accuracy of the information to which Purchaser has had access and all
questions raised by Purchaser have been answered to the full
satisfaction of Purchaser. Purchaser has conducted its own
investigation and analysis of the business and its investment in the
Shares. Purchaser has substantial experience in evaluating and
investing in private placement transactions of securities in companies
similar to so that it is capable of evaluating the merits and the
risks of its investment in and has the capacity to protect its own
interests in making its investment in Seller. Purchaser can afford to
suffer a complete loss of the cash consideration paid in respect of
its investment in the Shares.
2.2.7 Rule 144. Purchaser understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known
to such person) promulgated under the Securities Act ("Rule 144")
depends on the satisfaction of various conditions and that, if
applicable, Rule 144 may only afford the basis for sales under certain
circumstances only in limited amounts.
2.2.8 Accredited Investor. Purchaser is an "accredited investor"
(as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act).
ARTICLE III
DOCUMENTS DELIVERED UPON EXECUTION OF THIS AGREEMENT
3.1 Documents Delivered by Seller. Concurrently with the execution of
this Agreement, Seller shall deliver to Purchaser the following documents:
3.1.1 Stock Certificate. A stock certificate evidencing the
Shares.
3.1.2 Officer's Certificate. An Officer's Certificate (or other
evidence acceptable to Purchaser) certifying that the STC
Broadcasting, Inc. Certificate of Designation of the Powers,
Preferences and Relative, Participating, Optional and Other Special
Rights of Preferred Stock, Series B, and Qualifications, Limitations
and Restrictions thereof (the "Certificate of Designation"), has been
filed with the Secretary of State of the State of Delaware.
5
<PAGE> 6
3.2 Documents Delivered by Purchaser. Concurrently with the execution
of this Agreement, Purchaser shall deliver to Seller the following:
3.2.1 Purchase Price. Evidence of a wire transfer of immediately
available funds in the amount of the Purchase Price.
ARTICLE IV
SURVIVAL AND INDEMNIFICATION
4.1 Survival of Representations, Warranties and Covenants. The
representations and warranties contained in this Agreement shall survive the
execution of this Agreement and remain in effect indefinitely.
4.2 Definitions. For purposes of this Agreement, (i) "Indemnity
Payment" means any amount of Indemnifiable Losses required to be paid pursuant
to this Agreement, (ii) "Indemnitee" means any person entitled to
indemnification under this Agreement, (iii) "Indemnifying Party" means any
person required to provide indemnification under this Agreement, (iv)
"Indemnifiable Losses" means any and all damages, losses, liabilities,
obligations, costs, and expenses, and any and all claims, demands, or suits (by
any person), including the costs and expenses of any and all actions, suits,
proceedings, demands, assessments, judgments, settlements, and compromises
relating thereto and including reasonable attorneys' fees and expenses in
connection therewith, and (v) "Third Party Claim" means any claim, action, or
proceeding made or brought by any person who is not a party to this Agreement
or an Affiliate of a party to this Agreement.
4.3 Indemnification.
(a) Seller shall (with respect to Indemnifiable Losses
described in this Section 4.3) indemnify, defend, and hold harmless Purchaser,
its affiliates, and their respective directors, officers, partners, employees,
agents, and representatives from and against any and all Indemnifiable Losses
to the extent relating to, resulting from, or arising out of any breach of any
representation or warranty of Seller under the terms of this Agreement and any
certificate or other document delivered pursuant hereto.
(b) Purchaser shall indemnify, defend, and hold harmless
Seller, its affiliates, and their respective directors, officers, partners,
employees, agents, or representatives from and against any and all
Indemnifiable Losses to the extent relating to, resulting from, or arising out
of any breach of any representation or warranty of Purchaser under the terms of
this Agreement and any certificate or other document delivered pursuant hereto.
4.4 Defense of Claims.
(a) If any Indemnitee receives notice of assertion or
commencement of any Third Party Claim against such Indemnitee with respect to
which
6
<PAGE> 7
an Indemnifying Party is obligated to provide indemnification under this
Agreement, the Indemnitee will give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 15 calendar days after
receipt of such notice of such Third Party Claim. Such notice will describe the
Third Party Claim in reasonable detail, will include copies of all material
written evidence thereof and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate in, or,
by giving written notice to the Indemnitee, to assume, the defense of any Third
Party Claim at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel (reasonably satisfactory to the Indemnitee), and the
Indemnitee will cooperate in good faith in such defense.
(b) If, within 10 calendar days after giving notice of a
Third Party Claim to an Indemnifying Party pursuant to Section 4.4(a), an
Indemnitee receives written notice from the Indemnifying Party that the
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in the last sentence of Section 4.4(a), the Indemnifying Party will
not be liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof; provided, however, that if the
Indemnifying Party fails to take reasonable steps necessary to defend
diligently such Third Party Claim within 10 calendar days after receiving
written notice from the Indemnitee that the Indemnitee believes the
Indemnifying Party has failed to take such steps or if the Indemnifying Party
has not undertaken fully to indemnify the Indemnitee in respect of all
Indemnifiable Losses relating to the matter, the Indemnitee may assume its own
defense, and the Indemnifying Party will be liable for all reasonable costs or
expenses paid or incurred in connection therewith. Without the prior written
consent of the Indemnitee, the Indemnifying Party will not enter into any
settlement of any Third Party Claim which would lead to liability or create any
financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder.
(c) A failure to give timely notice or to include any
specified information in any notice as provided in Section 4.4(a) or 4.4(b)
will not affect the rights or obligations of any party hereunder except and
only to the extent that, as a result of such failure, any person which was
entitled to receive such notice was deprived of its right to recover any
payment under its applicable insurance coverage or was otherwise materially
damaged as a result of such failure.
(d) The Indemnifying Party will have a period of 30 calendar
days within which to respond in writing to any claim by an Indemnitee on
account of an Indemnifiable Loss which does not result from a Third Party Claim
(a "Direct Claim"). If the Indemnifying Party does not so respond within such
30 calendar day period, the Indemnifying Party will be deemed to have rejected
such claim, in which event the Indemnitee will be free to pursue such remedies
as may be available to the Indemnitee on the terms and subject to the
conditions of this Article IV.
7
<PAGE> 8
4.5 Exclusive Remedy. Following the execution of this Agreement, the
remedies provided in this Article IV shall be the sole and exclusive remedies
of the parties with respect to the breach of any representation, warranty,
covenant, or agreement of any party under this Agreement except as otherwise
provided in this Agreement.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 Notices. All notices and other communications required or
permitted hereunder shall be in writing and, unless otherwise provided in this
Agreement, shall be deemed to have been duly given when delivered in person or
when dispatched by electronic facsimile transfer or one business day after
having been dispatched by a nationally recognized overnight courier service to
the appropriate party at the address specified below:
(a) If to Seller, to:
STC Broadcasting, Inc.
720 Second Avenue South
Suite 420
St. Petersburg, Florida 33701
Facsimile No.: (727) 821-8092
Attention: David A. Fitz, Chief Financial Officer
with a copy to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Facsimile No.: (214) 740-7313
Attention: Lawrence D. Stuart, Jr.
(b) If to Purchaser, to:
Sunrise Television Corp.
720 Second Avenue South
Suite 420
St. Petersburg, Florida 33701
Facsimile No.: (727) 821-8092
Attention: David A. Fitz, Chief Financial Officer
with a copy to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Facsimile No.: (214) 740-7313
Attention: Lawrence D. Stuart, Jr.
8
<PAGE> 9
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
5.2 Expenses. Seller shall pay any expenses incurred by it and
Purchaser, incidental to this Agreement and in preparing to consummate and
consummating the transactions provided for herein.
5.3 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but shall not be assignable or delegable by any party
without the prior written consent of the other party, which shall not be
unreasonably withheld; provided, however, that nothing in this Agreement is
intended to limit Purchaser's ability to sell or to transfer any or all of the
Shares acquired hereunder or any assets of the Company following the execution
of this Agreement; provided further, however, that Purchaser shall not assign
or otherwise transfer any of its rights, duties or obligations hereunder if
such assignment or transfer (i) would violate any of the rules, regulations or
policies of the Federal Communications Commission (the "FCC") or (ii) could
reasonably be expected to cause adverse consequences for any of the parties
hereto under the ownership attribution rules of the FCC.
5.4 Entire Agreement. This Agreement (including any of the Exhibits
and Schedules hereto) supersedes any other agreement, whether written or oral,
that may have been made or entered into by any party or any of their respective
affiliates (or by any director, officer, or representative thereof) relating to
the matters contemplated hereby. This Agreement (together with any of the
Exhibits) constitutes the entire agreement by and among the parties hereto and
there are no agreements or commitments by or among such parties or their
affiliates except as expressly set forth herein.
5.5 Amendments and Supplements. This Agreement may be amended or
supplemented at any time by additional written agreements signed by the parties
hereto.
5.6 Rights of the Parties. Except as provided in Sections 5.3 and
Article IV, nothing expressed or implied in this Agreement is intended or shall
be construed to confer upon or give any person other than the parties hereto
and their respective affiliates any rights or remedies under or by reason of
this Agreement or any transaction contemplated hereby.
5.7 Brokers. Each party hereto acknowledges and agrees that any fees
or commissions owed to any broker, finder, or financial advisor in connection
with the negotiation or execution of this Agreement or the consummation of the
transactions contemplated hereby shall be the sole liability of the party
retaining such broker, finder, or financial advisor.
9
<PAGE> 10
5.8 Further Assurances. From time to time, as and when requested by
either party, the other party will execute and deliver, or cause to be executed
and delivered, all such documents and instruments as may be reasonably
necessary to consummate the transactions contemplated by this Agreement.
5.9 Governing Law. This Agreement shall be governed by, and construed
in accordance, with the laws of the State of NEW YORK, without regard to the
Conflicts of laws of principals thereof.
5.10 Severability. In the event that one or more provisions of this
Agreement shall be deemed or held to be invalid, illegal, or unenforceable in
any respect under any applicable Law, this Agreement shall be construed with
the invalid, illegal, or unenforceable provision deleted, and the validity,
legality, and enforceability of the remaining provisions contained herein shall
not be affected or impaired thereby.
5.11 Execution in Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
5.12 Titles and Headings. Titles and headings to articles and sections
hereof are inserted for convenience of reference only, and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.
5.13 Certain Interpretive Matters and Definitions.
(a) Unless the context otherwise requires, (i) all
references to Sections or Articles are to Section or Articles of or to this
Agreement, (ii) each term defined in this Agreement has the meaning assigned to
it, (iii) "or" is disjunctive but not necessarily exclusive, (iv) words in the
singular include the plural and vice versa, (v) the term "Affiliate" has the
meaning given to such term in Rule 12b-2 of Regulation 12B under the Securities
Exchange Act of 1934, as amended, (vi) "including" and "includes" shall mean
"including, without limitation," and (vii) "person" or "Person" shall mean any
individual, partnership, joint venture, limited liability company, corporation,
trust, unincorporated association, Governmental Entity, or other entity.
(b) No provision of this Agreement will be interpreted in
favor of, or against, any of the parties hereto by reason of the extent to
which any such party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any prior
draft hereof or thereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SELLER:
STC Broadcasting Inc.
By: /s/ David A. Fitz
---------------------------
Name: David A. Fitz
Title: Executive Vice President
PURCHASER:
Sunrise Television Corp.
By: /s/ David A. Fitz
---------------------------
Name: David A. Fitz
Title: Executive Vice President
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EXHIBIT A
(Series B Preferred Stock Certificate of Designations)
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Exhibit 10.3
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
BY AND AMONG
SUNRISE TELEVISION CORP.
AND
HICKS, MUSE, TATE & FURST EQUITY FUND III, L.P.,
HM3 COINVESTORS, L.P.
AND
CHASE EQUITY ASSOCIATES, L.P.
AS PURCHASERS
DATED AS OF DECEMBER 30, 1999
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND INTERPRETATION.........................................................1
Section 1.01. Definitions...................................................................1
Section 1.02. Interpretation...............................................................14
Section 1.03. Business Day Adjustment......................................................15
ARTICLE II PURCHASE OF NOTES.....................................................................15
Section 2.01. Purchase of Notes and Warrants...............................................15
Section 2.02. Closing......................................................................16
Section 2.03. Mandatory Redemption.........................................................16
Section 2.04. Use of Proceeds..............................................................16
Section 2.05. Interest on the Notes........................................................16
Section 2.06. Receipt of Payments..........................................................17
Section 2.07. Application of Payments......................................................18
Section 2.08. Sharing of Payments..........................................................18
Section 2.09. Indemnity....................................................................18
Section 2.10. Access.......................................................................19
Section 2.11. Taxes........................................................................19
NOTES; RIGHTS OF HOLDERS OF NOTES.......................................................................20
Section 3.01. Issue of Notes...............................................................20
Section 3.02. Purchase and Issuance of the Notes...........................................20
Section 3.03. Subordination of Liabilities.................................................21
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................22
Section 4.01. Representations, Warranties and Agreements of the Company....................22
Section 4.02. Representations and Warranties of the Purchasers.............................28
ARTICLE V CONDITIONS PRECEDENT TO CLOSING.......................................................29
Section 5.01. Conditions Precedent to the Closing..........................................29
Section 5.02. Conditions Precedent to Obligations of the Company...........................30
ARTICLE VI COVENANTS.............................................................................30
Section 6.01. Notices of Material Events...................................................31
Section 6.02. Compliance with Laws.........................................................31
Section 6.03. Use of Proceeds..............................................................31
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Section 6.04. Limitation on Restricted Payments............................................31
Section 6.05. Corporate Existence..........................................................31
Section 6.06. Payment of Taxes and Other Claims............................................32
Section 6.07. Maintenance of Properties and Insurance......................................32
Section 6.08. Compliance with Laws.........................................................32
Section 6.09. Reports......................................................................32
Section 6.10. Limitations on Transactions with Affiliates..................................33
Section 6.11. Limitation on Incurrence of Additional Indebtedness and Issuance
of Disqualified Capital Stock................................................33
Section 6.12. Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries.................................................................33
Section 6.13. Limitation on Asset Sales....................................................34
Section 6.14. Limitation on Asset Swaps....................................................35
Section 6.15. FCC Compliance...............................................................35
Section 6.16. Merger, Consolidation and Sale of Assets.....................................35
Section 6.17. Successor Corporation Substituted............................................36
ARTICLE VII EVENTS OF DEFAULTS....................................................................36
Section 7.01. Actions after Default........................................................36
Section 7.02. Events of Default............................................................36
Section 7.03. Notice of Events.............................................................37
ARTICLE VIII INDEMNITY.............................................................................37
Section 8.01. Indemnity....................................................................37
(a) Indemnification by the Company...............................................37
(b) Indemnification by the Purchasers............................................38
(c) Procedure....................................................................39
Section 8.02. Contribution.................................................................40
ARTICLE IX MISCELLANEOUS.........................................................................40
Section 9.01. Notices......................................................................40
Section 9.02. Expenses.....................................................................41
Section 9.03. Governing Law, Submission to Jurisdiction: Venue.............................41
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Section 9.04. Judgment.....................................................................42
Section 9.05. Benefit of Agreement.........................................................43
Section 9.06. Assignments..................................................................43
Section 9.07. Amendment....................................................................43
Section 9.08. Counterparts; Integration....................................................43
Section 9.09. Remedies and Waivers.........................................................43
Section 9.10. Severability.................................................................43
Section 9.11. WAIVER OF JURY TRIAL.........................................................43
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SENIOR SUBORDINATED
NOTE PURCHASE AGREEMENT
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT dated as of
December 30, 1999, by and among SUNRISE TELEVISION CORP., a Delaware
corporation (the "Company"), HICKS, MUSE, TATE & FURST EQUITY FUND III, L.P., a
Delaware limited partnership, HM3 COINVESTORS, L.P., a Delaware limited
partnership and CHASE EQUITY ASSOCIATES, L.P., a Delaware limited partnership
(collectively, the "Purchasers" and individually, each a "Purchaser").
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. Wherever used in this Agreement,
unless the context otherwise requires, the following terms have the meanings
indicated (such meanings to be equally applicable to both the singular and the
plural form of the terms defined):
"Acquired Indebtedness" means Indebtedness of a Person or any
of its Subsidiaries existing at the time such Person becomes a
Subsidiary of the Company or at the time it merges or consolidates
with the Company or any of its Subsidiaries or assumed in connection
with the acquisition of assets from such Person and not incurred by
such Person in connection with, or in anticipation or contemplation
of, such Person becoming a Subsidiary of the Company or such
acquisition, merger or consolidation.
"Affiliate" means a Person who, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or
is under common control with, the Company. The term "control" means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or
otherwise.
"Affiliate Transaction" has the meaning provided therefor in
Section 6.10.
"Asset Acquisition" means (i) an Investment by the Company or
any Subsidiary of the Company in any other Person pursuant to which
such Person shall become a Subsidiary of the Company or shall be
consolidated or merged with the Company or any Subsidiary of the
Company or (ii) the acquisition by the Company or any Subsidiary of
the Company of assets of any Person comprising a division or line of
business of such Person.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into
in the ordinary course of business),
<PAGE> 6
assignment or other transfer for value by the Company or any of its
Subsidiaries (excluding any Sale and Leaseback Transaction or any
pledge of assets or stock by the Company or any of its Subsidiaries)
to any Person other than the Company or a Wholly Owned Subsidiary of
the Company of (i) any Capital Stock of any Subsidiary of the Company
or (ii) any other property or assets of the Company or any Subsidiary
of the Company other than in the ordinary course of business;
provided, however, that for purposes of Section 6.13, Asset Sales
shall not include (a) a transaction or series of related transactions
in which the Company or its Subsidiaries receive aggregate
consideration of less than $500,000, (b) transactions permitted under
Section 6.14 or (c) transactions covered by Section 6.16.
"Asset Swap" means the execution of a definitive agreement,
subject only to FCC approval, if applicable, and other customary
closing conditions, that the Company in good faith believes will be
satisfied, for a substantially concurrent purchase and sale, or
exchange, of Productive Assets between the Company or any of its
Subsidiaries and another Person or group of affiliated Persons;
provided that any amendment to or waiver of any closing condition that
individually or in the aggregate is material to the Asset Swap shall
be deemed to be a new Asset Swap.
"Board of Directors" means, with respect to any Person, the
Board of Directors (or any other equivalent governing body) of such
Person or any committee of the Board of Directors of such Person duly
authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"Business Day" means a day when banks are open for business
in New York, New York.
"Capital Stock" means (i) with respect to any Person that is
a corporation, any and all shares, interests, participations or other
equivalents (however designated) of capital stock of such Person and
(ii) with respect to any Person that is not a corporation, any and all
partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligation of such Person to pay rent or other amounts under a lease
to which such Person is a party that is required to be classified and
accounted for as a capital lease obligation under GAAP, and for
purposes of this definition, the amount of such obligation at any date
shall be the capitalized amount of such obligation at such date,
determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States
Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within
one year from the date of acquisition thereof; (ii) marketable direct
obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition thereof
and, at the time of acquisition, having one of the two highest ratings
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obtainable from either Standard & Poor's Ratings Services, a division
of the McGraw Hill Companies, Inc. or Moody's Investors Service, Inc.;
(iii) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of
at least A-I from Standard & Poor's Services, a division of the McGraw
Hill Companies, Inc. or at least P-I from Moody's Investors Service,
Inc.; (iv) certificates of deposit or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any
commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $200,000,000; (v)
repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in
clause (iv) above; and (vi) investments in money market funds that
invest substantially all their assets in securities of the types
described in clauses (i) through (v) above.
"Change of Control" means the occurrence of one or more of
the following events: (i) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company to any Person or group
of related Persons for purposes of Section 13(d) of the Exchange Act
(a "Group") (whether or not otherwise in compliance with the
provisions of this Agreement), other than to Hicks Muse, any of its
Affiliates, officers and directors or Robert N. Smith or any of his
Affiliates (the "Permitted Holders"); or (ii) a majority of the board
of directors of the Company shall consist of Persons who are not
Continuing Directors; or (iii) the acquisition by any Person or Group
(other than the Permitted Holders or any direct or indirect Subsidiary
of any Permitted Holder) of the power, directly or indirectly, to vote
or direct the voting of securities having more than 50% of the
ordinary voting power for the election of directors of the Company.
"Closing" has the meaning provided therefor in Section 2.02.
"Closing Date" has the meaning provided therefor in Section
2.02.
"Commission" means the Securities and Exchange Commission.
"Commodity Agreement" means any commodity futures contract,
commodity option or other similar agreement or arrangement entered
into by the Company or any of its Subsidiaries designed to protect the
Company or any of its Subsidiaries against fluctuations in the price
of commodities actually used in the ordinary course of business of the
Company and its Subsidiaries.
"Communications Act" has the meaning provided therefor in
Section 4.01(e).
"Company" has the meaning provided therefor in the
introductory paragraph.
"Consolidated Cash Flow" means, with respect to any Person,
for any period, the sum (without duplication) of (i) Consolidated Net
Income and (ii) to the extent
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Consolidated Net Income has been reduced thereby, (A) all income taxes
of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to
extraordinary or non-recurring gains or losses), (B) Consolidated
Interest Expense and (C) Consolidated Non-Cash Charges, all as
determined on a consolidated basis for such Person and its
Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" means, with respect to any
Person for any period, without duplication, the sum of (i) the
interest expense of such Person and its Subsidiaries for such period
as determined on a consolidated basis in accordance with GAAP,
including (a) any amortization of debt discount, (b) the net cost
under Interest Swap Obligations (including any amortization of
discounts), (c) the interest portion of any deferred payment
obligation, (d) all commissions, discounts and other fees and charges
owed with respect to letters of credit, bankers' acceptance financing
or similar facilities, and (e) all accrued interest and (ii) the
interest component of Capitalized Lease Obligations paid or accrued by
such Person and its Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" of any Person means, for any
period, the aggregate net income (or loss) of such Person and its
Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP; provided, however, that there shall be excluded
therefrom, without duplication, (a) gains and losses from Asset Sales
(without regard to the $500,000 limitation set forth in the definition
thereof) or abandonments or reserves relating thereto and the related
tax effects, (b) items classified as extraordinary or non-recurring
gains and losses, and the related tax effects according to GAAP, (c)
the net income (or loss) of any Person acquired in a pooling of
interests transaction accrued prior to the date it becomes a
Subsidiary of such first-referred-to Person or is merged or
consolidated with it or any of its Subsidiaries, (d) the net income of
any Subsidiary to the extent that the declaration of dividends or
similar distributions by that Subsidiary of that income is restricted
by contract, operation of law or otherwise, and (e) the net income of
any Person, other than a Subsidiary, except to the extent of the
lesser of (x) dividends or distributions paid to such
first-referred-to Person or its Subsidiary by such Person and (y) the
net income of such Person (but in no event less than zero), and the
net loss of such Person shall be included only to the extent of the
aggregate Investment of the first-referred-to Person or a consolidated
Subsidiary of such Person and any non-cash expenses attributable to
grants or exercises of employee stock options.
"Consolidated Non-Cash Charges" means, with respect to any
Person for any period, the aggregate depreciation, amortization and
other non-cash expenses of such Person and its Subsidiaries (excluding
any such charges constituting an extraordinary or non-recurring item)
reducing Consolidated Net Income of such Person and its Subsidiaries
for such period, determined on a consolidated basis in accordance with
GAAP.
"Continuing Director" means, as of the date of determination,
any Person who (i) was a member of the Board of Directors of the
Company on the Closing Date, (ii) was
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nominated for election or elected to the board of directors of the
Company with the affirmative vote of a majority of the Continuing
Directors who were members of such board of directors at the time of
such nomination or election or (iii) is a representative of a
Permitted Holder.
"Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of July 2, 1998, among STC, the Company, The Chase
Manhattan Bank, as administrative agent, NationsBank, N.A., as
documentation agent, Salomon Brothers Holding Company Inc., as
syndication agent, and any other financial institutions from time to
time party thereto, together with the related documents thereto
(including any guarantee agreements and security documents), in each
case as such agreements have been or may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified
from time to time, including any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including by way of
adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under
such agreement or any successor or replacement agreement and whether
by the same or any other agent, lender or group of lenders (or other
institutions).
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement
designed to protect the Company or any of its Subsidiaries against
fluctuations in currency values.
"Default" means an event or condition that would constitute
an Event of Default but for the requirement that notice be given or
time elapse or both.
"Disqualified Capital Stock" means any Capital Stock that, by
its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of
any event, matures (excluding any maturity as the result of an
optional redemption by the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
redeemable at the sole option of the holder thereof (except, in each
case, upon the occurrence of a Change of Control), in whole or in
part, on or prior to the final maturity date of the Notes.
"DOJ" has the meaning provided therefor in Section 4.01(e).
"Dollars" and the sign "$" means the lawful currency of the
United States of America.
"Event of Default" means any one of the events specified in
Section 7.02.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission
thereunder.
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"FCC" means the United States Federal Communications
Commission or any similar agency having jurisdiction over the
purchase, sale and operation of broadcast licenses and related assets.
"Financial Monitoring and Oversight Agreements" means,
collectively, the Monitoring and Oversight Agreement among the
Company, STC and Hicks Muse Partners, as in effect on the Closing
Date, and the Financial Advisory Agreement among the Company, STC and
Hicks Muse Partners, as in effect on the Closing Date.
"FTC" has the meaning set forth in Section 4.01(e).
"GAAP" means generally accepted accounting principles as in
effect in the United States of America as of the Closing Date.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision
thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
"Hicks Muse" means Hicks, Muse, Tate & Furst Incorporated, a
Delaware corporation.
"Hicks Muse Partners" means Hicks, Muse & Co. Partners, L.P.,
a Texas limited partnership.
"Indebtedness" means with respect to any Person, without
duplication, any liability of such Person (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or other similar instruments,
(iii) constituting Capitalized Lease Obligations, (iv) incurred or
assumed as the deferred purchase price of property, or pursuant to
conditional sale obligations and title retention agreements (but
excluding trade accounts payable arising in the ordinary course of
business), (v) for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction, (vi) for
Indebtedness of others guaranteed by such Person, (vii) for Interest
Swap Obligations, Commodity Agreements and Currency Agreements and
(viii) for Indebtedness of any other Person of the type referred to in
clauses (i) through (vii) which is secured by any Lien on any property
or asset of such first-referred-to Person, the amount of such
Indebtedness being deemed to be the lesser of the value of such
property or asset or the amount of the Indebtedness so secured. The
amount of Indebtedness of any Person at any date shall be the
outstanding principal amount of all unconditional obligations
described above, as such amount would be reflected on a balance sheet
prepared in accordance with GAAP, and the maximum liability at such
date of such Person for any contingent obligations described above.
"Indenture" means the Indenture in respect of the STC Senior
Subordinated Notes, dated as of March 25, 1997, as in effect on the
date hereof, between STC, on the
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one hand, and U.S. Trust Company of Texas, N.A., or its successor, as
trustee, on the other hand.
"Interest Payment Date" has the meaning provided therefor in
Section 2.05(a).
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement, interest rate futures contract, interest rate option
contract or other similar arrangement or agreement to which the
Company or any of its Subsidiaries is party, designed to protect the
Company and its Subsidiaries against fluctuations in interest rates.
"Interest Swap Obligations" means the obligations of any
Person under any Interest Rate Agreement.
"Investment" means (i) any transfer or delivery of cash,
stock or other property of value in exchange for Indebtedness, stock
or other security or ownership interest in any Person by way of loan,
advance, capital contribution, guarantee or otherwise and (ii) an
investment deemed to have been made by the Company at the time any
entity which was a Subsidiary of the Company ceases to be such a
Subsidiary in an amount equal to the value of the loans and advances
made to, and any remaining ownership interest in, such entity
immediately following such entity ceasing to be a Subsidiary of the
Company. The amount of any non-cash Investment shall be the fair
market value of such Investment, as determined conclusively in good
faith by management of the Company unless the fair market value of
such Investment exceeds $1,000,000, in which case the fair market
value shall be determined conclusively in good faith by the Board of
Directors of the Company at the time such Investment is made.
"Leverage Ratio" shall mean the ratio of (i) the aggregate
outstanding amount of Indebtedness of STC and its Subsidiaries as of
the date of calculation on a consolidated basis in accordance with
GAAP plus the aggregate liquidation preference of all outstanding
Disqualified Capital Stock of STC to (ii) the Consolidated Cash Flow
of the STCs for the four full fiscal quarters (the "Four Quarter
Period") ending on or prior to the date of determination.
For purposes of this definition, the aggregate outstanding
principal amount of Indebtedness of the Person and its Subsidiaries
for which such calculation is made shall be determined on a pro forma
basis as if the Indebtedness giving rise to the need to perform such
calculation had been incurred and the proceeds therefrom had been
applied, and all other transactions in respect of which such
Indebtedness is being incurred had occurred, on the last day of the
Four Quarter Period. In addition to the foregoing, for purposes of
this definition, "Consolidated Cash Flow" shall be calculated on a pro
forma basis after giving effect to (i) the incurrence of the
Indebtedness of such Person and its Subsidiaries (and the application
of the proceeds therefrom) giving rise to the need to make such
calculation and any incurrence (and the application of the proceeds
therefrom) or repayment of other Indebtedness, other than the
incurrence or repayment of Indebtedness pursuant to working capital
facilities, at any time subsequent to the
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beginning of the Four Quarter Period and on or prior to the date of
determination, as if such incurrence (and the application of the
proceeds thereof), or the repayment, as the case may be, occurred on
the first day of the Four Quarter Period, (ii) any Asset Sales or
Asset Acquisitions (including any Asset Acquisition giving rise to the
need to make such calculation as a result of such Person or one of its
Subsidiaries (including any Person that becomes a Subsidiary as a
result of such Asset Acquisition) incurring, assuming or otherwise
becoming liable for Indebtedness) at any time on or subsequent to the
first day of the Four Quarter Period and on or prior to the date of
determination, as if such Asset Sale or Asset Acquisition (including
the incurrence, assumption or liability for any such Indebtedness and
also including any Consolidated Cash Flow associated with such Asset
Acquisition) occurred on the first day of the Four Quarter Period and
(iii) cost savings resulting from employee terminations, facilities
consolidations and closings, standardization of employee benefits and
compensation practices, consolidation of property, casualty and other
insurance coverage and policies, standardization of sales
representation commissions and other contract rates, and reductions in
taxes other than income taxes (collectively, "Cost Savings Measures"),
which cost savings the Company reasonably believes in good faith could
have been achieved during the Four Quarter Period as a result of such
Asset Acquisition (regardless of whether such cost savings could then
be reflected in pro forma financial statements under GAAP, Regulation
S-X promulgated by the Commission or any other regulation or policy of
the Commission), less the amount of any additional expenses that the
Company reasonably estimates would result from anticipated
replacements of any items constituting Cost Savings Measures in
connection with such Asset Acquisition; provided, however, that both
(A) such cost savings and Cost Savings Measures were identified and
such cost savings were quantified in an officer's certificate
delivered to the Purchasers at the time of the consummation of the
Asset Acquisition and (B) with respect to each Asset Acquisition
completed prior to the 90th day preceding such date of determination,
actions were commenced or initiated by the Company within 90 days of
such Asset Acquisition to effect the Cost Savings Measures identified
in such officer's certificate (regardless, however, of whether the
corresponding cost savings have been achieved). Furthermore, in
calculating "Consolidated Interest Expense" for purposes of the
calculation of "Consolidated Cash Flow," (i) interest on Indebtedness
determined on a fluctuating basis as of the date of determination
(including Indebtedness actually incurred on the date of the
transaction giving rise to the need to calculate the Leverage Ratio)
and which will continue to be so determined thereafter shall be deemed
to have accrued at a fixed rate per annum, equal to the rate of
interest on such Indebtedness as in effect on the date of
determination and (ii) notwithstanding (i) above, interest determined
on a fluctuating basis, to the extent such interest is covered by
Interest Swap Obligations, shall be deemed to accrue at the rate per
annum resulting after giving effect to the operation of such
agreements.
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof and any agreement to give any security interest).
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"License" has the meaning provided therefor in Section
4.01(j).
"Loan Documents" shall mean this Agreement, the Notes, the
Warrants and all other agreements, instruments, documents and
certificates, including pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of Company, and
delivered to the Purchasers, in their capacities as purchasers of the
Notes hereunder, in connection with this Agreement or the transactions
contemplated hereby.
"Market Effect" has the meaning provided therefor in Section
5.01(i).
"Material Adverse Change" has the meaning provided therefor
in Section 5.01(j).
"Material Adverse Effect" has the meaning provided therefor
in Section 4.01(a).
"Maximum Lawful Rate" has the meaning provided therefor in
Section 2.05(d).
"Net Cash Proceeds" means, with respect to any Asset Sale,
the proceeds in the form of cash or Cash Equivalents (including
payments in respect of deferred payment obligations when received in
the form of cash or Cash Equivalents) received by the Company or any
of its Subsidiaries from such Asset Sale net of (i) reasonable
out-of-pocket expenses and fees relating to such Asset Sale (including
legal, accounting and investment banking fees and sales commissions,
recording fees, title insurance premiums, appraiser's fees and costs
reasonably incurred in preparation of any asset or property for sale),
(ii) taxes paid or reasonably estimated to be payable (calculated
based on the combined state, federal and foreign statutory tax rates
applicable to the Company or the Subsidiary engaged in such Asset
Sale) and (iii) repayment of Indebtedness secured by assets subject to
such Asset Sale; provided, however, that if the instrument or
agreement governing such Asset Sale requires the transferor to
maintain a portion of the purchase price in escrow (whether as a
reserve for adjustment of the purchase price or otherwise) or to
indemnify the transferee for specified liabilities in a maximum
specified amount, the portion of the cash or Cash Equivalents that is
actually placed in escrow or segregated and set aside by the
transferor for such indemnification obligation shall not be deemed to
be Net Cash Proceeds until the escrow terminates or the transferor
ceases to segregate and set aside such funds, in whole or in part, and
then only to the extent of the proceeds released from escrow to the
transferor or that are no longer segregated and set aside by the
transferor.
"Notes" has the meaning provided therefor in Section 2.01.
"Obligations" shall mean all amounts owing by the Company to
the Purchasers and any of their assignees pursuant hereto or the
Notes, including all principal, interest, fees, expenses, attorney's
fees and any other sum chargeable to the Company under any of the Loan
Documents.
"Other Taxes" has the meaning provided therefore in Section
2.11(b).
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"Permitted Holder" has the meaning provided therefor in the
definition of "Change of Control."
"Permitted Indebtedness" means, without duplication, (i)
Indebtedness outstanding on the Closing Date; (ii) Indebtedness of the
Company or a Subsidiary incurred under the Credit Agreement in an
aggregate principal amount at any time outstanding not to exceed (a)
the sum of the aggregate commitments pursuant to the Credit Agreement
as in effect on Closing Date and (b) any Incremental Term Loans (as
defined in the Credit Agreement) after the Closing Date; (iii)
Indebtedness evidenced by or arising under the STC Senior Subordinated
Notes and the Indenture; (iv) Interest Swap Obligations; provided,
however that such Interest Swap Obligations are entered into to
protect the Company and its Subsidiaries from fluctuations in interest
rates of its Indebtedness; (v) additional Indebtedness of the Company
or any of its Subsidiaries not to exceed $10,000,000 in principal
amount outstanding at any time (which amount may, but need not, be
incurred under the Credit Agreement); (vi) Refinancing Indebtedness;
(vii) Indebtedness owed by the Company to any Wholly Owned Subsidiary
of the Company or by any Subsidiary of the Company to the Company or
any Wholly Owned Subsidiary of the Company; (viii) guarantees by
Subsidiaries of any Indebtedness permitted to be incurred pursuant to
the Indenture; (ix) Indebtedness in respect of performance bonds,
bankers' acceptances and surety or appeal bonds provided by the
Company or any of its Subsidiaries to their customers in the ordinary
course of their business; (x) Indebtedness arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of
its Subsidiaries pursuant to such agreements, in each case incurred in
connection with the disposition of any business assets or Subsidiaries
of the Company (other than guarantees of Indebtedness or other
obligations incurred by any Person acquiring all or any portion of
such business assets or Subsidiaries of the Company for the purpose of
financing such acquisition) in a principal amount not to exceed the
gross proceeds actually received by the Company or any of its
Subsidiaries in connection with such disposition; provided, however,
that the principal amount of any Indebtedness incurred pursuant to
this clause (x), when taken together with all Indebtedness incurred
pursuant to this clause (x) and then outstanding, shall not exceed
$7,500,000; and (xi) Indebtedness represented by Capitalized Lease
Obligations, mortgage financings or purchase money obligations, in
each case incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property used
in a related business or incurred to refinance any such purchase price
or cost of construction or improvement, in each case incurred no later
than 365 days after the date of such acquisition or the date of
completion of such construction or improvement; provided, however,
that the principal amount of any Indebtedness incurred pursuant to
this clause (xi) shall not exceed $3,000,000 at any time outstanding.
Notwithstanding anything to the contrary contained in this definition,
any Indebtedness permitted hereunder shall be permitted to the extent
and only to the extent it is also permitted under the terms of the
Credit Agreement and the Indenture.
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"Permitted Investments" means (i) Investments by the Company
or any Subsidiary of the Company to acquire the stock or assets of any
Person (or Acquired Indebtedness acquired in connection with a
transaction in which such Person becomes a Subsidiary of the Company)
engaged in the broadcast business or businesses reasonably related
thereto; provided, however, that if any such Investment or series of
related Investments involves an Investment by the Company in excess of
$5,000,000, the Company is able, at the time of such investment and
immediately after giving effect thereto, to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 6.11), (ii) Investments received by the
Company or its Subsidiaries as consideration for a sale of assets,
(iii) Investments by the Company or any Wholly Owned Subsidiary of the
Company in any Wholly Owned Subsidiary of the Company (whether
existing on the Closing Date or created thereafter) or any Person that
after such Investments, and as a result thereof, becomes a Wholly
Owned Subsidiary of the Company and Investments in the Company by any
Wholly Owned Subsidiary of the Company, (iv) Investments in cash and
Cash Equivalents, (v) Investments in securities of trade creditors,
wholesalers or customers received pursuant to any plan of
reorganization or similar arrangement, (vi) loans or advances to
employees of the Company or any Subsidiary thereof for purposes of
purchasing the Company's Capital Stock and other loans and advances to
employees made in the ordinary course of business consistent with past
practices of the Company or such Subsidiary, and (vii) additional
Investments in an aggregate amount not to exceed $1,000,000 at any
time outstanding. Notwithstanding anything to the contrary contained
in this definition, any Investment permitted hereunder shall be
permitted to the extent and only to the extent it is also permitted
under the terms of the Credit Agreement and the Indenture.
"Person" means shall mean any individual, corporation,
company, limited liability company, voluntary association,
partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision
thereof, or any other form of entity.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of
such Person with respect to dividends or redemptions or upon
liquidation.
"Preferred Stock Series A" means the 14% Redeemable Preferred
Stock of STC, par value $.01.
"Preferred Stock Series B" means the Preferred Stock, Series
B of STC, par value $.01.
"Productive Assets" means assets of a kind used or usable by
the Company and its Subsidiaries in broadcast businesses or businesses
reasonably related thereto, and specifically includes assets acquired
through Asset Acquisitions.
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"pro forma" means, unless otherwise provided herein, with
respect to any calculation made or required to be made pursuant to the
terms of this Agreement, a calculation in accordance with Article II
of Regulation S-X promulgated under the Securities Act.
"Purchasers" has the meaning provided therefor in the
introductory paragraph.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Refinancing Indebtedness" means any refinancing by the
Company or its Subsidiaries of Indebtedness of the Company or any of
its Subsidiaries incurred in accordance with Section 6.11 (other than
pursuant to clause (iii) or (iv) of the definition of Permitted
Indebtedness) that does not (i) result in an increase in the aggregate
principal amount of Indebtedness (such principal amount to include,
for purposes of this definition, any premiums, penalties or accrued
interest paid with the proceeds of the Refinancing Indebtedness) of
such Person or (ii) create Indebtedness with (A) a Weighted Average
Life to Maturity that is less than the Weighted Average Life to
Maturity of the Indebtedness being refinanced or (B) a final maturity
earlier than the final maturity of the Indebtedness being refinanced.
"Representative" has the meaning provided therefor in Section
3.03(a)(i).
"Restricted Payment" means (i) the declaration or payment of
any dividend or the making of any other distribution (other than
dividends or distributions payable in Qualified Capital Stock or in
options, rights or warrants to acquire Qualified Capital Stock) on
shares of the Company's or STC's Capital Stock, (ii) the purchase,
redemption, retirement or other acquisition for value of any Capital
Stock of the Company or STC, or any warrants, rights or options to
acquire shares of Capital Stock of the Company or STC, other than
through the exchange of such Capital Stock or any warrants, rights or
options to acquire shares of any class of such Capital Stock for
Qualified Capital Stock or warrants, rights or options to acquire
Qualified Capital Stock, (iii) the making of any principal payment on,
or the purchase, defeasance, redemption, prepayment, decrease or other
acquisition or retirement for value, prior to any scheduled final
maturity, scheduled repayment or scheduled sinking fund payment, of,
any Indebtedness of the Company or its Subsidiaries that is
subordinated or junior in right of payment to the STC Senior
Subordinated Notes or (iv) the making of any Investment (other than a
Permitted Investment).
"SAC" means Smith Acquisition Company, a Delaware
corporation.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a
Subsidiary transfers such property to a Person and the Company or a
Subsidiary leases it from such Person.
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"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder.
"Senior Indebtedness" means, with respect to any Person, (i)
all Indebtedness of such Person outstanding under the Credit Agreement
and all Interest Swap Obligations with respect thereto, (ii) any other
Indebtedness of such Person permitted to be issued under the terms of
this Agreement, provided, however, that Senior Indebtedness shall not
include any Indebtedness which by the terms of the instrument creating
or evidencing the same is on parity with or is subordinated or junior
in right of payment in any respect to any other Indebtedness such
Person or its Subsidiaries or Affiliates and (iii) all obligations
with respect to the foregoing. Notwithstanding anything to the
contrary contained herein, Senior Indebtedness will not include (i)
any liability for federal, state, local, foreign or other taxes, (ii)
any Indebtedness of any such Person to any of its Subsidiaries or
other Affiliates, (iii) any accounts payable or trade liabilities
arising in the ordinary course of business (including guarantees
thereof or instruments evidencing such liabilities), (iv) any
Indebtedness that is incurred in violation of the terms of this
Agreement, (v) Indebtedness of the Person to any shareholder of such
Person, (vi) Indebtedness to, or guaranteed by the Person or any of
its Subsidiaries for the benefit of, any director, officer or employee
of the Person or any Subsidiary of the Person (including, without
limitation, amounts owed for compensation), (vii) Capital Stock of
such Person and Indebtedness represented by Disqualified Capital
Stock, (viii) Indebtedness which, when incurred and without respect to
any election under Section 1111(b) of Title 11, United States Code, is
without recourse to such Person and (ix) any Indebtedness or
obligation which is subordinated in right of payment to any other
Indebtedness or obligation of such Person.
"Significant Subsidiary" means for any Person each Subsidiary
of such Person which (i) for the most recent fiscal year of such
Person accounted for more than 5% of the consolidated net income of
such Person or (ii) as at the end of such fiscal year, was the owner
of more than 5% of the consolidated assets of such Person.
"STC" means STC Broadcasting, Inc., a Delaware corporation.
"STC Senior Subordinated Notes" means STC's 11% Senior
Subordinated Notes due 2007.
"Subsidiary" with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a
majority of the votes entitled to be cast in the election of directors
under ordinary circumstances shall at the time be owned, directly or
indirectly, through one or more intermediaries, by such Person or (ii)
any other Person of which at least a majority of the voting interest
under ordinary circumstances is at the time, directly or indirectly,
through one or more intermediaries, owned by such Person; provided,
however, that notwithstanding the foregoing, SAC shall be deemed to be
a "Subsidiary" of the Company. Notwithstanding anything in this
Agreement to the contrary, all references to the Company and its
consolidated Subsidiaries or to financial information prepared on a
consolidated basis in accordance with GAAP shall be deemed
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to include the Company and its Subsidiaries as to which financial
statements are prepared on a combined basis in accordance with GAAP
and to financial information prepared on such a combined basis.
Notwithstanding anything in this Agreement to the contrary, an
Unrestricted Subsidiary shall not be deemed to be a Subsidiary for
purposes of this Agreement.
"Taxes" has the meaning provided therefor in Section 2.11(a).
"Unrestricted Subsidiary" means a Subsidiary of the Company
created after the Closing Date and so designated by a resolution
adopted by the Board of Directors of the Company; provided, however,
that (a) neither the Company nor any of its other Subsidiaries (other
than Unrestricted Subsidiaries) (1) provides any credit support for
any Indebtedness of such Subsidiary (including any undertaking,
agreement or instrument evidencing such Indebtedness) or (2) is
directly or indirectly liable for any Indebtedness of such Subsidiary
and (b) at the time of designation of such Subsidiary, such Subsidiary
has no property or assets (other than de minimis assets resulting from
the initial capitalization of such Subsidiary). The Board of Directors
may designate any Unrestricted Subsidiary to be a Subsidiary;
provided, however, that immediately after giving effect to such
designation (x) the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with
Section 6.11 hereof and (y) no Default or Event of Default shall have
occurred and be continuing.
"Weighted Average Life to Maturity" means, when applied to
any Indebtedness at any date, the number of years obtained by dividing
(a) the then outstanding aggregate principal amount of such
Indebtedness into (b) the total of the product obtained by multiplying
(i) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including
payment at final maturity, in respect thereof, by (ii) the number of
years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" of any Person means any Subsidiary
of such Person of which all the outstanding voting securities (other
than directors' qualifying shares) which normally have the right to
vote in the election of directors are owned by such Person or any
Wholly Owned Subsidiary of such Person; provided, however, that
"Wholly Owned Subsidiary" shall also include any Subsidiary of which
in excess of 95% of the common equity securities are owned by the
Company or another Wholly Owned Subsidiary and which is organized for
the purpose of facilitating the acquisition of any broadcasting
business that, but for the formation of such Person, the Company and
its Restricted Subsidiaries could not acquire under applicable laws
related to the ownership of broadcast businesses.
Section 1.02. Interpretation. In this Agreement, unless the
context otherwise requires:
(a) headings and underlinings are for convenience only and do
not affect the interpretation of this Agreement;
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(b) words importing the singular include the plural and vice
versa, and the word "including" shall mean "including, without
limitation" unless the context otherwise requires;
(c) an expression importing a natural Person includes any
company, partnership, trust, joint venture, association, corporation
or other body corporate and any Governmental Authority or agency;
(d) a reference to a Section, party, Exhibit, Annex or
Schedule is a reference to that Section of, or that party, Exhibit,
Annex or Schedule to, this Agreement;
(e) a reference to a document includes an amendment or
supplement to, or replacement or novation of, that document but
disregarding any amendment, supplement, replacement or novation made
in breach of this Agreement; and
(f) a reference to a party to any document includes that
party's successors and permitted assigns.
Section 1.03. Business Day Adjustment. Where the day on or by
which a payment is due to be made is not a Business Day, that payment shall be
done on or by the next succeeding Business Day.
ARTICLE II
PURCHASE OF NOTES
Section 2.01. Purchase of Notes and Warrants.
(a) The Company agrees to sell and, subject to the terms and
conditions set forth herein and in reliance on the representations and
warranties of the Company contained or incorporated herein, the
Purchasers agrees to purchase, the Notes and the Warrants for an
aggregate purchase price of $25,000,000 for the Notes and the
Warrants.
(b) On or before the Closing Date, the Company will have
authorized the issuance and sale to the Purchasers, in the respective
amounts set forth on Schedule 2.01, of $25,000,000 aggregate principal
amount of its Senior Notes due December 29, 2008 (the "Notes"), to be
substantially in the form attached hereto as Exhibit A.
(c) On or before the Closing Date, the Company will have
authorized the issuance and sale to the Purchasers, in the respective
amounts set forth on Schedule 2.01, of Stock Purchase Warrants of the
Company (the "Warrants"), to be substantially in the form attached
hereto as Exhibit B.
(d) The Notes and the Warrants shall include such notations,
legends or endorsements set forth thereon or required by law. The
Notes will be in the principal amount of $1,000,000 (except in the
case of any redemption following which the aggregate principal amount
remaining is less than $1,000,000) or integral multiples of
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$1,000,000 in excess thereof. Each Note shall be dated the date of its
issuance. The aggregate principal amount of the Notes outstanding at
any one time may not exceed $25,000,000, except to the extent interest
is added to the principal of any Note in accordance with the
provisions thereof. The terms and provisions contained in the Notes
shall constitute, and are hereby expressly made, a part of this
Agreement and, to the extent applicable, the Company, by its execution
and delivery of this agreement, expressly agrees to such terms and
provisions and to be bound thereby.
(e) On or before thirty (30) days after the Closing Date, the
Company and the Purchasers shall endeavor in good faith to allocate
valuations for the purchase price of the Notes and the Warrants in
accordance with the rules and regulations of the Internal Revenue
Service. The Company and the Purchasers hereby agree that all tax
returns filed by the Company and the Purchasers shall be consistent in
all material respects with such allocations, including for purposes of
Section 1271 et al. of the Internal Revenue Code of 1986, as amended.
Section 2.02. Closing. The closing of the purchase and sale
of the Notes (the "Closing") shall take place upon the satisfaction or waiver
of the conditions set forth in Article V hereof or such date and time as shall
be mutually agreed to by the parties hereto (the "Closing Date") at the offices
of Weil, Gotshal & Manges LLP, 100 Crescent Court, Suite 1300, Dallas, Texas,
or such other place as shall be mutually agreed to by the parties hereto. On
the Closing Date, the Company will deliver to the Purchasers the Notes payable
to the Purchaser against delivery by the Purchaser of the purchase price
therefor by wire transfer of funds to the account of the Company.
Section 2.03. Mandatory Redemption. Upon the occurrence of a
Change of Control, the Purchaser, by written notice to the Company within
thirty (30) days of the occurrence thereof, may require the Company to redeem
all or a portion of the Notes for a price equal to the outstanding principal
amount thereof, together with a payment of all accrued and unpaid interest on
the amount being prepaid through the date of prepayment. the Company shall give
the Purchaser written notice of the occurrence of a Change of Control within
ten (10) days after the occurrence thereof.
Section 2.04. Use of Proceeds. The Company shall use the
proceeds of the purchase price hereunder to purchase $25,000,000 aggregate
liquidation value of Preferred Stock Series B.
Section 2.05. Interest on the Notes.
(a) The Company shall pay interest to the Purchasers,
quarterly in arrears on the last day of each March, June, September
and December, commencing on March 31, 2000 (each, an "Interest Payment
Date"), at a rate equal to fourteen percent (14.00%) per annum, based
on a year of 360 days for the actual number of days elapsed, and based
on the amounts outstanding from time to time under the Notes;
provided, however, that on any Interest Payment Date prior to March
31, 2002, in lieu of the payment in whole of accrued and unpaid
interest in cash, such interest shall be accrued
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(in which case, interest shall also be payable on any accrued interest
until paid) and added to the principal amount then outstanding on the
Notes.
(b) If any payment on the Notes becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable
rate during such extension.
(c) So long as any Event of Default shall have occurred and
be continuing, the interest rate applicable to the Notes shall be
increased by 2% per annum above the rate otherwise applicable.
(d) Notwithstanding anything to the contrary set forth in
this Section 2.05, if at any time until payment in full of the Notes,
the interest rate payable thereon exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the "Maximum
Lawful Rate"), then in such event and so long as the Maximum Lawful
Rate would be so exceeded, the rate of interest payable on the Notes
shall be equal to the Maximum Lawful Rate; provided, however, that if
at any time thereafter the interest rate payable thereon is less than
the Maximum Lawful Rate, the Company shall continue to pay interest
thereunder at the Maximum Lawful Rate until such time as the total
interest received by the Purchaser is equal to the total interest
which it would have received had the interest rate on the Notes been
(but for the operation of this paragraph) the interest rate payable
since the Closing Date. Thereafter, the interest rate payable shall be
the stated interest rate unless and until such rate again exceeds the
Maximum Lawful Rate, in which event this paragraph shall again apply.
In no event shall the total interest received by the Purchaser
pursuant to the terms hereof exceed the amount which it could lawfully
have received had the interest due hereunder been calculated for the
full term hereof at the Maximum Lawful Rate. In the event the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest
shall be calculated at a daily rate equal to the Maximum Lawful Rate
divided by the number of days in the year in which such calculation is
made. In the event that a court of competent jurisdiction,
notwithstanding the provisions of this Section 2.05(d), shall make a
final determination that the Purchaser has received interest hereunder
or under any of the Loan Documents in excess of the Maximum Lawful
Rate, the Purchaser shall, to the extent permitted by applicable law,
promptly apply such excess first to any interest due and not yet paid
under the Notes, then to the outstanding principal of the Notes, then
to other unpaid Obligations and thereafter shall refund any excess to
the Company or as a court of competent jurisdiction may otherwise
order.
Section 2.06. Receipt of Payments. The Company shall make
each payment under the Notes not later than 2:00 P.M. (New York City time) on
the day when due in Dollars in immediately available funds to the applicable
Purchaser's depository bank in the United States as designated by such
Purchaser from time to time for deposit in such Purchaser's depositary account.
For purposes only of computing interest under the Notes, all payments shall be
applied
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by the Purchaser to the Notes on the day payment is credited by the Purchaser's
depository bank to the Purchaser's account in immediately available funds.
Section 2.07. Application of Payments. The Company
irrevocably waives the right to direct the application of any and all payments
at any time or times hereafter received by the Purchaser from or on behalf of
the Company pursuant to the terms of this Agreement, and the Company
irrevocably agrees that the Purchaser shall have the continuing exclusive right
to apply any and all such payments against the then due and payable Obligations
of the Company and in repayment of the Notes as it may deem advisable. In the
absence of a specific determination by the Purchaser with respect thereto, the
same shall be applied in the following order: (i) then due and payable fees and
expenses; (ii) then due and payable interest payments on the Notes; and (iii)
then due and payable principal payments on the Notes.
Section 2.08. Sharing of Payments. If any holder of a Note or
a portion thereof shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) on account of the
Notes held by it in excess of its ratable share of payments on account of the
Notes held by all holders thereof, such holder shall forthwith purchase from
each other holder such participations in the Notes held by it as shall be
necessary to cause such purchasing holder to share the excess payment ratably
with each other holder; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing holder, such
purchase shall be rescinded and such holder shall repay to the purchasing
holder the purchase price to the extent of such recovery together with an
amount equal to such holder's ratable share (according to the proportion of (i)
the amount of such holder's required repayment to (ii) the total amount so
recovered from the purchasing holder) of any interest or other amount paid or
payable by the purchasing holder in respect of the total amount so recovered.
The Company agrees that any holder so purchasing a participation from another
holder pursuant to this Section 2.08 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such holder were the direct
creditor of the Company in the amount of such participation. The Company
further agrees to make all payments on the Notes to all holders thereof on a
pro rata basis, based on the principal amount of the Notes held by each.
Section 2.09. Indemnity.
(a) The Company shall indemnify and hold each Purchaser and
each of its officers, directors and Affiliates harmless from and
against any and all suits, actions, proceedings, claims, damages,
losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by such Purchaser or
such other indemnified person as the result of such Purchaser having
entered into this Agreement or any of the other Loan Documents or
purchased the Notes hereunder or relating to or arising out of any
untrue representation, breach of warranty or failure to perform any
covenants or agreement by the Company contained herein or in any Loan
Document or otherwise relating to or arising out of the transactions
contemplated hereby; provided, however, that the Company shall not be
liable for such indemnification to such indemnified Person to the
extent that any such suit, action, proceeding, claim, damage,
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loss, liability or expense results from such indemnified Person's
gross negligence or willful misconduct.
(b) Each Purchaser shall indemnify and hold the Company and
each of its officers, directors and Affiliates harmless from and
against any and all suits, actions, proceedings, claims, damages,
losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by the Company or such
other indemnified person as the result of the Company having entered
into this Agreement or any of the other Loan Documents or issued the
Notes hereunder or relating to or arising out of any untrue
representation, breach of warranty or failure to perform any covenants
or agreement by such Purchaser contained herein or in any Loan
Document or otherwise relating to or arising out of the transactions
contemplated hereby; provided, however, that no Purchaser shall be
liable for such indemnification to such indemnified Person to the
extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results from such indemnified Person's gross
negligence or willful misconduct.
Section 2.10. Access. Each Purchaser and any of its officers,
employees and/or agents shall have the right, exercisable as frequently as it
determines to be appropriate, during normal business hours, to visit and
inspect the properties and facilities of the Company and its Subsidiaries and
to inspect, audit and make extracts from all of the Company's and its
Subsidiaries' records, files, corporate books and books of account and to
discuss the affairs, finances and accounts of the Company and its Subsidiaries
with the principal officers of the Company and its Subsidiaries, all at such
reasonable times, upon reasonable notice and as often as the Purchaser may
reasonably request. The Company shall deliver any document or instrument
reasonably necessary for such Purchaser, as it may request, to obtain records
from any service bureau maintaining records for the Company or its
Subsidiaries. The Company shall instruct its and its Subsidiaries' banking and
other financial institutions to make available to each Purchaser such
information and records as it may reasonably request.
Section 2.11. Taxes.
(a) Any and all payments by the Company hereunder or under
the Notes shall be made, in accordance with this Section 2.11, free
and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on or
measured by the net income of any Purchaser, by the jurisdiction under
the laws of which it is organized or any political subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Company shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under the Notes to
any Purchaser, (i) the sum payable thereunder shall be increased as
may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.11) each Purchaser receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Company
shall make such
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deductions, and (iii) the Company shall pay the full amount deducted
to the relevant taxing or other authority in accordance with
applicable law.
(b) In addition, the Company agrees to pay any present or
future stamp or documentary taxes or any other sales, transfer,
exercise, mortgage recording or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Notes
or from the execution, sale, transfer, delivery or registration of, or
otherwise with respect to, any of the Loan Documents ("Other Taxes").
(c) The Company shall indemnify each Purchaser for the full
amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section
2.11) paid by such Purchaser and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within thirty days from
the date the applicable Purchaser makes written demand therefor.
(d) Within thirty days after the date of any payment of
Taxes, the Company shall furnish to the applicable Purchaser the
original or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
of the Company hereunder, the agreements and obligations of the
Company contained in this Section 2.11 shall survive the payment in
full of the Notes.
ARTICLE III
ISSUE OF NOTES; PURCHASE AND ISSUANCE OF
NOTES; RIGHTS OF HOLDERS OF NOTES
Section 3.01. Issue of Notes. The Company has authorized the
issuance of up to $25,000,000 in principal amount of the Notes. The Notes will
be offered and issued to the Purchasers without being registered under the
Securities Act.
Section 3.02. Purchase and Issuance of the Notes.
(a) Subject to the terms and conditions herein set forth, the
Company agrees that it will sell to each of the Purchasers, severally
and not jointly, and each of the Purchasers, severally and not
jointly, agrees that it will purchase from the Company at the Closing
the principal amount of the Notes set forth opposite the name of such
Purchaser on Schedule I hereto; provided, however, that all such
issuances of the Notes shall not result in issued Notes in a principal
amount of more than $25,000,000.
(b) Delivery of the Notes to be purchased by the Purchasers
pursuant to this Agreement shall be made at the Closing by the Company
delivering certificates representing the Notes to the Purchasers.
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Section 3.03. Subordination of Liabilities. The Company, for
itself, its successors and assigns, covenants and agrees, and the Purchasers,
by their acceptance of the Notes likewise covenant and agree, that the payment
of the principal of, and interest on, and all other amounts owing in respect
of, the Notes are hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, to the prior payment in full of all Senior
Indebtedness.
(a) Nonpayment.
(i) Upon the maturity of any Senior Indebtedness
(including interest thereon or fees or any other amounts
owing in respect thereof), whether at stated maturity, by
acceleration or otherwise, all principal thereof and premium,
if any, and interest thereon and fees and any other amounts
owing in respect thereof (including interest payable in
respect of any of the foregoing subsequent to the
commencement of any proceeding against or with respect to the
Company under the Bankruptcy Code, 11 U.S.C. ss. 101 et.
seq.), in each case to the extent due and owing, shall first
be paid in full, or such payment duly provided for in cash or
in a manner satisfactory to the holder or holders of such
Senior Indebtedness, before any further payment is made on
account of the principal of (including installments thereof),
or interest on, or any amount otherwise owing in respect of,
the Notes.
(ii) In the event that notwithstanding the
provisions of the preceding clause (i), the Company shall
make any payment on account of the principal of, or interest
on, or amounts otherwise owing in respect of, the Notes, any
amounts received in cash in respect thereof shall not be
applied by the holder thereof to such Note but shall be held
by such holder in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of Senior
Indebtedness or their agent, representative or the trustee
under the indenture or other agreement pursuant to which any
instruments evidencing any Senior Indebtedness may have been
issued (each, a "Representative"), as their respective
interests may appear, for application pro rata to the payment
of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in
accordance with the terms of such Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or
for the benefit of the holders of Senior Indebtedness;
provided that, any such payment of the Company shall be
applied solely to Senior Indebtedness of the Company.
(b) Dissolution, Liquidation or Reorganization. Upon any
payment or distribution of assets of the Company (other than payments
consisting of shares of Preferred Stock or nonvoting Capital Stock or
other securities issued by the Company) upon any dissolution, winding
up, liquidation or reorganization of the Company (whether in
bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or otherwise):
(i) the holders of all Senior Indebtedness shall
first be entitled to receive payment in full (or have such
payment duly provided for in cash or in a manner satisfactory
to the holder or holders of such Senior Indebtedness) of the
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principal thereof, premium, if any, and interest (including
post-petition interest) due thereon and fees and any other
amounts owing in respect thereof before the Purchasers are
entitled to receive any payment in cash on account of the
principal of, or interest on, or any other amount owing in
respect of, the Notes;
(ii) any payment or distribution of assets of the
Company of any kind or character, whether in cash, property
or securities to which the Purchasers would be entitled
except for the provisions of this Section 3.03 (other than
payments consisting of shares of Preferred Stock or nonvoting
Capital Stock or other securities issued by the Company),
shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution, whether a trustee
in bankruptcy, a receiver or liquidating trustee or other
trustee or agent, directly to the holders of Senior
Indebtedness, or their Representative, to the extent
necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior
Indebtedness; and
(iii) in the event that, notwithstanding the
foregoing provisions of this Section 3.03, any payment or
distribution of assets of the Company, of any kind or
character, whether in cash, property or securities, shall be
received by a Purchaser on account of principal or interest
on the Notes (other than payments consisting of shares of
Preferred Stock or nonvoting Capital Stock or other
securities issued by the Company) before all Senior
Indebtedness is paid in full, or provision made for its
payment in full satisfactory to the holder or holders of such
Senior Indebtedness, such payment or distribution shall be
received and held in trust for and shall be paid over to the
holders of the Senior Indebtedness, as the case may be,
remaining unpaid or unprovided for or their Representatives,
for application to the payment of such Senior Indebtedness
until all such Senior Indebtedness shall have been paid in
full, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
(c) Obligation Unconditional. Nothing contained in this
Section 3.03 or in the Notes is intended to or shall impair, as
between the Purchasers and the Company, the obligation of the Company,
which is absolute and unconditional, to pay to the Purchasers the
principal of, and interest on, the Notes as and when the same shall
become due and payable in accordance with their terms. In the event
that by virtue of this Section 3.03, any amounts paid or payable to
the Purchasers in respect of the Notes shall instead be paid to the
holders of the Senior Indebtedness, the Purchasers shall be subrogated
to the rights of the holders of such Senior Indebtedness.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations, Warranties and Agreements of
the Company. The Company represents and warrants to, and agrees with, the
several Purchasers that:
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(a) The Company and each of its Subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing, as foreign
corporations in each jurisdiction in which their respective ownership
or lease of property or the conduct of their respective businesses
requires such qualification, and have all power and authority
necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to
so qualify or have such power or authority would not, singularly or in
the aggregate, have a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects
of the Company and its Subsidiaries taken as a whole (a "Material
Adverse Effect").
(b) The authorized capital stock of the Company consists of
1,000,000 shares of common stock, $0.01 par value per share, of which
891,589.16 shares are issued and outstanding; all of the outstanding
shares of capital stock of the Company are duly and validly authorized
and issued and fully paid and nonassessable. All of the outstanding
shares of capital stock of each Subsidiary of the Company (and, in the
case of SAC, 100% of the nonvoting stock) have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of any Lien,
charge, encumbrance, security interest, restriction upon voting
(except for SAC) or transfer or any other claim of any third party
(other than Liens and security interests created pursuant to the
Credit Agreement, the Indenture or applicable law) and restrictions on
transfer imposed by the FCC requirements.
(c) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and the other Loan
Documents and to perform its obligations hereunder and thereunder.
(d) The Loan Documents have been duly authorized, executed
and delivered by the Company and constitute valid and legally binding
agreements of the Company, enforceable against the Company in
accordance with their respective terms, except (i) to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law)
and (ii) to the extent that the enforceability of rights to
indemnification and contribution thereunder may be limited by federal
or state securities laws or regulations or the public policy
underlying such laws or regulations.
(e) The execution, delivery and performance by the Company of
each of the Loan Documents, the issuance, sale and delivery of the
Notes by the Company and compliance by the Company with the terms
thereof and the consummation by the Company and its Subsidiaries of
the transactions contemplated by the Loan Documents do not and will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in
the creation or imposition of any Lien, charge or encumbrance upon any
property or assets of the Company or any of its Subsidiaries pursuant
to, any material indenture, mortgage, deed of trust, loan agreement
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<PAGE> 28
or other material agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound or to which any of the property or assets of the
Company or any of its Subsidiaries is subject, except for any such
conflict, breach, violation, default, Lien, charge or encumbrance that
could not, singly or in the aggregate, reasonably be expected to have
a Material Adverse Effect; nor will such actions result in any
violation of the provisions of the charter or bylaws of the Company or
any of its Subsidiaries; or any statute or any order, rule or
regulation (including the Communications Act of 1934, as amended (the
"Communications Act"), and the rules and regulations of the FCC
thereunder) of any court or arbitrator or governmental agency or body
(including the FCC) having jurisdiction over the Company or any of its
Subsidiaries or any of their properties or assets, except for any such
conflict, breach, violation, default, Lien, charge or encumbrance that
could not, singly or in the aggregate, reasonably be expected to have
a Material Adverse Effect; and no consent, approval, authorization or
order of, or filing or registration with, any such court or arbitrator
or governmental agency or body (including the FCC, the Federal Trade
Commission (the "FTC") and the Department of Justice (the "DOJ")) is
required for the execution, delivery and performance by the Company of
each of the Loan Documents, the issuance, sale and delivery of the
Notes and compliance by the Company with the terms thereof and the
consummation of the transactions contemplated by the Loan Documents,
except for such consents, approvals, authorizations, filings,
registrations or qualifications (i) that have been obtained or made
prior to the Closing Date, and (ii) that from time to time, the
Company or its Subsidiaries may be required to obtain from or make
with the FCC in the ordinary course of business.
(f) The audited financial statements (including the related
notes) for the year ended December 31, 1998 previously delivered to
the Purchasers have been prepared in conformity with generally
accepted accounting principles consistently applied throughout the
periods covered thereby and fairly present in all material respects
the financial condition and the results of operations and cash flows
of the entities purported to be covered thereby for the respective
periods indicated except as otherwise disclosed therein. The unaudited
financial statements for the eleven months ended November 30, 1999
previously delivered to the Purchasers fairly present in all material
respects the financial condition and the results of operations and
cash flows of the entities purported to be covered thereby for the
respective periods indicated except as otherwise disclosed therein.
(g) Except as described on Schedule 4.01(g) hereto, there are
no legal or governmental proceedings (including before or by the FCC,
the FTC or the DOJ) pending to which the Company or any of its
Subsidiaries is a party or of which any property or assets of the
Company or any of its Subsidiaries or affiliates is the subject which,
singularly or in the aggregate, if determined adversely to the Company
or any of its Subsidiaries or affiliates, could reasonably be expected
to have a Material Adverse Effect; and to the best knowledge of the
Company, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
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(h) No injunction, restraining order or order of any nature
by any federal or state court of competent jurisdiction has been
issued with respect to the Company or any of its Subsidiaries which
would prevent or suspend the issuance or sale of the Notes; no action,
suit or proceeding is pending against or, to the best knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries before any court or arbitrator or any governmental
agency, body or official, domestic or foreign, which could reasonably
be expected to interfere with or adversely affect the issuance of the
Notes or in any manner draw into question the validity or
enforceability of any of the Loan Documents or any action taken or to
be taken pursuant thereto.
(i) Neither the Company nor any of its Subsidiaries is (i) in
violation of its charter or bylaws, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which it is a party or by which it
is bound or to which any of its property or assets is subject or (iii)
in violation in any material respect of any applicable law, ordinance,
court decree, governmental rule or regulation (including the
Communications Act and the rules and regulations of the FCC
thereunder) to which it or its property or assets may be subject.
(j) The Company and each of its Subsidiaries possess all
material licenses, orders, certificates, authorizations, approvals and
permits issued by, and have made all declarations and filings with,
the appropriate federal, state or foreign regulatory agencies or
bodies (including the FCC and the DOJ) that are necessary for the
ownership of their respective properties or the conduct of their
respective businesses, except where the failure to possess or make the
same would not, singularly or in the aggregate, have a Material
Adverse Effect, and neither the Company nor any of its Subsidiaries
has received notification of any revocation or modification of any
such license, certificate, authorization or permit that is generally
renewable in the ordinary course or has any reason to believe that any
such license, certificate, authorization or permit will not be renewed
in the ordinary course. The licenses issued with respect to the
Company's and its Subsidiaries' television broadcast stations by the
FCC (the "Licenses") are validly issued and in full force and effect
with no restrictions or qualifications -------- (other than standard
restrictions or qualifications usually on similar licenses) that
would, singly or in the aggregate, have a Material Adverse Effect. No
event has occurred that permits, or with notice or lapse of time or
both would permit, and no legal governmental proceeding has been
instituted or threatened that could cause, the revocation or
termination of any of the Licenses or that might result in any other
impairment or modification of the rights of the Company or any
Subsidiary thereof that in any such case would, singly or in the
aggregate, have a Material Adverse Effect. The Company has no reason
to believe that any License issued by the FCC will not be renewed in
the ordinary course.
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(k) Neither the Company nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended, and the rules and regulations thereunder.
(l) The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(m) The Company and each of its Subsidiaries have insurance
covering their respective properties, operations, personnel and
businesses, which insurance is in amounts and insures against such
losses and risks as are in the Company's opinion adequate to protect
the Company and its Subsidiaries and their respective businesses.
Neither the Company nor any of its Subsidiaries has received notice
from any insurer or agent of such insurer that capital improvements or
other expenditures are required or necessary to be made in order to
continue such insurance.
(n) The Company and each of its Subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures)
necessary for the conduct of their respective businesses; and the
conduct of their respective businesses does not conflict in any
material respect with, and the Company and its Subsidiaries have not
received any notice of any claim of conflict with, any such rights of
others.
(o) The Company and each of its Subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are
material to the business of the Company and its Subsidiaries, taken as
a whole, in each case free and clear of all Liens, encumbrances and
defects other than (i) Liens and encumbrances granted pursuant to the
Credit Agreement and (ii) Liens, encumbrances and defects that do not
materially interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries or could not reasonably
be expected to have a Material Adverse Effect.
(p) No labor disturbance by or dispute with the employees of
the Company or any of its Subsidiaries exists or, to the best
knowledge of the Company, is imminent, which could reasonably be
expected to have a Material Adverse Effect.
(q) There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission or other release or
threatened release of any kind of toxic or
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other wastes or other hazardous substances by, due to or caused by the
Company or any of its Subsidiaries (or, to the best knowledge of the
Company, any other entity (including any predecessor) for whose acts
or omissions the Company or any of its Subsidiaries is or could
reasonably be expected to be liable) upon any property now or
previously owned or leased by the Company or any of its Subsidiaries,
or upon any other property, in violation of any statute or any
ordinance, rule, regulation, order, judgment, decree or permit or
which would, under any statute or any ordinance, rule (including rule
of common law), regulation, order, judgment, decree or permit, give
rise to any liability except for any violation or liability which
would not have, singularly or in the aggregate with all such
violations and liabilities, a Material Adverse Effect; and there has
been no disposal, discharge, emission or other release of any kind
onto such property or into the environment surrounding such property
of any toxic or other wastes or other hazardous substances with
respect to which the Company has knowledge, except for any such
disposal, discharge, emission or other release of any kind which would
not have, singularly or in the aggregate with all such disposal,
discharge, emission and other release, a Material Adverse Effect.
(r) On the Closing Date the Company and its Subsidiaries,
taken as a whole (after giving effect to the issuance of the Notes),
will be Solvent. As used in this paragraph, the term "Solvent" means,
with respect to a particular date, that on such date (i) the aggregate
fair value (or present fair saleable value) of the assets of the
Company and its Subsidiaries, taken as a whole, is not less than their
total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured in the normal course
of business and (ii) the Company and its Subsidiaries, taken as a
whole, do not have an unreasonably small amount of capital with which
to conduct their businesses. In computing the amount of such
contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in the light of all
the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured
liability.
(s) Except as described on Schedule 4.01(s) hereto, there are
no outstanding subscriptions, rights, warrants, calls or options to
acquire, or instruments convertible into or exchangeable for, or
agreements or understandings with respect to the sale or issuance of,
any shares of capital stock of or other equity or other ownership
interest in the Company.
(t) None of the proceeds of the issuance of the Notes will be
used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry
any margin security or for any other purpose which might cause any of
the Notes to be considered a "purpose credit" within the meanings of
Regulation T, U or X of the Board of Governors of the Federal Reserve
System.
(u) Since November 30, 1999, (i) there has been no material
adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, management or business
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prospects of the Company nor any of its Subsidiaries, whether or not
arising in the ordinary course of business, (ii) neither the Company
nor any of its Subsidiaries has incurred any liability or obligation,
direct or contingent, other than in the ordinary course of business,
which would, singly or in the aggregate, have a Material Adverse
Effect, (iii) neither the Company nor any of its Subsidiaries has
entered into any material transaction other than in the ordinary
course of business and (iv) there has not been any change in the
capital stock or long-term debt of the Company or any of its
Subsidiaries, or any dividend or distribution of any kind declared,
paid or made by the Company or any of its Subsidiaries on any class of
its capital stock (other than dividends declared in respect of
Preferred Stock, Series A).
Section 4.02. Representations and Warranties of the
Purchasers. Each Purchaser makes the following representations and warranties
to the Company, each and all of which shall survive the execution and delivery
of this Agreement and the Closing hereunder:
(a) Each Purchaser is purchasing the Notes for its own
account, for investment purposes and not with a view to the
distribution thereof. No Purchaser will, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of any Note (or solicit any offers to buy, purchase, or
otherwise acquire any Note), except in compliance with the Securities
Act.
(b) Each Purchaser is an "accredited investor" (as that term
is defined in Rule 501 of Regulation D under the Securities Act) and
by reason of its business and financial experience, it has such
knowledge, sophistication and experience in business and financial
matters as to be capable of evaluating the merits and risks of the
prospective investment, is able to bear the economic risk of such
investment and is able to afford a complete loss of such investment.
(c) Each Purchaser is duly organized, validly existing and in
good standing under the laws of the state of its organization.
(d) The execution, delivery and performance by each Purchaser
of this Agreement and the other Loan Documents to be executed by it:
(i) are within such Purchaser's legal power; (ii) have been duly
authorized by all necessary legal action; (iii) are not in
contravention of any provision of such Purchaser's organizational
documents; and (iv) will not violate any law or regulation, or any
order or decree of any court or governmental instrumentality binding
on such Purchaser. This Agreement and the other Loan Documents to
which such Purchaser is a party have each been duly executed and
delivered by such Purchaser and constitute the legal, valid and
binding obligations of such Purchaser, enforceable against it in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
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ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
Section 5.01. Conditions Precedent to the Closing. The
obligation of the Purchasers to purchase the Notes to be purchased by them
hereunder on the Closing Date is subject to the satisfaction of the following
conditions:
(a) The representations and warranties made by the Company
herein shall be true and correct in all material respects on and as of
the Closing Date and the Company shall have complied in all material
respects with all agreements as set forth in or contemplated hereunder
and in the other Loan Documents, required to be performed by it at or
prior to the Closing.
(b) As of the Closing Date, and after giving effect to the
consummation of the transactions contemplated by this Agreement, there
shall exist no Default or Event of Default.
(c) As to the Purchasers, the purchase of and payment for the
Notes by the Purchasers hereunder (i) shall not be prohibited or
enjoined (temporarily or permanently) by any applicable law or
governmental regulation (including Regulation T, U or X of the Board
of Governors of the Federal Reserve System), (ii) shall not subject
the Purchasers to any penalty or other onerous condition under or
pursuant to any applicable law or governmental regulation (provided,
however, that such regulation, law or onerous condition was not in
effect at the date of this Agreement), and (iii) shall be permitted by
the laws and regulations of the jurisdictions to which they are
subject.
(d) At the Closing, the Purchasers shall have received a
certificate, dated the Closing Date, from the Company stating that the
conditions specified in Sections 5.01(a), through (c) have been
satisfied or duly waived as of the Closing Date.
(e) Each of the Loan Documents, except for this Agreement
shall be substantially in the form attached hereto and the Loan
Documents shall have been executed and delivered by all the respective
parties thereto and shall be in full force and effect.
(f) All proceedings taken in connection with the issuance of
the Notes and the transactions contemplated by this Agreement, the
other Loan Documents and all documents and papers relating thereto
shall be reasonably satisfactory to the Purchasers and their counsel.
The Purchasers and their counsel shall have received copies of such
papers and documents as they may reasonably request in connection
therewith, all in form and substance reasonably satisfactory to them.
(g) All reasonable costs and fees due and owing and expenses
(including reasonable legal fees and expenses) required to be paid to
or on behalf of the Purchasers on or prior to the Closing Date
pursuant to this Agreement and all fees and expenses
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<PAGE> 34
payable to the Purchasers' counsel (in each case upon presentation of
reasonable documentation therefor) shall have been paid.
(h) On or before the Closing Date, the Purchasers and their
counsel shall have received such further documents, opinions,
certificates and schedules or other instruments relating to the
business, corporate, legal and financial affairs of the Company and
its Subsidiaries as they may reasonably request.
(i) There shall not have occurred and be continuing (i) any
general suspension of, or limitation on times or prices for, trading
in securities on the New York Stock Exchange or American Stock
Exchange or in the over-the-counter market in the United States or the
establishment of minimum or maximum prices on any such exchange; (ii)
a declaration of a banking moratorium or any suspension of payments in
respect of the banks in the United States or the State of New York; or
(iii) either (A) an outbreak or escalation of hostilities between the
United States and any foreign power, (B) an outbreak or escalation of
any insurrection or other armed conflict involving the United States
or any other national or international calamity or emergency, or (C)
any material disruption of or material adverse change in financial,
banking or capital market (including high-yield market) conditions
(collectively, a "Market Effect").
(j) There shall not have occurred a material adverse change
or any development involving a prospective material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs, management or business prospects of the Company and its
Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business (collectively, a "Material Adverse Change").
(k) The Credit Agreement shall have been amended to permit
the issuance of the Notes, which such amendment shall be in form and
substance satisfactory to the Purchasers.
Section 5.02. Conditions Precedent to Obligations of the
Company. The obligations of the Company to issue the Notes pursuant to this
Agreement are subject, at the Closing to the satisfaction of the following
conditions:
(a) The representations and warranties made by the Purchasers
herein shall be true and correct in all material respects on and as of
the Closing Date.
(b) The issuance of the Notes by the Company shall not be
enjoined under the laws of any jurisdiction to which the Company is
subject (temporarily or permanently).
ARTICLE VI
COVENANTS
The Company covenants and agrees with the Purchasers that:
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Section 6.01. Notices of Material Events. The Company will
furnish to the Purchasers prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Company or STC that, if adversely determined,
could reasonably be expected to result in a Material Adverse Effect;
and
(c) any other development that results in, or could
reasonably be expected to result in, a Material Adverse Effect.
Section 6.02. Compliance with Laws. The Company will, and
will cause its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to it or them, or to its or
their property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Section 6.03. Use of Proceeds. The proceeds of the issuance
of the Notes will be used only for the purposes contemplated in Section 2.04.
No part of the proceeds of the issuance of the Notes will be used, whether
directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board of Governors of the Federal Reserve System of the
United States, including Regulations T, U and X.
Section 6.04. Limitation on Restricted Payments. The Company
shall not and shall not permit any Subsidiary of the Company to make any
Restricted Payments if at the time of such Restricted Payment and immediately
after giving effect thereto:
(a) a Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Restricted
Payment; or
(b) the Company is not able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with
Section 6.11 hereof.
Section 6.05. Corporate Existence. The Company shall do or
cause to be done all things reasonably necessary to preserve and keep in full
force and effect its corporate or other existence and the corporate or other
existence of each of its Significant Subsidiaries in accordance with the
respective organizational documents of each such Significant Subsidiary and the
material rights (charter and statutory) and franchises of the Company and each
such Significant Subsidiary; provided, however, that the Company shall not be
required to preserve, with respect to itself, any material right or franchise
and, with respect to any of its Significant Subsidiaries, any such existence,
material right or franchise, if the Board of Directors of the Company or such
Significant Subsidiary, as the case may be, shall determine that the
preservation thereof is no longer reasonably necessary or desirable in the
conduct of the business of the Company or any such Significant Subsidiary.
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Section 6.06. Payment of Taxes and Other Claims. The Company
shall pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all material taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and additions to
taxes) levied or imposed upon it or any of its Subsidiaries or properties of it
or any of its Subsidiaries and (ii) all material lawful claims for labor,
materials, supplies and services that, if unpaid, might by law become a Lien
upon the property of it or any of its Subsidiaries; provided, however, that
there shall not be required to be paid or discharged any such tax, assessment
or charge, the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings and for which adequate provision has been
made or where the failure to effect such payment or discharge is not adverse in
any material respect to the holders of Notes.
Section 6.07. Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each of its
Subsidiaries to, maintain its material properties in normal condition
(subject to ordinary wear and tear) and make all reasonably necessary
repairs, renewals or replacements thereto as in the judgment of the
Company may be reasonably necessary to the conduct of the business of
the Company and its Subsidiaries; provided, however, that nothing in
this Section 6.07 shall prevent the Company or any of its Subsidiaries
from discontinuing the operation and maintenance of any of its
properties, if such properties are, in the reasonable and good faith
judgment of the Board of Directors of the Company or the Subsidiary,
as the case may be, no longer reasonably necessary in the conduct of
their respective businesses.
(b) The Company shall provide or cause to be provided, for
itself and each of its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the
reasonable, good faith opinion of the Company, are reasonably adequate
and appropriate for the conduct of the business of the Company and
such Subsidiaries.
Section 6.08. Compliance with Laws. The Company shall comply,
and shall cause each of its Subsidiaries to comply, with all applicable
statutes, rules, regulations, orders and restrictions of the United States of
America, all states and municipalities thereof, and of any governmental
department, commission, board, regulatory authority, bureau, agency and
instrumentality of the foregoing, in respect of the conduct of their respective
businesses and the ownership of their respective properties, except for such
noncompliances as are not in the aggregate reasonably likely to have a material
adverse effect on the financial condition or results of operations of the
Company and its Subsidiaries taken as a whole.
Section 6.09. Reports. So long as any of the Notes are
outstanding, the Company will provide to the holders of Notes copies of the
annual reports and of the information, documents and other reports that the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act.
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Section 6.10. Limitations on Transactions with Affiliates.
Neither the Company nor any of its Subsidiaries will, directly or indirectly,
enter into or permit to exist any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with or for
the benefit of any of its Affiliates (other than transactions between the
Company and a Wholly Owned Subsidiary of the Company or among Wholly Owned
Subsidiaries of the Company) (an "Affiliate Transaction"), other than Affiliate
Transactions on terms that are no less favorable than those that might
reasonably have been obtained in a comparable transaction on an arm's-length
basis from a person that is not an Affiliate; provided, however, that for a
transaction or series of related transactions involving value of $1,000,000 or
more, such determination will be made in good faith by a majority of members of
the Board of Directors of the Company and by a majority of the disinterested
members of the Board of Directors of the Company, if any; provided, further,
that for a transaction or series of related transactions involving value of
$5,000,000 or more, the Board of Directors of the Company has received an
opinion from a nationally recognized investment banking firm that such
Affiliate Transaction is fair, from a financial point of view, to the Company
or such Subsidiary. The foregoing restrictions will not apply to (1) reasonable
and customary directors' fees, indemnification and similar arrangements and
payments thereunder, (2) any obligations of the Company or its Subsidiaries
under the Financial Monitoring and Oversight Agreements or any employment
agreement, noncompetition or confidentiality agreement with any officer of the
Company or its Subsidiaries (provided that each amendment of any of the
foregoing agreements shall be subject to the limitations of this covenant), (3)
reasonable and customary investment banking, financial advisory, commercial
banking and similar fees and expenses paid to any of the Purchasers and their
Affiliates, (4) any Restricted Payment permitted to be made pursuant to the
covenant described under Section 6.04, (5) any issuance of securities or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
finding of, employment arrangements, stock options and stock ownership plans
approved by the board of directors of the Company or its Subsidiaries, (6)
loans or advances to employees in the ordinary course of business of the
Company or any of its Subsidiaries consistent with past practices, and (7) the
issuance of Capital Stock of the Company or its Subsidiaries (other than
Disqualified Stock).
Section 6.11. Limitation on Incurrence of Additional
Indebtedness and Issuance of Disqualified Capital Stock. The Company will not,
and will not permit any of its Subsidiaries to, directly or indirectly, create,
incur, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur"), any
Indebtedness (other than Permitted Indebtedness) and the Company will not issue
any Disqualified Capital Stock, and its Subsidiaries will not issue any
Preferred Stock (other than the Preferred Stock Series B being issued on the
Closing Date); provided, however, that the Company and its Subsidiaries may
incur Indebtedness or issue shares of such Capital Stock if, in either case,
the Leverage Ratio at the time of incurrence of such Indebtedness or the
issuance of such Capital Stock, as the case may be, after giving pro forma
effect to such incurrence or issuance as of such date and to the use of
proceeds therefrom is less than 7.0 to 1.
Section 6.12. Limitation on Dividend and Other Payment
Restrictions Affecting Subsidiaries. Neither the Company nor any of its
Subsidiaries will, directly or indirectly, create or otherwise cause to permit
to exist or become effective, by operation of the charter of such
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Subsidiary or by reason of any agreement, instrument, judgment, decree, rule,
order, statute or governmental regulation, any encumbrance or restriction on
the ability of any Subsidiary to (a) pay dividends or make any other
distributions on its Capital Stock; (b) make loans or advances or pay any
Indebtedness or other obligation owed to the Company or any of its
Subsidiaries; or (c) transfer any of its property or assets to the Company,
except for such encumbrances or restrictions existing under or by reason of:
(1) applicable law; (2) the Indenture; (3) customary non-assignment provisions
of any lease governing a leasehold interest of the Company or any Subsidiary;
(4) any instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired; (5) agreements existing on the Closing Date (including the Credit
Agreement) as such agreements are from time to time in effect; provided,
however, that any amendments or modifications of such agreements that affect
the encumbrances or restrictions of the types subject to this covenant shall
not result in such encumbrances or restrictions being less favorable to the
Company in any material respect, as determined in good faith by the Board of
Directors of the Company, than the provisions as in effect before giving effect
to the respective amendment or modification; (6) any restriction with respect
to such a Subsidiary imposed pursuant to an agreement entered into for the sale
or disposition of all or substantially all the Capital Stock or assets of such
Subsidiary pending the closing of such sale or disposition; (7) an agreement
effecting a refinancing, replacement or substitution of Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in clause (2), (4) or
(5) above or any other agreement evidencing Indebtedness permitted under the
Indenture; provided, however, that the provisions relating to such encumbrance
or restriction contained in any such refinancing, replacement or substitution
agreement or any such other agreement are no less favorable to the Company in
any material respect as determined in good faith by the Board of Directors of
the Company than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (2), (4) or (5); (8)
restrictions on the transfer of the assets subject to any Lien imposed by the
holder of such Lien; or (9) a licensing agreement to the extent such
restrictions or encumbrances limit the transfer of property subject to such
licensing agreement.
Section 6.13. Limitation on Asset Sales. Neither the Company
nor any of its Subsidiaries will consummate an Asset Sale unless (i) the
Company or the applicable Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by management of the Company or, if such Asset Sale involves consideration in
excess of $2,500,000, by the Board of Directors of the Company, as evidenced by
a duly adopted resolution of such Board of Directors), (ii) at least 75% of the
consideration received by the Company or such Subsidiary, as the case may be,
from such Asset Sale is in the form of cash or Cash Equivalents (other than to
the extent that the Company is exchanging all or substantially all the assets
of one or more broadcast businesses operated by the Company (including by way
of the transfer of capital stock) for all or substantially all the assets
(including by way of the transfer of capital stock) constituting one or more
broadcast businesses operated by another Person, in which event, to such
extent, the foregoing requirement with respect to the receipt of cash or Cash
Equivalents shall not apply) and is received at the time of such disposition
and (iii) upon the consummation of an Asset Sale, the Company applies, or
causes such Subsidiary to apply, such
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Net Cash Proceeds within 180 days of receipt thereof either (A) to repay any
Indebtedness of the Company or any Indebtedness of a Subsidiary of the Company
(and, to the extent such Indebtedness relates to principal under a revolving
credit or similar facility, to obtain a corresponding reduction in the
commitments thereunder), (B) to reinvest, or to be contractually committed to
reinvest pursuant to a binding agreement, in Productive Assets and, in the
latter case, to have so reinvested within 360 days of the date of receipt of
such Net Cash Proceeds, (C) to redeem the Notes, (D) to redeem the Preferred
Stock, Series B or (E) to redeem the Preferred Stock, Series A.
Section 6.14. Limitation on Asset Swaps. The Company will
not, and will not permit any Subsidiary to, engage in any Asset Swaps, unless:
(i) at the time of entering into such Asset Swap, and immediately after giving
effect to such Asset Swap, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof, (ii) in the event
such Asset Swap involves an aggregate amount in excess of $1,000,000, the terms
of such Asset Swap have been approved by a majority of the members of the Board
of Directors of the Company; and (iii) in the event such Asset Swap involves an
aggregate amount in excess of $5,000,000, the Company has received a written
opinion from an independent investment banking firm of nationally recognized
standing that such Asset Swap is fair to the Company or such Subsidiary, as the
case may be, from a financial point of view.
Section 6.15. FCC Compliance. Notwithstanding anything in
this Agreement to the contrary, the Company shall not be required to take any
action hereunder that (i) constitutes or would represent a transfer of control
to the Company or SAC or any Subsidiary of SAC without first obtaining the
consent of the FCC to such transfer of control or (ii) constitutes a violation
of the Communications Act or the rules or regulations promulgated thereunder.
Section 6.16. Merger, Consolidation and Sale of Assets.
(a) The Company may not, in a single transaction or a series
of related transactions, consolidate with or merge with or into, or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, another Person or adopt a plan of
liquidation unless:
(1) either (A) the Company is the surviving or
continuing Person or (B) the Person (if other than the Company) formed
by such consolidation or into which the Company is merged or the
Person that acquires by conveyance, transfer or lease the properties
and assets of the Company substantially as an entirety or in the case
of a plan of liquidation, the Person to which assets of the Company
have been transferred shall be a corporation, partnership or trust
organized and existing under the laws of the United States or any
State thereof or the District of Columbia;
(2) such surviving Person shall assume all of the
obligations of the Company under this Agreement pursuant to an
assignment and acceptance in a form reasonably satisfactory to the
Purchasers;
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(3) immediately after giving effect to such
transaction and the use of the proceeds therefrom (on a pro forma
basis, including giving effect to any Indebtedness incurred or
anticipated to be incurred in connection with such transaction), the
Company (in the case of clause (A) of the foregoing clause (1)) or
such Person (in the case of clause (B) of the foregoing clause (1))
shall be able to incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with Section 6.11; and
(4) immediately after giving effect to such
transactions, no Default or Event of Default shall have occurred and
be continuing.
(b) For purposes of this Section 6.16, the transfer (by
lease, assignment, sale or otherwise, in a single transaction or
series of related transactions) of all or substantially all of the
properties and assets of one or more Subsidiaries, the Capital Stock
of which constitutes all or substantially all of the properties or
assets of the Company, will be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
(c) Notwithstanding the foregoing clauses (a)(2) and (3),
subject to applicable FCC requirements, if any, (i) any Subsidiary of
the Company may consolidate with, merge into or transfer all or part
of its properties and assets to the Company and (ii) the Company may
merge with a corporate Affiliate thereof incorporated solely for the
purpose of reincorporating the Company in another jurisdiction in the
U.S. to realize tax or other benefits.
Section 6.17. Successor Corporation Substituted. Upon any
consolidation or merger, or any transfer of assets in accordance with Section
6.16, the successor Person formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Agreement with the same effect as if such successor Person had been named
as the Company herein. When a successor corporation assumes all of the
obligations of the Company hereunder and agrees to be bound hereby, the
predecessor shall be released from such obligations.
ARTICLE VII
EVENTS OF DEFAULTS
Section 7.01. Actions after Default. If any Event of Default
occurs and is continuing (whether it is voluntary or involuntary, or results
from operation of law or otherwise), the Purchasers may exercise any of their
rights by operation of law or otherwise including their rights under the Notes.
Section 7.02. Events of Default. It is an Event of Default
if:
(a) an Event of Default shall have occurred and be continuing
under the Indenture; or
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(b) an Event of Default shall have occurred and be continuing
under the Credit Agreement; or
(c) any representation or warranty made or deemed made by or
on behalf of the Company or STC in this Agreement, any report,
certificate, financial statement or other document furnished pursuant
to or in connection with this Agreement shall prove to have been
incorrect in any material respect when made or deemed made; or
(d) the Company or STC shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement and such
breach continues unremedied for 30 days thereafter; or
(e) a Change of Control shall have occurred.
Section 7.03. Notice of Events. If any Event of Default
happens, the Company shall promptly notify the Purchasers by facsimile
specifying the nature of such Event of Default and any steps the Company is
taking to remedy it.
ARTICLE VIII
INDEMNITY
Section 8.01. Indemnity.
(a) Indemnification by the Company. The Company agrees and
covenants to hold harmless and indemnify the Purchasers and each
Person, if any, who controls any of the Purchasers within the meaning
of Section 20 of the Exchange Act from and against any losses, claims,
damages, liabilities and expenses (including expenses of
investigation) to which the Purchasers or such controlling Person may
become subject (i) arising out of or based upon any untrue statement
or alleged untrue statement of any material fact contained in this
Agreement or (ii) arising out of, based upon or in any way related or
attributed to claims, actions or proceedings relating to this
Agreement or the subject matter of this Agreement or (iii) arising in
any manner out of or in connection with such Person being a Purchaser
of the Notes and relating to any action taken or omitted to be taken
by the Company; provided, however, that the Company shall not be
liable under this paragraph (a) for any amounts paid in settlement of
claims without their written consent, which consent shall not be
unreasonably withheld, or to the extent that it is finally judicially
determined that such losses, claims, damages or liabilities arose
primarily out of the gross negligence, willful misconduct or bad faith
of the Purchasers. The Company further agrees to reimburse the
Purchasers for any reasonable legal and other expenses as they are
incurred by it in connection with investigating, preparing to defend
or defending any lawsuits, claims or other proceedings or
investigations arising in any manner out of or in connection with such
Person being a Purchaser; provided that if the Company reimburses the
Purchasers hereunder for any expenses incurred in connection with a
lawsuit, claim or other proceeding for which indemnification is
sought, the Purchasers hereby agree to refund such reimbursement of
expenses to the extent it is finally judicially determined that the
losses, claims, damages or liabilities arising out of
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or in connection with such lawsuit, claim or other proceedings arose
primarily out of the gross negligence, willful misconduct or bad faith
of the Purchasers or from a violation by any Purchaser of legal
requirements applicable to such Purchaser solely because of their
character as a particular type of regulated institution. The Company
further agrees that the indemnification, contribution and
reimbursement commitments set forth in this Article VIII shall apply
whether or not the Purchasers are a formal party to any such lawsuits,
claims or other proceedings. Notwithstanding the foregoing, the
Company shall not be liable to a party seeking indemnification under
the foregoing provisions of this paragraph (a) to the extent that any
such losses, claims, damages, liabilities or expenses arise out of or
are based upon an untrue statement or omission made in any of the
documents referred to in this paragraph (a) in reliance upon and in
conformity with the information relating to the party seeking
indemnification furnished in writing by such party for inclusion
therein. The indemnity, contribution and expense reimbursement
obligations of the Company under this Article VIII shall be in
addition to any liability the Company may otherwise have.
(b) Indemnification by the Purchasers. Each Purchaser agrees
and covenants to hold harmless and indemnify the Company and each
Person, if any, who controls the Company within the meaning of Section
20 of the Exchange Act from and against any losses, claims, damages,
liabilities and expenses (including expenses of investigation) to
which the Company or such controlling Person may become subject (i)
arising out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in this Agreement or (ii)
arising out of, based upon or in any way related or attributed to
claims, actions or proceedings relating to this Agreement or the
subject matter of this Agreement or (iii) relating to any action taken
or omitted to be taken by such Purchaser; provided, however, that no
Purchaser shall be liable under this paragraph (a) for any amounts
paid in settlement of claims without their written consent, which
consent shall not be unreasonably withheld, or to the extent that it
is finally judicially determined that such losses, claims, damages or
liabilities arose primarily out of the gross negligence, willful
misconduct or bad faith of the Company. Each Purchaser further agrees
to reimburse the Company for any reasonable legal and other expenses
as they are incurred by it in connection with investigating, preparing
to defend or defending any lawsuits, claims or other proceedings or
investigations arising in any manner out of or in connection with the
issuance of the Notes to such Purchaser; provided that if such
Purchaser reimburses the Company hereunder for any expenses incurred
in connection with a lawsuit, claim or other proceeding for which
indemnification is sought, the Company hereby agrees to refund such
reimbursement of expenses to the extent it is finally judicially
determined that the losses, claims, damages or liabilities arising out
of or in connection with such lawsuit, claim or other proceedings
arose primarily out of the gross negligence, willful misconduct or bad
faith of the Company or from a violation by the Company of legal
requirements applicable to the Company solely because of its character
as a particular type of regulated institution. Each Purchaser further
agrees that the indemnification, contribution and reimbursement
commitments set forth in this Article VIII shall apply whether or not
the Company is a formal party to any such lawsuits, claims or other
proceedings. Notwithstanding the foregoing, no Purchaser shall
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be liable to a party seeking indemnification under the foregoing
provisions of this paragraph (a) to the extent that any such losses,
claims, damages, liabilities or expenses arise out of or are based
upon an untrue statement or omission made in any of the documents
referred to in this paragraph (a) in reliance upon and in conformity
with the information relating to the party seeking indemnification
furnished in writing by such party for inclusion therein. The
indemnity, contribution and expense reimbursement obligations of the
Purchasers under this Article VIII shall be in addition to any
liability such Purchasers may otherwise have.
(c) Procedure. If any Person shall be entitled to indemnity
hereunder (the "Indemnified Parties"), such Indemnified Party shall
give prompt notice confirmed in writing to the party or parties from
which such indemnity is sought (the "Indemnifying Parties") of the
commencement of any proceeding (a "Proceeding") with respect to which
such Indemnified Party seeks indemnification or contribution pursuant
hereto; provided, however, that the failure so to notify the
Indemnifying Parties shall not relieve the Indemnifying Parties from
any obligation or liability except to the extent that the Indemnifying
Parties have been prejudiced materially by such failure. The
Indemnifying Parties shall have the right, exercisable by giving
written notice to an Indemnified Party promptly after the receipt of
written notice from such Indemnified Party of such Proceeding, to
assume, at the Indemnifying Parties' expense, the defense of any such
Proceeding, with counsel reasonably satisfactory to such Indemnified
Party; provided, however, that an Indemnified Party or parties (if
more than one such Indemnified Party is named in any Proceeding) shall
have the right to employ separate counsel in any such Proceeding and
to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party or
parties unless: (1) the Indemnifying Parties agree to pay such fees
and expenses; or (2) the Indemnifying Parties fail promptly to assume
the defense of such Proceeding or fail to employ counsel reasonably
satisfactory to such Indemnified Party or parties; or (3) the named
parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party or Parties and the Indemnifying
Party or an Affiliate of the Indemnifying Party and such Indemnified
Parties, and the Indemnifying Parties shall have been advised in
writing by counsel that a conflict or potential conflict exists
between such Indemnified Party or Parties and the Indemnifying
Parties, in which case, if such Indemnified Party or Parties notify
the Indemnifying Parties in writing that they elect to employ separate
counsel at the expense of the Indemnifying Parties, the Indemnifying
Parties shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Parties, it
being understood, however, that, unless there exists a conflict among
Indemnified Parties, the Indemnifying Parties shall not, in connection
with any one such Proceeding or separate but substantially similar or
related Proceedings in the same jurisdiction, arising out of the same
general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with
appropriate local counsel, if any) at any time for such Indemnified
Party or Parties, or for fees and expenses that are not reasonable. No
Indemnified Party or Parties will settle any Proceedings without the
written consent of the Indemnifying Party or Parties (but such consent
will not be unreasonably withheld).
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Section 8.02. Contribution. If for any reason the
indemnification provided for in Section 8.01 of this Agreement is unavailable
to an Indemnified Party, or insufficient to hold it harmless, in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other, but
also the relative fault of the Indemnifying and Indemnified Parties in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying and Indemnified Parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Indemnifying or
Indemnified Parties and each such party's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages and liabilities referred to above shall be deemed to include any
reasonable legal or other fees or expenses incurred by such party in connection
with investigating or defending any such claim.
The Company and the Purchasers agree that it would not be
just and equitable if contribution pursuant to the immediately preceding
paragraph were determined by any method of allocation which does not take into
account the equitable considerations referred to in such paragraph. No Person
guilty of fraudulent misrepresentation shall be entitled to contribution from
any Person.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Notices. Any notice, request or other
communication to be given or made under this Agreement shall be in writing.
Subject to Section 7.03, the notice, request or other communication may be
delivered by hand or facsimile, to the party's address specified below or at
such other address as such party notifies to the other party from time to time
and will be effective upon receipt.
For the Company:
Sunrise Television Corp.
720 Second Avenue South
Suite 420
St. Petersburg, Florida 33701
Attention: David A. Fitz, Chief Financial Officer
Telephone: (727) 821-7900
Telefax: (727) 821-8092
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with a copy to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telephone: (214) 740-7365
Telefax: (214) 740-7313
For the Purchasers:
Chase Equity Associates, L.P.
380 Madison Avenue, 12th Floor
New York, New York 10017
Attention: Michael Hannon
Telephone: (212) 622-3012
Telefax: (212) 622-3771
and
Hicks, Muse, Tate & Furst Equity Fund III, L.P.
HM3 Coinvestors, L.P.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telephone: (214) 740-7365
Telefax: (214) 740-7313
Section 9.02. Expenses. The Company agrees promptly to pay
(i) all the actual and reasonable costs and expenses of preparation of the Loan
Documents; (ii) the reasonable fees, expenses and disbursements of Weil,
Gotshal & Manges LLP in connection with the negotiation, preparation, execution
and administration of the Loan Documents and the sale of the Notes hereunder,
and any amendments, modifications and waivers hereto or thereto and consents to
departures from the terms hereof and thereof, and (iii) after the occurrence
and during the continuance of an Event of Default, all reasonable costs and
expenses (including reasonable attorneys fees of one counsel to all the
Purchasers) in enforcing any obligations of or in collecting any payments due
from the Company hereunder or under the Notes by reason of such Event of
Default.
Section 9.03. Governing Law, Submission to Jurisdiction:
Venue.
(a) This Agreement is governed by, and shall be construed in
accordance with, the law of the State of New York.
(b) Any legal action or proceeding with respect to this
Agreement may be brought in the courts of the State of New York or of
the United States for the Southern
41
<PAGE> 46
District of New York and, by execution and delivery of this Agreement,
the Company hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. the Company hereby irrevocably designates, appoints
and empowers Hicks Muse, with offices at 1325 Avenue of the Americas,
25th Floor, New York, NY 10019, as its designee, appointee and agent
to receive, accept and acknowledge for and on its behalf, and in
respect of its property, service of any and all legal process,
summons, notices and documents which may be served in any such action
or proceeding. If for any reason such designee, appointee and agent
shall lease to be available to act as such, the Company agrees to
designate a new designee, appointee and agent in New York City on the
terms and for the purposes of this provision satisfactory to the
Purchasers. The Company further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to the Company at its address set forth in
Section 9.01 above, such service to become effective ten days after
such mailing. Nothing herein shall affect the right of the Purchasers
to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Company in any
other jurisdiction.
(c) The Company hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so,
any objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to
this Agreement will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
Section 9.04. Judgment.
(a) If for the purposes of obtaining judgment in any court it
is necessary to convert a sum due hereunder in Dollars into another
currency, the parties hereto agree, to the fullest extent that they
may effectively do so, that the rate of exchange used shall be that at
which in accordance with normal banking procedures the Purchasers
could purchase Dollars with such other currency in New York City at
11:00 A.M. (New York City time) on the Business Day preceding that on
which final judgment is given.
(b) The obligation of the Company in respect of any sum due
from it to the Purchasers hereunder held by the Purchasers shall,
notwithstanding any judgment in a currency other than Dollars, be
discharged only to the extent that on the Business Day following
receipt by the Purchasers of any sum adjudged to be so due in such
other currency, the Purchasers may in accordance with normal banking
procedures purchase Dollars with such other currency; if the Dollars
so purchased are less than such sum due to the Purchasers in Dollars,
the Company agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify the Purchasers against such loss, and the
Dollars so purchased exceed such sum due to the Purchasers in Dollars,
the Purchasers agree to remit to the Company such excess.
42
<PAGE> 47
Section 9.05. Benefit of Agreement. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, all future holders of the Notes, and their respective successors and
assigns.
Section 9.06. Assignments. The Company may not assign or
delegate any of its interests or obligations under this Agreement. Each holder
of Notes may sell or transfer all or a portion of its Notes to any person who
is reasonably satisfactory to the Company; provided that such sale or transfer
complies with Section 4.02 and each transferee of such Notes executes and
delivers to each party hereto a joinder agreement in form and substance
reasonably satisfactory to the Purchasers and the Company. Notwithstanding the
foregoing, each holder of Notes may sell or transfer all or a portion of its
Notes, in each case, to any of its Affiliates, without the consent of the
Company; provided, however, that no party shall assign or otherwise transfer
any of its rights, duties or obligations hereunder if such assignment or
transfer (i) would violate any of the rules, regulations or policies of the FCC
or (ii) could reasonably be expected to cause adverse consequences for any of
the parties hereto under the ownership attribution rules of the FCC.
Section 9.07. Amendment. Neither this Agreement nor any terms
hereof may be changed, waived or discharged or terminated unless such change,
waiver, discharge or termination is in writing signed by the Company and a
majority of the holders of Notes.
Section 9.08. Counterparts; Integration. This Agreement may
be executed in several counterparts, each of which is an original, but all of
which together constitute one and the same agreement. This Agreement, together
with the other Loan Documents, constitutes the entire contract among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, and as written, relating to the subject
matter hereof. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 9.09. Remedies and Waivers. No failure or delay by
the Purchasers in exercising any power, remedy, discretion, authority or other
rights under this Agreement shall waive or impair that or any other right of
the Purchasers. No single or partial exercise of such a right shall preclude
its additional or future exercise. No such waiver shall waive any other right
under this Agreement. All waivers or consents given under this Agreement shall
be in writing.
Section 9.10. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any Jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof, and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in
any other jurisdiction.
Section 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER
43
<PAGE> 48
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS
SECTION.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
44
<PAGE> 49
IN WITNESS WHEREOF, the parties have caused this Senior Note
Purchase Agreement to be signed in their respective names as of the date above
first written.
SUNRISE TELEVISION CORP.,
a Delaware corporation
By: /s/ David A. Fitz
------------------------------------
Name: David A. Fitz
Title: Executive Vice President
SIGNATURE PAGE TO
SENIOR NOTE PURCHASE AGREEMENT
<PAGE> 50
HICKS, MUSE, TATE & FURST EQUITY FUND III, L.P.,
a Delaware limited partnership
By: HM3/GP Partners, L.P., a Texas limited
partnership, its general partner
By: Hicks, Muse GP Partners III, a Texas
limited partnership, L.P., its general
partner
By: Hicks, Muse Fund III Incorporated, a
Texas corporation, its general partner
By: /s/ David W. Knickel
--------------------------------------------
Name: David W. Knickel
Title: Vice President, Secretary,
Treasurer
HM3 COINVESTORS, L.P., a Delaware limited
partnership
By: Hicks, Muse GP Partners III, a Texas
limited partnership, L.P., its general
partner
By: Hicks, Muse Fund III Incorporated, a
Texas corporation, its general partner
By: /s/ David W. Knickel
--------------------------------------------
Name: David W. Knickel
Title: Vice President, Secretary,
Treasurer
SIGNATURE PAGE TO
SENIOR NOTE PURCHASE AGREEMENT
<PAGE> 51
CHASE EQUITY ASSOCIATES, L.P.,
a Delaware limited partnership
By: Chase Capital Partners, a Delaware
general partnership, its general
partner
By: /s/ Michael R. Hannon
---------------------------------------------
Name: Michael R. Hannon
Title: General Partner
SIGNATURE PAGE TO
SENIOR NOTE PURCHASE AGREEMENT
<PAGE> 52
Schedule 2.01 to
Senior Note Purchase Agreement
PURCHASER COMMITMENTS
Hicks, Muse, Tate & Furst Equity Fund IV, L.P. $ 21,749,383.00
HM3 Coinvestors, L.P. $ 750,617.00
Chase Equity Associates, L.P. $ 2,500,000.00
<PAGE> 53
Schedule 4.01(g) to
Senior Note Purchase Agreement
LEGAL OR GOVERNMENTAL PROCEEDINGS
In April, 1999, the Antitrust Division of the United States Department
of Justice (the "DOJ") issued various requests to STC Broadcasting Company
("STC") for additional information under the Hart-Scott-Rodino Antitrust
Improvement Act (the "HSR Act") in connection with proposed transactions with
Sinclair Communications, Inc. ("Sinclair"). STC and Sinclair are in discussions
with the DOJ regarding the transaction, and the waiting period under the HSR
Act has been extended pending completion of these discussions.
<PAGE> 54
Schedule 4.01(s) to
Senior Note Purchase Agreement
OUTSTANDING WARRANTS
<TABLE>
<CAPTION>
------------------------------------------ ----------------- --------------------------------------
HOLDER CERT. # VESTED SHARES TO DATE
------------------------------------------ ----------------- --------------------------------------
<S> <C> <C>
Hicks, Muse, Tate & Furst Equity Fund W-1
IV, L.P.
------------------------------------------ ----------------- --------------------------------------
Chase Equity Associates, L.P. W-2
------------------------------------------ ----------------- --------------------------------------
HM3 Coinvestors, L.P. W-3
------------------------------------------ ----------------- --------------------------------------
</TABLE>
<PAGE> 55
Exhibit A to
Senior Note Purchase Agreement
FORM OF SENIOR NOTES
<PAGE> 56
Exhibit B to
Senior Note Purchase Agreement
FORM OF WARRANTS
<PAGE> 1
Exhibit 10.4
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), NOR PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY
STATE. THIS SECURITY MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED, OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (A) A REGISTRATION
STATEMENT THAT IS EFFECTIVE UNDER THE ACT OR (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. THIS WARRANT AND THE
SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO THE TERMS OF A
SECURITIES PURCHASE AGREEMENT, DATED AS OF DECEMBER 30, 1999 (THE "SECURITIES
PURCHASE AGREEMENT"), BETWEEN SUNRISE TELEVISION CORP. AND THE PURCHASERS
LISTED THEREIN, A COPY OF WHICH AGREEMENT MAY BE OBTAINED UPON REQUEST.
STOCK PURCHASE WARRANT
Date of Issuance: December 30, 1999 Certificate No. W-4
For value received, SUNRISE TELEVISION CORP., a Delaware corporation
("Holdings"), hereby grants to HICKS, MUSE, TATE & FURST EQUITY FUND III, L.P.,
a Delaware limited partnership ("Purchaser") and its assigns and transferees,
the right to purchase from Holdings the Warrant Shares (as defined herein) at a
price per share of $.01 (the "Exercise Price"). Certain capitalized terms used
herein are defined in Section 2 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
1A. Exercise Period. The purchase rights represented by this
Warrant may only be exercised by the Registered Holder in accordance with
Section 1B (i) below prior to the expiration of the first Exit Event Period
occurring after the date hereof; provided, however, that this Warrant may only
be exercised with respect to Vested Warrant Shares.
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised pursuant
to Section 1A when all of the following items have been delivered to Holdings
(the "Exercise Time"):
<PAGE> 2
(a) a completed Exercise Agreement, in the form, set forth
in Exhibit A hereto, executed by the Registered Holder;
2
<PAGE> 3
(b) this Warrant;
(c) the aggregate Exercise Price (payable in the manner
provided in subsection (viii) below); and
(d) such documentation as Holdings shall reasonably
request, including as described in Section 1B (vii) below.
(ii) Certificates for Vested Warrant Shares purchased upon
exercise of this Warrant shall be delivered by Holdings to the Registered
Holder within ten (10) business days after the date of the Exercise Time
together with any cash payable in lieu of a fraction of a share pursuant to
Section 10 hereof.
(iii) The Vested Warrant Shares issuable upon the exercise of
this Warrant shall be deemed to have been issued to the Registered Holder at
the Exercise Time, and the Registered Holder shall be deemed for all purposes
to have become the record holder of such Vested Warrant Shares at the Exercise
Time.
(iv) The issuance of certificates for Vested Warrant Shares
upon exercise of this Warrant shall be made without charge to the Registered
Holder for any issuance tax in respect thereof or other cost incurred by
Holdings in connection with such exercise and the related issuance of Vested
Warrant Shares; provided, that Holdings shall not be required to pay any taxes
in respect of the Warrant and Vested Warrant Shares with respect to any
permitted transfer of the Warrant which taxes shall be paid by the transferee
prior to the issuance of the Vested Warrant Shares.
(v) Holdings shall give to the Registered Holder not less than
ten (10) business days prior written notice (an "Exit Event Notice") of the
occurrence of an Exit Event. Upon exercise of this Warrant during an Exit Event
Period, such exercise shall be conditioned upon the consummation of such Exit
Event, and such exercise shall not be deemed to be effective until immediately
prior to the consummation of such Exit Event; provided, that in the event that
such Exit Event is not consummated, such exercise will be deemed ineffective.
(vi) Holdings shall at all times reserve and keep available out
of its authorized but unissued Shares of Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant
Shares issuable upon the exercise of this Warrant. All Warrant Shares which are
so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free of preemptive rights. Holdings will use its commercially
reasonable efforts to ensure that all such Warrant Shares may be so issued
without violation by Holdings of any applicable law or governmental regulation.
<PAGE> 4
(vii) Upon exercise of this Warrant, Holdings may require
customary representations and warranties from the Registered Holder to assure
that the issuance and sale of the Warrant Shares shall not require registration
or qualification under the Securities Act or any state securities law.
(viii) The aggregate Exercise Price shall be paid by the
Registered Holder by certified or official bank check or by wire transfer of
immediately available funds to an account designated by Holdings for this
purpose; provided, however, that upon exercise of this Warrant in connection
with an Initial Public Offering, the Registered Holder may elect to pay the
aggregate Exercise Price by the surrender of Warrant Shares (which surrender
shall consist of Warrant Shares for which this Warrant is being exercised), and
without the payment of the aggregate Exercise Price in cash, in return for the
delivery to the Registered Holder of such number of Warrant Shares (rounded to
the nearest whole share) equal to the product of (1) the number of Warrant
Shares for which this Warrant is being exercised (as if the Exercise Price were
being paid in cash) and (2) the Cashless Exercise Ratio.
SECTION 2. Definitions. The following terms have the meanings set
forth below:
"Affiliate" means, as to any Person, any other Person who, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the first Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Cashless Exercise Ratio" means a fraction, the numerator of which is
the excess of the Fair Market Value of the Warrant Shares on the date of
exercise over the Exercise Price as of the date of exercise and denominator of
which is the Fair Market Value of the Warrant Shares on the date of exercise.
"Common Stock" means the Common Stock of Holdings, par value $.01 per
share.
"Exit Event" means the occurrence of a Sale of Holdings or an Initial
Public Offering.
"Exit Event Period" means, with respect to a proposed Exit Event, the
period beginning on the date the Exit Event Notice is given and ending on the
date which is the tenth (10) business day thereafter.
"Fair Market Value" means, (a) for the purposes of any determination
being made in connection with an Initial Public Offering involving Common
Stock, the initial price to the public for a share of such Common Stock being
sold
<PAGE> 5
in such Initial Public Offering and (b) for the purposes of any determination
being made in connection with an Initial Public Offering involving any capital
stock other than Common Stock, the fair market value of one share of Common
Stock as determined in good faith by the Board of Directors of Holdings (taking
into consideration the initial price to the public for a share of such capital
stock being sold in such Initial Public Offering).
"Independent Third Party" means any person who, immediately prior to
the contemplated transaction, does not own in excess of 5% of Holdings' Common
Stock on a fullydiluted basis (a "5% Owner"), who is not controlling,
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Person.
"Initial Public Offering" means Holdings' first underwritten public
offering of any series of Holdings' capital stock which has the unlimited right
to participate in dividends and distributions upon the liquidation of Holdings.
"Original Purchaser" means the Purchaser named in the Securities
Purchase Agreement that first acquired this Warrant (or any predecessor to this
Warrant).
"Person" means any individual, partnership, limited liability
corporation, joint venture, corporation, trust, unincorporated organization or
government or department or agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
the records of Holdings maintained pursuant to Section 8.
"Sale of Holdings" means the sale of Holdings to an Independent Third
Party or group (within the meaning of Section 13(d) of the Securities Exchange
Act of 1934, as amended) of Independent Third Parties pursuant to which such
party or parties acquire (i) capital stock of Holdings possessing the voting
power under normal circumstances to elect a majority of Holdings' board of
directors (whether by merger, consolidation, sale, transfer or exchange of
Holdings' capital stock) or (ii) all or substantially all of Holdings' assets
determined on a consolidated basis.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of December 30, 1999, between Holdings and the Purchasers
named therein.
"Vested Warrant Shares" means the number of Warrant Shares reflected
on Schedule 1 hereto under the caption "Shares Vesting Quarterly" under the
name of the Purchaser (the "Purchaser Column"). That number of Warrant Shares
shown under the Purchaser Column on the line item delineated "At
<PAGE> 6
Closing" shall be fully vested upon issuance and the Warrant thereafter may be
exercised at any time for such number of Warrant Shares, subject to the terms
and conditions of this Warrant. If, on March 31, June 30, September 30 and
December 31 of each year, commencing March 31, 2000 and continuing through and
including December 31, 2002, the Original Purchaser (or any Affiliate thereof)
continues to own any Subordinated Notes of the Company purchased by the
Original Purchaser pursuant to the Securities Purchase Agreement (including,
for purposes hereof, any Subordinated Notes issued after December 30, 1999 in
lieu of cash dividends on the Subordinated Notes), that number of Warrant
Shares shown under the Purchaser Column on the line item with the corresponding
date, shall be fully vested and the Warrant thereafter may be exercised at any
time for such number of Warrant Shares (plus any other Vested Warrant Shares as
to which the Warrant has not previously been exercised), subject to the terms
and conditions of this Warrant.
"Warrant Shares" means the number shares of Common Stock issuable upon
exercise of this Warrant as determined in accordance with Schedule 1 hereto
under the name of the Purchaser (or one of its Affiliates) on such Schedule 1,
subject to adjustment as provided herein.
SECTION 3. No Voting Rights. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of Holdings.
SECTION 4. Adjustment to Warrant Shares.
(a) If there is any change in the number of outstanding shares of
Common Stock through the declaration of stock dividends, stock splits
or similar transactions, the number of Warrant Shares issuable upon
exercise of the Warrant shall be automatically adjusted to reflect
such stock dividends, stock splits or similar transactions.
(b) In case of any reclassification of the Common Stock or any
consolidation of Holdings with, or merger of Holdings into, any other
Person, any merger of another Person into Holdings (other than a
merger that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock), any
sale or transfer of all or substantially all of the assets of Holdings
or any compulsory share exchange pursuant to which share exchange the
Common Stock is converted into other securities, cash or other
property, then lawful provision shall be made as part of the terms of
such transaction whereby the Holder of the Warrant shall have the
right thereafter, during the period the Warrant shall be exercisable,
to exercise the Warrant for (but only for) the kind and amount of
securities, cash and other property receivable upon the
reclassification, consolidation, merger, sale, transfer or share
exchange by a holder of the number of shares of Common Stock into
which the Warrant would have been exercisable immediately prior to the
reclassification, consolidation, merger, sale, transfer or share
exchange. Holdings or the Person formed by the
<PAGE> 7
consolidation or resulting from the merger or which acquires such
assets or which acquires Holdings' shares, as the case may be, shall
make provision in its certificate or articles of incorporation or
other constituent documents to establish such rights. The certificate
or articles of incorporation or other constituent documents shall
provide for adjustments, which, for events subsequent to the effective
date of the certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be
practicable. to the adjustments provided for in this Section 4(b). The
provisions of this Section 4(b) shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share
exchanges.
SECTION 5. Replacement. Upon receipt of evidence satisfactory to
Holdings (an affidavit of the Registered Holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of indemnity satisfactory to Holdings or, in the case
of any such mutilation upon surrender of such certificate, Holdings shall, at
the expense of the Registered Holder, execute and deliver in lieu of such
certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
SECTION 6. Notices. Except as otherwise expressly provided herein, all
notices and deliveries referred to in this Warrant shall be in writing, shall
be delivered personally, sent by registered or certified mail, return receipt
requested and postage prepaid or sent via nationally recognized overnight
courier or via facsimile and shall be deemed to have been given when so
delivered (or when received, if delivered by any other method) if sent (i) to
Holdings, at its principal executive offices and (ii) to the Registered Holder,
at such holder's address as it appears in the records of Holdings (unless
otherwise indicated by such holder).
SECTION 7. Warrant Register. Holdings shall maintain at its principal
executive offices books for the registration and, to the extent permitted by
(a) the laws of the State of Delaware and (b) pursuant to Section 4 hereof, the
registration of transfer of the Warrant. Upon any transfer of the Warrant, the
Registered Holder shall deliver to Holdings a Transfer Agreement substantially
in the form set forth in Exhibit B hereto. Holdings may deem and treat the
Registered Holder as the absolute owner hereof (notwithstanding any notation of
ownership or other writing hereon made by anyone) for all purposes and shall
not be affected by any notice to the contrary. As a condition to the transfer
of this Warrant, the transferee shall be required to deliver a written
acknowledgment of its agreement to the vesting provisions of this Warrant.
SECTION 8. Fractions of Shares. Holdings may, but shall not be
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant. As to any fraction of a share which Holdings elects not to issue,
Holdings shall
<PAGE> 8
make a cash payment in respect of such fraction in an amount equal to the same
fraction of the fair market value of a Warrant Share on the date of such
exercise as determined by the Board of Directors of Holdings in its sole
discretion.
SECTION 9. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. THE
PROVISIONS OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF
LAW OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION WHICH WOULD RESULT IN
THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
<PAGE> 9
IN WITNESS WHEREOF, Holdings has caused this Warrant to be signed and
attested by its duly authorized officers and to be dated the date hereof.
SUNRISE TELEVISION CORP.
By: /s/ David A. Fitz
---------------------------
Name: David A. Fitz
Title: Executive Vice President
<PAGE> 10
EXHIBIT A
EXERCISE AGREEMENT
To:_____________________________________________ Dated:_______________________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-_____________ ), hereby agrees to subscribe for the
purchase of _________ Vested Warrant Shares covered by such Warrant.
Signature:__________________________
Name:_______________________________
Address:____________________________
<PAGE> 11
EXHIBIT B
FORM OF TRANSFER AGREEMENT
FOR VALUE RECEIVED,_____________________________________________________
hereby sells, assigns and transfers unto
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
its right to purchase _____________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint Attorney, to
transfer the same on the books of Holdings, with full power of substitution in
the premises.
Date:_____________________________
Signature:__________________________
Name:_______________________________
Address:____________________________
<PAGE> 12
SCHEDULE 1
SUNRISE TELEVISION CORP.
WARRANT SHARES VESTING SCHEDULE
<TABLE>
<CAPTION>
DATE HMTF FUND III HM3 COINVESTORS, L.P. CHASE EQUITY ASSOCIATES
---- ------------------------------- ------------------------------- -------------------------------
Shares Vesting Cumulative Shares Vesting Cumulative Shares Vesting Cumulative
Quarterly Shares Vested Quarterly Shares Vested Quarterly Shares Vested
-------------- ------------ -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
At Closing
(December 30, 1999) 2,968.2 2,968.2 91.8 91.8 340 340
March 31, 2000 2,968.2 5,936.4 91.8 183.6 340 680
June 30, 2000 2,968.2 8,904.6 91.8 275.4 340 1,020
September 30, 2000 2,968.2 11,872.8 91.8 367.2 340 1,360
December 31, 2000 2,968.2 14,841.0 91.8 459.0 340 1,700
March 31, 2001 2,968.2 17,809.2 91.8 550.8 340 2,040
June 30, 2001 2,968.2 20,777.4 91.8 642.6 340 2,380
September 30, 2001 2,968.2 23,745.6 91.8 734.4 340 2,720
December 31, 2001 3,492.0 27,237.6 108.0 842.4 400 3,120
March 31, 2002 3,492.0 30,729.6 108.0 950.4 400 3,520
June 30, 2002 3,492.0 34,221.6 108.0 1,058.4 400 3,920
September 30, 2002 3,492.0 37,713.6 108.0 1,166.4 400 4,320
December 31, 2002 3,492.0 41,205.6 108.0 1,274.4 400 4,720
</TABLE>
<PAGE> 1
Exhibit 10.5
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), NOR PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY
STATE. THIS SECURITY MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED, OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (A) A REGISTRATION
STATEMENT THAT IS EFFECTIVE UNDER THE ACT OR (B) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. THIS WARRANT AND THE SHARES
ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO THE TERMS OF A SECURITIES
PURCHASE AGREEMENT, DATED AS OF DECEMBER 30, 1999 (THE "SECURITIES PURCHASE
AGREEMENT"), BETWEEN SUNRISE TELEVISION CORP. AND THE PURCHASERS LISTED
THEREIN, A COPY OF WHICH AGREEMENT MAY BE OBTAINED UPON REQUEST.
STOCK PURCHASE WARRANT
Date of Issuance: December 30, 1999 Certificate No. W-5
For value received, SUNRISE TELEVISION CORP., a Delaware corporation
("Holdings"), hereby grants to HM3 COINVESTORS, L.P., a Delaware limited
partnership ("Purchaser") and its assigns and transferees, the right to
purchase from Holdings the Warrant Shares (as defined herein) at a price per
share of $.01 (the "Exercise Price"). Certain capitalized terms used herein are
defined in Section 2 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
1A. Exercise Period. The purchase rights represented by this
Warrant may only be exercised by the Registered Holder in accordance with
Section 1B (i) below prior to the expiration of the first Exit Event Period
occurring after the date hereof; provided, however, that this Warrant may only
be exercised with respect to Vested Warrant Shares.
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised
pursuant to Section 1A when all of the following items have been delivered to
Holdings (the "Exercise Time"):
(a) a completed Exercise Agreement, in the form, set forth
in Exhibit A hereto, executed by the Registered Holder;
<PAGE> 2
(b) this Warrant;
(c) the aggregate Exercise Price (payable in the manner
provided in subsection (viii) below); and
(d) such documentation as Holdings shall reasonably
request, including as described in Section 1B (vii) below.
(ii) Certificates for Vested Warrant Shares purchased upon
exercise of this Warrant shall be delivered by Holdings to the Registered
Holder within ten (10) business days after the date of the Exercise Time
together with any cash payable in lieu of a fraction of a share pursuant to
Section 10 hereof.
(iii) The Vested Warrant Shares issuable upon the exercise of
this Warrant shall be deemed to have been issued to the Registered Holder at
the Exercise Time, and the Registered Holder shall be deemed for all purposes
to have become the record holder of such Vested Warrant Shares at the Exercise
Time.
(iv) The issuance of certificates for Vested Warrant Shares
upon exercise of this Warrant shall be made without charge to the Registered
Holder for any issuance tax in respect thereof or other cost incurred by
Holdings in connection with such exercise and the related issuance of Vested
Warrant Shares; provided, that Holdings shall not be required to pay any taxes
in respect of the Warrant and Vested Warrant Shares with respect to any
permitted transfer of the Warrant which taxes shall be paid by the transferee
prior to the issuance of the Vested Warrant Shares.
(v) Holdings shall give to the Registered Holder not less than
ten (10) business days prior written notice (an "Exit Event Notice") of the
occurrence of an Exit Event. Upon exercise of this Warrant during an Exit Event
Period, such exercise shall be conditioned upon the consummation of such Exit
Event, and such exercise shall not be deemed to be effective until immediately
prior to the consummation of such Exit Event; provided, that in the event that
such Exit Event is not consummated, such exercise will be deemed ineffective.
(vi) Holdings shall at all times reserve and keep available out
of its authorized but unissued Shares of Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant
Shares issuable upon the exercise of this Warrant. All Warrant Shares which are
so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free of preemptive rights. Holdings will use its commercially
reasonable efforts to ensure that all such Warrant Shares may be so issued
without violation by Holdings of any applicable law or governmental regulation.
<PAGE> 3
(vii) Upon exercise of this Warrant, Holdings may require
customary representations and warranties from the Registered Holder to assure
that the issuance and sale of the Warrant Shares shall not require registration
or qualification under the Securities Act or any state securities law.
(viii) The aggregate Exercise Price shall be paid by the
Registered Holder by certified or official bank check or by wire transfer of
immediately available funds to an account designated by Holdings for this
purpose; provided, however, that upon exercise of this Warrant in connection
with an Initial Public Offering, the Registered Holder may elect to pay the
aggregate Exercise Price by the surrender of Warrant Shares (which surrender
shall consist of Warrant Shares for which this Warrant is being exercised), and
without the payment of the aggregate Exercise Price in cash, in return for the
delivery to the Registered Holder of such number of Warrant Shares (rounded to
the nearest whole share) equal to the product of (1) the number of Warrant
Shares for which this Warrant is being exercised (as if the Exercise Price were
being paid in cash) and (2) the Cashless Exercise Ratio.
SECTION 2. Definitions. The following terms have the meanings set
forth below:
"Affiliate" means, as to any Person, any other Person who, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the first Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Cashless Exercise Ratio" means a fraction, the numerator of which is
the excess of the Fair Market Value of the Warrant Shares on the date of
exercise over the Exercise Price as of the date of exercise and denominator of
which is the Fair Market Value of the Warrant Shares on the date of exercise.
"Common Stock" means the Common Stock of Holdings, par value $.01 per
share.
"Exit Event" means the occurrence of a Sale of Holdings or an Initial
Public Offering.
"Exit Event Period" means, with respect to a proposed Exit Event, the
period beginning on the date the Exit Event Notice is given and ending on the
date which is the tenth (10) business day thereafter.
"Fair Market Value" means, (a) for the purposes of any determination
being made in connection with an Initial Public Offering involving Common
Stock, the initial price to the public for a share of such Common Stock being
sold
<PAGE> 4
in such Initial Public Offering and (b) for the purposes of any determination
being made in connection with an Initial Public Offering involving any capital
stock other than Common Stock, the fair market value of one share of Common
Stock as determined in good faith by the Board of Directors of Holdings (taking
into consideration the initial price to the public for a share of such capital
stock being sold in such Initial Public Offering).
"Independent Third Party" means any person who, immediately prior to
the contemplated transaction, does not own in excess of 5% of Holdings' Common
Stock on a fullydiluted basis (a "5% Owner"), who is not controlling,
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Person.
"Initial Public Offering" means Holdings' first underwritten public
offering of any series of Holdings' capital stock which has the unlimited right
to participate in dividends and distributions upon the liquidation of Holdings.
"Original Purchaser" means the Purchaser named in the Securities
Purchase Agreement that first acquired this Warrant (or any predecessor to this
Warrant).
"Person" means any individual, partnership, limited liability
corporation, joint venture, corporation, trust, unincorporated organization or
government or department or agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
the records of Holdings maintained pursuant to Section 8.
"Sale of Holdings" means the sale of Holdings to an Independent Third
Party or group (within the meaning of Section 13(d) of the Securities Exchange
Act of 1934, as amended) of Independent Third Parties pursuant to which such
party or parties acquire (i) capital stock of Holdings possessing the voting
power under normal circumstances to elect a majority of Holdings' board of
directors (whether by merger, consolidation, sale, transfer or exchange of
Holdings' capital stock) or (ii) all or substantially all of Holdings' assets
determined on a consolidated basis.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of December 30, 1999, between Holdings and the Purchasers
named therein.
"Vested Warrant Shares" means the number of Warrant Shares reflected
on Schedule 1 hereto under the caption "Shares Vesting Quarterly" under the
name of the Purchaser (the "Purchaser Column"). That number of Warrant Shares
shown under the Purchaser Column on the line item delineated "At
<PAGE> 5
Closing" shall be fully vested upon issuance and the Warrant thereafter may be
exercised at any time for such number of Warrant Shares, subject to the terms
and conditions of this Warrant. If, on March 31, June 30, September 30 and
December 31 of each year, commencing March 31, 2000 and continuing through and
including December 31, 2002, the Original Purchaser (or any Affiliate thereof)
continues to own any Subordinated Notes of the Company purchased by the
Original Purchaser pursuant to the Securities Purchase Agreement (including,
for purposes hereof, any Subordinated Notes issued after December 30, 1999 in
lieu of cash dividends on the Subordinated Notes), that number of Warrant
Shares shown under the Purchaser Column on the line item with the corresponding
date, shall be fully vested and the Warrant thereafter may be exercised at any
time for such number of Warrant Shares (plus any other Vested Warrant Shares as
to which the Warrant has not previously been exercised), subject to the terms
and conditions of this Warrant.
"Warrant Shares" means the number shares of Common Stock issuable upon
exercise of this Warrant as determined in accordance with Schedule 1 hereto
under the name of the Purchaser (or one of its Affiliates) on such Schedule 1,
subject to adjustment as provided herein.
SECTION 3. No Voting Rights. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of Holdings.
SECTION 4. Adjustment to Warrant Shares.
(a) If there is any change in the number of outstanding shares of
Common Stock through the declaration of stock dividends, stock splits
or similar transactions, the number of Warrant Shares issuable upon
exercise of the Warrant shall be automatically adjusted to reflect
such stock dividends, stock splits or similar transactions.
(b) In case of any reclassification of the Common Stock or any
consolidation of Holdings with, or merger of Holdings into, any other
Person, any merger of another Person into Holdings (other than a
merger that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock), any
sale or transfer of all or substantially all of the assets of Holdings
or any compulsory share exchange pursuant to which share exchange the
Common Stock is converted into other securities, cash or other
property, then lawful provision shall be made as part of the terms of
such transaction whereby the Holder of the Warrant shall have the
right thereafter, during the period the Warrant shall be exercisable,
to exercise the Warrant for (but only for) the kind and amount of
securities, cash and other property receivable upon the
reclassification, consolidation, merger, sale, transfer or share
exchange by a holder of the number of shares of Common Stock into
which the Warrant would have been exercisable immediately prior to the
reclassification, consolidation, merger, sale, transfer or share
exchange. Holdings or the Person formed by the
<PAGE> 6
consolidation or resulting from the merger or which acquires such
assets or which acquires Holdings' shares, as the case may be, shall
make provision in its certificate or articles of incorporation or
other constituent documents to establish such rights. The certificate
or articles of incorporation or other constituent documents shall
provide for adjustments, which, for events subsequent to the effective
date of the certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be
practicable. to the adjustments provided for in this Section 4(b). The
provisions of this Section 4(b) shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share
exchanges.
SECTION 5. Replacement. Upon receipt of evidence satisfactory to
Holdings (an affidavit of the Registered Holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of indemnity satisfactory to Holdings or, in the case
of any such mutilation upon surrender of such certificate, Holdings shall, at
the expense of the Registered Holder, execute and deliver in lieu of such
certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
SECTION 6. Notices. Except as otherwise expressly provided herein, all
notices and deliveries referred to in this Warrant shall be in writing, shall
be delivered personally, sent by registered or certified mail, return receipt
requested and postage prepaid or sent via nationally recognized overnight
courier or via facsimile and shall be deemed to have been given when so
delivered (or when received, if delivered by any other method) if sent (i) to
Holdings, at its principal executive offices and (ii) to the Registered Holder,
at such holder's address as it appears in the records of Holdings (unless
otherwise indicated by such holder).
SECTION 7. Warrant Register. Holdings shall maintain at its principal
executive offices books for the registration and, to the extent permitted by
(a) the laws of the State of Delaware and (b) pursuant to Section 4 hereof, the
registration of transfer of the Warrant. Upon any transfer of the Warrant, the
Registered Holder shall deliver to Holdings a Transfer Agreement substantially
in the form set forth in Exhibit B hereto. Holdings may deem and treat the
Registered Holder as the absolute owner hereof (notwithstanding any notation of
ownership or other writing hereon made by anyone) for all purposes and shall
not be affected by any notice to the contrary. As a condition to the transfer
of this Warrant, the transferee shall be required to deliver a written
acknowledgment of its agreement to the vesting provisions of this Warrant.
SECTION 8. Fractions of Shares. Holdings may, but shall not be
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant. As to any fraction of a share which Holdings elects not to issue,
Holdings shall
<PAGE> 7
make a cash payment in respect of such fraction in an amount equal to the same
fraction of the fair market value of a Warrant Share on the date of such
exercise as determined by the Board of Directors of Holdings in its sole
discretion.
SECTION 9. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. THE
PROVISIONS OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF
LAW OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION WHICH WOULD RESULT IN
THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
<PAGE> 8
IN WITNESS WHEREOF, Holdings has caused this Warrant to be signed and
attested by its duly authorized officers and to be dated the date hereof.
SUNRISE TELEVISION CORP.
By: /s/ David A. Fitz
---------------------------
Name: David A. Fitz
Title: Executive Vice President
<PAGE> 9
EXHIBIT A
EXERCISE AGREEMENT
To:_____________________________________________ Dated:_______________________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-_________________ ), hereby agrees to subscribe for
the purchase of __________________________ Vested Warrant Shares covered by
such Warrant.
Signature:__________________________
Name:_______________________________
Address:____________________________
<PAGE> 10
EXHIBIT B
FORM OF TRANSFER AGREEMENT
FOR VALUE RECEIVED, ____________________________________________________
hereby sells, assigns and transfers unto
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
its right to purchase ____________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint Attorney, to
transfer the same on the books of Holdings, with full power of substitution in
the premises.
Date:_____________________________
Signature:__________________________
Name:_______________________________
Address:____________________________
<PAGE> 11
SCHEDULE 1
SUNRISE TELEVISION CORP.
WARRANT SHARES VESTING SCHEDULE
<TABLE>
<CAPTION>
DATE HMTF FUND III HM3 COINVESTORS, L.P. CHASE EQUITY ASSOCIATES
---- ------------------------------- ------------------------------- -------------------------------
Shares Vesting Cumulative Shares Vesting Cumulative Shares Vesting Cumulative
Quarterly Shares Vested Quarterly Shares Vested Quarterly Shares Vested
-------------- ------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
At Closing
(December 30, 1999) 2,968.2 2,968.2 91.8 91.8 340 340
March 31, 2000 2,968.2 5,936.4 91.8 183.6 340 680
June 30, 2000 2,968.2 8,904.6 91.8 275.4 340 1,020
September 30, 2000 2,968.2 11,872.8 91.8 367.2 340 1,360
December 31, 2000 2,968.2 14,841.0 91.8 459.0 340 1,700
March 31, 2001 2,968.2 17,809.2 91.8 550.8 340 2,040
June 30, 2001 2,968.2 20,777.4 91.8 642.6 340 2,380
September 30, 2001 2,968.2 23,745.6 91.8 734.4 340 2,720
December 31, 2001 3,492.0 27,237.6 108.0 842.4 400 3,120
March 31, 2002 3,492.0 30,729.6 108.0 950.4 400 3,520
June 30, 2002 3,492.0 34,221.6 108.0 1,058.4 400 3,920
September 30, 2002 3,492.0 37,713.6 108.0 1,166.4 400 4,320
December 31, 2002 3,492.0 41,205.6 108.0 1,274.4 400 4,720
</TABLE>
<PAGE> 1
Exhibit 10.6
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), NOR PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY
STATE. THIS SECURITY MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED, OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO (A) A REGISTRATION
STATEMENT THAT IS EFFECTIVE UNDER THE ACT OR (B) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. THIS WARRANT AND THE SHARES
ISSUABLE UPON EXERCISE OF THIS WARRANT ARE SUBJECT TO THE TERMS OF A SECURITIES
PURCHASE AGREEMENT, DATED AS OF DECEMBER 30, 1999 (THE "SECURITIES PURCHASE
AGREEMENT"), BETWEEN SUNRISE TELEVISION CORP. AND THE PURCHASERS LISTED
THEREIN, A COPY OF WHICH AGREEMENT MAY BE OBTAINED UPON REQUEST.
STOCK PURCHASE WARRANT
Date of Issuance: December 30, 1999 Certificate No. W-6
For value received, SUNRISE TELEVISION CORP., a Delaware corporation
("Holdings"), hereby grants to CHASE EQUITY ASSOCIATES, L.P., a Delaware
limited partnership ("Purchaser") and its assigns and transferees, the right to
purchase from Holdings the Warrant Shares (as defined herein) at a price per
share of $.01 (the "Exercise Price"). Certain capitalized terms used herein are
defined in Section 2 hereof.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
1A. Exercise Period. The purchase rights represented by this
Warrant may only be exercised by the Registered Holder in accordance with
Section 1B (i) below prior to the expiration of the first Exit Event Period
occurring after the date hereof; provided, however, that this Warrant may only
be exercised with respect to Vested Warrant Shares.
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised
pursuant to Section 1A when all of the following items have been delivered to
Holdings (the "Exercise Time"):
(a) a completed Exercise Agreement, in the form, set forth
in Exhibit A hereto, executed by the Registered Holder;
<PAGE> 2
(b) this Warrant;
(c) the aggregate Exercise Price (payable in the manner
provided in subsection (viii) below); and
(d) such documentation as Holdings shall reasonably
request, including as described in Section 1B (vii) below.
(ii) Certificates for Vested Warrant Shares purchased upon
exercise of this Warrant shall be delivered by Holdings to the Registered
Holder within ten (10) business days after the date of the Exercise Time
together with any cash payable in lieu of a fraction of a share pursuant to
Section 10 hereof.
(iii) The Vested Warrant Shares issuable upon the exercise of
this Warrant shall be deemed to have been issued to the Registered Holder at
the Exercise Time, and the Registered Holder shall be deemed for all purposes
to have become the record holder of such Vested Warrant Shares at the Exercise
Time.
(iv) The issuance of certificates for Vested Warrant Shares
upon exercise of this Warrant shall be made without charge to the Registered
Holder for any issuance tax in respect thereof or other cost incurred by
Holdings in connection with such exercise and the related issuance of Vested
Warrant Shares; provided, that Holdings shall not be required to pay any taxes
in respect of the Warrant and Vested Warrant Shares with respect to any
permitted transfer of the Warrant which taxes shall be paid by the transferee
prior to the issuance of the Vested Warrant Shares.
(v) Holdings shall give to the Registered Holder not less than
ten (10) business days prior written notice (an "Exit Event Notice") of the
occurrence of an Exit Event. Upon exercise of this Warrant during an Exit Event
Period, such exercise shall be conditioned upon the consummation of such Exit
Event, and such exercise shall not be deemed to be effective until immediately
prior to the consummation of such Exit Event; provided, that in the event that
such Exit Event is not consummated, such exercise will be deemed ineffective.
(vi) Holdings shall at all times reserve and keep available out
of its authorized but unissued Shares of Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the maximum number of Warrant
Shares issuable upon the exercise of this Warrant. All Warrant Shares which are
so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free of preemptive rights. Holdings will use its commercially
reasonable efforts to ensure that all such Warrant Shares may be so issued
without violation by Holdings of any applicable law or governmental regulation.
<PAGE> 3
(vii) Upon exercise of this Warrant, Holdings may require
customary representations and warranties from the Registered Holder to assure
that the issuance and sale of the Warrant Shares shall not require registration
or qualification under the Securities Act or any state securities law.
(viii) The aggregate Exercise Price shall be paid by the
Registered Holder by certified or official bank check or by wire transfer of
immediately available funds to an account designated by Holdings for this
purpose; provided, however, that upon exercise of this Warrant in connection
with an Initial Public Offering, the Registered Holder may elect to pay the
aggregate Exercise Price by the surrender of Warrant Shares (which surrender
shall consist of Warrant Shares for which this Warrant is being exercised), and
without the payment of the aggregate Exercise Price in cash, in return for the
delivery to the Registered Holder of such number of Warrant Shares (rounded to
the nearest whole share) equal to the product of (1) the number of Warrant
Shares for which this Warrant is being exercised (as if the Exercise Price were
being paid in cash) and (2) the Cashless Exercise Ratio.
SECTION 2. Definitions. The following terms have the meanings set
forth below:
"Affiliate" means, as to any Person, any other Person who, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the first Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Cashless Exercise Ratio" means a fraction, the numerator of which is
the excess of the Fair Market Value of the Warrant Shares on the date of
exercise over the Exercise Price as of the date of exercise and denominator of
which is the Fair Market Value of the Warrant Shares on the date of exercise.
"Common Stock" means the Common Stock of Holdings, par value $.01 per
share.
"Exit Event" means the occurrence of a Sale of Holdings or an Initial
Public Offering.
"Exit Event Period" means, with respect to a proposed Exit Event, the
period beginning on the date the Exit Event Notice is given and ending on the
date which is the tenth (10) business day thereafter.
"Fair Market Value" means, (a) for the purposes of any determination
being made in connection with an Initial Public Offering involving Common
Stock, the initial price to the public for a share of such Common Stock being
sold
<PAGE> 4
in such Initial Public Offering and (b) for the purposes of any determination
being made in connection with an Initial Public Offering involving any capital
stock other than Common Stock, the fair market value of one share of Common
Stock as determined in good faith by the Board of Directors of Holdings (taking
into consideration the initial price to the public for a share of such capital
stock being sold in such Initial Public Offering).
"Independent Third Party" means any person who, immediately prior to
the contemplated transaction, does not own in excess of 5% of Holdings' Common
Stock on a fullydiluted basis (a "5% Owner"), who is not controlling,
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Person.
"Initial Public Offering" means Holdings' first underwritten public
offering of any series of Holdings' capital stock which has the unlimited right
to participate in dividends and distributions upon the liquidation of Holdings.
"Original Purchaser" means the Purchaser named in the Securities
Purchase Agreement that first acquired this Warrant (or any predecessor to this
Warrant).
"Person" means any individual, partnership, limited liability
corporation, joint venture, corporation, trust, unincorporated organization or
government or department or agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in
the records of Holdings maintained pursuant to Section 8.
"Sale of Holdings" means the sale of Holdings to an Independent Third
Party or group (within the meaning of Section 13(d) of the Securities Exchange
Act of 1934, as amended) of Independent Third Parties pursuant to which such
party or parties acquire (i) capital stock of Holdings possessing the voting
power under normal circumstances to elect a majority of Holdings' board of
directors (whether by merger, consolidation, sale, transfer or exchange of
Holdings' capital stock) or (ii) all or substantially all of Holdings' assets
determined on a consolidated basis.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of December 30, 1999, between Holdings and the Purchasers
named therein.
"Vested Warrant Shares" means the number of Warrant Shares reflected
on Schedule 1 hereto under the caption "Shares Vesting Quarterly" under the
name of the Purchaser (the "Purchaser Column"). That number of Warrant Shares
shown under the Purchaser Column on the line item delineated "At
<PAGE> 5
Closing" shall be fully vested upon issuance and the Warrant thereafter may be
exercised at any time for such number of Warrant Shares, subject to the terms
and conditions of this Warrant. If, on March 31, June 30, September 30 and
December 31 of each year, commencing March 31, 2000 and continuing through and
including December 31, 2002, the Original Purchaser (or any Affiliate thereof)
continues to own any Subordinated Notes of the Company purchased by the
Original Purchaser pursuant to the Securities Purchase Agreement (including,
for purposes hereof, any Subordinated Notes issued after December 30, 1999 in
lieu of cash dividends on the Subordinated Notes), that number of Warrant
Shares shown under the Purchaser Column on the line item with the corresponding
date, shall be fully vested and the Warrant thereafter may be exercised at any
time for such number of Warrant Shares (plus any other Vested Warrant Shares as
to which the Warrant has not previously been exercised), subject to the terms
and conditions of this Warrant.
"Warrant Shares" means the number shares of Common Stock issuable upon
exercise of this Warrant as determined in accordance with Schedule 1 hereto
under the name of the Purchaser (or one of its Affiliates) on such Schedule 1,
subject to adjustment as provided herein.
SECTION 3. No Voting Rights. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a stockholder of Holdings.
SECTION 4. Adjustment to Warrant Shares.
(a) If there is any change in the number of outstanding shares of
Common Stock through the declaration of stock dividends, stock splits
or similar transactions, the number of Warrant Shares issuable upon
exercise of the Warrant shall be automatically adjusted to reflect
such stock dividends, stock splits or similar transactions.
(b) In case of any reclassification of the Common Stock or any
consolidation of Holdings with, or merger of Holdings into, any other
Person, any merger of another Person into Holdings (other than a
merger that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock), any
sale or transfer of all or substantially all of the assets of Holdings
or any compulsory share exchange pursuant to which share exchange the
Common Stock is converted into other securities, cash or other
property, then lawful provision shall be made as part of the terms of
such transaction whereby the Holder of the Warrant shall have the
right thereafter, during the period the Warrant shall be exercisable,
to exercise the Warrant for (but only for) the kind and amount of
securities, cash and other property receivable upon the
reclassification, consolidation, merger, sale, transfer or share
exchange by a holder of the number of shares of Common Stock into
which the Warrant would have been exercisable immediately prior to the
reclassification, consolidation, merger, sale, transfer or share
exchange. Holdings or the Person formed by the
<PAGE> 6
consolidation or resulting from the merger or which acquires such
assets or which acquires Holdings' shares, as the case may be, shall
make provision in its certificate or articles of incorporation or
other constituent documents to establish such rights. The certificate
or articles of incorporation or other constituent documents shall
provide for adjustments, which, for events subsequent to the effective
date of the certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be
practicable. to the adjustments provided for in this Section 4(b). The
provisions of this Section 4(b) shall similarly apply to successive
reclassifications, consolidations, mergers, sales, transfers or share
exchanges.
SECTION 5. Replacement. Upon receipt of evidence satisfactory to
Holdings (an affidavit of the Registered Holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of indemnity satisfactory to Holdings or, in the case
of any such mutilation upon surrender of such certificate, Holdings shall, at
the expense of the Registered Holder, execute and deliver in lieu of such
certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
SECTION 6. Notices. Except as otherwise expressly provided herein, all
notices and deliveries referred to in this Warrant shall be in writing, shall
be delivered personally, sent by registered or certified mail, return receipt
requested and postage prepaid or sent via nationally recognized overnight
courier or via facsimile and shall be deemed to have been given when so
delivered (or when received, if delivered by any other method) if sent (i) to
Holdings, at its principal executive offices and (ii) to the Registered Holder,
at such holder's address as it appears in the records of Holdings (unless
otherwise indicated by such holder).
SECTION 7. Warrant Register. Holdings shall maintain at its principal
executive offices books for the registration and, to the extent permitted by
(a) the laws of the State of Delaware and (b) pursuant to Section 4 hereof, the
registration of transfer of the Warrant. Upon any transfer of the Warrant, the
Registered Holder shall deliver to Holdings a Transfer Agreement substantially
in the form set forth in Exhibit B hereto. Holdings may deem and treat the
Registered Holder as the absolute owner hereof (notwithstanding any notation of
ownership or other writing hereon made by anyone) for all purposes and shall
not be affected by any notice to the contrary. As a condition to the transfer
of this Warrant, the transferee shall be required to deliver a written
acknowledgment of its agreement to the vesting provisions of this Warrant.
SECTION 8. Fractions of Shares. Holdings may, but shall not be
required to, issue a fraction of a Warrant Share upon the exercise of this
Warrant. As to any fraction of a share which Holdings elects not to issue,
Holdings shall
<PAGE> 7
make a cash payment in respect of such fraction in an amount equal to the same
fraction of the fair market value of a Warrant Share on the date of such
exercise as determined by the Board of Directors of Holdings in its sole
discretion.
SECTION 9. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. THE
PROVISIONS OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF
LAW OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION WHICH WOULD RESULT IN
THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
<PAGE> 8
IN WITNESS WHEREOF, Holdings has caused this Warrant to be signed and
attested by its duly authorized officers and to be dated the date hereof.
SUNRISE TELEVISION CORP.
By: /s/ David A. Fitz
---------------------------
Name: David A. Fitz
Title: Executive Vice President
<PAGE> 9
EXHIBIT A
EXERCISE AGREEMENT
To:______________________________________________ Dated:_______________________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-_________________ ), hereby agrees to subscribe for
the purchase of ________________________ Vested Warrant Shares covered by such
Warrant.
Signature:__________________________
Name:_______________________________
Address:____________________________
<PAGE> 10
EXHIBIT B
FORM OF TRANSFER AGREEMENT
FOR VALUE RECEIVED,_____________________________________________________
hereby sells, assigns and transfers unto
Name____________________________________________________________________________
(please typewrite or print in block letters)
Address_________________________________________________________________________
its right to purchase _______________ shares of Common Stock represented by
this Warrant and does hereby irrevocably constitute and appoint Attorney, to
transfer the same on the books of Holdings, with full power of substitution in
the premises.
Date:_____________________________
Signature:__________________________
Name:_______________________________
Address:____________________________
<PAGE> 11
SCHEDULE 1
SUNRISE TELEVISION CORP.
WARRANT SHARES VESTING SCHEDULE
<TABLE>
<CAPTION>
DATE HMTF FUND III HM3 COINVESTORS, L.P. CHASE EQUITY ASSOCIATES
---- ------------------------------- ------------------------------- -------------------------------
Shares Vesting Cumulative Shares Vesting Cumulative Shares Vesting Cumulative
Quarterly Shares Vested Quarterly Shares Vested Quarterly Shares Vested
-------------- ------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
At Closing
(December 30, 1999) 2,968.2 2,968.2 91.8 91.8 340 340
March 31, 2000 2,968.2 5,936.4 91.8 183.6 340 680
June 30, 2000 2,968.2 8,904.6 91.8 275.4 340 1,020
September 30, 2000 2,968.2 11,872.8 91.8 367.2 340 1,360
December 31, 2000 2,968.2 14,841.0 91.8 459.0 340 1,700
March 31, 2001 2,968.2 17,809.2 91.8 550.8 340 2,040
June 30, 2001 2,968.2 20,777.4 91.8 642.6 340 2,380
September 30, 2001 2,968.2 23,745.6 91.8 734.4 340 2,720
December 31, 2001 3,492.0 27,237.6 108.0 842.4 400 3,120
March 31, 2002 3,492.0 30,729.6 108.0 950.4 400 3,520
June 30, 2002 3,492.0 34,221.6 108.0 1,058.4 400 3,920
September 30, 2002 3,492.0 37,713.6 108.0 1,166.4 400 4,320
December 31, 2002 3,492.0 41,205.6 108.0 1,274.4 400 4,720
</TABLE>
