CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATIONS, PREFERENCES, AND RELATIVE RIGHTS,
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS
OF THE
12-5/8% SERIES E CUMULATIVE EXCHANGEABLE PREFERRED STOCK DUE
OCTOBER 31, 2006
OF
SFX BROADCASTING, INC.
-----------------------------------
(Pursuant to Section 242 of the General
Corporation Law of the State of Delaware)
SFX Broadcasting, Inc. (the "Company"), a corporation
organized and existing under and by virtue of the provisions of the General
Corporation Law of the State of Delaware, hereby certifies as follows:
FIRST: The Certificate of Incorporation of the Company
authorizes the issuance of Preferred Stock, and, further, authorizes the
issuance of shares of Preferred Stock from time to time in one or more series
as may from time to time be determined by the Board of Directors, each of said
series to be distinctly designated, and on such terms and for such
consideration as shall be fixed by the Board of Directors, and further, grants
to the Board of Directors of the Company the authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a particular series
of Preferred Stock, the voting powers, if any, and the designations,
preferences and relative, participating, optional, conversion and other special
rights, and the qualifications, limitations and restrictions of such series.
SECOND: The Board of Directors of the Company by unanimous
written consent dated January 17, 1997, did duly adopt a resolution authorizing
the creation and issuance of a series of said Preferred Stock to be known as
12-5/8% Series E Cumulative Exchangeable Preferred Stock (the "Shares") and
fixing the number, designations, preferences, rights and limitations of such
series of Preferred Stock.
THIRD: The Board of Directors of the Company by unanimous
written consents dated December 31, 1997 and January 27, 1998, did duly adopt a
resolution authorizing the amendment of the Certificate of Designations,
Preferences and Relative, Participating, Optional and Other Special Rights of
Preferred Stock and Qualifications, Limitations and Restrictions thereof of
12-5/8% Series E Cumulative Exchangeable Preferred Stock Due October 31, 2006
of SFX Broadcasting, Inc. (the "Certificate of Designations").
FOURTH: The amendment set forth in this Certificate of
Amendment has been duly adopted in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware. The Board of
Directors of the Corporation has received the consent to the
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amendment set forth in this Certificate of Amendment of the Certificate of
Designations from the owners and holders of a majority of the outstanding
Shares.
FIFTH: The common stockholders approved the following
resolutions relating to the Shares in Written Consents of the Holder of a
Majority of the Combined Voting Power of the Common Stock of SFX Broadcasting,
Inc., dated January 6, 1998 and January 27, 1998:
RESOLVED, that the following new definitions be added to
Section 1 of the Certificate of Designations, and inserted in alphabetical
order in Section 1:
Acquisition Agreements. The term "Acquisition Agreements" shall mean
the acquisition agreements relating to the Pending Acquisitions (as defined in
the Consent Solicitation Statement of the Corporation dated January 7, 1998, as
supplemented by Supplement No. 1 thereto dated January 28, 1998) as they may be
amended from time to time and all transactions and agreements specifically
contemplated thereby or by instruments referred to therein.
Class A Common Stock. The term "Class A Common Stock" shall mean the
Corporation's Class A Common Stock, par value $.01 per share.
Class B Common Stock. The term "Class B Common Stock" shall mean the
Corporation's Class B Common Stock, par value $.01 per share.
Consent Solicitations. The term "Consent Solicitations" means the
consent solicitations of the Corporation made pursuant to the Consent
Solicitation Statements dated January 7, 1998, as supplemented by Supplements
No. 1 thereto dated January 28, 1998, to the holders of the Corporation's
103/4% Senior Subordinated Notes due 2006 and to the holders of Series E
Preferred Stock and the related Information Statement.
Entertainment Companies. The term "Entertainment Companies" shall mean
SFX Entertainment and any and all of its direct and indirect Subsidiaries.
Meadows Repurchase. The term "Meadows Repurchase" shall mean the
redemption by the Corporation of up to 250,838 shares of Class A Common Stock
for $33.00 per share, pursuant to the Agreement of Merger, dated February 12,
1997, by and among the Corporation, NOC-Acquisition Corp., CAPCO Acquisition
Corp., QN Acquisition Corp., Nederlander of Connecticut, Inc., Connecticut
Ampitheater Development Corporation, QN Corp., Connecticut Performing Arts,
Inc. and Connecticut Performing Arts Partners and the Stockholders of
Nederlander of Connecticut, Inc,. Connecticut Ampitheater Development
Corporation and QN Corp. listed on the signature page thereto.
Merger Agreement. The term "Merger Agreement" shall mean the Agreement
and Plan of Merger, dated as of August 24, 1997, as it may be amended from time
to time, among the Corporation, SBI Holding Corporation and SBI Radio
Acquisition Corporation and all transactions
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and agreements specifically contemplated thereby or by instruments referred to
therein.
SBI Merger. The term "SBI Merger" shall mean a merger of SBI Radio
Acquisition Corporation into the Corporation pursuant to the Merger Agreement.
SFX Entertainment. The term "SFX Entertainment" shall mean SFX
Entertainment, Inc., a subsidiary of the Corporation, newly formed in Delaware,
to which the Corporation will contribute cash and all of the capital stock of
SFX Concerts, Inc. (formerly known as Delsener/Slater Enterprises, Inc.) that
the Corporation directly or indirectly owns.
Spin-Off. The term "Spin-Off" shall mean the distribution of SFX
Entertainment common stock pro rata to the holders of Class A Common Stock and
the Class B Common Stock (and the transfer to an escrow account for delivery to
the holders of certain warrants to receive Class A Common Stock) or other
disposition pursuant to, or as permitted by, the Merger Agreement of all of the
capital stock and assets of the Entertainment Companies.
Spin-Off Transactions. The term "Spin-Off Transactions" shall mean the
Spin-Off, the Pending Acquisitions and the Merger Agreement as it relates to
the transactions described or referred to under the "Proposed Amendments" and
"Spin-Off" sections of the Consent Solicitation Statement of the Corporation
dated January 7, 1998, as supplemented by Supplement No. 1 thereto dated
January 28, 1998, relating to this Certificate of Designations.
RESOLVED, that the definition of "Consolidated Cash Flow" contained in
Section 1 be amended to read in its entirety as follows:
Consolidated Cash Flow. The term "Consolidated Cash Flow" shall mean,
with respect to any Person for any period, the Consolidated Net Income of such
Person for such period plus (i) an amount equal to any extraordinary loss plus
any net loss realized in connection with an Asset Sale by such Person or any of
its Subsidiaries during such period (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based on
income or profits of such Person and its Subsidiaries for such period, to the
extent that such provision for taxes was included in computing such
Consolidated Net Income, plus (iii) Consolidated Interest Expense of such
Person for such period, to the extent any such Consolidated Interest Expense
was deducted in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash charges (excluding any such non-cash charge to the
extent that it represents an accrual of or reserve for cash charges in any
future period) of such Person and its Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash charges were
deducted in computing such Consolidated Net Income, plus (v) the Specified
Charges (as defined in the Corporation's Consent Solicitation Statement dated
January 7, 1998, as supplemented by Supplement No. 1 thereto dated January 28,
1998, relating to the Series E Preferred Stock), plus (vi) to the extent that
such Consolidated Net Income was reduced thereby (a) amortization of the
expenses incurred in connection with the Consulting, Non-Compete and
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Termination Agreement among the Corporation, SBI Holding Corporation and Robert
F.X. Sillerman dated as of August 24, 1997, (b) consent fees and expenses
directly related to the Consent Solicitations, (c) legal and other costs
associated with pending or threatened litigation in connection with the SBI
Merger and (d) other unusual and nonrecurring charges paid or accrued in 1997
or 1998 (including, but not limited to, legal, accounting, investment banking,
severance and termination fees) relating to the SBI Merger, the Spin-Off, the
Pending Acquisitions or transactions related thereto; provided that the
aggregate amount of charges that may be added to Consolidated Net Income
pursuant to this clause (d) to determine Consolidated Cash Flow for any
four-quarter period will not exceed $13.5 million (net of expenses reimbursed
or paid by SFX Entertainment) less (vii) all non-cash items increasing
Consolidated Net Income for such period (excluding any such non-cash income to
the extent it represents an accrual of cash income in any future period), in
each case, on a consolidated basis and determined in accordance with GAAP.
RESOLVED, that the definition of "Subsidiary" contained in Section 1
be amended to read in its entirety as follows:
Subsidiary. The term "Subsidiary" shall mean, with respect to any
person, (i) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Voting Stock thereof is at the
time owned or controlled, directly or indirectly, by such person or one or more
of the other Subsidiaries of that person (or a combination thereof) and (ii)
any partnership (a) the sole general partner or the managing general partner of
which is such person or a Subsidiary of such person or (b) the only general
partners of which are such person or of one or more Subsidiaries of such person
(or any combination thereof); however, with respect to the Corporation,
"Subsidiary" does not include the Entertainment Companies.
RESOLVED, that Section 8 of the Certificate of Designations be amended
to read in its entirety as follows:
8. Certain Covenants
(a) Restricted Payments. The Corporation shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the
Corporation's Parity Securities or Junior Securities (including, without
limitation, any payment in connection with any merger or consolidation
involving the Corporation) or to the direct or indirect holders of the
Corporation's Parity Securities or Junior Securities in their capacity as such
(other than dividends or distributions payable in Capital Stock (other than
Disqualified Stock) of the Corporation); (ii) purchase, redeem or otherwise
acquire or retire for value any Parity Securities or Junior Securities of the
Corporation; (iii) make any payment on, or purchase, redeem, defease or
otherwise acquire or retire for value any Junior Securities, except payments of
the Liquidation Preference thereof at final maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
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(a) no Voting Rights Triggering Event shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Corporation would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $l.00 of additional Indebtedness (other than
Permitted Debt) pursuant to the Debt to Cash Flow Ratio test set forth below
under Section 8(b) hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments declared or made after the Initial Issue Date (other
than Restricted Payments permitted by clauses (2), (5), (6), (10), (13) or (14)
of the following paragraph) shall not exceed, at the date of determination, the
sum of (1) an amount equal to the Corporation's Consolidated Cash Flow from the
Initial Issue Date to the end of the Corporation's most recently ended full
fiscal quarter for which internal financial statements are available, taken as
a single accounting period, less the product of 1.4 times the Corporation's
Consolidated Interest Expense from the Initial Issue Date to the end of the
Corporation's most recently ended full fiscal quarter for which internal
financial statements are available, taken as a single accounting period, plus
(2) an amount equal to the net cash proceeds received by the Corporation from
the issue or sale after the Initial Issue Date of Equity Interests of the
Corporation (other than (i) sales of Disqualified Stock and (ii) Equity
Interests sold to any of the Corporation's Subsidiaries) or of debt securities
or Disqualified Stock (other than the Series D Preferred Stock) of the
Corporation issued after the Initial Issue Date that have been converted into
such Equity Interests plus (3) to the extent that any Restricted Investment
that was made after the Initial Issue Date is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition, if
any) and (B) the initial amount of such Restricted Investment.
If no Voting Rights Triggering Event shall have occurred and be
continuing as a result thereof, the foregoing provisions will not prohibit: (1)
the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied with
the provisions of this Certificate of Designations; (2) the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Corporation in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Corporation) of other Equity
Interests of the Corporation (other than any Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded from
clause (c)(2) of the preceding paragraph; (3) cash payments made in respect of
fractional shares of Capital Stock not to exceed $100,000 in the aggregate in
any fiscal year; (4) the payment of dividends on the shares of Series D
Preferred Stock in accordance with the terms thereof as in effect on the
Initial Issue Date; (5) the issuance of Series D Exchange Notes in exchange for
the Series D Preferred Stock; provided that such issuance is permitted by
Section 8(b) hereof; (6) the issuance of Exchange Debentures in exchange for
the Series E Preferred Stock; provided that such issuance is permitted by
Section 8(b) hereof; (7) in the event that the Corporation elects to issue the
Series D Exchange Notes in exchange for the Series D Preferred Stock, cash
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payments made in lieu of the issuance of Series D Exchange Notes having a face
amount less than $50 and any cash payments representing accrued and unpaid
dividends in respect thereof, not to exceed $100,000 in the aggregate in any
fiscal year; (8) in the event that the Corporation elects to issue Exchange
Debentures in exchange for Series E Preferred Stock, cash payments made in lieu
of the issuance of Exchange Debentures having a face amount less than $l,000
and any cash payments representing accrued and unpaid dividends in respect
thereof, not to exceed $100,000 in the aggregate in any fiscal year; (9)
payments made by the Corporation to SCMC for facilities maintenance and other
services and reimbursements pursuant to the Shared Facilities Agreement, as
amended from time to time, to the extent that such payments do not exceed the
amount of payments which would have been due if calculated in accordance with
the terms of the Shared Facilities Agreement as in effect on the Initial Issue
Date; (10) payments by the Corporation pursuant to the Management Termination
Agreements in accordance with the terms thereof as in effect on the Initial
Issue Date; (11) the redemption by the Corporation of its Series C Preferred
Stock in accordance with the terms thereof as in effect on the Initial Issue
Date; (12) the redemption by the Corporation of its Series B Preferred Stock in
accordance with the terms thereof as in effect on the Initial Issue Date;
provided that payments made by the Corporation to redeem the Series B Preferred
Stock shall not exceed $1.0 million in any fiscal year or $2.0 million in the
aggregate since the Initial Issue Date; (13) the Spin-Off Transactions; and
(14) the Meadows Repurchase.
The amount of all Restricted Payments (other than cash) shall be the
Fair Market Value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Board of Directors) on the
date of the Restricted Payment of the asset(s) or securities proposed to be
transferred by the Corporation or such Subsidiary, as the case may be, pursuant
to the Restricted Payment. Not later than the date of making any Restricted
Payment, the Corporation shall deliver to the Board of Directors an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this covenant were computed,
which calculations may be based upon the Corporation's latest available
financial statements.
(b) Incurrence of Indebtedness and Issuance of Preferred Stock. The
Corporation shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt) and that
the Corporation will not issue any Disqualified Stock and will not permit any
of its Subsidiaries to issue any shares of Preferred Stock; provided, however,
that (i) the Corporation may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock and (ii) (A) the Subsidiaries may guarantee
Senior Debt and (B) the Subsidiaries may issue Preferred Stock other than
Disqualified Stock if, in either case, the Corporation's Debt to Cash Flow
Ratio at the time of incurrence of such Indebtedness or the issuance of such
Disqualified Stock or the Guarantee of such Senior Debt or the issuance of such
Preferred Stock, as the case may be, after giving pro forma effect to such
incurrence or issuance or Guarantee as of such date and to the use of proceeds
therefrom as if the same had occurred at the beginning of the most recently
ended four full fiscal quarter period of the Corporation for which internal
financial statements are available, would have been no greater than 7.0 to 1.
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The foregoing provisions will not apply to the incurrence of any of
the following Indebtedness (collectively, "Permitted Debt"):
(i) the incurrence by the Corporation and its Subsidiaries of
Indebtedness pursuant to one or more Bank Facilities, so long as the aggregate
principal amount of all Indebtedness outstanding under all Bank Facilities does
not, at the time of incurrence, exceed an amount equal to $225.0 million;
(ii) the incurrence by the Corporation and its Subsidiaries of the
Existing Indebtedness;
(iii) Indebtedness under the Exchange Debentures;
(iv) the issuance of Disqualified Stock by the Corporation that by its
items would not require or permit any payment of dividends or other
distributions that would violate the covenant Section 8(a) above;
(v) the incurrence by the Corporation or any of its Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new Subsidiary;
provided that such Indebtedness was incurred by the prior owner of such assets
or such Subsidiary prior to such acquisition by the Corporation or one of its
Subsidiaries and was not incurred in connection with, or in contemplation of,
such acquisition by the Corporation or one of its Subsidiaries; and provided
further that, after giving pro forma effect to such incurrence of Indebtedness
as of such date and to the use of proceeds therefrom as if the same had
occurred at the beginning of the most recently ended four full fiscal quarter
period for which internal financial statements are available, the Corporation's
Debt to Cash Flow Ratio would have been no greater than 7.0 to 1.
(vi) the incurrence by the Corporation or any of its Subsidiaries of
Permitted Refinancing Debt in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund, Indebtedness that
was permitted by this Certificate of Designations to be incurred;
(vii) the incurrence by the Corporation or any of its Subsidiaries of
intercompany Indebtedness between or among the Corporation and any of its
Subsidiaries; provided, however, that (i) if the Corporation is the obligor on
such Indebtedness, such Indebtedness is expressly subordinate to the payment in
full of all Obligations with respect to the Exchange Debentures and (ii)(A) any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Corporation or a Subsidiary
and (B) any sale or other transfer of any such Indebtedness to a Person that is
not either the Corporation or a Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Corporation or such
Subsidiary, as the case may be;
(viii) the incurrence by the Corporation or any of its Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
interest rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of this Certificate of Designations to be outstanding;
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and
(ix) the incurrence by the Corporation and any of its Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause of this
paragraph) in an aggregate principal amount (or accreted value, as applicable)
at any time outstanding not to exceed $10.0 million.
(c) Merger, Consolidation or Sale of Assets. The Corporation shall not
consolidate or merge with or into (whether or not the Corporation is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions, to another corporation, Person or entity unless (i) the
Corporation is the surviving corporation or the entity or the Person formed by
or surviving any such consolidation or merger (if other than the Corporation)
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any states, any state thereof or the District of
Columbia; (ii) the Series E Preferred Stock shall be converted into or
exchanged for and shall become shares of such successor, transferee or
resulting Person, having in respect of such successor, transferee or resulting
Person the same powers, preferences and relative participating, optional or
other special rights and the qualifications, limitations or restrictions
thereon, that the Series E Preferred Stock had immediately prior to such
transaction; (iii) immediately after such transaction no Voting Rights
Triggering Event exists; (iv) such transaction will not result in the loss or
suspension or material impairment of any Material Broadcast License; and (v)
except in the case of a merger of the Corporation with or into a Wholly Owned
Subsidiary of the Corporation, the Corporation or the entity or Person formed
by or surviving any such consolidation or merger (if other than the
Corporation), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Corporation immediately preceding the transaction and (B) will, at
the time of such transaction and after giving pro forma effect thereto as if
such transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt to Cash Flow Ratio test set forth in Section 8(b) hereof.
(d) Transactions with Affiliates. The Corporation shall not, and shall
not permit any of its Subsidiaries to, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Corporation or the relevant Subsidiary than those that would have been
obtained in a comparable transaction by the Corporation or such Subsidiary with
an unrelated Person and (ii) the Corporation delivers to the Holders (a) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the members
of the Board of Directors that are disinterested as to such Affiliate
Transaction and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, an opinion as to
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the fairness to the Holders of such Affiliate Transaction from a financial
point of view issued by an accounting, appraisal or investment banking firm of
national standing; provided that (1) transactions between or among the
Corporation and/or its Wholly-Owned Subsidiaries, (2) the redemption or
repurchase of the Existing MMR Indebtedness, (3) transactions and agreements
specifically contemplated by the Termination and Assignment Agreement between
the Corporation and SCMC as in effect on the Initial Issue Date, (4) payments
required by the terms of the joint lease among the Corporation, SCMC and the
landlord thereunder for the Corporation's corporate headquarters located at 650
Madison Avenue, New York, New York and any agreements directly related thereto,
in each case, as the same are in effect on the Initial Issue Date, (5) payments
made by the Corporation to SCMC for the facilities maintenance and other
services and reimbursements pursuant to the Shared Facilities Agreement, (6)
payments and other transactions by the Corporation pursuant to the Management
Termination Agreements, (7) any Restricted Payments that are permitted by
Section 8(a) hereof and any Permitted Investments, (8) the transactions and
agreements specifically contemplated by the Merger Agreement, the Acquisition
Agreements or by instruments referred to in any such agreements and (9) any
Spin-Off Transaction, in each case, shall not be deemed to be Affiliate
Transactions.
(e) Payments for Consent. Neither the Corporation nor any of its
Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of dividend or other distribution, fee or
otherwise, to any Holder of any Series E Preferred Stock for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Certificate of Designations or the Series E Preferred Stock
unless such consideration is offered to be paid and is paid to all Holders of
the Series E Preferred Stock that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver
or agreement.
(f) Reports.
(i) Whether or not required by the rules and regulations of the
Securities and Exchange Commission (the "Commission"), so long as any shares of
Series E Preferred Stock are outstanding, the Corporation shall furnish to the
Holders of Series E Preferred Stock (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Corporation were required to file such
Forms, including "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Corporation's certified independent accountants and (ii)
all current reports that would be required to be filed with the Commission on
Form 8-K if the Corporation were required to file such reports. In addition,
whether or not required by the rules and regulations of the Commission, the
Corporation shall file a copy of all such information and reports with the
Commission for public availability (unless the Commission will not accept such
a filing) and make such information available to securities analysts and
prospective investors upon request.
(ii) The Corporation shall deliver to the Holders, within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Corporation and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
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officers with a view to determining whether the Corporations has kept,
observed, performed and fulfilled its obligations under this Certificate of
Designations and further stating, as to each such officer signing such
certificate, that to the best of his or her knowledge the Corporation has kept,
observed, performed and fulfilled each and every covenant contained in this
Certificate of Designations and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Certificate
of Designations (or, if any such default shall have occurred, describing all
such defaults of which he or she may have knowledge and what action the
Corporation is taking or proposes to take with respect thereto) and that to the
best of his or her knowledge no event has occurred and remains in existence by
reason of which payments on account of the Liquidation Preference of or
dividends, if any, on the Series E Preferred Stock is prohibited or if such
event has occurred, a description of the event and what action the Corporation
is taking or proposes to take with respect thereto.
(iii) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 8(f)(i) above shall be accompanied by
a written statement of the Corporation's independent public accountants (who
shall be a firm of established national reputation) that in making the
examination necessary for certification of such financial statements, nothing
has come to their attention that would lead them to believe that the
Corporation has violated any provisions of this Certificate of Designations or,
if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge
of any such violation.
(iv) The Corporation shall, so long as any of the shares of Series E
Preferred Stock are outstanding, deliver to the Holders, forthwith upon any
Executive Officer of the Corporation becoming aware of any default under this
Certificate of Designations, an Officers' Certificate specifying such default
and what action the Corporation is taking or proposes to take with respect
thereto.
(g) Conflicts with By-laws. If any provisions of the Corporation's
By-laws conflict in any way with this Certificate of Designations, the
Corporation shall, so long as any of the shares of Series E Preferred Stock are
outstanding, take all necessary actions to amend such By-laws and thereby
resolve the conflict.
SIXTH: The Certificate of Designations, Preferences, and Relative
Rights, Qualifications, Limitations and Restrictions of the 12 5/8% Series E
Cumulative Exchangeable Preferred Stock Due October 31, 2006 is hereby amended
to read in its entirety as shown in Exhibit A, attached hereto.
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IN WITNESS WHEREOF, SFX Broadcasting, Inc. has caused this Certificate
of Amendment to be signed by Michael G. Ferrel, its President on February 10,
1998.
SFX BROADCASTING, INC
By: /s/ Michael G. Ferrel
------------------------
Michael G. Ferrel
President
ATTESTATION
The undersigned attests that the foregoing was executed on
the date indicated by Michael G. Ferrel, who is the duly elected and acting
President of SFX Broadcasting, Inc.
/s/ Howard J. Tytel
- -------------------
Howard J. Tytel
Secretary
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EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
12 5/8% SERIES E CUMULATIVE EXCHANGEABLE PREFERRED
STOCK DUE OCTOBER 31, 2006
OF
SFX BROADCASTING, INC.
-------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
-------------------------
SFX Broadcasting, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, certifies that pursuant to the authority contained in Article 6 of
its Restated Certificate of Incorporation (the "Certificate of Incorporation")
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware, the Board of Directors of the Corporation by
unanimous written consent dated January 17, 1997 duly approved and adopted the
following resolution which resolution remains in full force and effect on the
date hereof:
RESOLVED, that pursuant to the authority vested in the Board
of Directors by its Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of 125/8% Series
E Cumulative Exchangeable Preferred Stock due October 31, 2006 (the "Series E
Preferred Stock"), par value $0.01 per share, with a liquidation preference of
$100.00 per share, consisting of 4,150,000 shares, having the following voting
powers, preferences and relative, participating, optional and other special
rights, and qualifications, limitations and restrictions thereof as follows:
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1. Certain Definitions.
Unless the context otherwise requires, the terms defined in
this Section 1 shall have, for all purposes of this resolution, the meanings
herein specified (with terms defined in the singular having comparable meanings
when used in the plural).
Acquired Debt. The term "Acquired Debt" shall mean, with
respect to any specified Person, (i) Indebtedness of any other Person existing
at the time such other Person is merged with or into or became a Subsidiary of
such specified Person, including, without limitation, Indebtedness incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Subsidiary of such specified Person, and (ii) Indebtedness
secured by a Lien encumbering any asset acquired by such specified Person.
Acquisition Agreements. The term "Acquisition Agreements"
shall mean the acquisition agreements relating to the Pending Acquisitions (as
defined in the Consent Solicitation Statement of the Corporation dated January
7, 1998, as supplemented by Supplement No. 1 thereto dated January 28, 1998) as
they may be amended from time to time and all transactions and agreements
specifically contemplated thereby or by instruments referred to therein.
Advertising Business. The term "Advertising Business" shall
mean any business deriving substantially all of its revenues from the (i) sale
of advertisements and (ii) sale of products or provision of services to any
business described in clause (i) above.
Affiliate. The term "Affiliate" of any specified Person shall
mean any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person. For
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with"), as
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of
the voting securities of a Person shall be deemed to be control.
Affiliate Transaction. The term "Affiliate Transaction" shall
have the meaning set forth in Section 8(d) below.
Applicable Redemption Price. The term "Applicable Redemption
Price" shall mean a price per share equal to the following redemption prices
(expressed as a percentage of the Liquidation Preference thereof) during the
twelve-month periods commencing on January 15 of the years indicated:
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2002......................................106.313%
2003......................................104.734%
2004......................................103.156%
2005......................................101.578%
2006 and thereafter ......................100.000%
in each case, together with accrued and unpaid dividends (if any) thereon to
the Redemption Date.
Asset Sale. The term "Asset Sale" shall mean (i) the sale,
lease, conveyance or other disposition of any assets (including without
limitation, by way of a sale and leaseback or pursuant to an LMA or similar
arrangement); provided that the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Corporation and its Subsidiaries
taken as a whole will be governed by the Sections 7 and 8(c) hereof and (ii)
the issue or sale by the Corporation or any of its Subsidiaries of Equity
Interests of any of the Corporation's Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a Fair Market Value in excess of $5.0 million or (b)
for aggregate net proceeds in excess of $5.0 million. Notwithstanding the
foregoing: (i) the Pending Dispositions, the Chancellor Exchange and the CBS
Exchange, in each case as described in the Prospectus Supplement dated January
17, 1997, in all material respects, (ii) a transfer of assets by the
Corporation to a Wholly Owned Subsidiary or by a Wholly Owned Subsidiary to the
Corporation or to another Wholly Owned Subsidiary, (iii) an issuance of Equity
Interests by a Wholly Owned Subsidiary to the Corporation or to another Wholly
Owned Subsidiary, (iv) a Restricted Payment that is permitted under Section
8(a) hereof and (v) sales of obsolete equipment in the ordinary course of
business, will not be deemed to be Asset Sales.
Attributable Debt. The term "Attributable Debt" in respect of
a sale and leaseback transaction shall mean, at the time of determination, the
present value (discounted at the rate of interest implicit in such transaction,
determined in accordance with GAAP) of the obligation of the lessee for net
rental payments during the remaining term of the lease included in such sale
and leaseback transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended).
Bank Facilities. The term "Bank Facilities" shall mean, with
respect to the Corporation, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities with banks or
other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time. Indebtedness under Bank Facilities outstanding on the
date on which the Series E Preferred Stock is first issued under the
Certificate of Designations shall be deemed to have been incurred on such date
in reliance on the exception provided by clause (i) under Section 8(b).
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Broadcast Business. The term "Broadcast Business" shall mean
any business, the majority of whose revenues are derived from the broadcast of
radio programming.
Business Day. The term "Business Day" shall mean a day other
than a Saturday or Sunday or any federal holiday.
Capital Lease Obligation. The term "Capital Lease Obligation"
shall mean, at the time any determination thereof is to be made, the amount of
the liability in respect of a capital lease that would at such time be required
to be capitalized on a balance sheet in accordance with GAAP.
Capital Stock. The term "Capital Stock" shall mean (i) in the
case of a corporation, corporate stock, (ii) in the case of an association or
business entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, (iii) in the case of a
partnership, partnership interests (whether general or limited) and (iv) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
Cash Equivalents. The term "Cash Equivalents" shall mean (i)
United States dollars, (ii) securities issued or directly and fully guaranteed
or insured by the United States government or any agency or instrumentality
thereof having maturities of not more than six months from the date of
acquisition, (iii) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any lender party to the Credit Agreement or with
any domestic commercial bank having capital and surplus in excess of $500.0
million and a Thomson Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii)
above and (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within six months after the date of acquisition.
CBS Exchange. The term "CBS Exchange" shall mean the pending
exchange by the Corporation of radio station WHFS-FM, operating in Washington,
D.C./Baltimore, Maryland, for KTXQ-FM and KRRW-FM, both operating in Dallas,
Texas, and owned by CBS, Inc.
Chancellor Exchange. The term "Chancellor Exchange" shall
mean the pending exchange of the Corporation's radio stations WBAB-FM, WHFM-FM,
WBLI-FM and WGBB-AM, each operating on Long Island, New York, for WFYV-FM and
WAPE-FM, both operating in Jacksonville, Florida, and a payment to the
Corporation of $11.0 million in cash.
Change of Control. The term "Change of Control" shall mean
the occurrence of any of the following: (i) the sale, lease, transfer,
conveyance or other disposition (other than by way of merger or consolidation),
in one or a series of related transactions, of all or substantially all of the
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assets of the Corporation and its Subsidiaries taken as a whole to any "person"
(as such term is used in Section 13(d)(3) of the Exchange Act) other than the
Principal or his Related Parties (as defined below), (ii) the adoption of a
plan relating to the liquidation or dissolution of the Corporation, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than the Principal and his Related Parties, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act, except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time, upon the happening
of an event or otherwise), directly or indirectly, of Voting Stock of the
Corporation having more than 35% of the combined voting power of all classes of
Voting Stock of the Corporation then outstanding or (iv) the first day on which
a majority of the members of the Board of Directors of the Corporation are not
Continuing Directors.
Change of Control Offer. The term "Change of Control Offer"
shall have the meaning set forth in Section 7(a) below.
Change of Control Payment. The term "Change of Control
Payment" shall have the meaning set forth in Section 7(a) below.
Change of Control Payment Date. The term "Change of Control
Payment Date" shall have the meaning set forth in Section 7(d)(ii) below.
Class A Common Stock. The term "Class A Common Stock" shall
mean the Corporation's Class A Common Stock, par value $.01 per share.
Class B Common Stock. The term "Class B Common Stock" shall
mean the Corporation's Class B Common Stock, par value $.01 per share.
Common Equity. The term "Common Equity" shall mean all shares
now or hereafter authorized of any class of common stock of the Corporation,
including the Class A Common Stock and Class B Common Stock, and any other
stock of the Corporation, howsoever designated, authorized after the Initial
Issue Date, that have the right (subject always to prior rights of any class or
series of preferred stock) to participate in the distribution of the assets and
earnings of the Corporation without limit as to per share amount.
Consent Solicitations. The term "Consent Solicitations" means
the consent solicitations of the Corporation made pursuant to the Consent
Solicitation Statements dated January 7, 1998, as supplemented by Supplements
No. 1 thereto dated January 28, 1998, to the holders of the Corporation's
103/4% Senior Subordinated Notes due 2006 and to the holders of the Series E
Preferred Stock and the related Information Statement.
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Consolidated Cash Flow. The term "Consolidated Cash Flow"
shall mean, with respect to any Person for any period, the Consolidated Net
Income of such Person for such period plus (i) an amount equal to any
extraordinary loss plus any net loss realized in connection with an Asset Sale
by such Person or any of its Subsidiaries during such period (to the extent
such losses were deducted in computing such Consolidated Net Income), plus (ii)
provision for taxes based on income or profits of such Person and its
Subsidiaries for such period, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (iii) Consolidated
Interest Expense of such Person for such period, to the extent any such
Consolidated Interest Expense was deducted in computing such Consolidated Net
Income, plus (iv) depreciation, amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash charges
(excluding any such non-cash charge to the extent that it represents an accrual
of or reserve for cash charges in any future period) of such Person and its
Subsidiaries for such period to the extent that such depreciation, amortization
and other non-cash charges were deducted in computing such Consolidated Net
Income, plus (v) the Specified Charges (as defined in the Corporation's Consent
Solicitation Statement dated January 7, 1998, as supplemented by Supplement No.
1 thereto dated January 28, 1998, relating to the Series E Preferred Stock),
plus (vi) to the extent that such Consolidated Net Income was reduced thereby
(a) amortization of the expenses incurred in connection with the Consulting,
Non-Compete and Termination Agreement among the Corporation, SBI Holding
Corporation and Robert F.X. Sillerman dated as of August 24, 1997, (b) consent
fees and expenses directly related to the Consent Solicitations, (c) legal and
other costs associated with pending or threatened litigation in connection with
the SBI Merger and (d) other unusual and nonrecurring charges paid or accrued
in 1997 or 1998 (including, but not limited to, legal, accounting, investment
banking, severance and termination fees) relating to the SBI Merger, the
Spin-Off, the Pending Acquisitions or transactions related thereto; provided
that the aggregate amount of charges that may be added to Consolidated Net
Income pursuant to this clause (d) to determine Consolidated Cash Flow for any
four-quarter period will not exceed $13.5 million (net of expenses reimbursed
or paid by SFX Entertainment) less (vii) all non-cash items increasing
Consolidated Net Income for such period (excluding any such non-cash income to
the extent it represents an accrual of cash income in any future period), in
each case, on a consolidated basis and determined in accordance with GAAP.
Consolidated Indebtedness. The term "Consolidated
Indebtedness" of any Person as of any date of determination shall mean the sum
(without duplication) of (i) the total amount of Indebtedness and Attributable
Debt of such Person and its Subsidiaries, plus (ii) the total amount of other
Indebtedness shown on the balance sheet of the primary obligor on such
Indebtedness, to the extent that such Indebtedness has been Guaranteed by such
Person or one of its Subsidiaries, plus (iii) the aggregate liquidation value
or redemption amount (if larger) of all Disqualified Stock of such Person and
all preferred stock of Subsidiaries of such Person, in each case, determined on
a consolidated basis in accordance with GAAP.
Consolidated Interest Expense. The term "Consolidated
Interest Expense" shall
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mean, with respect to any Person for any period, the sum of (i) the
consolidated interest expense of such Person and its Subsidiaries for such
period, whether paid or accrued (including, without limitation, amortization of
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers' acceptance financings, and net
payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated
interest expense of such Person and its Subsidiaries that was capitalized
during such period, and (iii) any interest expense on Indebtedness of another
Person that is guaranteed by such Person or one of its Subsidiaries or secured
by a Lien on assets of such Person or one of its Subsidiaries (whether or not
such Guarantee or Lien is called upon) and (iv) the product of (a) all cash
dividend payments (and non-cash dividend payments in the case of a Person that
is a Subsidiary) on any series of preferred stock of such Person, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
Consolidated Net Income. The term "Consolidated Net Income"
shall mean, with respect to any Person for any period, the aggregate of the Net
Income of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP; provided that (i) the Net Income
(but not loss) of any Person that is not a Subsidiary or that is accounted for
by the equity method of accounting shall be included only to the extent of the
amount of dividends or distributions paid in cash to the referent Person or to
a Wholly Owned Subsidiary thereof, (ii) the Net Income of any Subsidiary shall
be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that Net Income is not at the date
of determination permitted without any prior governmental approval (that has
not been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders,
(iii) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
Consolidated Net Worth. The term "Consolidated Net Worth"
shall mean, with respect to any Person as of any date, the sum of (i) the
consolidated equity of the common stockholders of such Person and its
consolidated Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with respect to any
series of preferred stock (other than Disqualified Stock) that by its terms is
not entitled to the payment of dividends unless such dividends may be declared
and paid only out of net earnings in respect of the year of such declaration
and payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets
of a going concern business made within 12 months after the acquisition of such
business) subsequent to the date of the Certificate of
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Designations in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all of the foregoing
determined in accordance with GAAP.
Continuing Directors. The term "Continuing Directors" shall
mean, as of any date of determination, any member of the Board of Directors of
the Corporation who (i) was a member of such Board of Directors on the Initial
Issue Date or (ii) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
Credit Agreement. The term "Credit Agreement" shall mean that
certain credit agreement by and among the Corporation, the Corporation's
Subsidiaries, as guarantors, The Bank of New York, as agent, and the lenders
party thereto, providing for $225 million of revolving credit borrowings,
including any related notes, guarantees, collateral documents, and other
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time.
Debt to Cash Flow Ratio. The term "Debt to Cash Flow Ratio"
shall mean, as of any date of determination, the ratio of (a) the Consolidated
Indebtedness as of such date to (b) the Consolidated Cash Flow of the
Corporation and its Subsidiaries on a consolidated basis for the four most
recent full fiscal quarters ending immediately prior to such date for which
internal financial statements are available. For purposes of calculating
Consolidated Cash Flow for the computation referred to above, (i) acquisitions
that have been made by the Corporation or any of its Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the date on which such Ratio is being
calculated (the "Calculation Date") shall be deemed to have occurred on the
first day of the four-quarter reference period and Consolidated Cash Flow for
such reference period shall be calculated without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income, and (ii)
the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded.
Default. The term "Default" shall mean any event that is or
with the passage of time or the giving of notice or both would be an Event of
Default.
Disqualified Stock. The term "Disqualified Stock" shall mean
any Capital Stock that, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable at the option of the
holder thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
date that is 91 days after the
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mandatory redemption date of the Series E Preferred Stock.
Dividend Payment Date. The term "Dividend Payment Date" shall
have the meaning set forth in Section 2(a) below.
Dividend Period. The term "Dividend Period" shall mean the
period from, and including, the Initial Issue Date to, but not including, the
first Dividend Payment Date and thereafter, each period from, and including,
the preceding Dividend Payment Date to, but not including the next Dividend
Payment Date.
Entertainment Companies. The term "Entertainment Companies"
shall mean SFX Entertainment and any and all of its direct and indirect
Subsidiaries.
Equity Interests. The term "Equity Interests" shall mean
Capital Stock and all warrants, options or other rights to acquire Capital
Stock (but excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
Exchange Date. The term "Exchange Date" shall have the
meaning set forth in Section 5(b) below.
Exchange Debentures. The term "Exchange Debentures" shall
mean the Corporations's 12 5/8% Senior Subordinated Exchange Debentures due
October 31, 2006 issuable in exchange for the Corporation's Series E Preferred
Stock.
Exchange Indenture. The term "Exchange Indenture" shall mean
that certain indenture under which the Exchange Debentures would be issued and
which shall be substantially in the form attached as Annex A hereto.
Executive Officer. The term "Executive Officer" shall mean
any officer of the Corporation that would be deemed to be an "executive
officer" within meaning of the rules and regulations of the Securities and
Exchange Commission.
Existing Indebtedness. The term "Existing Indebtedness" shall
mean all Indebtedness of the Corporation and its Subsidiaries (other than
Indebtedness under the Credit Agreement) in existence on the Initial Issue
Date, until such amounts are repaid.
Existing MMR Indebtedness. The term "Existing MMR
Indebtedness" shall mean all Indebtedness of MMR and its Subsidiaries in
existence at the closing of the MMR Merger, until such amounts are repaid.
Fair Market Value. The term "Fair Market Value" shall mean,
with respect to any asset or property, the sale value that would be obtained in
an arm's length transaction between an
9
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
GAAP. The term "GAAP" shall mean generally accepted
accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which are in
effect on the Initial Issue Date.
Government Securities. The term "Government Securities" shall
mean direct obligations of, or obligations guaranteed by, the United States of
America for the payment of which obligations or guarantee the full faith and
credit of the United States of America is pledged.
Guarantee. The term "Guarantee" shall mean a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner (including, without
limitation, letters of credit and reimbursement agreements in respect thereof),
of all or any part of any Indebtedness.
Hedging Obligations. The term "Hedging Obligations" shall
mean, with respect to any Person, the obligations of such Person under (i)
interest rate swap agreements, interest rate cap agreements and interest rate
collar agreements and (ii) other agreements or arrangements designed to protect
such Person against fluctuations in interest rates.
Holder. The term "Holder" shall mean the record holder of one
or more shares of Series E Preferred Stock, as shown on the books and records
of the Transfer Agent.
Indebtedness. The term "Indebtedness" shall mean, with
respect to any Person, any indebtedness of such Person, whether or not
contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing Capital
Lease Obligations or the balance deferred and unpaid of the purchase price of
any property or payment obligations under an LMA or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether
or not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person.
Initial Issue Date. The term "Initial Issue Date" shall mean
the date that shares of Series E Preferred Stock are first issued by the
Corporation.
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Investments. The term "Investments" shall mean, with respect
to any Person, all investments by such Person in other Persons (including
Affiliates) in the form of direct or indirect loans (including guarantees of
Indebtedness or other obligations), advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP; provided that an acquisition of assets,
Equity Interests or other securities by the Corporation for consideration
consisting of Common Equity shall not be deemed to be an Investment. If the
Corporation or any Subsidiary of the Corporation sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Corporation
such that, after giving effect to any such sale or disposition, such Person is
no longer a Subsidiary of the Corporation, the Corporation shall be deemed to
have made an Investment on the date of any such sale or disposition equal to
the Fair Market Value of the Equity Interests of such Subsidiary not sold or
disposed of.
Junior Securities. The term "Junior Securities" shall mean
any class of stock ranking junior to the Series E Preferred Stock as to the
payment of dividends and as to rights in liquidation, dissolution or winding up
of the affairs of the Corporation. The Corporation's Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock are expressly defined and
included as Junior Securities.
Lien. The term "Lien" shall mean, with respect to any asset,
any mortgage, lien, pledge, charge, security interest or encumbrance of any
kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
Liquidation Preference. The term "Liquidation Preference"
shall mean $100 per share of Series E Preferred Stock.
Local Marketing Agreement or LMA. The terms "Local Marketing
Agreement" or "LMA" shall mean a local marketing arrangement, sale agreement,
time brokerage agreement, management agreement or similar arrangement pursuant
to which a Person, subject to customary preemption rights and other limitations
(i) obtains the right to sell at least a majority of the advertising inventory
of a radio station of which a third party is the licensee, (ii) obtains the
right to broadcast programming and sell advertising time during a majority of
the air time of a radio station or (iii) manages the selling operations of a
radio station with respect to at least a majority of the advertising inventory
of such station.
Management Termination Agreements. The term "Management
Termination Agreements" shall mean each of (i) the termination agreement
between the Corporation and R.
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Steven Hicks, dated April 16, 1996, and (ii) the amendment to the employment
agreement between the Corporation and D. Geoffrey Armstrong, effective as of
April 15, 1996, in each case, as in effect on the Initial Issue Date.
Mandatory Redemption Date. The term "Mandatory Redemption
Date" shall have the meaning set forth in Section 4(a) below.
Material Broadcast License. The term "Material Broadcast
License" shall mean one or more authorizations issued by the Federal
Communications Commission for the operation of AM or FM radio stations that
individually or collectively are material to the financial condition, results
of operations or prospects of the Corporation and its Subsidiaries taken as a
whole.
Meadows Repurchase. The term "Meadows Repurchase" shall mean
the redemption by the Corporation of up to 250,838 shares of Class A Common
Stock for $33.00 per share, pursuant to the Agreement of Merger, dated February
12, 1997, by and among the Corporation, NOC-Acquisition Corp., CAPCO
Acquisition Corp., QN Acquisition Corp., Nederlander of Connecticut, Inc.,
Connecticut Ampitheater Development Corporation, QN Corp., Connecticut
Performing Arts, Inc. and Connecticut Performing Arts Partners and the
Stockholders of Nederlander of Connecticut, Inc,. Connecticut Ampitheater
Development Corporation and QN Corp. listed on the signature page thereto.
Merger Agreement. The term "Merger Agreement" shall mean the
Agreement and Plan of Merger, dated as of August 24, 1997, as it may be amended
from time to time, among the Corporation, SBI Holding Corporation and SBI Radio
Acquisition Corporation and all transactions and agreements specifically
contemplated thereby or by instruments referred to therein.
MMR. The term "MMR" shall mean Multi-Market Radio, Inc., a
Delaware corporation.
MMR Merger. The term "MMR Merger" shall mean the merger of
SFX Merger Company, a Wholly Owned Subsidiary of the Corporation, with and into
MMR, pursuant to which MMR became a Wholly Owned Subsidiary of the Corporation.
Net Income. The term "Net Income" shall mean, with respect to
any Person, the net income (loss) of such Person, determined in accordance with
GAAP and before any reduction in respect of preferred stock dividends,
excluding, however, (i) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in connection with
(a) any Asset Sale (including, without limitation, dispositions pursuant to
sale and leaseback transactions) or (b) the disposition of any securities by
such Person or any of its Subsidiaries or the extinguishment of any
Indebtedness of such person or any of its Subsidiaries and (ii) any
extraordinary or nonrecurring gain (but not loss), together with any related
provision for taxes on such extraordinary or nonrecurring gain (but not loss).
12
Net Proceeds. The term "Net Proceeds" shall mean the
aggregate cash proceeds received by the Corporation or any of its Subsidiaries
in respect of any Asset Sale (including, without limitation, any cash received
upon the sale or other disposition of any non-cash consideration received in
any Asset Sale), net of the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees,
and sales commissions) and any relocation expenses incurred as a result
thereof, taxes paid or payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements),
amounts required to be applied to the repayment of Indebtedness (other than
Senior Debt) secured by a Lien on the asset or assets that were the subject of
such Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
New Note Indenture. The term "New Note Indenture" shall mean
the indenture governing the Corporation's 10 3/4% Senior Subordinated Notes due
2006.
New Notes. The term "New Notes" shall mean the Corporation's
10 3/4% Senior Subordinated Notes due 2006.
Obligations. The term "Obligations" shall mean any principal,
interest, penalties, fees (including, but not limited to, reasonable fees and
expenses of counsel), indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
Officers' Certificate. The term "Officers' Certificate" shall
mean a certificate signed on behalf of the Corporation by two officers of the
Corporation, one of whom must be the Chief Executive Officer, the Chief
Financial Officer, the Treasurer or the principal accounting officer of the
Corporation that meets the requirements of Section 10 hereof.
Pari Passu Debt. The term "Pari Passu Debt" shall mean (i)
the New Notes and (ii) all other Indebtedness that ranks pari passu in right of
payment with the Exchange Debentures.
Parity Securities. The term "Parity Securities" shall mean
any class or series of stock of the Corporation authorized after the Initial
Issue Date that is entitled to receive payment of dividends and to receive
assets upon liquidation, dissolution or winding up of the affairs of the
Corporation on a parity with the Series E Preferred Stock.
Pending Dispositions. The term "Pending Dispositions" shall
mean, collectively, (i) the pending sale of KOLL-FM, operating in Little Rock,
Arkansas, and (ii) the pending sale of WYAK-FM and WMYB-FM, both operating in
Myrtle Beach, South Carolina.
Permitted Investments. The term "Permitted Investments" shall
mean (a) any Investment in the Corporation or any Subsidiary of the
Corporation; (b) any Investment in Cash
13
Equivalents; (c) any Investment by the Corporation or any Subsidiary of the
Corporation in a Person, if after such Investment (i) such Person becomes a
Subsidiary of the Corporation or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Corporation or a Subsidiary of the
Corporation; (d) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the Corporation's debt agreements; (e) obligations or shares of
Capital Stock received in connection with or as a result of a bankruptcy,
workout or reorganization of the issuer of such obligations or shares of
Capital Stock; (f) any Investment received involuntarily; (g) Investments in
any Person (other than an Affiliate of the Corporation that is not also a
Subsidiary of the Corporation) engaged in a Broadcast Business or an
Advertising Business which Investments have an aggregate Fair Market Value
(measured on the date each such Investment was made and without giving effect
to subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (g) that are at the time outstanding, not to
exceed $20.0 million and (h) other Investments in any Person (other than an
Affiliate of the Corporation that is not also a Subsidiary of the Corporation)
having an aggregate Fair Market Value (measured on the date each such
Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause (h)
that are at the time outstanding, not to exceed $15.0 million.
Permitted Liens. The term "Permitted Liens" shall mean (i)
Liens securing Senior Debt of the Corporation or securing Indebtedness of any
Subsidiary that, in either case, was permitted by the terms of the Exchange
Indenture to be incurred; (ii) Liens in favor of the Corporation; (iii) Liens
on property of a Person existing at the time such Person is merged into or
consolidated with the Corporation or any Subsidiary of the Corporation;
provided that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Corporation; (iv) Liens on property
existing at the time of acquisition thereof by the Corporation or any
Subsidiary of the Corporation, provided that such Liens were in existence prior
to the contemplation of such acquisition and do not extend to any assets other
than such assets so acquired; (v) Liens existing on the Initial Issue Date;
(vi) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor; and (vii) Liens incurred in the ordinary
course of business of the Corporation or any Subsidiary of the Corporation with
respect to obligations that do not exceed $10.0 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Corporation or such Subsidiary.
Permitted Refinancing Debt. The term "Permitted Refinancing
Debt" shall mean any Indebtedness of the Corporation or any of its Subsidiaries
issued in exchange for, or the net proceeds
14
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Corporation or any of its Subsidiaries; provided that: (i)
the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable expenses incurred
in connection therewith); (ii) such Permitted Refinancing Debt has a final
maturity date later than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Exchange Debentures, such Permitted Refinancing Debt has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Exchange Debentures on terms at least as favorable to the Holders of
Exchange Debenture as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) such Permitted Refinancing Debt is incurred either by the
Corporation or by the Subsidiary who was the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
Preferred Stock. The term "Preferred Stock," of any Person,
shall mean Capital Stock of such Person of any class or series (however
designated) that ranks prior, as to payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class or series of such Person.
Principal. The term "Principal" shall mean Robert F.X.
Sillerman.
Record Date. The term "Record Date" shall have the meaning
set forth in Section 2(a) below.
Redemption Date. The term "Redemption Date" shall have the
meaning set forth in Section 4(e) below.
Related Party. The term "Related Party" with respect to the
Principal shall mean (A) any spouse or immediate family member (in the case of
an individual) of the Principal or (B) any trust, corporation, partnership or
other entity, the beneficiaries, stockholders, partners, owners or persons (as
defined in "Change of Control") beneficially holding an 80% or more controlling
interest of which consist of the Principal and/or such other persons referred
to in the immediately preceding clause (A).
Restricted Investments. The term "Restricted Investment"
shall mean an Investment other than a Permitted Investment.
SBI Merger. The term "SBI Merger" shall mean a merger of SBI
Radio Acquisition
15
Corporation into the Corporation pursuant to the Merger Agreement.
SCMC. The term "SCMC" shall mean Sillerman Communications
Management Corporation, a Delaware corporation.
Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended.
Senior Securities. The term "Senior Securities" shall mean
(i) the Series D Preferred Stock and (ii) any class or series of stock of the
Corporation authorized after the Initial Issue Date ranking senior to the
Series E Preferred Stock in respect of the right to receive dividends and in
respect of the right to participate in any distribution upon liquidation,
dissolution or winding up of the affairs of the Corporation.
Series D Exchange Notes. The term "Series D Exchange Notes"
shall mean the Corporation's 6 1/2% Subordinated Convertible Exchange Notes due
2007 issuable in exchange for the Corporation's Series D Preferred Stock.
Series D Exchange Note Indenture. The term "Series D Exchange
Note Indenture" shall mean the indenture governing the Corporation's 6 1/2%
Subordinated Convertible Exchange Notes due 2007 issuable in exchange for the
Corporation's Series D Preferred Stock.
Series D Preferred Stock. The term Series D Preferred Stock
shall mean the Corporation's 6 1/2 Series D Cumulative Convertible Exchangeable
Preferred Stock due May 31, 2007.
SFX Entertainment. The term "SFX Entertainment" shall mean
SFX Entertainment, Inc., a subsidiary of the Corporation, newly formed in
Delaware, to which the Corporation will contribute cash and all of the capital
stock of SFX Concerts, Inc. (formerly known as Delsener/Slater Enterprises,
Inc.) that the Corporation directly or indirectly owns.
SFX Merger Company. The term "SFX Merger Company" shall mean
SFX Merger Company, a Delaware corporation.
Shared Facilities Agreement. The term "Shared Facilities
Agreement" shall mean the Shared Facilities Agreement between the Corporation
and SCMC, as in effect on the Initial Issue Date.
Significant Subsidiary. The term "Significant Subsidiary"
shall mean any Subsidiary that would be a "significant subsidiary" as defined
in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the
Securities Act, as such Regulation is in effect on the date hereof.
16
Spin-Off. The term "Spin-Off" shall mean the distribution of
SFX Entertainment common stock pro rata to the holders of Class A Common Stock
and the Class B Common Stock (and the transfer to an escrow account for
delivery to the holders of certain warrants to receive Class A Common Stock) or
other disposition pursuant to, or as permitted by, the Merger Agreement of all
of the capital stock and assets of the Entertainment Companies.
Spin-Off Transactions. The term "Spin-Off Transactions" shall
mean the Spin-Off, the Pending Acquisitions and the Merger Agreement as it
relates to the transactions described or referred to under the "Proposed
Amendments" and "Spin-Off" sections of the Consent Solicitation Statement of
the Corporation dated January 7, 1998, as supplemented by Supplement No. 1
thereto dated January 28, 1998, relating to this Certificate of Designations.
Subsidiary. The term "Subsidiary" shall mean, with respect to
any person, (i) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Voting Stock thereof is at
the time owned or controlled, directly or indirectly, by such person or one or
more of the other Subsidiaries of that person (or a combination thereof) and
(ii) any partnership (a) the sole general partner or the managing general
partner of which is such person or a Subsidiary of such person or (b) the only
general partners of which are such person or of one or more Subsidiaries of
such person (or any combination thereof); however, with respect to the
Corporation, "Subsidiary" does not include the Entertainment Companies.
Transfer Agent. The term "Transfer Agent" shall mean the
entity designated from time to time by the Corporation to act as the registrar
and transfer agent for the Series E Preferred Stock.
Voting Stock. The term "Voting Stock" shall mean with respect
to any specified Person, Capital Stock with voting power, under ordinary
circumstances and without regard to the occurrence of any contingency, to elect
the directors or other managers or trustees of such Person.
Voting Rights Trigger Event. The term "Voting Rights Trigger
Event" shall have the meaning set forth in Section 6(b) below.
Weighted Average Life to Maturity. The term "Weighted Average
Life to Maturity" shall mean, when applied to any Indebtedness at any date, the
number of years obtained by dividing (i) the sum of the products obtained by
multiplying (a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (b) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment, by (ii) the then outstanding principal amount of such
Indebtedness.
Wholly Owned Subsidiary. The term "Wholly Owned Subsidiary"
of any Person means a Subsidiary of such Person all of the outstanding Capital
Stock or other ownership interests
17
of which (other than directors' qualifying shares) shall at the time be owned
by such Person or by one or more Wholly Owned Subsidiaries of such Person and
one or more Wholly Owned Subsidiaries of such Person.
2. Dividends.
(a) The Holders of shares of the Series E Preferred Stock
shall be entitled to receive, when, as and if dividends are declared by the
Board of Directors out of funds of the Corporation legally available therefor,
cumulative preferential dividends from the date such shares of Series E
Preferred Stock are issued accruing at the rate per share of $12.625 per annum,
payable semi-annually in arrears on January 15 and July 15 in each year or, if
any such date is not a Business Day, on the next succeeding Business Day (each,
a "Dividend Payment Date"), to the Holders of record as of the next preceding
January 1 and July 1 (each, a "Record Date"). Dividends will be payable in
cash, except that on each Dividend Payment Date occurring on or prior to
January 15, 2002, dividends may be paid, at the Corporation's option, by the
issuance of additional shares of Series E Preferred Stock (including fractional
shares) having a aggregate Liquidation Preference equal to the amount of such
dividends. The first dividend payment will be payable on July 15, 1997.
Dividends payable on the Series E Preferred Stock will be computed on the basis
of a 360-day year of twelve 30-day months and will be deemed to accrue on a
daily basis.
(b) Dividends on the Series E Preferred Stock shall accrue
whether or not the Corporation has earnings or profits, whether or not there
are funds legally available for the payment of such dividends and whether or
not dividends are declared. Dividends will accumulate to the extent they are
not paid on the Dividend Payment Date for the period to which they relate.
Accumulated unpaid dividends will bear interest at the rate of 12 5/8% per
annum. The Corporation shall take all actions required or permitted under
Delaware law to permit the payment of dividends on the Series E Preferred
Stock.
(c) No dividend whatsoever shall be declared or paid upon, or
any sum set apart for the payment of dividends upon, any outstanding Series E
Preferred Stock with respect to any dividend period unless all dividends for
all preceding dividend periods have been declared and paid upon, or declared
and a sufficient sum set apart for the payment of such dividend upon, all
outstanding shares of Series E Preferred Stock. Unless full cumulative
dividends on all outstanding shares of Series E Preferred Stock due for all
past dividend periods shall have been declared and paid, or declared and a
sufficient sum for the payment thereof set apart, then: (i) no dividend (other
than a dividend payable solely in shares of any Junior Securities) shall be
declared or paid upon, or any sum set apart for the payment of dividends upon,
any shares of Junior Securities; (ii) no other distribution shall be made upon
or any sum set apart for the payment of any distribution upon, any shares of
Junior Securities; (iii) no shares of Junior Securities shall be purchased,
redeemed or otherwise acquired or retired for value (excluding an exchange for
shares of other Junior Securities) by the Corporation or any of its
Subsidiaries; and (iv) no monies shall be paid into or set apart or made
available for a sinking or other like fund for the purchase, redemption or
other acquisition or
18
retirement for value of any shares of Junior Securities by the Corporation or
any of its Subsidiaries. Holders of the Series E Preferred Stock will not be
entitled to any dividends, whether payable in cash, property or stock, in
excess of the full cumulative dividends as herein described.
3. Distributions Upon Liquidation, Dissolution or Winding Up.
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation or reduction or decrease in its capital
stock resulting in a distribution of assets to the holders of any class or
series of the Corporation's Capital Stock (a "reduction or decrease in capital
stock"), each Holder of shares of the Series E Preferred Stock shall be
entitled to payment out of the assets of the Corporation available for
distribution of an amount equal to the Liquidation Preference per share of
Series E Preferred Stock held by such Holder, plus accrued and unpaid dividends
to the date fixed for liquidation, dissolution, winding up or reduction or
decrease in capital stock, before any distribution is made on any Junior
Securities, including, without limitation, Common Equity of the Corporation.
After payment in full of the Liquidation Preference and all accrued dividends
to which Holders of Series E Preferred Stock are entitled, such Holders will
not be entitled to any further participation in any distribution of assets of
the Corporation. However, neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Corporation nor the
consolidation or merger of the Corporation with or into one or more
corporations will be deemed to be a voluntary or involuntary liquidation,
dissolution or winding up of the Corporation or reduction or decrease in
capital stock, unless such sale, conveyance, exchange or transfer shall be in
connection with a liquidation, dissolution or winding up of the business of the
Corporation or reduction or decrease in capital stock.
4. Redemption by the Corporation
(a) On October 31, 2006 (the "Mandatory Redemption Date"),
the Corporation shall redeem (subject to the legal availability of funds
therefor) all outstanding shares of Series E Preferred Stock at a price in cash
equal to the Liquidation Preference thereof, plus accrued and unpaid dividends
to the date of redemption.
(b) Subject to Section 4(c) below, the Series E Preferred
Stock may not be redeemed at the option of the Corporation prior to January 15,
2002. The Series E Preferred Stock may be redeemed, in whole or in part, at the
option of the Corporation on or after January 15, 2002, at the Applicable
Redemption Price.
(c) In addition, prior to January 15, 2000, the Corporation
may, at its option, redeem up to 50% of the aggregate of (i) the Liquidation
Preference of the Series E Preferred Stock issued (whether initially issued or
issued in lieu of cash dividends) less the Liquidation Preference of Series E
Preferred Stock exchanged for Exchange Debentures and (ii) the principal amount
of Exchange Debentures issued (whether issued in exchange for Series E
Preferred Stock or in lieu of
19
cash interest), with the net proceeds of one or more Common Equity offerings
received on or after the date of original issuance of the Series E Preferred
Stock at a redemption price of 112.625% of the Liquidation Preference or
principal amount, as the case may be, plus accumulated and unpaid dividends in
the case of Series E Preferred Stock and accrued and unpaid interest in the
case of Exchange Debentures; provided, that after any such redemption, if any
Series E Preferred Stock or Exchange Debentures remain outstanding, at least
$50 million in Liquidation Preference or principal amount, as applicable, of
the Series E Preferred Stock or Exchange Debentures, as the case may be, remain
outstanding; and provided further, that any such redemption shall occur within
75 days of the date of closing of such offering of Common Equity of the
Corporation.
(d) In case of redemption of less than all of the shares of
Series E Preferred Stock at the time outstanding, the shares to be redeemed
shall be selected pro rata or by lot as determined by the Corporation in its
sole discretion.
(e) Notice of any redemption shall be sent by or on behalf of
the Corporation not more than 60 days nor less than 30 days prior to the date
specified for redemption in such notice (including the Mandatory Redemption
Date, the "Redemption Date"), by first class mail, postage prepaid, to all
Holders of record of the Series E Preferred Stock at their respective last
addresses as they shall appear on the books of the Corporation; provided,
however, that no failure to give such notice or any defect therein or in the
mailing thereof shall affect the validity of the proceedings for the redemption
of any shares of Series E Preferred Stock except as to the Holder to whom the
Corporation has failed to give notice or except as to the Holder to whom notice
was defective. In addition to any information required by law or by the
applicable rules of any exchange upon which Series E Preferred Stock may be
listed or admitted to trading, such notice shall state: (i) the paragraph of
this Certificate of Designations pursuant to which the redemption is made; (ii)
the Redemption Date; (iii) the Applicable Redemption Price; (iv) the number of
shares of Series E Preferred to be redeemed and, if less than all shares held
by such Holder are to be redeemed, the number of such shares to be redeemed;
(v) the place or places where certificates for such shares are to be
surrendered for payment of the Applicable Redemption Price, including any
procedures applicable to redemptions to be accomplished through book-entry
transfers; and (vi) that dividends on the shares to be redeemed will cease to
accrue on the Redemption Date. Upon the mailing of any such notice of
redemption, the Corporation shall become obligated to redeem at the time of
redemption specified thereon all shares called for redemption.
(f) If notice has been mailed in accordance with Section 4(e)
above and provided that on or before the Redemption Date specified in such
notice, all funds necessary for such redemption shall have been set aside by
the Corporation, separate and apart from its other funds in trust for the pro
rata benefit of the Holders of the shares so called for redemption, so as to
be, and to continue to be available therefor, then, from and after the
Redemption Date, dividends on the shares of the Series E Preferred Stock so
called for redemption shall cease to accrue, and said shares shall no longer be
deemed to be outstanding and shall not have the status of shares of Series E
Preferred Stock, and all rights of the Holders thereof as stockholders of the
Corporation (except the
20
right to receive from the Corporation the Applicable Redemption Price) shall
cease. Upon surrender, in accordance with said notice, of the certificates for
any shares so redeemed (properly endorsed or assigned for transfer, if the
Corporation shall so require and the notice shall so state), such shares shall
be redeemed by the Corporation at the Applicable Redemption Price. In case
fewer than all the shares represented by any such certificate are redeemed, a
new certificate or certificates shall be issued representing the unredeemed
shares without cost to the Holder thereof.
(g) Any funds deposited with a bank or trust company for the
purpose of redeeming Series E Preferred Stock shall be irrevocable except that:
(i) the Corporation shall be entitled to receive
from such bank or trust company the interest or other earnings, if any, earned
on any money so deposited in trust, and the Holders of any shares redeemed
shall have no claim to such interest or other earnings; and
(ii) any balance of monies so deposited by the
Corporation and unclaimed by the Holders of the Series E Preferred Stock
entitled thereto at the expiration of two years from the applicable Redemption
Date shall be repaid, together with any interest or other earnings earned
thereon, to the Corporation, and after any such repayment, the Holders of the
shares entitled to the funds so repaid to the Corporation shall look only to
the Corporation for payment without interest or other earnings.
(h) No Series E Preferred Stock may be redeemed except with
funds legally available for the purpose. The Corporation shall take all actions
required or permitted under Delaware Law to permit any such redemption.
(i) Notwithstanding the foregoing provisions of this Section
4, unless the full cumulative dividends on all outstanding shares of Series E
Preferred Stock shall have been paid or contemporaneously are declared and paid
for all past dividend periods, none of the shares of Series E Preferred Stock
shall be redeemed unless all outstanding shares of Series E Preferred Stock are
simultaneously redeemed.
(j) All shares of Series E Preferred Stock redeemed pursuant
to this Section 4 shall be restored to the status of authorized and unissued
shares of preferred stock, without designation as to series and may thereafter
be reissued as shares of any series of preferred stock other than shares of
Series E Preferred Stock.
5. Exchange.
(a) The Corporation may, at its option on any Dividend
Payment Date, exchange, in whole or in part, on a pro rata basis, the then
outstanding Series E Preferred Stock for Exchange Debentures; provided that
immediately after giving effect to any partial exchange, there shall be
outstanding Series E Preferred Stock with an aggregate liquidation preference
of not less than $50.0
21
million and not less than $50.0 million in aggregate principal amount of
Exchange Debentures; and, provided further, that (i) on the date of such
exchange there are no accumulated and unpaid dividends on the Series E
Preferred Stock (including the dividend payable on such date) or other
contractual impediments to such exchange; (ii) there shall be legally available
funds sufficient therefor; (iii) such exchange would be permitted under the
terms of the Series D Preferred Stock, to the extent then outstanding, and,
immediately after giving effect to such exchange, no Default or Event of
Default (each as defined in the Exchange Indenture) would exist under the
Exchange Indenture, no default or event of default would exist under the Credit
Agreement, the New Note Indenture or the Series D Exchange Note Indenture and
no default or event of default under any material instrument governing
Indebtedness outstanding at the time would be caused thereby; (iv) the Exchange
Indenture has been qualified under the Trust Indenture Act, if such
qualification is required at the time of exchange; and (v) the Corporation
shall have delivered a written opinion to the Trustee (as defined herein) to
the effect that all conditions to be satisfied prior to such exchange have been
satisfied.
(b) The Exchange Debentures shall be issuable in all
appropriate denominations. Notice of the intention to exchange shall be sent by
or on behalf of the Corporation not more than 60 days nor less than 30 days
prior to the date fixed for the exchange (the "Exchange Date"), by first class
mail, postage prepaid, to each Holder of record of Series E Preferred Stock at
its respective last addresses as they shall appear on the books of the
Corporation; provided, however, that no failure to give such notice or any
defect therein or in the mailing thereof shall affect the validity of the
proceedings for the exchange of any shares of Series E Preferred Stock except
as to the Holder to whom the Corporation has failed to give notice or except as
to the Holder to whom notice was defective. In addition to any information
required by law or by the applicable rules of any exchange upon which Series E
Preferred Stock may be listed or admitted to trading, such notice shall state:
(i) the Exchange Date; (ii) the place or places where certificates for such
shares are to be surrendered for exchange, including any procedures applicable
to exchanges to be accomplished through book-entry transfers; and (iii) that
dividends on the shares of Series E Preferred Stock to be exchanged will cease
to accrue on the Exchange Date. Prior to giving the notice of intention to
exchange, the Corporation shall execute and deliver with a bank or trust
company (the "Trustee"), with capital, surplus and undivided profits of not
less than $100,000,000, selected by the Corporation, and qualify under the
Trust Indenture Act of 1939, as amended, the Exchange Indenture with such
changes as would not adversely affect any of the voting powers, preferences and
relative, participating, optional and other special rights of any holders of
Series E Preferred Stock as may be required by law or usage.
(c) A Holder delivering Series E Preferred Stock for exchange
will not be required to pay any taxes or duties in respect of the issue or
delivery of Exchange Debentures on exchange but will be required to pay any tax
or duty that may be payable in respect of any transfer involved in the issue or
delivery of the Exchange Debentures in a name other than that of the Holder of
the Series E Preferred Stock. Certificates representing Exchange Debentures
will not be issued or delivered unless all taxes and duties, if any, payable by
the Holder have been paid.
22
(d) If notice of any exchange has been properly given, and if
on or before the Exchange Date the Exchange Debentures have been duly executed
and authenticated and an amount in cash equal to all accrued and unpaid
dividends thereon to the Exchange Date has been deposited with the Transfer
Agent, then on or after the close of business on the Exchange Date, the shares
of Series E Preferred to be exchanged will no longer be deemed to be
outstanding and may thereafter be issued in the same manner as the other
authorized but unissued preferred stock, but not as Series E Preferred Stock,
and all rights of the Holders thereof as stockholders of the Corporation will
cease, except the right of the Holders to receive upon surrender of their
certificates the Exchange Debentures and all accrued and unpaid dividends
thereon to the Exchange Date.
(e) As a condition to the exercise of the exchange rights
described in this Section 5, the Corporation shall deliver an opinion to the
Trustee as to the due authorization, execution, delivery and enforceability of
both the Exchange Debentures and the Exchange Debenture Indenture.
6. Voting Rights.
(a) The Holders of record of shares of Series E Preferred
Stock shall not be entitled to any voting rights except as hereinafter provided
in this Section 6 or as otherwise provided by law.
(b) If and upon:
(i) the accumulation of accrued and unpaid dividends
on the outstanding Series E Preferred Stock in an amount equal to
three (3) full semi-annual dividends (whether or not consecutive);
(ii) the failure of the Corporation to satisfy any
mandatory redemption or repurchase obligation (including, without
limitation, pursuant to any required Change of Control Offer) with
respect to the Series E Preferred Stock;
(iii) the failure of the Corporation to make a
Change of Control Offer on the terms and in accordance with the
provisions described below in Section 7 hereof;
(vi) the failure of the Corporation to comply with
any of the other covenants or agreements set forth in this Certificate
of Designations and the continuance of such failure for 60 consecutive
days or more; or
(v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the
Corporation or any of its Subsidiaries (or the payment of which is
guaranteed by the Corporation or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the Initial
Issue Date, which default (i) is caused by
23
a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in
such Indebtedness on the date of such default (a "Payment Default") or
(ii) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $25.0 million or
more (each of the events described in clauses 6(b)(i) through (v)
being referred to herein as a "Voting Rights Trigger Event");
then the authorized number of members of the Corporation's Board of Directors
will be immediately and automatically increased by two, and the Holders of a
majority of the outstanding shares of Series E Preferred Stock, voting
separately as a class, shall be entitled to elect two directors of the
Corporation.
(c) Whenever such voting right shall have vested, such right
may be exercised initially either at a special meeting of the Holders of Series
E Preferred Stock, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at such
annual meetings or by the written consent of the Holders of Series E Preferred
Stock. Such right of the Holders of Series E Preferred Stock to elect directors
may be exercised until (i) all dividends in arrears shall have been paid in
full and (ii) all other Voting Rights Trigger Events have been cured or waived,
at which time the right of the Holders of Series E Preferred Stock to elect
such number of directors shall cease, the term of such directors previously
elected shall thereupon terminate, and the authorized number of directors of
the Corporation shall thereupon return to the number of authorized directors
otherwise in effect, but subject always to the same provisions for the renewal
and divestment of such special voting rights in the case of any such future
dividend default or defaults or any such failure to make redemption payments.
(d) At any time when such voting right shall have vested in
the Holders of Series E Preferred Stock and if such right shall not already
have been initially exercised, a proper officer of the Corporation shall, upon
the written request of Holders of record of 10% or more of the Series E
Preferred Stock then outstanding, addressed to the Secretary of the
Corporation, call a special meeting of Holders of Series E Preferred Stock.
Such meeting shall be held at the earliest practicable date upon the notice
required for annual meetings of stockholders at the place for holding annual
meetings of stockholders of the Corporation or, if none, at a place designated
by the Secretary of the Corporation. If such meeting shall not be called by the
proper officers of the Corporation within 30 days after the personal service of
such written request upon the Secretary of the Corporation, or within 30 days
after mailing the same within the United States, by registered mail, addressed
to the Secretary of the Corporation at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal authorities), then the
Holders of record of 10% of the shares of Series E Preferred Stock then
outstanding may designate in writing a Holder of Series E Preferred Stock to
call such meeting at the expense of the Corporation, and such meeting may be
called by such person so designated upon the notice required for annual
meetings of stockholders
24
and shall be held at the place for holding annual meetings of the Corporation
or, if none, at a place designated by such Holder. Any Holder of Series E
Preferred Stock that would be entitled to vote at such meeting shall have
access to the stock books of the Corporation for the purpose of causing a
meeting of stockholders to be called pursuant to the provisions of this
Section. Notwithstanding the provisions of this paragraph, however, no such
special meeting shall be called if any such request is received less than 90
days before the date fixed for the next ensuing annual or special meeting of
stockholders.
(e) If the directors so elected by the Holders of Series E
Preferred Stock shall cease to serve as a director before his term shall
expire, the Holders of Series E Preferred Stock then outstanding may, at a
special meeting of the Holders called as provided above, elect a successor to
hold office for the unexpired term of the director whose place shall be vacant.
(f) The Corporation shall not, without the affirmative vote
or consent of the Holders of a majority of the then outstanding shares of
Series E Preferred Stock (with shares held by the Corporation or any of its
Affiliates not being considered to be outstanding for this purpose) amend or
otherwise alter its Certificate of Incorporation in any manner that adversely
affects the rights of Holders of Series E Preferred Stock.
(g) Without the consent of each Holder affected, an amendment
or waiver may not (with respect to any shares of Series E Preferred Stock held
by a non-consenting Holder):
(i) alter the voting rights with respect to the
Series E Preferred Stock or reduce the number of shares of Series E
Preferred Stock whose Holders must consent to an amendment, supplement
or waiver;
(ii) reduce the Liquidation Preference of or change
the Mandatory Redemption Date of any share of Series E Preferred Stock
or alter the provisions with respect to the redemption of the Series E
Preferred Stock (other than provisions relating to the covenant
described above in Section 7 hereof);
(iii) reduce the rate of or change the time for
payment of dividends on any share of Series E Preferred Stock;
(iv) waive a default or event of default in the
payment of dividends or on the Series E Preferred Stock;
(v) make any share of Series E Preferred Stock
payable in any form other than that stated in this Certificate of
Designations;
(vi) make any change in the provisions of this
Certificate of Designations relating to waivers of the rights of
Holders of Series E Preferred Stock to receive the
25
Liquidation Preference, dividends on the Series E Preferred Stock;
(vii) waive a redemption payment with respect to any
share of Series E Preferred Stock (other than a payment required by
the covenant described above in Section 7 hereof); or
(viii) make any change in the foregoing amendment
and waiver provisions.
(h) The Corporation shall not, without the consent of at
least 662/3% of the then outstanding shares of Series E Preferred Stock (with
shares held by the Corporation or its Affiliates not being considered to be
outstanding for this purpose), authorize, create (by way of reclassification or
otherwise) or issue any Senior Securities or any obligation or security
convertible or exchangeable into or evidencing a right to purchase, shares of
any class or series of Senior Securities.
(i) In addition, any amendment to the provisions of Section 7
hereof (including the related definitions) will require the consent of the
Holders of at least 75% of the shares of Series E Preferred Stock then
outstanding (with shares held by the Corporation or its Affiliates not being
considered to be outstanding for this purpose) if such amendment would
adversely affect the rights of Holders of Series E Preferred Stock.
(j) The Corporation in its sole discretion may without the
vote or consent of any Holders of the Series E Preferred Stock amend or
supplement this Certificate of Designations:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to provide for uncertificated Series E
Preferred Stock in addition to or in place of certificated Series E
Preferred Stock; or
(iii) to make any change that would provide any
additional rights or benefits to the Holders of the Series E Preferred
Stock or that does not adversely affect the legal rights or benefits
under this Certificate of Designations of any such Holder.
7. Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder
of Series E Preferred Stock shall have the right to require the Corporation to
repurchase all or any part of such Holder's shares of Series E Preferred Stock
(a "Change of Control Offer") at an offer price in cash equal to 101% of the
aggregate Liquidation Preference thereof plus accrued and unpaid dividends, if
any, thereon to the date of purchase (the "Change of Control Payment").
(b) The Change of Control Offer shall include all
instructions and materials necessary to enable Holders to tender their shares
of Series E Preferred Stock.
26
(c) The Corporation shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the shares of Series E Preferred Stock as a result of a
Change of Control.
(d) Within 30 days following any Change of Control, the
Corporation shall mail a notice to each Holder stating:
(i) that the Change of Control Offer is being made
pursuant to this Section 7 and that all shares of Series E Preferred
Stock tendered will be accepted for payment;
(ii) the purchase price and the purchase date, which
shall be no earlier than 30 days nor later than 60 days from the date
such notice is mailed (the "Change of Control Payment Date");
(iii) that any share of Series E Preferred Stock not
tendered will continue to accrue dividends;
(iv) that, unless the Corporation fails to pay the
Change of Control Payment, all shares of Series E Preferred Stock
accepted for payment pursuant to the Change of Control Offer shall
cease to accrue dividends after the Change of Control Payment Date;
(v) that Holders electing to have any shares of
Series E Preferred Stock purchased pursuant to a Change of Control
Offer will be required to surrender the shares of Series E Preferred
Stock, with the form entitled "Option of Holder to Elect Purchase"
which shall be included with the Notice of Change of Control
completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the
Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the number of shares of Series E
Preferred Stock delivered for purchase, and a statement that such
Holder is withdrawing his election to have such shares purchased; and
(vii) the circumstances and relevant facts regarding
such Change of Control (including, but not limited to, information
with respect to pro forma historical financial information after
giving effect to such Change of Control and information regarding the
Person or Persons acquiring control).
27
(e) On the Change of Control Payment Date, the Corporation
shall, to the extent lawful, (i) accept for payment all shares of Series E
Preferred Stock properly tendered pursuant to the Change of Control Offer, (ii)
deposit with the Paying Agent an amount equal to the Change of Control Payment
in respect of all shares of Series E Preferred Stock so tendered and (iii)
deliver or cause to be delivered to the Transfer Agent shares of Series E
Preferred Stock so accepted together with an Officers' Certificate stating the
aggregate Liquidation Preference of the shares of Series E Preferred Stock or
portions thereof being purchased by the Corporation. The Paying Agent shall
promptly mail to each Holder of Series E Preferred Stock so tendered the Change
of Control Payment for such Series E Preferred Stock and the Transfer Agent
will promptly authenticate and mail (or cause to be transferred by book-entry)
to each Holder a new certificate representing the shares of Series E Preferred
Stock equal in Liquidation Preference amount to any unpurchased portion of the
shares of Series E Preferred Stock surrendered, if any. The Corporation shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(f) Prior to complying with the provisions of this Section 7,
but in any event within 90 days following a Change of Control, the Corporation
shall either repay all outstanding Indebtedness or obtain the requisite
consents, if any, under all agreements governing outstanding Indebtedness, in
each case to the extent required to permit the repurchase of Series E Preferred
Stock required by this Section 7. If the Corporation fails to make such
repayment or obtain such consents within such time period, it will result in a
Voting Rights Triggering Event, but the obligation to commence and consummate a
Change of Control Offer will be suspended until such repayment is made or such
consents are obtained. If such consents are not obtained, the Corporation will
not repurchase any Series E Preferred Stock until the 91st day following the
retirement of the New Notes. The Corporation will publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
(g) The Corporation shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 7 applicable to a Change of Control
Offer made by the Corporation and purchases all shares of Series E Preferred
Stock validly tendered and not withdrawn under such Change of Control Offer.
8. Certain Covenants
(a) Restricted Payments. The Corporation shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any other payment or distribution on account of the
Corporation's Parity Securities or Junior Securities (including, without
limitation, any payment in connection with any merger or consolidation
involving the Corporation) or to the direct or indirect holders of the
Corporation's Parity Securities or Junior Securities in their capacity as such
(other than dividends or distributions payable in Capital Stock (other than
Disqualified Stock) of the Corporation); (ii) purchase, redeem or otherwise
acquire or
28
retire for value any Parity Securities or Junior Securities of the Corporation;
(iii) make any payment on, or purchase, redeem, defease or otherwise acquire or
retire for value any Junior Securities, except payments of the Liquidation
Preference thereof at final maturity; or (iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv)
above being collectively referred to as "Restricted Payments"), unless, at the
time of and after giving effect to such Restricted Payment:
(a) no Voting Rights Triggering Event shall have occurred and
be continuing or would occur as a consequence thereof; and
(b) the Corporation would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $l.00 of additional Indebtedness (other than
Permitted Debt) pursuant to the Debt to Cash Flow Ratio test set forth below
under Section 8(b) hereof; and
(c) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments declared or made after the Initial
Issue Date (other than Restricted Payments permitted by clauses (2), (5), (6),
(10), (13) or (14) of the following paragraph) shall not exceed, at the date of
determination, the sum of (1) an amount equal to the Corporation's Consolidated
Cash Flow from the Initial Issue Date to the end of the Corporation's most
recently ended full fiscal quarter for which internal financial statements are
available, taken as a single accounting period, less the product of 1.4 times
the Corporation's Consolidated Interest Expense from the Initial Issue Date to
the end of the Corporation's most recently ended full fiscal quarter for which
internal financial statements are available, taken as a single accounting
period, plus (2) an amount equal to the net cash proceeds received by the
Corporation from the issue or sale after the Initial Issue Date of Equity
Interests of the Corporation (other than (i) sales of Disqualified Stock and
(ii) Equity Interests sold to any of the Corporation's Subsidiaries) or of debt
securities or Disqualified Stock (other than the Series D Preferred Stock) of
the Corporation issued after the Initial Issue Date that have been converted
into such Equity Interests plus (3) to the extent that any Restricted
Investment that was made after the Initial Issue Date is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (A) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment.
If no Voting Rights Triggering Event shall have occurred and be
continuing as a result thereof, the foregoing provisions will not prohibit: (1)
the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied with
the provisions of this Certificate of Designations; (2) the redemption,
repurchase, retirement or other acquisition of any Equity interests of the
Corporation in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Subsidiary of the Corporation) of other Equity
Interests of the Corporation (other than any Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other
29
acquisition shall be excluded from clause (c)(2) of the preceding paragraph;
(3) cash payments made in respect of fractional shares of Capital Stock not to
exceed $100,000 in the aggregate in any fiscal year; (4) the payment of
dividends on the shares of Series D Preferred Stock in accordance with the
terms thereof as in effect on the Initial Issue Date; (5) the issuance of
Series D Exchange Notes in exchange for the Series D Preferred Stock; provided
that such issuance is permitted by Section 8(b) hereof; (6) the issuance of
Exchange Debentures in exchange for the Series E Preferred Stock; provided that
such issuance is permitted by Section 8(b) hereof; (7) in the event that the
Corporation elects to issue the Series D Exchange Notes in exchange for the
Series D Preferred Stock, cash payments made in lieu of the issuance of Series
D Exchange Notes having a face amount less than $50 and any cash payments
representing accrued and unpaid dividends in respect thereof, not to exceed
$100,000 in the aggregate in any fiscal year; (8) in the event that the
Corporation elects to issue Exchange Debentures in exchange for Series E
Preferred Stock, cash payments made in lieu of the issuance of Exchange
Debentures having a face amount less than $l,000 and any cash payments
representing accrued and unpaid dividends in respect thereof, not to exceed
$100,000 in the aggregate in any fiscal year; (9) payments made by the
Corporation to SCMC for facilities maintenance and other services and
reimbursements pursuant to the Shared Facilities Agreement, as amended from
time to time, to the extent that such payments do not exceed the amount of
payments which would have been due if calculated in accordance with the terms
of the Shared Facilities Agreement as in effect on the Initial Issue Date; (10)
payments by the Corporation pursuant to the Management Termination Agreements
in accordance with the terms thereof as in effect on the Initial Issue Date;
(11) the redemption by the Corporation of its Series C Preferred Stock in
accordance with the terms thereof as in effect on the Initial Issue Date; (12)
the redemption by the Corporation of its Series B Preferred Stock in accordance
with the terms thereof as in effect on the Initial Issue Date; provided that
payments made by the Corporation to redeem the Series B Preferred Stock shall
not exceed $1.0 million in any fiscal year or $2.0 million in the aggregate
since the Initial Issue Date; (13) the Spin-Off Transactions; and (14) the
Meadows Repurchase.
The amount of all Restricted Payments (other than cash) shall be the
Fair Market Value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Board of Directors) on the
date of the Restricted Payment of the asset(s) or securities proposed to be
transferred by the Corporation or such Subsidiary, as the case may be, pursuant
to the Restricted Payment. Not later than the date of making any Restricted
Payment, the Corporation shall deliver to the Board of Directors an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this covenant were computed,
which calculations may be based upon the Corporation's latest available
financial statements.
(b) Incurrence of Indebtedness and Issuance of Preferred
Stock. The Corporation shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable, contingently or otherwise, with
respect to (collectively, "incur") any Indebtedness (including Acquired Debt)
and that the Corporation will not issue any Disqualified Stock and will not
permit any of its Subsidiaries to issue
30
any shares of Preferred Stock; provided, however, that (i) the Corporation may
incur Indebtedness (including Acquired Debt) or issue shares of Disqualified
Stock and (ii) (A) the Subsidiaries may guarantee Senior Debt and (B) the
Subsidiaries may issue Preferred Stock other than Disqualified Stock if, in
either case, the Corporation's Debt to Cash Flow Ratio at the time of
incurrence of such Indebtedness or the issuance of such Disqualified Stock or
the Guarantee of such Senior Debt or the issuance of such Preferred Stock, as
the case may be, after giving pro forma effect to such incurrence or issuance
or Guarantee as of such date and to the use of proceeds therefrom as if the
same had occurred at the beginning of the most recently ended four full fiscal
quarter period of the Corporation for which internal financial statements are
available, would have been no greater than 7.0 to 1. The foregoing provisions
will not apply to the incurrence of any of the following Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Corporation and its
Subsidiaries of Indebtedness pursuant to one or more Bank Facilities, so long
as the aggregate principal amount of all Indebtedness outstanding under all
Bank Facilities does not, at the time of incurrence, exceed an amount equal to
$225.0 million;
(ii) the incurrence by the Corporation and its
Subsidiaries of the Existing Indebtedness;
(iii) Indebtedness under the Exchange Debentures;
(iv) the issuance of Disqualified Stock by the
Corporation that by its items
would not require or permit any payment of dividends or other distributions
that would violate the covenant Section 8(a) above;
(v) the incurrence by the Corporation or any of its
Subsidiaries of Indebtedness in connection with the acquisition of assets or a
new Subsidiary; provided that such Indebtedness was incurred by the prior owner
of such assets or such Subsidiary prior to such acquisition by the Corporation
or one of its Subsidiaries and was not incurred in connection with, or in
contemplation of, such acquisition by the Corporation or one of its
Subsidiaries; and provided further that, after giving pro forma effect to such
incurrence of Indebtedness as of such date and to the use of proceeds therefrom
as if the same had occurred at the beginning of the most recently ended four
full fiscal quarter period for which internal financial statements are
available, the Corporation's Debt to Cash Flow Ratio would have been no greater
than 7.0 to 1.
(vi) the incurrence by the Corporation or any of its
Subsidiaries of Permitted Refinancing Debt in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by this Certificate of Designations to be
incurred;
(vii) the incurrence by the Corporation or any of
its Subsidiaries of
31
intercompany Indebtedness between or among the Corporation and any of its
Subsidiaries; provided, however, that (i) if the Corporation is the obligor on
such Indebtedness, such Indebtedness is expressly subordinate to the payment in
full of all Obligations with respect to the Exchange Debentures and (ii)(A) any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Corporation or a Subsidiary
and (B) any sale or other transfer of any such Indebtedness to a Person that is
not either the Corporation or a Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Corporation or such
Subsidiary, as the case may be;
(viii) the incurrence by the Corporation or any of
its Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Certificate of Designations
to be outstanding; and
(ix) the incurrence by the Corporation and any of
its Subsidiaries of Indebtedness (in addition to Indebtedness permitted by any
other clause of this paragraph) in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding not to exceed $10.0 million.
(c) Merger, Consolidation or Sale of Assets. The Corporation
shall not consolidate or merge with or into (whether or not the Corporation is
the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless (i) the Corporation is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Corporation) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any states, any state thereof or
the District of Columbia; (ii) the Series E Preferred Stock shall be converted
into or exchanged for and shall become shares of such successor, transferee or
resulting Person, having in respect of such successor, transferee or resulting
Person the same powers, preferences and relative participating, optional or
other special rights and the qualifications, limitations or restrictions
thereon, that the Series E Preferred Stock had immediately prior to such
transaction; (iii) immediately after such transaction no Voting Rights
Triggering Event exists; (iv) such transaction will not result in the loss or
suspension or material impairment of any Material Broadcast License; and (v)
except in the case of a merger of the Corporation with or into a Wholly Owned
Subsidiary of the Corporation, the Corporation or the entity or Person formed
by or surviving any such consolidation or merger (if other than the
Corporation), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Corporation immediately preceding the transaction and (B) will, at
the time of such transaction and after giving pro forma effect thereto as if
such transaction had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Debt to Cash Flow Ratio test set forth in
32
Section 8(b) hereof.
(d) Transactions with Affiliates. The Corporation shall not,
and shall not permit any of its Subsidiaries to, make any payment to, or sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Corporation or the relevant Subsidiary than those that would have been
obtained in a comparable transaction by the Corporation or such Subsidiary with
an unrelated Person and (ii) the Corporation delivers to the Holders (a) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the members
of the Board of Directors that are disinterested as to such Affiliate
Transaction and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal
or investment banking firm of national standing; provided that (1) transactions
between or among the Corporation and/or its Wholly-Owned Subsidiaries, (2) the
redemption or repurchase of the Existing MMR Indebtedness, (3) transactions and
agreements specifically contemplated by the Termination and Assignment
Agreement between the Corporation and SCMC as in effect on the Initial Issue
Date, (4) payments required by the terms of the joint lease among the
Corporation, SCMC and the landlord thereunder for the Corporation's corporate
headquarters located at 650 Madison Avenue, New York, New York and any
agreements directly related thereto, in each case, as the same are in effect on
the Initial Issue Date, (5) payments made by the Corporation to SCMC for the
facilities maintenance and other services and reimbursements pursuant to the
Shared Facilities Agreement, (6) payments and other transactions by the
Corporation pursuant to the Management Termination Agreements, (7) any
Restricted Payments that are permitted by Section 8(a) hereof and any Permitted
Investments, (8) the transactions and agreements specifically contemplated by
the Merger Agreement, the Acquisition Agreements or by instruments referred to
in any such agreements and (9) any Spin-Off Transaction, in each case, shall
not be deemed to be Affiliate Transactions.
(e) Payments for Consent. Neither the Corporation nor any of
its Subsidiaries shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of dividend or other distribution, fee or
otherwise, to any Holder of any Series E Preferred Stock for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Certificate of Designations or the Series E Preferred Stock
unless such consideration is offered to be paid and is paid to all Holders of
the Series E Preferred Stock that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver
or agreement.
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(f) Reports.
(i) Whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any shares of Series E Preferred Stock are outstanding, the Corporation
shall furnish to the Holders of Series E Preferred Stock (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Corporation were required to
file such Forms, including "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Corporation's certified independent
accountants and
(ii) all current reports that would be required to
be filed with the Commission on Form 8-K if the Corporation were required to
file such reports. In addition, whether or not required by the rules and
regulations of the Commission, the Corporation shall file a copy of all such
information and reports with the Commission for public availability (unless the
Commission will not accept such a filing) and make such information available
to securities analysts and prospective investors upon request.
(iii) The Corporation shall deliver to the Holders,
within 90 days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Corporation and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing officers with a view to determining whether the Corporations has kept,
observed, performed and fulfilled its obligations under this Certificate of
Designations and further stating, as to each such officer signing such
certificate, that to the best of his or her knowledge the Corporation has kept,
observed, performed and fulfilled each and every covenant contained in this
Certificate of Designations and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Certificate
of Designations (or, if any such default shall have occurred, describing all
such defaults of which he or she may have knowledge and what action the
Corporation is taking or proposes to take with respect thereto) and that to the
best of his or her knowledge no event has occurred and remains in existence by
reason of which payments on account of the Liquidation Preference of or
dividends, if any, on the Series E Preferred Stock is prohibited or if such
event has occurred, a description of the event and what action the Corporation
is taking or proposes to take with respect thereto.
(iv) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 8(f)(i) above shall
be accompanied by a written statement of the Corporation's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial
statements, nothing has come to their attention that would lead them to believe
that the Corporation has violated any provisions of this Certificate of
Designations or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall
not be liable directly or
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indirectly to any Person for any failure to obtain knowledge of any such
violation.
(v) The Corporation shall, so long as any of the
shares of Series E Preferred Stock are outstanding, deliver to the Holders,
forthwith upon any Executive Officer of the Corporation becoming aware of any
default under this Certificate of Designations, an Officers' Certificate
specifying such default and what action the Corporation is taking or proposes
to take with respect thereto.
(g) Conflicts with By-laws. If any provisions of the
Corporation's By-laws conflict in any way with this Certificate of
Designations, the Corporation shall, so long as any of the shares of Series E
Preferred Stock are outstanding, take all necessary actions to amend such
By-laws and thereby resolve the conflict.
9. Payment.
(a) All amounts payable in cash with respect to the Series E
Preferred Stock shall be payable in United States dollars at the office or
agency of the Corporation maintained for such purpose within the City and State
of New York or, at the option of the Corporation, payment of dividends may be
made by check mailed to the Holders of the Series E Preferred Stock at their
respective addresses set forth in the register of Holders of Series E Preferred
Stock maintained by the Transfer Agent, provided that all cash payments with
respect to the Global Shares (as defined below) and shares of Series E
Preferred Stock the Holders of which have given wire transfer instructions to
the Corporation will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. Unless
otherwise designated by the Corporation, the Corporation's office or agency in
New York shall be the office of the Paying Agent maintained for such purpose.
(b) Any payment on the Series E Preferred Stock due on any
day that is not a Business Day need not be made on such day, but may be made on
the next succeeding Business Day with the same force and effect as if made on
such due date.
(c) The Corporation has initially appointed the Transfer
Agent to act as the Paying Agent. The Corporation may at any time terminate the
appointment of any Paying Agent and appoint additional or other Paying Agents,
provided that until the Series E Preferred Stock has been delivered to the
Corporation for cancellation, or moneys sufficient to pay the Liquidation
Preference and accrued dividends on the Series E Preferred Stock have been made
available for payment and either paid or returned to the Corporation as
provided in this Certificate of Designations, it shall maintain an office or
agency in the Borough of Manhattan, The City of New York for surrender of
Series E Preferred Stock.
(d) Dividends payable on the Series E Preferred Stock on any
redemption date or repurchase date that is a Dividend Payment Date will be paid
to the Holders of record as of the
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immediately preceding Record Date.
(e) All moneys deposited with any Paying Agent or then held
by the Corporation in trust for the payment of the Liquidation Preference and
dividends on any shares of Series E Preferred Stock which remain unclaimed at
the end of two years after such payment has become due and payable will be
repaid to the Corporation, and the Holder of such shares of Series E Preferred
Stock will thereafter look only to Corporation for payment thereof.
10. Officers' Certificate.
Each Officers' Certificate provided for in this Certificate
of Designations shall include:
(a) a statement that the officer making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such officer, he or
she has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such
officer, such condition or covenant has been satisfied.
11. Exclusion of Other Rights.
Except as may otherwise be required by law, the shares of
Series E Preferred Stock shall not have any voting powers, preferences and
relative, participating, optional or other special rights, other than those
specifically set forth in this Certificate of Designations (as such Certificate
of Designations may be amended from time to time) and in the Certificate of
Incorporation. The shares of Series E Preferred Stock shall have no preemptive
or subscription rights.
12. Headings of Subdivisions.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.
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13. Severability of Provisions.
If any voting powers, preferences and relative,
participating, optional and other special rights of the Series E Preferred
Stock and qualifications, limitations and restrictions thereof set forth in
this resolution (as such resolution may be amended from time to time) is
invalid, unlawful or incapable of being enforced by reason of any rule of law
or public policy, all other voting powers, preferences and relative,
participating, optional and other special rights of Series E Preferred Stock
and qualifications, limitations and restrictions thereof set forth in this
resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other special rights of Series E Preferred Stock
and qualifications, limitations and restrictions thereof shall, nevertheless,
remain in full force and effect, and no voting powers, preferences and
relative, participating, optional or other special rights of Series E Preferred
Stock and qualifications, limitations and restrictions thereof herein set forth
shall be deemed dependent upon any other such voting powers, preferences and
relative, participating, optional or other special rights of Series E Preferred
Stock and qualifications, limitations and restrictions thereof unless so
expressed herein.
14. Form of Securities.
(a) The Series E Preferred Stock shall initially be issued in
the form of one or more Global Preferred Shares (the "Global Shares"). The
Global Shares shall be deposited on the Initial Issue Date with, or on behalf
of, The Depository Trust Company (the "Depository") and registered in the name
of Cede & Co., as nominee of the Depository (such nominee being referred to as
the "Global Share Holder").
(b) So long as the Global Share Holder is the registered
owner of any Series E Preferred Stock, the Global Share Holder will be
considered the sole Holder under this Certificate of Designations of any shares
of Series E Preferred Stock evidenced by the Global Shares. Beneficial owners
of shares of Series E Preferred Stock evidenced by the Global Shares shall not
be considered the owners or Holders thereof under this Certificate of
Designations for any purpose. The Corporation shall not have any responsibility
or liability for any aspect of the records of the Depositary relating to the
Series E Preferred Stock.
(c) Payments in respect of the Liquidation Preference,
dividends on any Series E Preferred Stock registered in the name of the Global
Share Holder on the applicable record date shall be payable by the Corporation
to or at the direction of the Global Share Holder in its capacity as the
registered Holder under this Certificate of Designations. The Corporation may
treat the persons in whose names Series E Preferred Stock, including the Global
Shares, are registered as the owners thereof for the purpose of receiving such
payments. The Corporation does not have nor will have any responsibility or
liability for the payments of such amounts to beneficial holders of Series E
Preferred Stock.
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(d) Any person having a beneficial interest in a Global Share
may, upon request to the Corporation, exchange such beneficial interest for
Series E Preferred Stock in the form of registered definitive certificates
("Certificated Securities"). Upon any such issuance, the Corporation shall
register such Certificated Securities in the name of, and cause the same to be
delivered to, such person or persons (or the nominee of any thereof). If (i)
the Corporation notifies the Holders in writing that the Depositary is no
longer willing or able to act as a depositary and the Corporation is unable to
locate a qualified successor within 90 days or (ii) the Corporation, at its
option, notifies the Holders in writing that it elects to cause the issuance of
Series E Preferred Stock in the form of Certificated Securities, then, upon
surrender by the Global Share Holder of its Global Shares, Series E Preferred
Stock in such form will be issued to each person that the Global Share Holder
and the Depositary identify as being the beneficial owner of the related Series
E Preferred Stock.
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