SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 3, 1996
BULL RUN CORPORATION
(Exact name of registrant as specified in its charter)
GEORGIA 0-9385 91-1117599
(State or other (Commission File (IRS Employer
jurisdiction of Number Identification No.)
incorporation)
4370 PEACHTREE ROAD, N.E., ATLANTA, GEORGIA 30319
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 266-8333
N/A
(Former name or former address, if changed since last report.)
Page 1 of 69 pages
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Item 5. Other Events.
On January 3, 1996, Bull Run Corporation ("Bull Run")
entered into a First Modification of Loan Agreement and two
bank term notes with Bank South (the "Bank Notes"), providing
for a total borrowing of up to $23,500,000 bearing interest
initially at the prime rate, with the principal amount thereof
due in 47 monthly installments of $200,000 each commencing
February 1, 1999 with the remaining principal balance thereof
due on January 1, 2003. The Bank Notes replaced two former term
loans with Bank South totaling $13,500,000. The Bank
Notes are collateralized by shares of common stock of Gray
Communications Systems, Inc. ("Gray") owned by Bull Run, an
8% subordinated note receivable from Gray (discussed
below), warrants to purchase shares of Gray common stock
(discussed below), and shares of Bull Run common stock held by
a principal shareholder of Bull Run. The existing $1,500,000
revolving credit note with Bank South expiring on April 1,
1997, provided for under the original Loan Agreement between
Bull Run and Bank South dated March 29, 1995, remains
outstanding.
Also on January 3, 1996, Bull Run entered into a Note
Purchase Agreement with Gray pursuant to which Bull Run
purchased an 8% Subordinated Note issued by Gray in the
principal amount of $10,000,000 due in January 2005, with
interest payable quarterly beginning March 31, 1996. In
connection with the Note Purchase Agreement, Gray issued Bull
Run warrants entitling Bull Run to purchase up to 487,500
shares of Gray common stock at $17.88125 per share, of which
warrants for 300,000 shares are fully vested, with the
remaining warrants vesting in five annual installments of
37,500 shares each, beginning January 3, 1997, assuming the
8% Subordinated Note remains outstanding. Vested warrants
are exercisable after January 3, 1998 and expire in January
2006.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
a) Financial Statements
Not Applicable.
b) Pro Forma Financial Information
Not Applicable.
c) Exhibits
<TABLE>
<CAPTION>
Page in
8-K
<S> <C> <C>
(i) First Modification of Loan Agreement between Bull 4
Run Corporation and Bank South, dated
January 3, 1996
(ii) First Term Loan Note dated January 3, 1996 13
(iii) Second Term Loan Note dated January 3, 1996 15
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(iv) Note Purchase Agreement between Bull Run 17
Corporation and Gray Communications Systems,
Inc. dated January 3, 1996
(v) 8% Subordinated Note dated January 3, 1996 44
(vi) Warrant to Purchase Common Stock 46
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 18, 1996 BULL RUN CORPORATION
By: /s/ Frederick J. Erickson
Frederick J. Erickson
Vice President - Finance,
Chief Financial Officer, Treasurer and
Assistant Secretary
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FIRST MODIFICATION OF LOAN AGREEMENT
THIS MODIFICATION is made as of this 3rd day of January, 1996,
by and between BULL RUN CORPORATION, a Georgia corporation ("Borrower"), and
BANK SOUTH, a Georgia banking corporation formerly known as Bank South, N.A.
("Lender").
Statement of Facts
Lender and Borrower are parties to that certain Loan
Agreement, dated as of March 29, 1995 (the "Loan Agreement"), pursuant to which
Lender has agreed to make one or more loans from time to time to the Borrower in
accordance with the terms and conditions thereof. Lender and Borrower desire to
modify the Loan Agreement in certain respects in accordance with the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, the
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Borrower and Lender do hereby agree that all capitalized terms used herein shall
have the meanings ascribed thereto in the Loan Agreement as amended hereby
(except as otherwise expressly defined or limited herein) and do hereby further
agree as follows:
Statement of Terms
1. Amendments of Loan Agreement. Subject to the
fulfillment of the conditions precedent to the effectiveness of this
Modification which are set forth below, the Loan Agreement shall be amended
as follows:
(a) The Loan Agreement is hereby amended by
adding to Section 1.01 thereof the following new definitions:
"Default Interest Rate" shall mean for any
particular type of Loan the interest rate otherwise
in effect with respect to such Loan plus (a) an
additional two percentage points (2.0%) during the
period from January 3, 1996 through January 2, 1999,
(b) an additional two and one-quarter percentage
points (2.25%) during the period from January 3, 1999
through January 2, 2001 and (c) an additional two and
one-half percentage points (2.5%) from and after
January 3, 2001.
"Gray" shall mean Gray Communications
Systems, Inc., a Georgia corporation, and its
successors and assigns.
"Interest Rate Contract" shall mean any
interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, or other
similar agreement or arrangement entered into by
Borrower to protect the Borrower against fluctuations
in interest rates.
"Prior First Term Loan" shall mean the
$10,400,000 loan made by Lender to Borrower on or
about March 29, 1995 under Section 3.01 of the Loan
Agreement as originally executed and delivered.
"Prior Second Term Loan" shall mean the
$3,100,000 loan made by
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Lender to Borrower on or about March 29, 1995 under
Section 3.02 of the Loan Agreement as originally
executed and delivered.
"Second Borrower Pledge Agreement" shall
mean the Second Borrower Stock Pledge Agreement,
dated as of January 3, 1996, executed by Borrower in
favor of the Lender, as the same may be amended,
supplemented or restated or otherwise replaced from
time to time."
"Subordinated Note" shall mean the
$10,000,000 principal amount 8% Subordinated Note due
January 3, 2005 issued or to be issued by Gray in
favor of Borrower, and any extension, modification,
supplement or replacement thereof or therefor.
"Warrant" shall mean the warrant to purchase
487,500 shares of the common stock of Gray which have
been or will be issued by Gray in favor of Borrower
in connection with the Subordinated Note, and any
extension, modification, supplement or replacement
thereof or therefor.
(b) The Loan Agreement is hereby further amended by
deleting from Section 1.01 thereof the terms "Applicable Term
Loan Margin," "Collateral," "First Guarantor Pledge
Agreement," "First Term Loan Maximum Availability," "First
Term Loan Note," "Pledge Agreements," "Second Term Loan
Maximum Availability," "Second Guarantor Pledge Agreement,"
"Second Term Loan Note" and "Term Loan Facility Expiration
Date" and by substituting in lieu thereof the following new
definitions of such terms:
"Applicable Term Loan Margin" shall mean at
any time (a) during the period from January 3, 1996
through January 2, 1999, zero percentage points
(0.0%) for so much of the principal balance of any
Term Loan as consists of Prime Rate Advances and one
and three-quarters percentage points (1.75%) for so
much of the principal balance of any Term Loan as
consists of LIBOR Advances, (b) during the period
from January 3, 1999 through January 2, 2001,
one-quarter of one percentage point (0.25%) for so
much of the principal balance of any Term Loan as
consists of Prime Rate Advances and two and
one-quarter percentage points (2.25%) for so much of
the principal balance of any Term Loan as consists of
LIBOR Advances, and (c) from and after January 3,
2001, one-half of one percentage point (0.50%) for so
much of the principal balance of any Term Loan as
consists of Prime Rate Advances and two and one-half
percentage points (2.50%) for so much of the
principal balance of any Term Loan as consists of
LIBOR Advances.
"Collateral" shall mean (i) the Pledged
Shares, (ii) the Subordinated Note, (iii) the
Warrant, (iv) any and all other property which may be
hereafter pledged or collaterally assigned to Lender
or in which Lender may be otherwise granted a Lien to
secure the Obligations pursuant to any and all of the
Credit Documents and (v) any and all cash and
non-cash proceeds of the foregoing.
"First Guarantor Pledge Agreement" shall
mean the Amended and Restated First Guarantor Stock
Pledge Agreement, dated as of January 3, 1996,
executed by the Guarantor in favor of the Lender, as
the same may be
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amended, supplemented, restated or otherwise replaced
from time to time
"First Term Loan Maximum Availability" shall
mean $10,400,000 (as such amount may be adjusted from
time to time pursuant to this Agreement).
"First Term Loan Note" shall mean the First
Term Loan Note, dated as of January 3, 1996, executed
by the Borrower and payable to the order of Lender as
evidence of the First Term Loan and any extension,
renewal, modification or replacement thereof or
therefor.
"Pledge Agreements" shall mean the Borrower
Pledge Agreement, the Second Borrower Pledge
Agreement, the Guarantor Pledge Agreements, and the
Partnership Pledge Agreement.
"Second Guarantor Pledge Agreement" shall
mean the Amended and Restated Second Guarantor Stock
Pledge Agreement, dated as of January 3, 1996,
executed by Guarantor in favor of the Lender, as the
same may be amended, supplemented, restated or
otherwise replaced from time to time.
"Second Term Loan Maximum Availability"
shall mean $13,100,000 (as such amount may be
adjusted from time to time pursuant to this
Agreement).
"Second Term Loan Note" shall mean the
Second Term Loan Note, dated as of January 3, 1996,
executed by the Borrower and payable to the order of
Lender as evidence of the Second Term Loan and any
extension, renewal, modification or replacement
thereof or therefor.
"Term Loan Facility Expiration Date" shall
mean January 31, 1996 (as such date may be extended,
accelerated, amended from time to time pursuant to
this Agreement."
(c) The Loan Agreement shall be further amended by
deleting Section 2.02(b) thereof in its entirety and by
substituting in lieu thereof the following new Section
2.02(b):
(b) After the occurrence and during the
continuation of any Event of Default, the unpaid
principal balance of the Revolving Credit Loans (and,
to the extent permitted by applicable law, all
accrued interest thereon) may, if elected by Lender
in its discretion, bear interest at a rate per annum
equal to the Default Interest Rate, which rate
adjustment shall be effective from the date notice
thereof is given by the Lender to the Borrower.
(d) The Loan Agreement shall be further amended by
deleting Section 3.01 and Section 3.02 thereof in their
entireties and by substituting in lieu thereof the following
new Section 3.01 and Section 3.02:
Section 3.01. First Term Loan Facility. (a)
Subject to the terms and conditions of this
Agreement, the Lender agrees to advance to the
Borrower, from time to time on or prior to the Term
Loan Facility Expiration Date and upon the Borrower's
request therefor, a First Term Loan in the
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<PAGE>
principal amount of up to the First Term Loan Maximum
Availability. The First Term Loan Facility may be
disbursed in one or more advances but the Lender's
commitment under the First Term Loan Facility shall
be reduced by each advance thereunder and any sums
advanced under the First Term Loan Facility may not
be repaid and then re-borrowed thereunder.
(b) The proceeds of the First Term Loan
shall be used to refinance the $10,400,000
outstanding principal balance of the Prior First Term
Loan.
Section 3.02. Second Term Loan Facility. (a)
Subject to the terms and conditions of this
Agreement, the Lender agrees to advance to the
Borrower, from time to time on or prior to the Term
Loan Facility Expiration Date and upon the Borrower's
request therefor, a Second Term Loan in the principal
amount of up to the Second Term Loan Maximum
Availability. The Second Term Loan Facility may be
disbursed in one or more advances but the Lender's
commitment under the Second Term Loan Facility shall
be reduced by each advance thereunder and any sums
advanced under the Second Term Loan Facility may not
be repaid and then re-borrowed thereunder.
(b) The proceeds of the Second Term Loan
shall be used to finance or refinance (i) the
$3,100,000 outstanding principal balance of the Prior
Second Term Loan and, (ii) up to $10,000,000 of the
cost of the acquisition by the Borrower of the
Subordinated Note and the Warrant.
(e) The Loan Agreement is hereby further amended by
deleting Section 3.03(b) thereof in its entirety and by
substituting in lieu thereof, the following new Section
3.03(b):
(b) After the occurrence and during
the continuation of any Event of Default,
the unpaid principal balance of either or
both of the Term Loans (and, to the extent
permitted by applicable law, all accrued
interest thereon) may, if elected by the
Lender in its discretion, bear interest at a
rate per annum equal to Default Rate, which
rate adjustment shall be effective from the
date notice thereof is given by the Lender
to the Borrower.
(f) The Loan Agreement is hereby further amended by
deleting Section 3.04 thereof in its entirety and by
substituting in lieu thereof the following new Section 3.04:
Section 3.04. Term Loan Notes;
Repayment of Principal and Interest. (a) The
Borrower's obligation to pay to the Lender
the principal of and interest on the First
Term Loan shall be evidenced by the records
of the Lender (subject to Section 4.05
hereof) and by the First Term Loan Note. The
principal balance of the First Term Loan
shall be payable in forty-seven (47)
consecutive monthly installments of $100,000
each which shall be due commencing on
February 1, 1999 and shall continue to be
due on the same day of each succeeding month
thereafter, together with a forty-eighth
(48th) and final installment of principal on
the First Term Loan which shall be due on
January 1, 2003 in an amount equal to the
entire remaining unpaid
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principal balance of the First Term Loan.
(b) The Borrower's obligation to pay
to the Lender the principal of and interest
on the Second Term Loan shall be evidenced
by the records of the Lender (subject to
Section 4.05 hereof) and by the Second Term
Loan Note. The principal balance of the
Second Term Loan shall be payable in
forty-seven (47) consecutive monthly
installments of $100,000 each which shall be
due commencing on February 1, 1999 and shall
continue to be due on the same day of each
succeeding month thereafter, together with a
forty-eighth (48th) and final installment of
principal on the Second Term Loan which
shall be due on January 1, 2003 in an amount
equal to the entire remaining unpaid
principal balance of the Second Term Loan.
(c) During the period from January
3, 1996 through January 1, 1999, accrued
interest on so much of any Term Loan as
consists of Prime Rate Advances shall be
payable to the Lender in arrears on the
first (1st) day of each calendar quarter,
commencing with the calendar quarter
following the calendar quarter in which the
initial advance of such Term Loan is made,
and continuing to be due on the same day of
each calendar quarter thereafter, and from
and after February 1, 1999, accrued interest
on so much of any Term Loan as consists of
Prime Rate Advances shall be payable on the
same dates on which are due installments of
principal on such Term Loan as provided
above. Accrued interest on so much of any
Term Loan as consists of LIBOR Advances
shall be payable to the Lender in arrears on
the last day of each Interest Period
applicable thereto and, in the case of any
LIBOR Advance having an Interest Period in
excess of three (3) months, on each day
which occurs every three (3) months after
the initial date of such Interest Period. In
all cases a final payment equal to all
remaining accrued but unpaid interest on
each of the Term Loans shall be due on the
date on which the final installment of
principal on such Term Loan is due as
provided above.
(g) The Loan Agreement is hereby further amended by
adding to Section 4.03(c) the following clause (iii) after
clause (ii) thereof, with the intent being that Borrower must
provide Lender with thirty days irrevocable written notice of
any principal prepayment on any of the Term Loans:
and (iii) in the event of any full or
partial prepayment on any Term Loan,
Borrower must provide Lender with thirty
(30) days prior irrevocable written notice
of the date and amount of such prepayment.
(h) The Loan Agreement is hereby further amended by
deleting Section 4.04(b) and 4.04(c) thereof and by
substituting in lieu thereof the following new subsections (b)
and (c), respectively:
(b) The Obligations (other than the
Second Term Loan Obligations) shall be
secured by (i) the Borrower's first-priority
and perfected pledge to the Lender of one
hundred percent of the outstanding capital
stock of Guarantor pursuant to the Borrower
Stock
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Pledge Agreement, (ii) the Guarantor's first
priority and perfected pledge to the Lender
of 169,431 shares of the common stock of
Gray pursuant to the First Guarantor Pledge
Agreement and (iii) the Partnership's first
priority and perfected pledge to the Lender
of 1,284,000 shares of the common stock of
the Borrower pursuant to the Partnership
Pledge Agreement.
(c) The Second Term Loan Obligations
shall be secured by the Guarantor's
first-priority and perfected pledge to the
Lender of 906,294 shares of the common stock
of Gray pursuant to the Second Guarantor
Pledge Agreement and shall be further
secured by the Borrower's first-priority and
perfected pledge to the Lender of the
Subordinated Note and all of the Warrant
pursuant to the Second Borrower Pledge
Agreement.
(i) The Loan Agreement is hereby further amended by
adding the following new Section 7.07 to Article VII thereof:
Section 7.07. Interest Rate
Contracts. Upon the written request of
Lender, the Borrower shall enter into one or
more Interest Rate Contracts with one or
more financial institutions acceptable to
Lender and which (i) are sufficient to
protect the Borrower against fluctuations in
interest rates with respect to principal and
interest payments in an aggregate notational
amount of up to $10,000,000 and (ii) are
otherwise in form and substance acceptable
to Lender. Once any such Interest Rate
Contract has been entered into by the
Borrower, the Borrower shall maintain in
full force and effect such Interest Rate
Contract. Notwithstanding the foregoing, the
Borrower shall determine to its own
satisfaction whether any such Interest Rate
Contract to which it is a party is
sufficient to provide protection against
fluctuations in interest rates and to meet
its needs and (notwithstanding any approval,
or failure to approve, by the Lender) the
Lender shall have no obligation or
accountability with respect thereto or any
obligation to propose, quote or enter into
any such Interest Rate Contract with the
Borrower.
(j) The Loan Agreement is hereby further amended by
deleting Section 7.05(c) thereof and by substituting in lieu
thereof the following new Section 7.05(c):
(c) Borrower's Leverage Ratio shall
not be more than 1.5 to 1.0 as of the end of
any fiscal quarter or year ending on or
after December 31, 1995.
2. No Other Amendments. Except for the amendments expressly
set forth and referred to in Section 1 above, the Loan Agreement shall remain
unchanged and in full force and effect. Nothing in this Modification or any of
the other Supplemental Credit Documents (as defined below) is intended, or shall
be construed, to constitute a novation or an accord and satisfaction of any of
the Obligations or to modify, affect or impair the perfection or continuity of
Lender's security interests in, security titles to or other Liens on any
Collateral for the Obligations. Without limiting the generality of the
foregoing, Borrower acknowledges and agrees that the First Borrower Pledge
Agreement remains in full force and effect to secure all of the Obligations
(other than the Second
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Term Loan Obligations).
3. Representations and Warranties. To induce Lender to enter
into this Modification, the Borrower does hereby warrant, represent and covenant
to Lender that: (a) each representation or warranty of the Borrower set forth in
the Loan Agreement is hereby restated and reaffirmed as true and correct on and
as of the date hereof as if such representation or warranty were made on and as
of the date hereof (except to the extent that any such representation or
warranty expressly relates to a prior specific date or period), and no Default
or Event of Default has occurred and is continuing as of this date under the
Loan Agreement as amended by this Modification; and (b) each of the Borrower,
the Guarantor and the Partnership has the power and is duly authorized to enter
into, deliver and perform the Supplemental Credit Documents to which it is a
party, and each of the Supplemental Credit Documents is the legal, valid and
binding obligation of each Credit Party enforceable against such Credit Party in
accordance with its terms.
4. Facility Fee. In consideration of Lender entering into this
Modification, Borrower shall pay to Lender on or before the date of this
Modification, a non-refundable facility fee of $75,000 ($25,000 of which already
has been received by Lender). Borrower acknowledges that such facility fee shall
be fully earned by the Lender upon the Lender's receipt of such fee and shall be
non-refundable.
5. Reimbursement of Costs and Expenses. The Borrower hereby
agrees to reimburse Lender on demand for all costs (including reasonable
attorneys' fees) incurred by Lender in negotiating, documenting and consummating
this Modification, the other documents referred to herein, and the transactions
contemplated hereby and thereby.
6. Conditions Precedent to Effectiveness of this Modification.
The effectiveness of this Modification and the amendments provided in Section 1
above are subject to the truth and accuracy in all material respects of the
representations and warranties of the Borrower contained in Section 3 above and
to the fulfillment of the following additional conditions precedent (all
documents described below shall be in form and substance satisfactory to Lender,
and the documents described in paragraph (a), (c) and (d) below are herein
collectively called the "Supplemental Credit Documents"):
(a) Lender shall have received one or more duly
executed counterparts of this Modification, the First Term
Loan Note, the Second Term Loan Note, the Second Borrower
Pledge Agreement, the Amended and Restated First Guarantor
Pledge Agreement and the Amended and Restated Second Guarantor
Pledge Agreement;
(b) Lender shall have received the originals of all
certificates or other instruments, evidencing the shares or
warrants covered by the Second Borrower Stock Pledge Agreement
together with an endorsement of the Note and a UCC-1 financing
statement covering such collateral, both duly executed and
delivered by Borrower;
(c) Lender shall have received a written report of
examinations of the Uniform Commercial Code financing
statement, tax lien and judgment lien records of Fulton
County, Georgia showing that there are no such Liens of record
upon the Borrower other than those in favor of Lender;
(d) Lender shall have received the First Modification
of Option Agreement duly executed by the Purchaser and
consented to by the other Credit Parties;
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(e) Lender shall have received a duly executed
Guarantor Reaffirmation and Consent from the Guarantor and a
duly executed Partnership Reaffirmation and Consent from the
Partnership;
(f) Lender shall have received closing certificates
duly executed and completed by the Borrower, the Guarantor and
the Partnership and a duly executed and completed Federal
Reserve Form U-1 relating to each of the Revolving Credit
Loan, the First Term Loan and the Second Term Loan;
(g) Lender shall have received an opinion of the
Borrower's, the Guarantor's, the Partnership's and the
Purchaser's counsel addressing such legal matters as may be
requested by the Lender;
(h) Lender shall have received a certificate of
existence for Borrower from the Secretary of State of Georgia
and a good standing certificate for Guarantor from the
Secretary of State of Delaware;
(i) Lender shall have received payment of the
facility fee by Borrower pursuant to Section 4 hereof plus all
interest accrued through the effective date of this
Modification on the Prior First Term Loan and the Prior Second
Term Loan;
(j) All conditions precedent to the issuance of the
Subordinated Note and the Warrant and the closing of Gray's
acquisition of television station WRDW-TV, Augusta, Georgia,
shall have been fulfilled (other than the disbursement of the
Term Loan proceeds as contemplated hereby), and the
Subordinated Note and the Warrant shall be issued and such
acquisition shall be closed on terms and conditions acceptable
to Lender in all respects;
(k) The First Consolidated Modification of Loan
Agreement, dated as of the date hereof, among Gray, Lender and
the other parties thereto shall have been executed and
delivered by all parties thereto and all conditions to the
effectiveness thereof shall have been fulfilled (other than
the issuance of the Subordinated Note and the Warrant and the
closing of the aforesaid acquisition); and
(l) Lender shall have received an executed
participation agreement from Deposit Guaranty National Bank
for the purchase of a $10,000,000 participation interest in
the Term Loans.
7. Counterparts. This Modification may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.
8. Governing Law. This Modification shall be governed by, and
construed in accordance with, the internal laws of the State of Georgia
applicable to contracts made and performed in such state.
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IN WITNESS WHEREOF, the parties hereto have caused this
Modification to be duly executed and delivered as of the day and year specified
at the beginning hereof.
BORROWER:
BULL RUN CORPORATION
By: /Robert S. Prather, Jr./
President
LENDER:
BANK SOUTH
By: /W. Thompkins Rison, Jr./
Corporate Banking Officer
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FIRST TERM LOAN NOTE
$10,400,000 January 3, 1996
FOR VALUE RECEIVED, the undersigned BULL RUN CORPORATION, a
Georgia corporation (the "Borrower"), hereby promises to pay to the order of
BANK SOUTH, a Georgia banking corporation formerly known as Bank South, N.A.
(herein, together with any subsequent holder hereof, called the "Lender"), the
principal sum of TEN MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS
($10,400,000), or the outstanding principal amount of the First Term Loan made
to the Borrower by the Lender pursuant to the Loan Agreement referred to below,
which principal sum shall be payable (i) in installments on the due dates and in
the amounts set forth in the Loan Agreement or (ii) on any earlier date on which
all amounts outstanding under this First Term Loan Note (this "Note") have
become due and payable pursuant to the provisions of Section 9.02 of the Loan
Agreement. The Borrower likewise promises to pay interest on the outstanding
principal balance of the First Term Loan made by the Lender to the Borrower, at
such interest rates, payable at such times, and computed in such manner, as are
specified in the Loan Agreement in strict accordance with the terms thereof.
This Note is issued pursuant to, and is the First Term Loan
Note referred to in, the Loan Agreement dated as of March 29, 1995, between the
Borrower and the Lender as amended by the First Modification of Loan Agreement
dated January 3, 1996 between Borrower and Lender (as the same may be further
amended or supplemented from time to time, the "Loan Agreement"), and the Lender
is and shall be entitled to all benefits thereof and of all the other Credit
Documents executed and delivered to the Lender in connection therewith. Terms
defined in the Loan Agreement are used herein with the same meaning. The Loan
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain Events of Default, provisions
relating to prepayments on account of principal hereof prior to the maturity
hereof, and provisions for post-default interest rates.
The Borrower agrees to make payments of principal and interest
hereon on the dates and in the amounts specified in the Loan Agreement in strict
accordance with the terms thereof.
In case an Event of Default shall occur and be continuing, the
principal and all accrued interest of this Note may automatically become, or may
be declared, immediately due and payable in the manner and with the effect
provided in the Loan Agreement. The Borrower agrees to pay, and save the Lender
harmless against any liability for the payment of, all costs and expenses,
including actual and reasonable attorneys' fees, arising in connection with the
enforcement by the Lender of any of its rights or remedies under this Note or
the Loan Agreement.
This Note has been delivered in Atlanta, Georgia, and the
rights and obligations of the Lender and the Borrower hereunder shall be
construed in accordance with and governed by the laws of the State of Georgia
(without giving effect to its conflicts of law rules).
The Borrower expressly waives any presentment, demand, protest
or notice in connection with this Note, whether now or hereafter required by
applicable law. This Note is intended to be an instrument under seal.
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IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed, sealed and delivered by its duly authorized officer as of the date
first above written.
BULL RUN CORPORATION
(CORPORATE SEAL)
By: /Robert S. Prather, Jr./
President
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SECOND TERM LOAN NOTE
$13,100,000 January 3, 1996
FOR VALUE RECEIVED, the undersigned BULL RUN CORPORATION,
Georgia corporation (the "Borrower"), hereby promises to pay to the order of
BANK SOUTH, a Georgia banking corporation formerly known as Bank South, N.A.
(herein, together with any subsequent holder hereof, called the "Lender"), the
principal sum of THIRTEEN MILLION ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($13,100,000), or the outstanding principal amount of the Second Term Loan made
to the Borrower by the Lender pursuant to the Loan Agreement referred to below,
which principal sum shall be payable (i) in installments on the due dates and in
the amounts set forth in the Loan Agreement or (ii) on any earlier date on which
all amounts outstanding under this Second Term Loan Note (this "Note") have
become due and payable pursuant to the provisions of Section 9.02 of the Loan
Agreement. The Borrower likewise promises to pay interest on the outstanding
principal balance of the Second Term Loan made by the Lender to the Borrower, at
such interest rates, payable at such times, and computed in such manner, as are
specified in the Loan Agreement in strict accordance with the terms thereof.
This Note is issued pursuant to, and is the Second Term Loan
Note referred to in, the Loan Agreement dated as of March 29, 1995, between the
Borrower and the Lender as amended by the First Modification of Loan Agreement
dated January 3, 1996 between Borrower and Lender (as the same may be further
amended or supplemented from time to time, the "Loan Agreement"), and the Lender
is and shall be entitled to all benefits thereof and of all the other Credit
Documents executed and delivered to the Lender in connection therewith. Terms
defined in the Loan Agreement are used herein with the same meaning. The Loan
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain Events of Default, provisions
relating to prepayments on account of principal hereof prior to the maturity
hereof, and provisions for post-default interest rates.
The Borrower agrees to make payments of principal and interest
hereon on the dates and in the amounts specified in the Loan Agreement in strict
accordance with the terms thereof.
In case an Event of Default shall occur and be continuing, the
principal and all accrued interest of this Note may automatically become, or may
be declared, immediately due and payable in the manner and with the effect
provided in the Loan Agreement. The Borrower agrees to pay, and save the Lender
harmless against any liability for the payment of, all costs and expenses,
including actual and reasonable attorneys' fees, arising in connection with the
enforcement by the Lender of any of its rights or remedies under this Note or
the Loan Agreement.
This Note has been delivered in Atlanta, Georgia, and the
rights and obligations of the Lender and the Borrower hereunder shall be
construed in accordance with and governed by the laws of the State of Georgia
(without giving effect to its conflicts of law rules).
The Borrower expressly waives any presentment, demand, protest
or notice in connection with this Note, whether now or hereafter required by
applicable law. This Note is intended to be an instrument under seal.
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IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed, sealed and delivered by its duly authorized officer as of the date
first above written.
BULL RUN CORPORATION
(CORPORATE SEAL)
By: /Robert S. Prather, Jr./
President
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GRAY COMMUNICATIONS SYSTEMS, INC.
$10,000,000 IN AGGREGATE PRINCIPAL AMOUNT
OF
8.0% SUBORDINATED NOTES DUE JANUARY 3, 2OO5
------------------------------
NOTE PURCHASE AGREEMENT
------------------------------
Dated as of January 3, 1996
17
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. ISSUANCE OF NOTES
1.1. Authorization of Notes.................................................................1
1.2. Purchase and Sale of Note; Closing.....................................................2
1.3. Use of Proceeds........................................................................2
1.4. Definitions............................................................................2
2. GENERAL REPRESENTATIONS AND WARRANTIES OF THE
COMPANY. 2
3. REPRESENTATIONS OF THE PURCHASER................................................................3
3.1. No Intent to Distribute................................................................3
3.2. ERISA Representations..................................................................4
4. CONDITIONS OF OBLIGATION TO PURCHASE NOTES......................................................4
5. EXPENSES. 5
6. CERTAIN SPECIAL RIGHTS..........................................................................6
6.1. Payments...............................................................................6
6.2. Delivery Expenses......................................................................6
6.3. Issuance Taxes.........................................................................6
7. NOTE PAYMENTS...................................................................................7
7.1. Required Payments......................................................................7
7.2. Optional Prepayments...................................................................7
7.3. Partial Prepayment Pro Rata............................................................7
8. REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES.................................................7
8.1. Registration...........................................................................7
8.2. Exchange...............................................................................8
8.3. Replacement............................................................................8
9. CERTAIN COVENANTS OF THE COMPANY................................................................8
10. DEFAULTS AND REMEDIES...........................................................................9
10.1. Events of Default; Acceleration of Notes...............................................9
10.2. Default Remedies......................................................................12
11. SUBORDINATION..................................................................................13
11.1. Notes Subordinated to Senior Debt.....................................................13
11.2. Payment Subordination.................................................................13
11.3. Insolvency, Bankruptcy, etc...........................................................14
11.4. Constructive Trust....................................................................14
11.5. Obligations of Company................................................................15
11.6. Subrogation...........................................................................15
11.7. Benefits of Agreement.................................................................15
11.8. Subordination Not Impaired by Acts or Omissions of Holders of
Senior Debt...........................................................................16
11.9. Authority to Act for Noteholders......................................................16
12. INTERPRETATION OF AGREEMENT AND NOTES..........................................................17
12.1. Definitions...........................................................................17
12.2. Directly or Indirectly................................................................23
12.3. Accounting Terms......................................................................23
12.4. Governing Law.........................................................................23
12.5. Headings..............................................................................24
13. MISCELLANEOUS..................................................................................24
13.1. Notices...............................................................................24
13.2. Survival..............................................................................24
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13.3. Successors and Assigns................................................................24
13.4. Amendment and Waiver..................................................................25
13.5. Counterparts..........................................................................25
13.6. Consent to Jurisdiction and Venue.....................................................25
13.7. Saturdays, Sundays, Holidays, Etc.....................................................26
</TABLE>
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GRAY COMMUNICATIONS SYSTEMS, INC.
126 North Washington Street
Albany, Georgia 31701
Telephone No.: (912) 888-9390
Telecopier No.: (912) 888-9374
--------------------------------
NOTE PURCHASE AGREEMENT
--------------------------------
Dated as of January 3, 1996
Bull Run Corporation
4370 Peachtree Road
Atlanta, Georgia 30319
Ladies and Gentlemen:
The undersigned, Gray Communications Systems, Inc., a Georgia
corporation (the "Company"), hereby agrees with you as follows:
ISSUANCE OF NOTES.
Authorization of Notes.
The Company has authorized the issuance and sale of $10,000,000 in
aggregate principal amount of its 8.0% Subordinated Notes due January 3, 2005
(such notes, together with all notes in the form annexed hereto as Exhibit A
issued in exchange or replacement for, or on registration of transfer of, such
notes are hereinafter called the "Notes"). Each Note shall bear interest from
the date thereof until such Note shall become due and payable in accordance with
the terms thereof and hereof (whether at maturity, by acceleration or otherwise)
at the rate of 8.0% per annum, payable quarterly in arrears on each March 31,
June 30, September 30 and December 31, commencing March 31, 1996, and shall have
a stated maturity of January 3, 2005, whereupon the entire outstanding principal
balance shall be due and payable. Interest shall be computed on the basis of a
360-day year of twelve 30-day months. Each Note shall bear interest on any
overdue principal, including any overdue payment or prepayment of principal and
(to the extent permitted by applicable law) on any overdue installment of
interest, at the rate of 10.0% per annum. If the Company shall have paid or
agreed to pay any interest or premium on any Note in excess of that permitted by
law, then it is the express intent of the Company and the holder thereof that
all excess amounts previously paid or to be paid by the Company be applied to
reduce the principal balance of such Note, and the provisions thereof
immediately be deemed reformed and the amounts thereafter collectable thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the then applicable law, but so as to permit the recovery of the
fullest amount otherwise called for thereunder.
Purchase and Sale of Note; Closing.
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The Company agrees to sell to you, and upon and subject to the terms
and conditions hereof and in reliance upon the representations and warranties of
the Company contained herein, you agree to purchase from the Company, Notes in
an aggregate principal amount of $10,000,000 at a purchase price equal to one
hundred percent (100%) of such principal amount (the "Purchase Price "). The
Notes are to be sold and delivered at one closing to be held on January 3, 1996
at 10:00 a.m., Atlanta, Georgia time (the "Closing Date "), at the offices of
Alston & Bird, 1201 West Peachtree Street, Atlanta, Georgia 30309-3424. On the
Closing Date, the Company will deliver to you a Note or Notes dated the Closing
Date, in the aggregate principal amount of $10,000,000 and registered in your
name, or in the name of such nominee as you shall have designated by notice to
the Company. The delivery of such Note or Notes to you shall be made against
payment in the amount of the Purchase Price by wire transfer of immediately
available funds to the Company's account at Bank South (ABA No. 061000078),
Account No. 6225659), Reference: Gray Communications Systems, Inc., Notify:
Natalie Duggan upon receipt (912) 434-8730.
Use of Proceeds.
The proceeds of the sale of the Notes (net of expenses and costs) will
be used by the Company to finance the purchase of substantially all of the
assets of television station WRDW-TV from Television Station Partners, L.P., a
Delaware limited partnership and WRDW Associates, a New York general partnership
(collectively, the "Sellers").
Definitions.
Certain capitalized terms used in this Agreement are defined in
ss.12.1. hereof. References to a "Schedule" or "Exhibit" are, unless otherwise
specified, to the appropriate Schedule or Exhibit annexed to this Agreement,
each of which is deemed to be a part hereof.
GENERAL REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
The Company hereby makes to you, on and as of the Closing Date, each of
the representations and warranties set forth in Article V of the Bank Credit
Agreement as if such representations and warranties were set forth herein in
full, and for these purposes, all defined terms set forth in the Bank Credit
Agreement and not otherwise defined herein are hereby incorporated herein by
reference; provided, however, that the term "Credit Documents" as defined in the
Bank Credit Agreement shall, for purposes of the representations and warranties
made under this Section 2, be deemed to include this Agreement, the Notes, the
Warrant Agreement and the other instruments and documents executed by the
Company in connection herewith. The Company hereby further represents and
warrants to you that: (i) after giving effect to the issuance of the Notes and
the consummation of the Acquisition, no Default or Event of Default is or shall
be in existence; and (ii) no part of the proceeds of the issuance of the Notes
will be used for any purpose which violates, or which would be inconsistent or
not in compliance with the provisions of the applicable Margin Regulations (as
defined in the Bank Credit Agreement). Further, neither the Company nor any
agent acting on its behalf has, directly or indirectly, offered the Notes or any
similar security of the Company for sale to, or solicited any offers to buy the
Notes or any similar security of the Company from, or otherwise approached or
negotiated with respect thereto with, any Person other than
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<PAGE>
institutional investors, and neither the Company nor any agent acting on its
behalf has taken any action which would reasonably be expected to subject the
issuance or sale of the Notes to the provisions of section 5 of the Securities
Act or to the provisions of any securities or Blue Sky law of any applicable
jurisdiction. The Company hereby represents and warrants to you that, within the
preceding twelve months, neither the Company nor any other Person acting on
behalf of the Company has offered or sold to any Person any Notes, or any
securities of the same or a similar class as the Notes, or any other
substantially similar securities of the Company.
REPRESENTATIONS OF THE PURCHASER.
No Intent to Distribute.
This Agreement is made with you in reliance upon your representation to
the Company, which by your acceptance hereof you confirm, that you are
purchasing the Notes as principal for your own account and not with a view to
the distribution thereof, and that you have no present intention of distributing
any of the same; provided, however, that the disposition of your property shall
be at all times within your own control and that your right to sell or otherwise
dispose of all or any part of the Notes purchased or acquired by you pursuant to
an effective registration statement under the Securities Act or under an
exemption from such registration available under the Securities Act (including
but not limited to the exemption provided by Rule 144A of the SEC thereunder)
and in accordance with any applicable state securities law shall not be
prejudiced; provided, further, that you acknowledge that nothing in this
Agreement is intended to impose an obligation on the Company to register the
Notes under the Securities Act or any state securities law. The Company
covenants that it will, upon the request of the holder of any Note, provide such
holder, and any qualified institutional buyer designated by such holder, such
financial and other information as such holder may reasonably determine to be
necessary in order to permit compliance with the information requirements of
Rule 144A under the Securities Act in connection with the resale of Notes. For
the purpose of this ss.3.1., the term "qualified institutional buyer" shall have
the meaning specified in Rule 144A under the Securities Act. You hereby
represent that you have not engaged any Person to act as your agent, broker or
dealer in connection with the purchase of the Notes hereunder. The Company and
you each acknowledge that the Notes are securities (as defined in the Securities
Act and the Exchange Act).
ERISA Representations.
You represent that no part of the funds to be used by you to purchase
the Notes constitutes assets allocated to any "separate account" (within the
meaning of Section 3(17) of ERISA) in which any "employee benefit plan" (within
the meaning of Section 3(3) of ERISA) or its related trust has any interest.
CONDITIONS OF OBLIGATION TO PURCHASE NOTES.
Your obligation to purchase and pay for the Notes to be purchased by
you hereunder on the Closing Date shall be subject to the satisfaction, prior to
or concurrently with such purchase and payment, of the following conditions:
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<PAGE>
(a) You shall have received an executed copy of this Agreement and an
executed copy of the Notes.
(b) You shall have received from Heyman & Sizemore, special counsel for
the Company, an opinion, dated the Closing Date, substantially in the form of
Exhibit B hereto.
(c) The representations and warranties of the Company contained herein
shall be true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date.
There shall exist on the Closing Date no Default or Event of Default assuming
for this purpose that the Notes had been outstanding at all times from and after
the date hereof and the proceeds of issuance thereof had been applied in the
manner contemplated by ss.1.3. hereof. You shall have received an Officer's
Certificate, dated the Closing Date, to the effect of the foregoing sentences.
(d) Your special counsel, Alston & Bird ("Special Counsel"), shall have
received payment of the invoice rendered for its fees and disbursements posted
through the date of such invoice (with the understanding that a supplemental
statement for fees and disbursements subsequently posted is to be rendered at a
later date) in connection with your purchase of the Notes hereunder.
(e) The Acquisition Agreement and all other agreements, instruments and
arrangements between the Sellers and the Company shall have been reduced to
writing and furnished to you, and such agreements, instruments and arrangements
shall be in form and substance satisfactory to you. You shall have received an
Officer's Certificate of the Company attaching copies of the fully executed
Acquisition Agreement and each of such other agreements and certifying that each
such document is a true, correct and complete copy thereof, that such documents
are the only agreements between such parties relating to the transactions
contemplated by the Acquisition Agreement or the business or assets of the
Company or the Sellers, that each such document is in full force and effect
without any term or condition thereof having been amended, modified or waived or
any exercise of rights with respect thereto forborne without your prior written
consent, that there is no default thereunder and that each of the conditions set
forth in the Acquisition Agreement to be satisfied prior to or on the Closing
Date shall have been satisfied (without any thereof having been waived).
(f) Concurrently with or immediately after the purchase by you of the
Notes to be purchased by you hereunder and in any event on the Closing Date, the
Acquisition shall have been consummated in accordance with the terms of the
Acquisition Agreement and with all applicable statutes, laws, rules and
regulations.
(g) A Warrant to Purchase Common Stock in substantially the form
attached hereto as Exhibit C (the "Warrant Agreement") shall have been executed
by the Company and delivered to you.
(h) All conditions precedent to the effectiveness of the First
Consolidated Modification of Credit Agreement shall have been satisfied prior to
or on the Closing Date (other than the condition that the Notes be purchased
hereunder).
(i) To the extent required by the terms of the Teachers Note Agreement,
you
23
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shall have received a written consent from Teachers Insurance and Annuity
Association of America in form and substance satisfactory to you and your
Special Counsel in connection with the execution, delivery and performance of
this Agreement, the Notes, the Warrant Agreement and the transactions
contemplated hereby and thereby.
(j) Any taxes, fees and other charges due in connection with the
issuance and sale of the Notes shall have been paid in full by the Company.
(k) All proceedings and actions taken on or prior to the Closing Date
in connection with the transactions contemplated by this Agreement, the
Acquisition Agreement, the Notes, the First Modification of Credit Agreement and
all instruments incident thereto, shall be in form and substance satisfactory to
you and your Special Counsel, and you and your Special Counsel shall have
received copies of all documents that you or they may reasonably request in
connection with such proceedings, actions and transactions.
EXPENSES.
Whether or not the Notes shall be sold or this Agreement shall be
terminated, the Company agrees to pay, and to hold you harmless against
liability for, all reasonable costs and expenses relating to this Agreement, any
other documents prepared in connection herewith and the Notes and to any
modification, amendment, alteration or enforcement of this Agreement, any
additional documents prepared in connection herewith, the Notes or any agreement
or instrument contemplated hereby (whether or not the same shall have come into
effect). The obligations of the Company under this Section 5. shall survive the
payment or prepayment of the Notes and the termination of this Agreement.
CERTAIN SPECIAL RIGHTS.
Payments.
Notwithstanding any provision to the contrary in this Agreement or the
Notes, the Company will punctually pay in immediately available funds prior to
noon, Atlanta, Georgia time, all amounts payable to you with respect to any
Notes held by you or your nominee (without the necessity for any presentation or
surrender thereof or any notation of such payment thereon) in the manner and at
the address for such purpose as may be specified by you from time to time. You
agree that, as promptly as practicable after the payment or prepayment in whole
of any Note held by you or your nominee and receipt by you of a written request
from the Company to surrender such Note to the Company for cancellation, you
will surrender such Note at the office of the Company set forth on the first
page hereof. The Company will afford the benefits of this ss.6.1. to any
institutional investor which is a holder of a Note or Notes, each of which, by
its receipt and acceptance of a Note, will be deemed to have made the same
agreement relating to its Notes as you have made in this ss.6.1. The Company
shall only be obligated to make payments on any Note held by an institutional
investor which becomes a Noteholder in the manner provided in this ss.6.1. from
and after the time such Noteholder provides to the Company written notice of its
election to receive payments in such manner and the address to which payments
are to be directed (including the account number of such Noteholder's bank
account to which payments are to be directed and the name, address and ABA
number of the bank in which such account is maintained, if payments are to be
made to such Noteholder by the wire transfer of immediately available funds).
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Delivery Expenses.
If you shall surrender any Note to the Company pursuant to this
Agreement, or if the Company shall issue any new Note pursuant to this
Agreement, the Company will pay all costs and expenses of delivery of the
surrendered Note and any Note or Notes issued in exchange or replacement for, or
on registration of transfer of, the surrendered Note or any such new Note, as
the case may be, in each case insured to your reasonable satisfaction. The
obligations of the Company under this ss.6.2. shall survive the payment of the
Notes and the termination of this Agreement.
Issuance Taxes.
The Company will pay all taxes in connection with the execution and
delivery of this Agreement, the issuance and sale of the Notes by the Company,
and any modification of this Agreement, or the Notes and will save you and any
subsequent holder of Notes harmless, without limitation as to time, against any
and all liabilities (including, without limitation, any interest or penalty for
nonpayment or delay in payment, or any income taxes paid by you in connection
with any reimbursement by the Company for the payment by any other Person of any
such taxes) with respect to all such taxes. The obligations of the Company under
this ss.6.3. shall survive the payment of the Notes and the termination of this
Agreement.
NOTE PAYMENTS.
Required Payments.
On the maturity date of the Notes, the full principal amount of the
Notes then outstanding, if any, together with accrued interest thereon, shall be
due and payable.
Optional Prepayments.
Upon the terms and subject to the conditions hereinafter set forth, the
Company, at its option, may prepay the Notes in whole at any time without
penalty, provided that notice of any prepayment of Notes pursuant to this
ss.7.2. shall be given to each holder of the Notes not less than 30 nor more
than 60 days before the proposed payment date fixed for prepayment (the
"Optional Prepayment Date"), and shall be accompanied by an Officer's
Certificate of the Company certifying as to: (i) the Optional Prepayment Date,
(ii) the aggregate principal amount of the Notes to be prepaid on such Optional
Prepayment Date, (iii) the aggregate principal amount of the Notes and the
principal amount of each such Note held by such holder to be prepaid, and (iv)
the aggregate amount of accrued interest applicable to such prepayment. Any
notice of prepayment pursuant to this ss.7.2. shall be irrevocable, and once
having been so given, the aggregate principal amount of Notes specified in such
notice, together with the accrued interest thereon, shall become due and payable
on such Optional Prepayment Date.
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Partial Prepayment Pro Rata.
The aggregate principal amount of each partial prepayment of Notes
pursuant to ss.7.2. hereof shall be allocated among the holders of the Notes to
be prepaid in proportion, as nearly as practicable, to the respective unpaid
principal amounts of Notes then held thereby, with adjustments, to the extent
practicable, to compensate for any prior prepayments not made in exactly such
proportion.
REGISTRATION, EXCHANGE AND REPLACEMENT OF NOTES.
Registration.
The Notes issuable pursuant to this Agreement shall be registered
notes. The Company will keep, at the office of the Company specified on the
first page hereof, books for the registration and registration of transfer of
Notes. Prior to presentation of any Note for registration of transfer, the
Company shall treat the Person in whose name such Note is registered as the
owner and holder of such Note for all purposes whatsoever, whether or not such
Note shall be overdue, and the Company shall not be affected by notice to the
contrary.
Exchange.
The holder of any Note, at its option, may in person or by duly
authorized attorney surrender the same for exchange at the office of the Company
specified on the first page hereof, and promptly thereafter and at the Company's
expense, except as provided below, receive in exchange therefor a new Note or
Notes, each in the denomination requested by such holder (but not less than
$1,000,000, or if such holder shall be a holder of less than $1,000,000 in
aggregate principal amount of Notes, such lesser amount), dated the date to
which interest shall have been paid on the Note so surrendered or, if no
interest shall have yet been so paid, dated the date of the Note so surrendered
and registered in the name of such Person or Persons as shall have been
designated in writing by such holder or its attorney for the same principal
amount as the then unpaid principal amount of the Note so surrendered. The
Company agrees to pay, and will save any Noteholder harmless against liability
for, any stamp or other tax or governmental charge imposed in respect of any
transfer involved in such exchange.
Replacement.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
and (a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it; provided, however, that if the holder of such Note is the
original purchaser of such Note, or any Affiliate or nominee thereof, or any
institutional investor or any nominee thereof, its own unsecured agreement of
indemnity shall be deemed to be satisfactory; or (b) in the case of mutilation,
upon surrender thereof, the Company, at its expense, will execute and deliver in
lieu thereof a new Note executed in the same manner as the Note being replaced,
in the same principal amount as the unpaid principal amount of such Note and
dated the date to which interest shall have been paid on such Note or, if no
interest shall have yet been so paid, dated the date of such Note.
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CERTAIN COVENANTS OF THE COMPANY.
The Company hereby covenants with you that, so long as any Notes shall
remain outstanding, it shall comply with, perform and observe all of the
covenants (including, without limitation, all negative and affirmative
covenants) and agreements set forth in Article VI and Article VII of the Bank
Credit Agreement as in effect on the Closing Date, as if such covenants and
agreements were set forth herein in full, and for these purposes, all defined
terms set forth in the Bank Credit Agreement and not otherwise defined herein
are hereby incorporated herein by reference; provided, however, that (i) all
reports, certificates, notices, financial and other information required to be
delivered to the "Administrative Agent and each Lender" pursuant to Section 6.1
of the Bank Credit Agreement shall be delivered to you within the time periods
specified therein; (ii) that all references in such Articles to the
"Administrative Agent," a "Lender" and/or the "Collateral Agent" shall be deemed
to be a reference to the Noteholders; and (iii) the covenants and agreements
incorporated herein pursuant to this Section 9. shall remain in full force and
effect without modification and regardless of whether the Bank Credit Agreement
may, after the Closing Date, be amended, restated, supplemented or otherwise
modified or terminated or no longer in effect. The Company further agrees that
no waiver or consent given under the Bank Credit Agreement shall be deemed to be
a waiver or consent given under this Agreement.
DEFAULTS AND REMEDIES
Events of Default; Acceleration of Notes.
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
(a) any payment or prepayment of principal of any Note shall not be
made when the same becomes due and payable, whether at maturity, at a date fixed
for prepayment, upon acceleration or otherwise; or
(b) any payment of interest on any Note shall not be made when the same
becomes due and payable and such default shall continue for 5 Business Days
following the date on which such payment was due and payable; or
(c) the Company shall default in the due and punctual performance of or
compliance with any covenant, condition or agreement to be performed or observed
by it under Section 5.01(b), Section 6.09, Section 6.12, Section 6.13, Section
6.14 or Article VII of the Bank Credit Agreement, as such Sections and such
Article are incorporated herein pursuant to Section 9. hereof or the Company
shall use the proceeds of sale of the
Notes other than as described in ss.1.3. hereof; or
(d) the Company shall default in the due and punctual performance of or
compliance with any other covenant, condition or agreement to be performed or
observed by it under any provision hereof and any such failure shall continue
unremedied for 30 days; or
(e) any representation, warranty, certification or statement of the
Company, made or contained in this Agreement or in any agreement, instrument,
certificate, statement or other writing furnished in connection herewith or
therewith or pursuant
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hereto or thereto, shall prove to have been false or inaccurate in any material
respect on the date as of which such representation or warranty was made, or any
representation or warranty of the Sellers contained in the Acquisition Agreement
or in any agreement, instrument, certificate, statement or other writing
furnished in connection therewith or pursuant thereto shall prove to have been
false or inaccurate in any material respect on the date as of which such
representation or warranty was made; or
(f) the Company or any of its Subsidiaries shall, in respect of any of
its Indebtedness for Money Borrowed (excluding the Notes) in an amount,
individually or in the aggregate, exceeding $500,000 (including, without
limitation, the Indebtedness represented by the Senior Debt): (i) fail to pay
any amount of Indebtedness for Money Borrowed when due whether at maturity, at a
date fixed for prepayment, upon acceleration or otherwise, or (ii) default in
the performance or observance of any other provision contained in any instrument
or agreement evidencing such Indebtedness for Money Borrowed and such default
shall not have been waived in writing by the holder(s) of such Indebtedness and
shall continue beyond any applicable notice and/or cure period provided in such
instrument or agreement; or
(g) a final judgment or judgments entered by a court or courts of
competent jurisdiction for the payment of money in excess of $500,000 in the
aggregate shall be rendered against the Company or any of its Subsidiaries and
shall remain in force undischarged and unstayed for a period of more than 30
days; or
(h) the Company or any of its Subsidiaries shall institute proceedings
for liquidation, readjustment, arrangement or composition (or for any related or
similar purpose) under any law relating to financially distressed debtors, their
creditors or property, or shall consent to (or fail to object to in a timely
manner) the institution of any such proceedings against the Company or any of
its Subsidiaries; or
(i) the Company or any of its Subsidiaries having material assets shall
be insolvent (within the meaning of any applicable law), or shall be unable, or
shall admit in writing its inability, to pay its debts as they become due, or
shall make an assignment for the benefit of creditors or enter into any
arrangement for the adjustment or composition of debts or claims; or
(j) a court or other governmental authority or agency having
jurisdiction in the premises shall enter a decree or order (i) for the
appointment of a receiver, liquidator, assignee, trustee, custodian or
sequestrator (or other similar official) of the Company or any other Subsidiary
or of any part of its property, or for the winding-up or liquidation of its
affairs; and such decree or order shall remain in force undischarged and
unstayed for a period of more than 60 days, or (ii) for the sequestration or
attachment of any material part of the property of the Company or any of its
Subsidiaries without its unconditional return to the possession of the Company
or such Subsidiary, or its unconditional release from such sequestration or
attachment, within 60 days thereafter; or
(k) a court or other governmental authority or agency having
jurisdiction in the premises shall enter a decree or order approving or
acknowledging as properly filed or commences against the Company or any of its
Subsidiaries a petition or proceedings for liquidation, rehabilitation,
readjustment or composition (or for any related or similar purpose) under any
law relating to financially distressed debtors, their creditors or property, and
any such decree or order shall remain in force undischarged and unstayed
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for a period of more than 60 days; or
(l) the Company or any of its Subsidiaries shall take corporate action
for the purpose or with the effect of authorizing or confirming the taking or
existence of any action or condition specified in clause (j) or (k) above; or
(m) (i) any domestic Pension Plan (other than a Multiemployer Plan)
shall incur an "accumulated funding deficiency" (within the meaning of Section
412 of the Code) with respect to any plan year; or (ii) any waiver shall be
sought or granted under Section 412(d) of the Code; or (iii) any foreign Pension
Plan shall violate any funding requirement imposed by applicable foreign law; or
(iv) any Pension Plan shall be, have been or be likely to be terminated or the
subject of termination proceedings under ERISA; or (v) the Company, any of its
Subsidiaries or any ERISA Affiliate shall incur or be likely to incur a
liability to or on account of a Pension Plan under Section 4062, 4063, 4064 or
4201 of ERISA or any comparable provision of applicable foreign law, and there
shall result from one or more of the events set forth in the foregoing clauses
(i) through (v) either a liability or a material risk of incurring a liability
to the PBGC, any foreign governmental entity or a Pension Plan, which could have
a material and adverse effect on the business, earnings, prospects, properties
or condition (financial or other) of the Company or the Company and its
Subsidiaries, taken as a whole; or
(n) any FCC License held by the Company or any Subsidiary shall be
revoked or suspended and such revocation or suspension shall not have been
effectively stayed within 30 days, unless (i) such revoked or suspended FCC
License shall have been replaced by a substantially equivalent FCC License by
the time such revocation or suspension occurs, or (ii) the Company shall have
delivered to each holder of Notes at the time outstanding an Officer's
Certificate satisfactory in form and substance to each such holder certifying
that the revocation ore suspension of such FCC License does not and will not
materially and adversely affect the business, earnings, prospects, properties or
condition (financial or other) of the Company or any of its Subsidiaries; or
(o) the acquisition after the Closing Date by any Person or, by any two
or more Persons, acting in concert, of beneficial ownership (within the meaning
of Rule 13d- 3 of the SEC under the Exchange Act) of either fifteen percent
(15%) or more of the outstanding Voting Stock of the Company or the power to
direct or cause the direction of the management and policies of the Company
whether through the ownership of voting securities, by contract, or otherwise,
or if any of the Broadcast Subsidiaries (as defined in the Bank Credit
Agreement) shall no longer be a wholly-owned Subsidiary of the Company;
then:
(x) upon the occurrence and continuance of any of the Events
of Default set forth in clauses (h) through (l), inclusive, of this
ss.10.1., the unpaid principal amount of the Notes shall automatically
become due and payable, together with interest accrued thereon, without
presentment, demand, protest or any notice, all of which are expressly
hereby waived; or
(y) upon the occurrence and continuance of any Event of
Default set forth in clauses (a) through (g), inclusive, or in clauses
(m) through (o), inclusive, of this ss.10.1., any holder of a Note may,
in respect of the Note or Notes then
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held by such holder, by written notice to the Company, declare the
Note(s) held by such holder to be due and payable, whereupon the same
shall mature and become due and payable, together with interest accrued
thereon, without presentment, demand, protest or notice of any kind,
all of which are hereby expressly waived.
Default Remedies.
If an Event of Default shall occur and be continuing, the holder of any
Note then outstanding may exercise any right, power or remedy permitted to it by
law, either by suit in equity or by action at law, or both, whether for specific
performance of any covenant or agreement contained in this Agreement or in such
Note or for an injunction against a violation of any of the terms of this
Agreement or such Note or in aid of any exercise of any power granted in this
Agreement or in such Note, or may proceed to enforce payment of such Note or to
enforce any other legal or equitable right of the holder of such Note. No remedy
herein conferred upon any Noteholder is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law, in
equity, by statute or otherwise. No course of dealing on the part of any
Noteholder, or any delay or failure on the part of any Noteholder to exercise
any right or power, shall operate as a waiver of such right or power or
otherwise prejudice the rights, powers and remedies of such Noteholder or of any
other Noteholder. No failure to insist upon strict compliance with any covenant,
term, condition or other provision of this Agreement or the Notes shall
constitute a waiver by any Noteholder of any such covenant, term, condition or
other provision or of any Default or Event of Default in connection therewith.
To the extent effective under applicable law, the Company hereby agrees to
waive, and does hereby absolutely and irrevocably waive and relinquish, the
benefit and advantage of any valuation, stay, appraisement, extension or
redemption laws now existing or that may hereafter exist that, but for this
provision, might be applicable to any sale made under any judgment, order or
decree of any court, or otherwise, based on the Notes or on any claim for
interest on the Notes. If an Event of Default shall occur, and be continuing,
the Company will pay to the Noteholders, to the extent not prohibited by
applicable law, such further amount as shall be sufficient to cover the
reasonable costs and expenses of collection and of the taking of remedial
actions and the maintenance of enforcement proceedings, including, without
limitation, reasonable attorneys' fees and disbursements actually incurred. All
sums payable by the Company under the Notes shall be paid without counterclaim,
setoff, deduction or defense and without abatement, suspension, deferment,
diminution or reduction, except to the extent expressly provided in Section 11
hereof.
SUBORDINATION.
Notes Subordinated to Senior Debt.
Anything in this Agreement or the Notes to the contrary
notwithstanding, the Indebtedness evidenced by the Notes together with all other
Junior Debt shall be subordinate and junior in right of payment, to the extent
and in the manner set forth in this Section 11., to the prior payment in full of
all Senior Debt. By accepting any Note, each holder thereof shall be deemed to
have agreed to be bound by the provisions of this Section 11.
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Payment Subordination.
Unless and until all Senior Debt shall have been paid in full, no
direct or indirect payment (in cash, property, or securities or by set-off or
otherwise) shall be made by or on behalf of the Company or any of its
Subsidiaries or from any of the properties of the Company or any of its
Subsidiaries on account of the principal of, or premium (if any) or interest on,
or any other amount owing with respect to any of the Notes or any other Junior
Debt or in respect of any prepayment, redemption, retirement, purchase or other
acquisition by the Company or any of its Subsidiaries of any of the Junior Debt
or of any judgment for any of the foregoing, the maturity date of the Notes may
not be accelerated by the holder or holders thereof, and no other action may be
taken by the holder or holders of any Junior Debt to collect or enforce payment
of any Junior Debt from the Company or any of its Subsidiaries or any of the
properties of the Company or any of its Subsidiaries or to enforce compliance by
the Company or any of its Subsidiaries with any of the covenants incorporated in
Section 9. hereof; provided, however, that (i) scheduled payments of accrued
interest on the Notes may be made by the Company if at the time of each such
payment and after giving effect thereto no Senior Default or Senior Event of
Default is in existence or would be caused thereby; (ii) the maturity of the
Notes may be accelerated upon the occurrence and during the continuation of any
Senior Bankruptcy Default or upon the acceleration of the maturity of any of the
Senior Debt (but any such acceleration of any Junior Debt shall be subject to
all of the other terms and conditions of this Section 11. including, without
limitation, the payment subordination provisions set forth above and any payment
turn-over provisions set forth below) and (iii) the Junior Debt may be set-off
against the exercise price to be paid by you pursuant to Section 2 of the
Warrant Agreement upon your exercise of the warrants granted to you under the
Warrant Agreement.
Insolvency, Bankruptcy, etc.
In the event of:
(i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company or any of its Subsidiaries, its or any such Subsidiary's
creditors as such or its or any of its Subsidiaries' property,
(ii) any proceeding for the liquidation, dissolution or other
winding-up of the Company or any of its Subsidiaries, voluntary or involuntary,
whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company or any of its Subsidiaries for the
benefit of creditors, or
(iv) any other marshaling of the assets of the Company or any of its
Subsidiaries,
all Senior Debt shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made by or on behalf of
the Company or any of its Subsidiaries or from its or any of its Subsidiaries'
assets or any other source on account of any Junior Debt. Any payment or
distribution, whether in cash, securities or other property (including
securities of the Company or any of its Subsidiaries or any other
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Person provided for by a plan of reorganization or readjustment the payment of
which is subordinate, at least to the extent provided in these subordination
provisions with respect to the Junior Debt, to the payment in full of all Senior
Debt at the time outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment), which would otherwise
(but for these subordination provisions) be payable or deliverable in respect of
any Junior Debt shall first be paid or delivered directly to the holders of
Senior Debt for application pro rata in accordance with the priorities then
existing among such holders until all Senior Debt shall have been paid in full
and before any payment is made on any of the Junior Debt.
Constructive Trust.
If any payment or distribution of any character or any security,
whether in cash, securities or other property (including any securities of the
Company or any of its Subsidiaries or any other Person provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in this Section 11. with respect to the Junior Debt, to the
payment of all Senior Debt at the time outstanding and to any securities issued
in respect thereof under any such plan of reorganization or readjustment), shall
be received from or on behalf of the Company or any of its Subsidiaries or from
any such person's properties or any other source, including pursuant to a
judgment, by any holder of any Junior Debt on account of such Junior Debt in
contravention of any of the terms hereof, including without limitation the
prohibitions on payments contained in ss.11.2. and ss.11.3. hereof, and before
all the Senior Debt shall have been paid in full, or provision for such payment
has been made, such payment or distribution or security shall be received in
trust for the benefit of, and shall be paid over or delivered and transferred
to, the holders of the Senior Debt at the time outstanding in accordance with
the priorities then existing among such holders for application to the payment
of all Senior Debt remaining unpaid, to the extent necessary to pay all such
Senior Debt in full. In the event of a failure of any holder of any Note to
endorse or assign any such payment, distribution or security, each holder of
Senior Debt is hereby irrevocably authorized to endorse or assign the same.
Obligations of Company.
No present or future holder of any Senior Debt shall be prejudiced in
the right to enforce subordination of the Notes by any act or failure to act on
the part of the Company. Nothing contained herein shall impair, as between the
Company and any holder of any Note, the obligation of the Company to pay to the
holder thereof the principal thereof, premium, if any, and interest thereon as
and when the same shall become due and payable in accordance with the terms
thereof. Nothing contained in this Section 11. is intended or shall be construed
to affect the rights of the holders of the Junior Debt relative to creditors of
the Company or any of its Subsidiaries other than the holder or holders of the
Senior Debt.
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Subrogation.
Upon the payment in full of all Senior Debt, the holder or holders of
the Junior Debt shall be subrogated to all rights of any holders of Senior Debt
to receive any further payments or distributions applicable to the Senior Debt
until the Junior Debt shall have been paid in full, and for the purposes of such
subrogation, no payment or distribution received by the holders of Senior Debt
of cash, securities or other property to which the holder or holders of the
Junior Debt would have been entitled except for these subordination provisions
shall, as between the Company and its creditors other than the holders of Senior
Debt, on the one hand, and the holder or holders of the Junior Debt, on the
other, be deemed to be a payment or distribution by the Company to or on account
of the Senior Debt.
Benefits of Agreement.
No right of any present or future holder of any Senior Debt to enforce
the provisions of this Section 11. shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
non-compliance by the Company with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Subordination Not Impaired by Acts or Omissions of Holders of
Senior Debt.
No right of any present or future holder of any Senior Debt to enforce
the provisions of this Section 11. shall at any time or in any way be prejudiced
or impaired by the creation, renewal, extension, modification, increase,
compromise, or release of any or all of the Senior Debt or any or all of the
collateral therefor or guaranties thereof, either in whole or in part.
Authority to Act for Noteholders.
For so long as any of the Senior Debt shall remain unpaid, the holders
of Senior Debt shall have the right to act as the Noteholders' attorney-in-fact
for the purposes specified herein and the Noteholders hereby irrevocably appoint
the holders of Senior Debt as the true and lawful attorney-in-fact (which
appointment is coupled with an interest), with full power of substitution, in
the name of the Noteholders or in the name of the holders of Senior Debt, for
the use and benefit of the holders of Senior Debt, without notice to the
Noteholders, to perform the following acts, at the option of the holders of
Senior Debt at any meeting of the creditors of the Company or in connection with
any case or proceeding, whether voluntary or involuntary, for the distribution,
division or application of the assets of the Company or the proceeds thereof,
regardless of whether such case or proceeding is for the liquidation,
dissolution, winding up of the affairs, reorganization or arrangement of the
Company, or for the composition of the debts of the Company, in bankruptcy or in
connection with a receivership, or under an assignment for the benefit of the
creditors of the Company or otherwise:
(a) To enforce claims comprising the Junior Debt, either in their own
name or in the name of the Noteholders, by proof of debt, proof of
claim, suit or otherwise;
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(b) To collect any assets of the Company distributed, divided or
applied by way of dividend or payment, or any securities issued, on
account of the Indebtedness evidenced by the Junior Debt and to apply
the same, or the proceeds of any realization upon the same that the
holders of the Senior Debt in their discretion elect to effect, to the
Senior Debt until all of the Senior Debt has been paid in full,
rendering any surplus to the Company if and to the extent permitted by
law; and
(c) To vote claims comprising the Junior Debt to accept or reject any
plan of partial or complete liquidation, reorganization, arrangement,
composition or extension.
The Noteholders further grant to the holders of the Senior Debt an
irrevocable proxy to exercise any voting rights the Noteholders may have with
respect to the approval or disapproval of a plan of reorganization of the
Company proposed by any Person or class of Persons in any bankruptcy or similar
proceeding. In no event shall the holders of the Senior Debt be liable to the
Noteholders for any failure to prove the Junior Debt, to exercise any right with
respect thereto or to collect any sums payable thereon.
INTERPRETATION OF AGREEMENT AND NOTES.
Definitions.
Except as the context shall otherwise require, the following terms
shall have the following meanings for all purposes of this Agreement (the
definitions to be applicable to both the singular and the plural form of the
terns defined, where either such form is used in this Agreement):
"Acquisition" shall mean the acquisition by the Company from
the Sellers of substantially all of the assets of the television
station WRDW-TV pursuant to the Acquisition Agreement.
"Acquisition Agreement" shall mean that certain Asset
Acquisition Agreement dated April 11, 1995 between the Company and the
Sellers.
"Additional Senior Debt" shall mean any indebtedness,
obligations or liabilities of the Company that constitute Additional
Debt under (and as such term is defined in) the Intercreditor
Agreement.
"Affiliate," with respect to any Person (hereinafter "such
Person"), shall mean any other Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with, such Person or another Affiliate of such
Person, (ii) which beneficially owns or holds 5% or more of the shares
of any class of the Voting Stock of such Person, or (iii) 5% or more of
the shares of any class of Voting Stock of which is beneficially owned
or held of record by such Person or any of its Subsidiaries. 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 Stock, by contract or
otherwise. "Affiliate," when used herein without reference to any
Person, shall mean an Affiliate of the Company.
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"Bank Debt" shall mean all of the Obligations as defined in
the Bank Credit Agreement.
"Bank Credit Agreement" shall mean that certain Credit
Agreement dated as of April 22, 1994 by and among the Company, the
Lenders listed therein, and Bank South, as Administrative Agent, as
modified and amended by the First Consolidated Modification of Credit
Agreement, and as the same may be further amended, supplemented or
restated from time to time.
"Board" shall mean, with respect to any Person, its board of
directors or, if it does not have a board of directors, its governing
body which performs the same duties as a board of directors.
"Business Day" shall mean any day on which commercial banks
are not authorized or required to close in Atlanta, Georgia.
"Closing Date" shall have the meaning set forth in ss.1.2.
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and any successor statute, together with the
rules and regulations thereunder.
"Company" shall have the meaning set forth in the first
sentence hereof.
"Default" shall mean any event or condition that would become
an Event of Default after notice or passage of time or both.
"Dollars" or "$" shall mean the lawful currency of the United
States of America, and in relation to any payment under this Agreement,
same day or immediately available funds.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time and any successor statute,
together with the rules and regulations thereunder.
"ERISA Affiliate" shall mean any Person which is under "common
control" with the Company or any of its Subsidiaries (within the
meaning of Section 414(b) or (c) of the Code or Section 4001(a)(14) of
ERISA).
"ERISA Termination Event" shall mean (a) a "reportable event"
(within the meaning of Section 4043(b) of ERISA) with respect to a
Pension Plan (other than a "reportable event" as to which the PBGC has
by regulation waived the 30-day notice requirement under Section
4043(a) of ERISA); provided, however, that a failure to meet the
minimum funding standards of Section 412 of the Code shall be an ERISA
Termination Event regardless of the issuance of any waiver under
Section 412(d) of the Code; (b) the withdrawal of the Company, any of
its Subsidiaries or any ERISA Affiliate from a Pension Plan during a
plan year in which it was a "substantial employer" (within the meaning
of Section 4001(a)(2) of ERISA); (c) the complete or partial withdrawal
of the Company, any of its Subsidiaries or any ERISA Affiliate from a
Multiemployer Plan under Section 4201 or 4204 or ERISA; (d) the receipt
by the Company, any of its
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Subsidiaries or any ERISA Affiliate of notice from a Multiemployer Plan
that is in reorganization or insolvent under Section 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under Section
4041A of ERISA; (e) the providing of a notice of intent to terminate a
Pension Plan pursuant to Section 4041(a)(2) of ERISA or the treatment
of a Pension Plan amendment as a termination under Section 4041(e) of
ERISA; (f) the institution of proceedings by the PBGC to terminate a
Pension Plan or the appointment of a trustee to administer any Pension
Plan under Section 4042 of ERISA; (g) the receipt by the Company, any
of its Subsidiaries or any ERISA Affiliate of a notice from any
Multiemployer Plan that any action described in clause (h) has been
taken with respect to that Multiemployer Plan; or (i) any other event
or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer,
any Pension Plan.
"Event of Default" shall have the meaning assigned thereto in
ss.10.1. hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"FCC" shall mean the Federal Communications Commission or any
governmental body succeeding to the functions thereof.
"FCC License" shall mean any radio, television or other
license, permit, certificate of compliance franchise, approval or
authorization granted or issued by the FCC.
"First Consolidated Modification of Credit Agreement" shall
mean that certain First Consolidated Modification of Credit Agreement
dated as of January 3, 1996 among the Company, Bank South (formerly
known as Bank South, N.A.), Deposit Guaranty National Bank, Society
National Bank and Bank South, as Administrative Agent.
The term "generally accepted accounting principles" shall
mean, as of the date of any determination with respect thereto,
generally accepted accounting principles as understood and applied in
the United States at the time in question.
The terms "hereof," "herein," "hereunder" and other words of
similar import shall be construed to refer to this Agreement as a whole
and not to any particular Section or other subsection.
The term "holder," with respect to any Note, shall mean the
Person in whose name such Note is registered.
"Indebtedness," with respect to any Person, shall mean all
items (other than capital stock, capital surplus, retained earnings and
deferred credits and deferred income taxes), which in accordance with
generally accepted accounting principles would be included in
determining total liabilities as shown on the liability side of a
balance sheet as at the date on which Indebtedness is to be determined.
"Indebtedness" shall also include, whether or not so reflected, (a)
indebtedness, obligations and liabilities secured by any Lien on
property of
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such Person whether or not the indebtedness secured thereby shall have
been assumed by such person, (b) all obligations of such Person in
respect of Capital Leases, and (c) all guarantees.
"Indebtedness for Money Borrowed," with respect to any Person,
shall mean and include all Indebtedness of such Person (a) in respect
of money borrowed or evidenced by a promissory note, debenture or other
like written obligation to pay money, (b) in respect of any Capital
Lease Obligations, (c) representing all or part of the deferred
purchase price of any assets acquired by such Person (d) all
obligations or liabilities of others secured by a Lien on any asset
owned by such Person, irrespective of whether such obligation or
liability is assumed, to the extent of the lesser of such obligation or
liability or the fair market value of such asset; and (e) any
guarantees by such Person of any Indebtedness for Money Borrowed of
another Person; provided, however, that in determining the Indebtedness
for Money Borrowed of the Company or any Subsidiary, (i) all
liabilities for which the Company or any Subsidiary is jointly and
severally liable with one or more other Persons (including, without
limitation, all liabilities of any partnership or joint venture of
which the Company is a general partner or co-venturer) shall be
included at the full amount thereof without regard to any right the
Company or Subsidiary may have against any such other Person for
contribution or indemnity, and (ii) no effect shall be given to
deposits, trust arrangements or similar arrangements which, in
accordance with generally accepted accounting principles, extinguish
Indebtedness for Money Borrowed for which the Company or any Subsidiary
remains legally liable.
"Intercreditor Agreement" shall mean the Collateral Agency and
Intercreditor Agreement dated as of August 29, 1994, among the Company,
the initial holders of the Bank Debt, the initial holder of the
Teachers Debt and Bank South as Collateral Agent, as the same may be
amended, supplemented or restated from time to time.
"Junior Debt" shall mean, collectively, all indebtedness,
obligations or liabilities of the Company which may now or hereafter
exist under any of the Notes or this Agreement and any extension,
renewal, modification or replacement thereof or therefor.
"Multiemployer Plan" shall mean any Plan that is a
"multiemployer plan" (within the meaning of Section 4001(a)(3) of
ERISA).
"Noteholder," with respect to any Note, shall mean the Person
in whose name such Note is registered.
"Notes" shall have the meaning set forth in ss.1.1. hereof.
"Officer's Certificate" shall mean a certificate executed on
behalf of the Company by the Chairman of the Board, the President or
any Vice President of the Company.
"Optional Prepayment Date" shall have the meaning set forth in
ss.7.2. hereof.
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The term "outstanding," with respect to the Notes, shall mean,
as of the date of determination, all Notes heretofore delivered
pursuant to this Agreement, except Notes theretofore cancelled or
delivered for cancellation and Notes in exchange or replacement for
which other Notes have been delivered pursuant to this Agreement;
provided, however, that, in determining whether the holders of the
requisite aggregate unpaid principal amount of Notes outstanding have
given any notice or taken any action hereunder, Notes held or owned,
directly or indirectly, by the Company, any of its Subsidiaries or any
other Affiliate shall be disregarded and deemed not to be outstanding.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereof.
"Pension Plan" shall mean any Plan that is an "employee
pension benefit plan" (within the meaning of Section 3(2) of ERISA).
"Person" shall mean any individual, corporation, limited
liability company, partnership, joint venture, association, joint stock
company, trust, estate, unincorporated organization or government (or
any agency or political subsection thereof).
"Plan" shall mean any "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) that the Company, any of its
Subsidiaries or any ERISA Affiliate maintains, contributes to or is
obligated to contribute to for the benefit of employees or former
employees of the Company, any of its Subsidiaries or any ERISA
Affiliate.
"Purchase Price" shall have the meaning set forth in ss.1.2.
hereof.
"Registration Rights Agreement" shall have the meaning set
forth in Section 2. hereof.
"SEC" shall mean the Securities and Exchange Commission and
any successor organization.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
"Senior Bankruptcy Default" shall mean any event of default
under or contained in any agreement or instrument evidencing any of the
Senior Debt or pursuant to which any of the Senior Debt has been
incurred of the type or similar to the events of default set forth in
ss.10.1.(h) through (l), inclusive, of this Agreement.
"Senior Debt" means, collectively, (i) the Bank Debt, (ii) the
Teachers Debt, (iii) the Swap Debt, (iv) any Additional Senior Debt,
and (v) any and all extensions, renewals, modifications or restatements
of any or all of the foregoing. If any particular Indebtedness
constitutes "Senior Debt", such "Senior Debt" also shall include any
interest accrued thereon (including without limitation any interest
thereon accruing at the contract rate after the commencement of any
proceeding of the type described in clause (i) of ss.11.3. hereof). The
"Senior Debt" also shall
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include any Indebtedness incurred by the Company in connection with any
refinancing of any of the foregoing Senior Debt. Notwithstanding the
foregoing, the "Senior Debt" shall not include (i) any Indebtedness of
the Company which, by its express terms or the express terms of the
instrument creating or evidencing it, is subordinate in right of
payment to any Indebtedness for Money Borrowed of the Company or pari
passu with the Notes or (ii) any indebtedness of the Company to any
Subsidiary or Affiliate of the Company.
"Senior Default" shall mean any Default as defined in the
Intercreditor Agreement.
"Senior Event of Default" shall mean any Event of Default as
defined in the Intercreditor Agreement
"Subsidiary" shall mean with respect to any corporation (the
"parent"), a corporation or partnership of which the parent, at the
time in respect of which such term is used, owns directly, or controls
with power to vote, indirectly through one or more Subsidiaries, shares
of at least 5l% of its Voting Stock. Unless the context clearly
indicates the contrary, "Subsidiary" refers to a Subsidiary of the
Company.
"Swap Debt" shall mean, collectively, all obligations,
indebtedness or liabilities of the Company which may now or hereafter
exist under the Swap Documents.
"Swap Documents" shall mean, collectively, the ISDA Master
Agreement dated as of June 13, 1995 between the Company and Society
National Bank, the Confirmation, dated June 2, 1995, relating thereto,
and any extensions, renewals, modifications, supplements, or
restatements of any of the foregoing.
"Teachers Debt" shall mean all obligations, indebtedness or
liabilities of the Company which may now or hereafter exist under the
Teachers Note Agreement or any of the Company's Senior Notes issued
thereunder.
"Teachers Note Agreement" shall mean that certain Note
Purchase Agreement dated as of April 15, 1994, between the Company and
Teachers Insurance and Annuity Association of America, and its
successors and assigns, and any amendment, supplement or restatement
thereof.
The term "this Agreement" shall mean this Note Purchase
Agreement (including the annexed Exhibits and Schedules), as it may
from time to time be amended, supplemented or modified in accordance
with its terms.
"Voting Stock," with respect to a corporation, shall mean the
stock of such corporation the holders of which are ordinarily, in the
absence of contingencies, entitled to elect members of the Board (or
other governing body) of such corporation, and with respect to any
partnership, shall mean the partnership interests in such partnership
the owners of which are entitled to manage the affairs of partnership,
or vote in connection with the management of the affairs of the
partnership or the designation of another Person as the Person entitled
to manage the affairs of the partnership (it being understood that, in
the case of any
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partnership, "shares" of Voting Stock shall refer to such
partnership interests).
"Warrant Agreement" shall have the meaning set forth in
Section 2. hereof.
Directly or Indirectly.
Any provision in this Agreement referring to action to be taken by any
Person, or that such Person is prohibited from taking, shall be applicable
whether such action is taken directly or indirectly by such Person.
Accounting Terms.
All accounting terms used herein that are not otherwise expressly
defined shall have the respective meanings given to them in accordance with
generally accepted accounting principles at the particular time.
Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF GEORGIA.
Headings.
The headings of the Sections and other subsections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
constitute a part hereof.
MISCELLANEOUS.
Notices.
(a) All communications under this Agreement or the Notes shall be in
writing and shall be delivered or mailed or sent by facsimile transmission (i)
if to you, to you at your address set forth on the first page hereof, marked for
the attention of Robert S. Prather, Jr., or at such other address as you may
have furnished to the Company in writing, (ii) if to any other Noteholder, to it
at its address listed in the books for the registration and registration of
transfer of Notes, required to be maintained by the Company pursuant to ss.8.1.
hereof, or at such other address as such Noteholder shall have furnished to the
Company in writing and (iii) if to the Company, to it at its address shown at
the head of this Agreement or at such other address or facsimile number as it
shall have furnished in writing to you and all other holders of the Notes at the
time outstanding.
(b) Any written communication so addressed and mailed by certified or
registered mail, return receipt requested, shall be deemed to have been given
when so mailed. All other written communications shall be deemed to have been
given upon receipt thereof.
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Survival.
All representations, warranties and covenants made by the Company
herein or by the Company or any of its Subsidiaries in any certificate or other
instrument delivered under or in connection with this Agreement shall be
considered to have been relied upon by you and shall survive the delivery to you
of the Notes regardless of any investigation made by you or on your behalf. All
statements in any such certificate or other instrument shall constitute
representations and warranties of the Company hereunder.
Successors and Assigns.
This Agreement shall be binding upon the parties hereof and their
respective successors and assigns, and shall inure to the benefit of and be
enforceable by the parties hereof and their respective successors and assigns
permitted hereunder; provided, however, that you shall not have any obligation
to purchase Notes of any Person other than Gray Communications Systems, Inc., a
Georgia corporation. Whether or not expressly so stated and subject to the
restrictions set forth herein, the provisions of Sections 5. through 13. of this
Agreement are intended to be for your benefit and for the benefit of all holders
from time to time of the Notes, and shall be enforceable by you and any other
such Noteholder whether or not an express assignment to such holder of rights
under this Agreement shall have been made by you or your successors or assigns.
Amendment and Waiver.
(a) This Agreement and the Notes may be amended or supplemented, and
the observance of any term hereof or thereof may be waived, with the written
consent of the Company and (i) on or prior to the Closing Date, you, and (ii)
after the Closing Date, the holders of 67% in aggregate unpaid principal amount
of the Notes then outstanding; provided, however, that no such amendment,
supplement or waiver shall, without the written consent of the holders of all
the Notes then outstanding, (x) change, with respect to the Notes, the amount or
time of any required prepayment or payment of principal or premium or the rate
or time of payment of interest, or change the funds in which any prepayment or
payment on the Notes is required to be made; or (y) reduce the percentage of the
aggregate principal amount of Notes required for any amendment, consent or
waiver hereunder; provided, further, that no modification of Section 11. hereof
may be made without the express prior written consent of the holders of all
Senior Debt then outstanding.
(b) Any amendment, supplement or waiver effected in accordance with
this ss.13.4. shall be binding upon each holder of any Note at the time
outstanding, each future holder of any Note and the Company. Notwithstanding any
other provision of this Agreement, no consent to any such amendment, supplement
or waiver by any Noteholder, shall have any effect for the purposes of this
ss.13.4. if such amendment, supplement or waiver was obtained in connection with
or in anticipation of the purchase by the Company, any Affiliate of the Company
or any other Person of any Note from the holder thereof, unless the holder of
each Note at the time outstanding has executed an amendment, supplement or
waiver, as the case may be, to substantially the same effect as the amendment,
supplement or waiver obtained from such Noteholder.
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<PAGE>
Counterparts.
This Agreement may be executed and delivered to you simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute but one and the same instrument.
Consent to Jurisdiction and Venue.
The Company hereby irrevocably (i) agrees that any suit, action or
other legal proceeding arising out of or relating to this Agreement or any Note
may be brought in a court of record in the State of Georgia or in the courts of
the United States of America located in such State, (ii) consents to the
jurisdiction of each such court in any such suit, action or proceeding, and
(iii) waives any objection which it may have to the laying of venue of any such
claim that any such suit, action or proceeding has been brought in an
inconvenient forum and covenants that it will not seek to challenge the
jurisdiction of any such court or seek to oust the jurisdiction of any such
court, whether on the basis of inconvenient forum or otherwise. The Company
irrevocably consents to the service of any and all process in any such suit,
action or proceeding by mail copies of such process to the Company at its
address for notices provided in ss.13.1. hereof. The Company agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. All mailings under this ss.13.6. shall be by registered or
certified mail, return receipt requested. Nothing in this ss.13.6. shall affect
your right to serve legal process in any other manner permitted by law or affect
your right to bring any suit, action or proceeding against the Company or any of
its properties in the courts of any other jurisdiction.
Saturdays, Sundays, Holidays, Etc.
If the last or appointed day for the taking of any action required or
permitted hereby or by the Notes (including, but not limited to, the payment of
principal of, or interest or premium, if any, on, the Notes) shall be a
Saturday, Sunday or a day which is not a Business Day, then such action may be
taken on the next succeeding day which is a Business Day; provided, however,
that if, pursuant to the provisions of this ss.13.7., the time for the payment
of any amount in respect of the Notes is postponed, interest on such amount
shall continue to accrue during the period of such postponement.
[Signatures on Following Page]
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If the foregoing is satisfactory to you, please sign the form of
acceptance on the enclosed counterparts hereof and return the same to the
Company, whereupon this letter, as so accepted, shall become a binding contract
between you and each of the undersigned.
Very truly yours,
GRAY COMMUNICATIONS SYSTEMS, INC.
By: /Ralph W. Gabbard/
Name: Ralph W. Gabbard
Title: President
The foregoing Agreement is hereby accepted.
BULL RUN CORPORATION
By: /Robert S. Prather, Jr./
Name: Robert S. Prather, Jr.
Title: President
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THE PAYMENT OF THIS NOTE IS SUBORDINATED PURSUANT TO THE TERMS AND CONDITIONS OF
THE PURCHASE AGREEMENT DESCRIBED BELOW. ANY HOLDER OF THIS NOTE, BY ITS
ACCEPTANCE HEREOF, SHALL AGREE TO BE BOUND BY THE PROVISIONS OF THE PURCHASE
AGREEMENT AS IF IT WERE AN ORIGINAL SIGNATORY THERETO.
GRAY COMMUNICATIONS SYSTEMS, INC.
8.0% Subordinated Note
due January 3, 2005
R- 1 January 3, 1996
$10,000,000 Atlanta, Georgia
GRAY COMMUNICATIONS SYSTEMS, INC. (the "Company"), a Georgia
corporation, for value received, hereby promises to pay to BULL RUN CORPORATION,
or its registered assigns, the principal sum of Ten Million and 00/100 Dollars
($10,000,000) on January 3, 2005; and to pay interest (computed on the basis of
a three hundred sixty (360) day year of twelve (12) thirty (30) day months) on
the unpaid principal balance thereof from the date of this Note at the rate of
8.0% per annum, quarterly on each March 31, June 30, September 30 and December
31 commencing March 31, 1996, until the principal amount hereof shall become due
and payable; and to pay, on demand, interest on any overdue principal, including
any overdue prepayment of principal and (to the extent permitted by applicable
law) on any overdue installment of interest, at a rate equal to the 10.0% per
annum.
Payments of principal and interest shall be made to the registered
holder hereof in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, at the office of the Company at 126 North Washington Street, Albany,
Georgia, or at such other location designated pursuant to the Purchase Agreement
referred to below, in each case, subject to the right of the registered holder
hereof under the Purchase Agreement to receive direct payment in immediately
available funds.
This Note is one of the 8.0% Subordinated Notes due January 3, 2005 of
the Company issued in an aggregate principal amount limits to $10,000,000
pursuant to that certain Note Purchase Agreement dated as of January 3, 1996,
between the Company and Bull Run Corporation (the "Purchase Agreement") and is
entitled to the benefits thereof and is subject to the terms and conditions
thereof. As and to the extent provided in the Purchase Agreement, this Note is
subject to prepayment, in whole or in part, in certain cases without premium.
Under certain circumstances, as specified in the Purchase Agreement,
the principal of and accrued interest on this Note may be declared due and
payable in the manner and with the effect provided in the Purchase Agreement.
This Note has not been registered under the Securities Act of 1933, as
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<PAGE>
amended, or the laws of any state and may be transferred in whole or in part
only pursuant to an effective registration statement under such act and
applicable state laws or under an exemption from such registration available
under such act and applicable state law. Subject to the foregoing, transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Company as provided in the Purchase Agreement.
Prior to presentation of this Note for registration of transfer, the Company
shall treat the person in whose name this Note is registered as the owner and
holder of his Note for the purpose of receiving all payments of principal and
interest hereon and for all other purposes whatsoever, whether or not this Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
The Company agrees to perform and observe duly and punctually each of
the covenants and agreements set forth in the Purchase Agreement. All such
covenants and agreements are incorporated by reference in this Note, and this
Note shall be interpreted and construed as if all such covenants and agreements
were set forth in full in this Note at this place.
All capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement.
This Note shall be governed by and construed in accordance with the law
of the State of Georgia.
IN WITNESS WHEREOF, GRAY COMMUNICATIONS SYSTEMS, INC. has
caused this Note to be duly executed on its behalf by its officer thereunto duly
authorized.
GRAY COMMUNICATIONS SYSTEMS, INC.
By: /Ralph W. Gabbard/
Name: Ralph w. Gabbard
Title: President
ATTEST:
By: /Marcia E. Crowe/
Title: Secretary
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NEITHER THIS WARRANT, NOR THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE HEREOF, HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, THE GEORGIA SECURITIES ACT OF 1973
OR ANY OTHER APPLICABLE SECURITIES LAWS. THIS WARRANT HAS BEEN ISSUED
OR SOLD, AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
HEREOF WILL BE ISSUED OR SOLD, IF AT ALL, IN RELIANCE UPON EXEMPTIONS
CONTAINED IN SUCH LAWS FOR TRANSACTIONS NOT INVOLVING ANY PUBLIC
OFFERING INCLUDING, BUT NOT LIMITED TO, PARAGRAPH (13) OF CODE SECTION
10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973. THIS WARRANT HAS BEEN
ACQUIRED, AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
HEREOF WILL BE ACQUIRED, IF AT ALL, FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED, PLEDGED OR DISPOSED OF IN ANY MANNER EXCEPT
IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER SUCH LAWS OR
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH LAWS.
GRAY COMMUNICATIONS SYSTEMS, INC.
Warrant to Purchase Common Stock
GRAY COMMUNICATIONS SYSTEMS, INC., a Georgia corporation (the
"Company"), hereby certifies that, for value received, BULL RUN CORPORATION, a
Georgia corporation (together with its registered or authorized assigns, the
"Holder"), is entitled, subject to the terms hereof, to purchase from the
Company upon surrender of this Warrant to Purchase Common Stock (this "Warrant")
at any time during the period described in Section 2 hereof, Four Hundred
Eighty-Seven Thousand Five Hundred (487,500) shares of Common Stock (as defined
below) of the Company (the "Warrant Shares") (as adjusted from time to time as
provided in this Warrant), at the Warrant Exercise Price (as defined below) per
share.
DEFINITIONS
SECTION 1. (a) Definitions. The following words and terms as
used in this Warrant shall have the following meanings:
"Affiliate" means, with respect to a Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person.
"Business Day" means a day other than a Saturday, a Sunday, a
day on which banking institutions in the State of Georgia are authorized or
obligated by law or required by executive order to be closed, and a day on which
the New York Stock Exchange is closed.
"Common Stock," when used with reference to stock of the
Company, means all shares now or hereafter authorized of Class A Common Stock,
no par value, of the Company and stock of any other class of the common equity
of the Company into which such shares may hereafter have been changed and other
rights or securities convertible into shares
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of Class A Common Stock of the Company.
"Conversion Price" means the price per share for which Common
Stock is issuable upon the conversion or exchange of Convertible Securities,
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance of such Convertible Securities,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the conversion or exchange of such Convertible Securities, by (ii)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities.
"Convertible Securities" mean any securities issued by the
Company or an Affiliate which are convertible into or exchangeable for, directly
or indirectly, shares of Common Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Expiration Date" means the tenth anniversary of the date
hereof.
"Funding Date" means the date on which the Notes are purchased
in accordance with the terms of the Note Agreement.
"Market Price" of a share of Common Stock on any day means the
average closing price of a share of Common Stock for the twenty (20) consecutive
trading days preceding such day on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, the average
of the reported bid and asked prices during such 10 trading day period in the
over-the-counter market as furnished by the National Quotation Bureau, Inc., or,
if such firm is not then engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business selected by the
Company, or, if there is no such firm, as furnished by any member of the
National Association of Securities Dealers, Inc. selected by the Company or, if
the shares of Common Stock are not publicly traded, the Market Price for such
day shall be the book value of a share of Common Stock of the Company as
disclosed in the last balance sheet of the Company regularly prepared by the
Company.
"Note Agreement" means that certain Note Purchase Agreement
dated January 3, 1996, between the Company and the above-named Holder.
"Notes" means the Company's 8.0% Subordinated Notes due
January 3, 2005 purchased by the above-named Holder pursuant to the Note
Agreement.
"Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or any agency or political subdivision thereof) or other
entity of any kind.
"Registrable Securities" means the Warrant Shares and any
securities issued or issuable upon exercise of this Warrant. As to any
particular Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement
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<PAGE>
with respect to the sale of such securities shall have become effective under
the Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (b) they shall have been distributed to the
public pursuant to Rule 144 (or any successor provision) or are saleable
pursuant to Rule 144(k) (or any successor provision) under the Securities Act,
(c) they shall have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent disposition of them shall not require registration or
qualification of them under the Securities Act or any similar state law then in
force, or (d) they shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Sections 20,21 and 22 hereof,
including, without limitation, all registration and filing fees, all fees and
expenses of complying with securities or blue sky laws, fees and other expenses
associated with filings with the National Association of Securities Dealers,
Inc. (including, if required, the reasonable fees and expenses of any "qualified
independent underwriter" and its counsel), all printing expenses, messenger,
telephone, duplication, word processing and delivery expenses incurred by the
Company, the fees and disbursements of counsel for the Company and of its
independent public accountants, the fees and disbursements of counsel retained
by the holders of Registrable Securities, Securities Act liability insurance if
the Company so desires such insurance, rating agency fees and the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, fees and disbursements of all independent
certified public accountants including, without limitation, the expenses of any
special audits made by such accountants required by or incident to such
performance and compliance, but not including such holders' proportionate share
of underwriting discounts and commissions.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Strike Price" means the price per share for which Common
Stock is issuable upon the exercise of any rights, options or warrants for the
purchase of Common Stock, determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the grant of such
rights, options or warrants, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such rights, options
or warrants, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights, options or warrants.
"Warrant Exercise Price" initially shall be the Market Price
as of the Funding Date.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all
references herein (A) to any Person other than the Company shall be deemed to
include such Person's successors and assigns, (B) to the Company shall be deemed
to include the Company's successors and assigns, and (C) to any applicable law
defined or referred to herein shall be deemed references to such applicable law
as the same may have been or may be amended or supplemented from time to time.
(ii) When used in this Agreement, the words "herein",
"hereof" and "hereunder", and words of similar import, shall refer to this
Agreement as a whole and not
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to any provision of this Agreement, and the words "Section" and "Exhibit" shall
refer to Sections of and Exhibits to this Agreement unless otherwise specified.
(iii) Whenever the context so requires, the neuter
gender includes the masculine or feminine, and the singular number includes the
plural, and vice versa.
SECTION 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, including, but
not limited to, Sections 19, 33 and 34 hereof, this Warrant may be exercised, in
whole or in part, at any time or from time to time during normal business hours
on or after the second anniversary of the date hereof and prior to the close of
business on the Expiration Date. The rights represented by this Warrant may be
exercised by the Holder, in whole or from time to time in part (except that this
Warrant shall not be exercisable as to a fractional share) by (i) delivery of a
written notice of such Holder's election to exercise this Warrant to the
Company's office located at the address set forth in Section 28 hereof, which
notice shall specify the number of Warrant Shares to be purchased, (ii) payment
to the Company of an amount equal to the Warrant Exercise Price multiplied by
the number of Warrant Shares as to which the Warrant is being exercised in cash,
by certified or official bank check or the cancellation of all or any portion of
the indebtedness of the Company evidenced by the Notes, (iii) surrender of this
Warrant, properly endorsed, at the principal office of the Company (or at such
other agency or office of the Company as the Company may designate by notice to
the Holder), and (iv) if the Warrant Shares issuable upon the exercise of the
rights represented by this Warrant have not been registered under the Securities
Act, delivery to the Company by the Holder of a letter in the form of Exhibit A
hereto; provided, however, that if such Warrant Shares are to be issued in any
name other than that of the registered holder of this Warrant, such issuance
shall be deemed a transfer subject to the provisions of Section 18. In the event
of any exercise of the rights represented by this Warrant, a certificate or
certificates for the Warrant Shares so purchased, registered in the name of, or
as directed by, the Holder, shall be delivered to, or as directed by, such
Holder within a reasonable time after such rights shall have been so exercised.
Unless the rights represented by this Warrant shall have expired or have been
fully exercised, the Company shall issue a new Warrant identical in all respects
to the Warrant exercised except it shall represent rights to purchase the number
of Warrant Shares purchasable immediately prior to such exercise under the
Warrant exercised, less the number of Warrant Shares with respect to which such
Warrant was exercised. The entity in whose name any certificate for Warrant
Shares is issued upon the exercise of this Warrant shall for all purposes be
deemed to have become the holder of record of such Warrant Shares immediately
prior to the close of business on the date on which the Warrant was surrendered
and payment of the amount due in respect of such exercise and any applicable
taxes was made, irrespective of the date of delivery of such share certificate,
except that, if the date of such surrender and payment is a date when the stock
transfer books of the Company are properly closed, such person shall be deemed
to have become the holder of such Warrant Shares at the opening of business on
the next succeeding date on which the stock transfer books are open. If this
Warrant is not exercised on or prior to the Expiration Date, this Warrant shall
become void and all rights of the Holder hereunder shall cease.
(b) Notwithstanding the provisions of Section 2(a) hereof to
the contrary, this Warrant may be exercised, in whole or in part, at any time or
from time to time during normal business hours on or after the date hereof and
prior to the close of business on the Expiration Date upon the occurrence of any
of the following:
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(i) any change in control of the Company by any means
whatsoever, including without limitation, by
acquisition of securities, merger, consolidation,
recapitalization or reorganization of the Company;
(ii) any partial or complete liquidation of the Company;
(iii) any sale or disposition of fifty percent (50%) or
more of the assets of the Company;
(iv) any public offering of all or part of any class of
securities issued by the Company pursuant to an
effective registration statement under the Securities
Act of 1933, as amended, other than a public offering
consummated prior to December 31, 1996;
(v) any tender offer for more than twenty percent (20%)
of any outstanding class of securities issued by the
Company;
(vi) any sale or other disposition by the Company of
capital stock of the Company constituting (on a
cumulative basis) more than fifty percent (50%) of
the capital stock of the Company then outstanding; or
(vii) any event constituting a breach of, or a default or
event of default under, the Note Agreement or the
Notes, or any event that with the giving of notice,
the passage of time or both would constitute a breach
of, or a default or event of default under, the Note
Agreement or the Notes.
SECTION 3. Covenants. The Company covenants and agrees that
all securities which may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable, free and clear of all taxes, liens, claims and encumbrances. The
Company further covenants and agrees that (i) during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of Common Stock
to provide for the exercise of the rights then represented by this Warrant and
(ii) it will, at its expense, use its best efforts to cause such shares to be
listed (subject to issuance or notice of issuance) on all stock exchanges, if
any, on which the Common Stock may become listed during such period.
SECTION 4. Adjustment of Warrant Exercise Price Upon Stock
Splits, Dividends, Distributions and Combinations. In case the Company shall at
any time subdivide its outstanding shares of Common Stock into a greater number
of shares or issue a stock dividend or make a distribution with respect to
outstanding shares of Common Stock or Convertible Securities payable in Common
Stock or in Convertible Securities which are convertible with no additional
consideration into shares of Common Stock, the Warrant Exercise Price in effect
immediately prior to such subdivision or stock dividend or distribution shall be
proportionately reduced (treating for such purpose any such shares of
Convertible Securities outstanding or payable as being the number of shares of
Common Stock issuable upon their conversion); and conversely, in case the shares
of Common Stock of the Company shall be combined into a smaller number of
shares, the Warrant Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
SECTION 5. Reorganization or Reclassification. In case of any
capital reorganization, or of any reclassification of the capital stock, of the
Company (other than a change in par value or from par value to no par value or
from no par value to par value or as a result of a split-up or combination), or
any consolidation or merger of the Company with another corporation, or the sale
of all or substantially all of the assets of the Company shall
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be effected in a manner by which the holders of Common Stock shall be entitled
to securities or assets with respect to or in exchange for Common Stock, then
this Warrant shall, after such capital reorganization, reclassification of
capital stock, merger or sale of assets, entitle the Holder hereof to purchase
the kind and number of shares of stock or other securities or property of the
Company, or of the corporation resulting from such consolidation to which the
Holder hereof would have been entitled if it had held the Common Stock issuable
upon the exercise hereof immediately prior to such capital reorganization,
reclassification of capital stock, consolidation, merger or sale. The Company
shall not effect any such capital reorganization, reclassification of capital
stock, consolidation, merger or sale unless prior to the consummation thereof
the successor corporation (if other than the Company) resulting therefrom or the
corporation purchasing such assets shall, by written instrument executed and
mailed to the Holder hereof at the last address of such Holder appearing on the
books of the Company, (i) assume the obligation to deliver to such Holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase, and (ii) agree to be bound
by all the terms of this Warrant.
SECTION 6. Anti-Dilution Adjustments.
(a) Issuance of Additional Shares. In case at any time the Company
shall issue or sell any shares of its Common Stock (excluding shares issued upon
the exercise of this Warrant and excluding shares issued in a public offering)
for a consideration per share less than the Market Price on the date of such
issue or sale, the Warrant Exercise Price shall be reduced to the price
determined by multiplying the Warrant Exercise Price in effect immediately prior
to the time of such issue or sale by a fraction, the numerator of which shall be
the sum of (i) the number of shares of Common Stock outstanding immediately
prior to such issue or sale multiplied by the Market Price immediately prior to
such issue or sale plus (ii) the aggregate consideration received by the Company
upon such issue or sale, and the denominator of which shall be the product of
(iii) the total number of shares of Common Stock outstanding immediately after
such issue or sale, multiplied by (iv) the Market Price immediately prior to
such issue or sale.
(b) Issuance of Rights, Options or Warrants. In case at any time the
Company shall grant (whether directly or by assumption in a merger or otherwise)
any rights (other than the rights represented by this Warrant), options or
warrants to subscribe for or to purchase shares of Common Stock, whether or not
such rights, options or warrants are immediately exercisable, and the Strike
Price is less than the Market Price as of the date such rights, options or
warrants are granted, then the total maximum number of shares of Common Stock
issuable upon the exercise of such rights, options or warrants shall be deemed
to have been issued at the Strike Price. Except as otherwise provided in Section
6(d) below, no adjustments of the Warrant Exercise Price shall be made upon the
actual issuance of the shares of Common Stock underlying such rights, options,
warrants.
(c) Issuance of Convertible Securities. In case at any time the Company
shall issue any Convertible Securities, whether or not the right to convert or
exchange any such Convertible Securities are immediately exercisable, and the
Conversion Price is less than the Market Price as of the date such Convertible
Securities are issued, then the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of such Convertible Securities shall be
deemed to have been issued at the Conversion Price. Except as otherwise provided
in Section 6(d) below, no adjustments of the Warrant
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Exercise Price shall be made upon the actual issuance of the shares of Common
Stock underlying such Convertible Securities.
(d) Change in Strike Price, Conversion Price or Conversion Rate. If (i)
the Strike Price for any right, option or warrant for the purchase of Common
Stock, (ii) the Conversion Price of any Convertible Security or (iii) the rate
at which any Convertible Securities are convertible into or exchangeable for
Common Stock changes at any time (other than by reason of provisions designed to
protect against dilution), the Warrant Exercise Price in effect at the time such
event occurs shall be readjusted to the Warrant Exercise Price which would have
been in effect at such time had such rights, options, warrants or Convertible
Securities still outstanding provided for such changed Strike Price, Conversion
Price or conversion rate, as the case may be, at the time such rights, options
or warrants were initially granted or such Convertible Securities were initially
issued. Upon the expiration of any such right, option or warrant or the
termination of any such right to convert or exchange such Convertible
Securities, the Warrant Exercise Price then in effect shall be increased to the
Warrant Exercise Price which would have been in effect at the time of such
expiration or termination had such right, option, warrant or Convertible
Security, to the extent outstanding immediately prior to such expiration or
termination, never been granted or issued, and the Common Stock issuable
thereunder shall no longer be deemed to be outstanding.
(e) Consideration for Stock. In case any shares of Common Stock or
Convertible Securities or any rights, options or warrants to purchase Common
Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Company therefor, without deducting any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible Securities or any
rights, options or warrants to purchase Common Stock or Convertible Securities
shall be issued or sold in whole or in part for consideration other than cash,
the amount of such consideration shall be deemed to be the fair value thereof as
determined by the Board of Directors of the Company, without deducting any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Company in connection therewith. In the event of any consolidation or
merger of the Company in which the Company is not the surviving corporation or
in the event of any sale of all or substantially all of the assets of the
Company for stock or other securities of any corporation, the Company shall be
deemed to have issued a number of shares of its Common Stock for stock or
securities of the other corporation computed on the basis of the actual exchange
ratio on which the transaction was predicated and for consideration equal to the
fair market value on the date of such transaction of such stock or securities of
the other corporation as determined by the Board of Directors of the Company,
and if any such calculation results in adjustment of the Warrant Exercise Price,
the determination of the number of shares of Common Stock issuable upon exercise
of this Warrant immediately prior to such merger, conversion or sale, for
purposes of Section 5 shall be made after giving effect to such adjustment of
the Warrant Exercise Price.
(f) Exceptions. Notwithstanding anything in this Section 6 to
the contrary, the Company shall not be required to make any adjustment of the
Warrant Exercise Price in connection with (i) the issuance of shares of Common
Stock upon exercise of options granted to management employees of the Company
pursuant to a stock option plan and
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(ii) any acquisition in which all or part of the purchase price is payable in
Common Stock or Convertible Securities and the Company or an Affiliate of the
Company is the surviving corporation.
SECTION 7. Record Date. In case the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them (i)
to receive a dividend or other distribution payable in Common Stock or in
Convertible Securities, or (ii) to subscribe for or purchase Common Stock or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
SECTION 8. Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the sale or other disposition of any such
shares shall be deemed an issuance thereof for the purposes of Section 6.
SECTION 9. Certain Events. If any event occurs as to which, in
the opinion of the Board of Directors of the Company, the provisions of Sections
4, 5 or 6 are not strictly applicable or, if strictly applicable, would not
fairly protect the purchase rights of the Holder of this Warrant in accordance
with the essential intent and principles of such provisions, then the Board of
Directors shall make an equitable adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such purchase rights.
SECTION 10. Notice of Adjustment of Warrant Exercise Price.
Upon any adjustment of the Warrant Exercise Price or in the occurrence of any
event which should result in an adjustment to the Warrant Exercise Price, the
Company shall promptly give written notice thereof to the Holder of this
Warrant, which notice shall state the Warrant Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
SECTION 11. Adjustments.
(a) Computation of Adjustments. Upon each computation of an
adjustment in the Warrant Exercise Price, the Warrant Exercise Price shall be
computed to the nearest cent (i.e., fractions of .5 of a cent, or greater, shall
be rounded to the highest cent) and the shares which may be subscribed for and
purchased upon exercise of this Warrant shall be calculated to the nearest whole
share (i.e., fractions of less than one half of a share, or greater, shall be
treated as being a whole share). No such adjustment shall be made, however, if
the change in the Warrant Exercise Price would be less than $.01 per share, but
any such lesser adjustment shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments carried forward,
shall amount to $.01 per share or more.
(b) Adjustment of Number of Shares. Upon each adjustment of
the Warrant Exercise Price as provided above, the registered holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant Exercise Price
resulting from such adjustment, the number
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of shares (calculated to the nearest tenth of a share) obtained by multiplying
the Warrant Exercise Price in effect immediately prior to such adjustment by the
number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Warrant Exercise Price after
such adjustment.
(c) Certain Prohibited Adjustments. Notwithstanding anything
herein to the contrary, the Company agrees not to enter into any transaction
which would cause an adjustment of the Warrant Exercise Price to less than the
par value of the Common Stock.
SECTION 12. Fractional Shares. The Company shall not be
required to issue fractional Warrant Shares upon the exercise of this Warrant.
If the Holder would be entitled upon the exercise of any rights evidenced hereby
to receive a fractional interest in a Warrant Share, the Company shall, upon
such exercise, pay in lieu of such fractional interest an amount in cash equal
to the value of such fractional interest, calculated based upon the Market Price
as of the date this Warrant is exercised.
SECTION 13. Notice of Certain Events. In case at any time:
(a) the Company shall pay any dividend upon, or make any
distribution in respect of, its Common Stock;
(b) the Company shall offer for subscription pro rata to
the holders of its Common Stock any additional shares
of stock of any class or other rights;
(c) there shall be any capital reorganization, or
reclassification of the capital stock, of the
Company, or consolidation or merger of the Company
with, or sale of all or substantially all of its
assets to another corporation; or
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the
Company;
then, in any one or more said cases, the Company shall give notice to the Holder
of the date on which (i) the books of the Company shall close or a record shall
be taken for such dividend, distribution or subscription rights, or (ii) such
reorganization, reclassification, consolidation, merger, sale of assets,
involuntary dissolution, liquidation or winding up shall take place, as the case
may be. Such notice shall be given not less than ten (10) days prior to the
record date or the date on which the transfer books of the Company are to be
closed in respect thereto in the case of an action specified in clause (i) and
at least thirty (30) days prior to the action in question in the case of an
action specified in clause (ii). Notices of regular dividends provided by the
Company in accordance with the requirements of the New York Stock Exchange shall
constitute notice to the Holder of such dividends in accordance with this
Section.
SECTION 14. No Change in Warrant Terms on Adjustment.
Irrespective of any adjustment in the Warrant Exercise Price or the number of
shares of Common Stock issuable upon exercise hereof, this Warrant, whether
theretofore or thereafter issued or reissued, may continue to express the same
Warrant Exercise Price and number of shares as are stated herein and the Warrant
Exercise Price and such number of shares specified herein shall be deemed to
have been so adjusted.
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SECTION 15. Taxes. The Company shall pay any tax or taxes
attributable to the issuance of securities issuable upon the exercise of this
Warrant, unless the certificates for such securities are to be issued in a name
other than that of the Holder hereof. The Company shall not be required to pay
any tax or taxes levied or assessed with respect to any transfer of this Warrant
or any Warrant Shares.
SECTION 16. Warrant Holder Not Deemed a Shareholder. No
Holder, as such, of this Warrant shall be entitled to vote or receive dividends
or be deemed a shareholder of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance of record to the Holder of this
Warrant of the securities which it is then entitled to receive upon the due
exercise of this Warrant.
SECTION 17. No Limitation on Corporate Action. Except as
otherwise specifically set forth herein, no provisions of this Warrant and no
right or option granted or conferred hereunder shall in any way limit, affect or
abridge the exercise by the Company of any of its corporate rights or powers to
recapitalize, amend its Articles of Incorporation, reorganize, consolidate or
merge with or into another corporation, or transfer all or any part of its
property or assets, or the exercise of any other of its corporate rights and
powers.
SECTION 18. Transfer; Restrictive Legends.
(a) This Warrant may not be transferred or assigned to any
Person without the express written consent of the Company, which consent shall
not be unreasonably withheld, and without complying with the restrictions
contained in Section 33 of this Warrant, if applicable. The Holder shall
indemnify and hold harmless the Company from any transfer or assignment of this
Warrant in violation of the terms hereof or in violation of applicable law.
Further, this Warrant may be transferred separately from the Notes.
(b) This Warrant is subject to the condition that if at any
time the Board of Directors of the Company determines, in its reasonable
discretion based upon the advice of its securities counsel, that the
registration or qualification of the Registrable Securities is necessary under
any state or federal law as a condition of or in connection with the issuance
and delivery of such securities, the issuance and delivery of such securities
may be withheld unless and until such registration or qualification shall have
been effected. Upon the request of Holder, the Company shall promptly supply to
such Holder all information regarding the Company required to be delivered in
connection with a transfer pursuant to Rule 144 or Rule 144A of the Securities
and Exchange Commission. If a registration statement is not in effect under the
Securities Act or any applicable state securities laws with respect to the
securities, the Board of Directors may require, as a condition of exercise and
as a condition to the issuance and delivery of any such securities, that the
Holder deliver to the Company a letter in the form of Exhibit A hereto, with any
supplemental changes the Board of Directors feel are necessary to comply with
federal and state securities laws. The Company may endorse on certificates
representing such securities such legends referring to the representations and
restrictions contained herein and in such letter, in addition to any other
applicable restrictions on resale as the Company, as it in its discretion shall
deem appropriate.
SECTION 19. Vesting. Notwithstanding anything in Section 2
to the
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contrary, this Warrant shall be exercisable only with respect to the number of
Warrant Shares which have vested in accordance with the following schedule:
(i) on the date hereof, three hundred thousand (300,000)
Warrant Shares shall automatically vest; and
(ii) for so long as any of the Notes remain outstanding, an
additional thirty-seven thousand five hundred (37,500) Warrant Shares,
up to an aggregate of one hundred eight-seven thousand (187,500)
Warrant Shares, shall vest on each anniversary of the date hereof;
provided, however, that upon the occurrence of an event described in
Section 2(b) hereof, any Warrant Shares not then vested shall immediately vest;
and provided further, that upon any adjustment of the number of Warrant Shares
the Holder is entitled to purchase upon the exercise of this Warrant in
accordance with Section 11(b) hereof, all numerical references to Warrant Shares
contained in this Section 19 shall be proportionately adjusted.
SECTION 20. Registration on Request of Holder.
(a) At any time within the first five (5) years after the date this
Warrant first becomes exercisable, upon the delivery to the Company of a written
request of the Holder and any holder of Registrable Securities, requesting that
the Company effect a registration under the Securities Act, and specifying the
intended method of disposition thereof, the Company will promptly give written
notice of such requested registration to all other holders of Registrable
Securities, and the Company thereupon on one occasion will use its best efforts
to effect, as expeditiously as possible, a registration under the Securities Act
(in accordance with the intended method of disposition specified in the notice
from the Holder and any holder of Registrable Securities) of all of the
Registrable Securities requested to be registered pursuant to this Section 20.
Notwithstanding the foregoing provisions of this Section 20(a), the Company
shall have no obligation to register any Registrable Securities during any
period of time (not to exceed, in the case of (x) or (y), 60 days or, in the
case of (z), 10 Business Days) when (x) the Company is contemplating a public
offering of its securities and in the judgment of the managing underwriter
thereof (or the Company, if such offering is not underwritten) such filing would
have a material adverse effect on the contemplated offering, (y) the Company is
in possession of material information that it deems advisable not to disclose in
a registration statement, or (z) the Company is engaged in any program for the
repurchase of stock of the Company.
(b) If any requested registration pursuant to this Section 20 is in the
form of an underwritten public offering, the holders of a majority of the
Registrable Securities which are to be registered pursuant to this Section 20
shall have the right to select the manager or comanagers that will administer
the offering, provided that such managers are reasonably satisfactory to the
Company.
(c) The Company's obligation to register Registrable Securities
pursuant to Section 20(a) shall not be deemed satisfied if the registration
statement does not become effective because of a material adverse change in the
Company. In addition, if such registration statement does become effective and
the method of disposition is an underwritten public offering, such obligation
shall not be deemed satisfied if more than fifty percent (50%) of the
Registrable Securities included in such registration statement are not sold
because of a material adverse change in the Company.
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(d) From the date of receipt of a notice from the Company pursuant to
Section 20(a) until the completion of the period of distribution of the
registration contemplated therein, the Company will not file with the Commission
any other registration statement with respect to its capital stock, whether for
its own account or that of other security holders, provided that the Company
shall not be prohibited from filing any registration statements on Forms S-4 or
S-8 or any other form which is not available for registering capital stock for
sale to the public. The Company shall be entitled to include in any registration
statement referred to in this Section 20 shares of its capital stock to be sold
by the Company for its own account or by other stockholders of the Company
pursuant to other registration rights agreements, provided the registration
statement relates to an underwritten public offering and in the opinion of the
managing underwriter such inclusion would not adversely affect the marketing of
the securities to be sold by the holders of Registrable Securities.
(e) Notwithstanding anything to the contrary in this Section 20, the
amount of Registrable Securities to be included in an underwritten public
offering may be reduced if and to the extent the managing underwriter shall be
of the opinion that such inclusion would adversely affect the marketing of the
securities to be sold in such underwritten public offering including the price
at which such securities will be sold. If such a determination is made, (i) the
number of equity securities (as defined in the Exchange Act) to be included by
the Company and the number of equity securities to be included by stockholders
other than the holder of Registrable Securities shall be reduced first; and then
(ii) the number of Registrable Securities to be included by the holders thereof
shall be reduced in a manner consistent with the provisions of Section 20(f)
hereof.
(f) If a requested registration pursuant to this Section 20 (x)
involves an underwritten public offering and the number of Registrable
Securities requested to be included in such registration exceeds the largest
number of Registrable Securities which can be sold as determined by the managing
underwriter pursuant to Section 20(e) (the "Maximum Offering Size"), or (y) the
number of Registrable Securities requested to be included in such registration
statement exceeds the number of Registrable Securities the Company is obligated
to register under Section 20(a), then the Company will include in such
registration the number of Registrable Securities requested to be included pro
rata in proportion to the percentage of Registrable Securities held by the
holders of Registrable Securities requesting registration; provided, however,
that such holders may decide among themselves a different priority.
SECTION 21. Incidental Registration Rights. If the Company at
any time proposes to register any of its equity securities (as defined in the
Exchange Act) under the Securities Act (other than pursuant to a registration
statement on Forms S-4 or S-8, or any successor forms), whether or not for sale
for its own account, and the registration form to be used may be used for the
registration of Registrable Securities, it shall at such time give the Holder
and any holder of Registrable Securities prompt written notice of its intentions
and, upon the written request of any such holder made within twenty (20) days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Company shall use its best efforts
to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the holders
thereof, to the extent required to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable Securities so to
be registered, provided that:
(i) if, at any time after giving written notice of its
intention to register any
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securities and, prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register such securities, the Company
may, at its election, give written notice of such determination to each
holder of Registrable Securities and, thereupon, shall be relieved of
its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith); and
(ii) if such registration shall be in connection with an
underwritten public offering and the managing underwriters shall advise
the Company in writing that in their opinion the number of Registrable
Securities requested to be included in such registration exceeds the
number of such securities which can be sold in such offering, the
Company shall include in such registration the number (if any) of
Registrable Securities so requested to be included which in the opinion
of such underwriters can be sold and shall not include in such
registration any securities (other than securities being sold by the
Company, which shall have priority in being included in such
registration) so requested to be included other than Registrable
Securities unless all Registrable Securities requested to be so
included are included therein (and if in the opinion of such
underwriters, some but not all of the Registrable Securities may be so
included, all holders of Registrable Securities requested to be
included therein shall share pro rata in the number of shares of
Registrable Securities included in such underwritten public offering on
the basis of the number of Registrable Securities requested to be
included therein), except that, in the case of a registration initially
requested or demanded by a holder or holders of securities other than
Registrable Securities, the holders of the Registrable Securities
requested to be included therein and the holders of such other
securities shall share pro rata (based on the number of shares if the
requested or demanded registration is to cover only Common Stock and,
if not, based on the proposed offering price of the total number of
securities included in such underwritten public offering requested to
be included therein); and the Company shall so provide in any
registration agreement hereinafter entered into with respect to any of
its securities.
SECTION 22. Registration in General.
(a) Procedures. If and whenever the Company is required to use its best
efforts to effect the registration of any Registrable Securities under
the Securities Act, the Company shall promptly:
(i) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such securities,
make all required filings with the NASD and use best efforts to cause
such registration statement to become effective;
(ii) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
until such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement, but in no
event for a period of more than six months after such registration
statement
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becomes effective;
(iii) furnish to counsel (if any) elected by holders of a
majority (by number of shares) of the Registrable Securities covered by
such registration statement copies of all documents proposed to be
filed with the Securities and Exchange Commission in connection with
such registration, which documents shall be subject to the review of
such counsel;
(iv) furnish to each seller of such securities such number of
conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits,
except that the Company shall not be obligated to furnish any seller of
securities with more than two copies of such exhibits), such number of
copies of the prospectus included in such registration statement
(including such preliminary prospectus and any summary prospectus), in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to facilitate
the disposition of the securities owned by such seller;
(v) use its best efforts to register or qualify such
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller shall
request, and do any and all other acts and things which may be
necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such
seller, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified, or to consent to
service of process in any such jurisdiction other than process served
in connection with alleged violations by the Company of the securities
laws of such jurisdiction;
(vi) furnish to each seller a signed counterpart, addressed to
the sellers, of
(A) an opinion of counsel for the Company, dated the
effective date of the registration statement, and
(B) subject to the accountants obtaining the
necessary representations as specified in Statement on
Auditing Standards No. 72, a "comfort" letter signed by the
independent public accountants who have certified the
Company's financial statements included in the registration
statement,
covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and, in
the case of such accountants' letter, with respect to changes
subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters
delivered to the underwriters in underwritten public offerings of
securities;
(vii) notify each seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be
stated
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therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and at the request of any
such seller prepare and furnish to such seller a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and Exchange
Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with
the first month after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of section 11(a)
of the Securities Act; and
(ix) use its best efforts to list such securities on any stock
market on which the Common Stock is then listed, if such securities are
not already so listed and if such listing is then permitted under the
rules of such exchange, and to provide a transfer agent and registrar
for such Registrable Securities not later than the effective date of
such registration statement.
The Company may require each seller of any securities as to which any
registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such holder agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such holder not materially
misleading.
By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 22(b)(vii) hereof, such holder shall promptly discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 22(b)(vii)
hereof. If so directed by the Company, each holder of Registrable Securities
shall deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in Section 22(b)(ii) hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice to
and including the date when each seller of any Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 22(b)(vii) hereof.
(b) Indemnification.
(i) Indemnification by the Company.
The Company shall indemnify and hold harmless each holder of
Registrable Securities, each person who controls such holder of
Registrable Securities within the meaning of either Section 15 of the
Securities Act or Section 20(a) of the Exchange
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Act and the officers, directors, employees and agents of each such
holder and control Person (each such Person being sometimes hereinafter
referred to as an "Indemnified Holder") from and against all losses,
claims, damages, liabilities, costs (including costs of preparation and
attorneys' fees) and expenses (including expenses of investigation)
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or
alleged omission to state therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages, liabilities
or expenses arise out of or are based upon any such untrue statement or
omission or allegation thereof based upon information relating to such
Indemnified Holder and furnished in writing to the Company by such
Indemnified Holder expressly for use therein. This indemnity shall be
in addition to any liability which the Company may otherwise have.
If any action or proceeding (including any governmental
investigation or inquiry) shall be brought or asserted against an
Indemnified Holder in respect of which indemnity may be sought from the
Company, such Indemnified Holder shall promptly notify the Company in
writing, and the Company shall, at its expense, assume the defense
thereof, including the employment of counsel satisfactory to such
Indemnified Holder and the payment of all expenses. The failure so to
notify the Company shall not relieve the Company from any obligation or
liability except to the extent (but only to the extent) that it shall
finally be determined by a court of competent jurisdiction (which
determination is not subject to appeal) that the Company has been
materially prejudiced by such failure. Such Indemnified Holder shall
have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Holder unless (A)
the Company has agreed to pay such fees and expenses or (B) the Company
shall have failed promptly to assume the defense of such action or
proceeding or has failed to employ counsel satisfactory to such
Indemnified Holder or (C) the named parties to any such action or
proceeding (including any impleaded parties) include both such
Indemnified Holder and the Company or an Affiliate of the Company, and
there may be one or more defenses available to such Indemnified Holder
which are additional to, or in conflict with, those available to the
Company or such Affiliate (in which case, if such Indemnified Holder
notifies the Company in writing that it elects to employ separate
counsel at the expense of the Company, the Company shall not have the
right to assume the defense of such action or proceeding on behalf of
such Indemnified Holder, it being understood, however, that the Company
shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or 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) at
any time for such Indemnified Holder). The Company shall not be liable
for any settlement of any such action or proceeding effected without
its written consent, but if settled with its written consent, or if
there be a final judgment for the plaintiff in any such action or
proceeding, the Company agrees to indemnify and hold harmless such
Indemnified Holders from and against any loss or liability by reason of
such settlement or judgment. Whether or not such defense is assumed by
the Company, no Indemnified Holder shall be subject to any liability
for any settlement made without its consent (but such consent shall not
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be unreasonably withheld). The Company shall not consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
each Indemnified Holder of a release, in form and substance
satisfactory to the Indemnified Holder, from all liability in respect
of such proceeding for which such Indemnified Holder would be entitled
to indemnification hereunder (whether or not any Indemnified Holder is
a party thereto).
(ii) Indemnification by Holder of Registrable Securities.
Each holder of Registrable Securities agrees to indemnify and
hold harmless the Company, its directors and officers and each Person,
if any, who controls the Company within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to such holders, but
only with respect to information relating to such holders furnished in
writing by such holders expressly for use in any registration statement
or prospectus, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be
brought against the Company or its directors or officers or any such
controlling person, in respect of which indemnity may be sought against
a holder of Registrable Securities, such holder shall have the rights
and duties given to the Company and the Company or its directors or
officers or such controlling person shall have the rights and duties
given to each holder by the preceding paragraph.
(iii) Contribution
If the indemnification provided for in this Section 22(b) is
unavailable to or insufficient to hold harmless an indemnified party
under Section 22(b)(i) or Section 22(b)(ii) hereof (other than by
reason of exceptions provided in those Sections) 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,
liabilities or expenses in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Holders on the other hand from their sale of Registrable Securities or
if such allocation is not permitted by applicable law, the relative
fault of the Company on the one hand and of the Indemnified Holder on
the other in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative fault of the
Company on the one hand and of the Indemnified Holder on the other
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 Company or by the Indemnified Holder and the parties'
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,
liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section
22(b)(i), any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or
claim.
The Company and each Holder of Registrable Securities agree
that it would not be just and equitable if contribution pursuant to
this Section 22(b)(iii) were
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determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(c) Expenses. The Company shall pay all Registration Expenses
in connection with each registration of Registrable Securities.
SECTION 23. Lock-Up Agreement. The Holder hereby agrees to
enter into an agreement with the Company, in form and substance reasonably
satisfactory to such Holder, restricting such Holder's ability to sell Warrant
Shares for a period not to exceed one hundred eighty (180) days following any
underwritten public offering of Common Stock pursuant to an effective
registration statement under the Securities Act.
SECTION 24. Exchange of Warrant. This Warrant is exchangeable
upon the surrender hereof by the holder hereof at such office or agency of the
Company, for new warrants of like tenor representing in the aggregate the right
to subscribe for and purchase the number of shares which may be subscribed for
and purchased hereunder from time to time after giving effect to all the
provisions hereof, each of such new warrants to represent the right to subscribe
for and purchase such number of shares as shall be designated by said holder
hereof at the time of such surrender.
SECTION 25. Financial Information. Within one hundred twenty
(120) days after the close of each fiscal year of the Company ending after the
date of the issuance of this Warrant and prior to the Expiration Date, the
Company shall furnish to the Holder the audited consolidated financial
statements of the Company and its consolidated subsidiaries (including balance
sheet and income statements) as at the end of each such fiscal year in
comparative form certified by a firm of independent certified public accountants
of recognized national standing, reasonably acceptable to the Holder and
selected by the Company, which financial statements shall be accompanied by the
opinion of such certified public accountants thereon.
SECTION 26. Lost, Stolen, Mutilated or Destroyed Warrant. If
this Warrant is lost, stolen, mutilated or destroyed, the Company shall, on such
terms as to indemnify or otherwise as it may in its discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed.
SECTION 27. Representation of Holder. The holder of this
Warrant, by the acceptance hereof, represents that it is acquiring this Warrant
for its own account for investment and not with a view to, or sale in connection
with, any distribution hereof or of any of the shares of Common Stock or other
securities issuable upon the exercise thereof, nor with any present intention of
distributing any of the same.
SECTION 28. Notice. All notices, demands and other
communications under this Warrant shall be in writing (which shall include
communications by telex and telecopy) and shall be delivered (a) in person or by
courier or overnight service, (b) mailed by first class registered or certified
mail, postage prepaid, return receipt requested, by prepaid telex or telecopier,
or by hand, courier or overnight service, and (c) be given at the following
respective addresses and telecopier numbers and to the attention of the
following Persons:
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(i) if to the Company, to:
Gray Communications Systems, Inc.
126 North Washington Street
Albany, Georgia 31701
Attn: Mr. Ralph W. Gabbard
Telecopier No.: (912) 888-9374
with a copy (which shall not constitute notice) to:
Heyman & Sizemore
2300 Cain Tower
229 Peachtree Street, NE
Atlanta, Georgia 30303-1608
Attn: Neal H. Ray, Esq.
Telecopier No.: (404) 521-2838
(ii) if to the Holder hereof, to:
Bull Run Corporation
4370 Peachtree Road
Atlanta, Georgia 30319
Attn: Mr. Robert S. Prather
Telecopier No.: (404) 261-9607
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attn: Stephen A. Opler, Esq.
Telecopier No.: (404) 881-4777
or at such other address or telecopier number or to the attention of such other
person as the party to whom such information pertains may hereafter specify for
the purpose in a notice to the other specifically captioned "Notice of Change of
Address", and (d) be effective or deemed delivered or furnished (i) if given by
mail, on the third Business Day after such communication is deposited in the
mail, addressed as above provided, (ii) if given by telecopier, when such
communication is transmitted to the appropriate number determined as above
provided in this Section 28 and the appropriate answer back is received or
receipt is otherwise acknowledged, and (iii) if given by hand delivery or
overnight delivery service when left at the address of the addressee addressed
as above provided, except that notices of
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a change of address or telecopier number, shall not be deemed furnished until
received.
SECTION 29. Miscellaneous. This Warrant and any term hereof
may be changed, waived, discharged, or terminated only by an instrument in
writing signed by the party or holder hereof against whom enforcement of such
change, waiver, discharge or termination is sought. The headings in this Warrant
are for purposes of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 30. Remedies. The Company stipulates that the remedies
at law of the Holder in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
SECTION 31. Governing Law. This Warrant shall be governed by
the laws of the State of Georgia, without regard to conflict of laws principles.
SECTION 32. Date. The date of this Warrant is January 3, 1996.
This Warrant, in all events, shall be wholly void and of no effect after the
close of business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Sections 20, 21 and 22 shall continue in
full force and effect after such date as to any Warrant Shares or other
securities issued upon the exercise of this Warrant.
SECTION 33. Certain Limitations on Exercise of Warrant. This
Warrant may not be exercised by the Holder to the extent, but only to the
extent, that the exercise of this Warrant would result in the Holder and its
Affiliates owning more than 49.9% of the outstanding shares of Common Stock, on
a fully diluted basis. In the event the circumstances described in the foregoing
sentence preclude the Holder from exercising any portion of this Warrant, the
Holder may, in accordance with the provisions of Section 18 of this Warrant,
freely sell or otherwise transfer this Warrant to any third party other than a
third party to which the Holder has previously sold, in one or more
installments, an aggregate of twenty-five percent (25%) or more of the
outstanding Common Stock, on a fully diluted basis.
SECTION 34. Shareholder Approval. Notwithstanding anything in
this Warrant to the contrary, this Warrant is not exerciseable until the holders
of at least a majority of the securities of the Company entitled to vote have
approved the issuance hereof, provided that the total vote cast represents at
least fifty percent (50%) of all such securities.
[Signatures Continued On Next Page]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers and its seal to be hereunto affixed as of
January 3, 1996.
GRAY COMMUNICATIONS SYSTEMS, INC.
By: /Ralph W. Gabbard/
Name: Ralph W. Gabbard
Title: President
ATTEST:
By: /Marcia E. Crowe/
Secretary
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EXHIBIT A
Notice of Exercise
[Date]
Gray Communications Systems, Inc.
126 North Washington Street
Albany, Georgia 31701
Attn: Mr. Ralph W. Gabbard
Re: Exercise of Warrant
Pursuant to the provisions of that certain Warrant to Purchase Common
Stock (the "Warrant") of Gray Communications Systems, Inc., a Georgia
corporation (the "Company"), dated January 3, 1996, Bull Run Corporation, a
Georgia corporation ("Bull Run"), hereby represents, warrants, covenants, and
agrees with the Company as follows:
The shares of common stock of the Company being acquired by
Bull Run pursuant to this exercise of the Warrant (the "Warrant
Shares") will be acquired for its own account without the participation
of any other person, with the intent of holding the Warrant Shares for
investment and without the intent of participating, directly or
indirectly, in a distribution of the Warrant Shares and not with a view
to, or for resale in connection with, any distribution of the Warrant
Shares, nor is Bull Run aware of the existence of any distribution of
the Warrant Shares;
Bull Run is not acquiring the Warrant Shares based upon any
representation, oral or written, by any person with respect to the
future value of, or income from, the Warrant Shares but rather upon an
independent examination and judgment as to the prospects of the
Company;
The Warrant Shares were not offered to Bull Run by means of
publicly disseminated advertisements or sales literature;
Bull Run is able to bear the economic risks of the investment
in the Warrant Shares, including the risk of a complete loss of Bull
Run's investment therein;
Bull Run understands and agrees that the Warrant Shares will
be issued and sold to Bull Run in reliance upon an exemption from, but
without registration under any state law relating to the registration
of securities for sale, and will be issued and sold in reliance on the
exemptions from
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registration under the Securities Act of 1933 (the "1933 Act"),
provided by Sections 3(b) and/or 4(2) thereof and the rules and
regulations promulgated thereunder;
Except as set forth in Section 18 of the Warrant, the Warrant
Shares cannot be offered for sale, sold or transferred by Bull Run
other than pursuant to: (A) an effective registration under the 1933
Act or in a transaction otherwise in compliance with the 1933 Act; and
(B) evidence reasonably satisfactory to the Company of compliance with
the applicable securities laws of other jurisdictions. The Company
shall be entitled to rely upon an opinion of counsel reasonably
satisfactory to it with respect to compliance with the above laws;
Except as set forth in Sections 20, 21 and 22 of the Warrant,
the Company will be under no obligation to register the Warrant Shares
or to comply with any exemption available for sale of the Warrant
Shares without registration or filing, and the information or
conditions necessary to permit routine sales of securities of the
Company under Rule 144 of the 1933 Act are not now available and no
assurance has been given that it or they will become available. The
Company is under no obligation to act in any manner so as to make Rule
144 available with respect to the Warrant Shares;
Bull Run has and has had complete access to and the
opportunity to review and make copies of all material documents related
to the business of the Company, including, but not limited to,
contracts, financial statements, tax returns, leases, deeds, and other
books and records. Bull Run has examined such of these documents as it
wished and is familiar with the business and affairs of the Company.
Bull Run realizes that the purchase of the Warrant Shares is a
speculative investment and that any possible profit therefrom is
uncertain;
Bull Run has had the opportunity to ask questions of and
receive answers from the Company and any person acting on its behalf
and to obtain all material information reasonably available with
respect to the Company and its affairs. Bull Run has received all
information and data with respect to the Company which it has requested
and which it has deemed relevant in connection with the evaluation of
the merits and risks of its investment in the Company;
Bull Run has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of the purchase of the Warrant Shares hereunder and it is able to bear
the economic risk of such purchase; and
The agreements, representations, warranties, and covenants
made by Bull Run herein extends to and applies to all of the Warrant
Shares. Acceptance by Bull Run of the certificate representing such
Warrant Shares
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shall constitute a confirmation by Bull Run that all such agreements,
representations, warranties, and covenants made herein shall be true
and correct at that time.
Bull Run understands that the certificates representing the Warrant
Shares shall bear a legend referring to the foregoing covenants, representations
and warranties and restrictions on transfer, and agrees that a legend to that
effect may be placed on any certificate which may be issued to Bull Run as a
substitute for the certificates representing the Warrant Shares.
Very truly yours,
BULL RUN CORPORATION
By:
Its:
AGREED TO AND ACCEPTED:
GRAY COMMUNICATIONS SYSTEMS, INC.
By:
Title:
Number of Shares
Exercised:
Number of Shares
Remaining: Date:
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