SINCLAIR BROADCAST GROUP, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
(as amended through July 9, 1996)
FIRST: Name. The name of the Corporation is:
SINCLAIR BROADCAST GROUP, INC.
SECOND: Purpose. The purpose for which the Corporation is formed and the
business or object to be carried on and promoted by it are as follows:
(a) to own, operate, acquire, sell, and transfer television stations and
television programming;
(b) to do anything permitted by Section 2-103 of the Corporations and
Associations Article of the Annotated Code of Maryland, as amended from time to
time; and
(c) to engage in any other lawful purpose and business.
THIRD: Capital Structure. The total number of shares of all classes of
stock which the Corporation has authority to issue is one hundred forty-five
million (145,000,000) shares, having an aggregate par value of one million four
hundred fifty thousand dollars ($1,450,000), consisting of one hundred million
(100,000,000) shares of Class A Common Stock with a par value of one cent ($.01)
per share (the "Class A Common Stock"), thirty-five million (35,000,000) shares
of Class B Common Stock with a par value of one cent ($.01) per share (the
"Class B Common Stock"), and ten million (10,000,000) shares of Preferred Stock
with a par value of one cent ($.01) per share (the "Preferred Stock"). Class A
Common Stock and Class B Common Stock are hereinafter collectively referred to
as "Common Shares."
FOURTH: Voting Rights. (a) Holders of Class A Common Stock are entitled to
one (1) vote per share of such stock held and, except as provided below, holders
of Class B Common Stock are entitled to ten (10) votes per share of such stock
held with respect to matters properly submitted for the vote of holders of
Common Shares at any duly constituted meeting of stockholders. The holders of
Common Shares will vote together as a single class on all matters properly
presented to the stockholders for their vote unless otherwise required by law.
The holders of the Common Shares are not entitled to cumulate votes in the
election of any directors.
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(b) Notwithstanding the foregoing, holders of Class B Common Stock shall be
entitled to one (1) vote per share with respect to: (i) any proposed "Rule 13e-3
transaction," as that term is defined in Rule 13e-3 promulgated under the
Securities Exchange Act of 1934, as amended, between the Corporation and any
person who held stock in the Corporation as of January 1, 1995 (the "Controlling
Stockholders"), any Affiliate (as such term is defined below) of the Controlling
Stockholders, or any group which the Controlling Stockholders are an Affiliate
or which the Controlling Stockholders are a member; (ii) any disposition of all
or substantially all of the Corporation's assets; (iii) any sale or transfer or
other disposition of assets which would cause a fundamental change in the nature
of the Corporation's business; and (iv) a merger or a consolidation of the
Corporation subsequent to which the holders of the Common Shares will own less
than 50% of the common stock of the Corporation following such transaction.
For the purpose of paragraph (b) above, an "Affiliate" is defined as: (i)
any individual or entity that, directly or indirectly, controls, is controlled
by, or is under the common control of the Controlling Stockholders; (ii) any
corporation or organization (other than the Corporation or a majority owned
subsidiary of the Corporation) of which any of the Controlling Stockholders is
an owner or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of voting securities or in which any of the
Controlling Stockholders has a substantial beneficial interest; (iii) a voting
trust or similar arrangement pursuant to which any of the Controlling
Stockholders serves as a trustee or in a similar fiduciary capacity; or (v) any
relative or spouse of the Controlling Stockholders or any relative of such
spouse provided such spouse has the same residence as the Controlling
Stockholder.
FIFTH: Conversion of Class B Common Stock.
(a) In the event that the number of shares of the Corporation's Common
Shares held in the aggregate by Controlling Stockholders falls to below ten
percent (10%) of the total number of Common Shares outstanding, each share of
Class B Common Stock shall at that time be automatically converted to one (1)
fully paid and non-assessable share of Class A Common Stock.
(b) Upon the sale or other transfer by a holder of Class B Common Stock to
a person or entity other than a Permitted Transferee (as such term is defined
below), such shares of Class B Common Stock shall be automatically converted
into an equal number of shares of Class A Common Stock. Promptly upon such sale
or other transfer, the holder of Class B Common Stock therefor, duly endorsed in
blank or accompanied by proper instruments of transfer, at the office of the
Corporation or of any transfer agent for the Class A Common Stock, and shall
give written notice to the Corporation at such office: (i) stating that the
shares are being converted pursuant to this paragraph, (ii) identifying the
number of shares of Class B Common Stock being converted, and (iii)
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setting out the name or names (with addresses) and denominations in which the
certificate or certificates for Class A Common Stock shall be issued and shall
include instructions for delivery thereof. Delivery of such notice together with
the certificates representing the Class B Common Stock shall obligate the
Corporation or its transfer agent to issue and deliver at such stated address to
such stated transferee a certificate or certificates for the number of Class A
Common Stock to which such transferee is entitled, registered in the name of
such transferee. In the event of a sale or other transfer of less than all of
the Class B Common Stock evidenced by a certificate surrendered to the
Corporation in the accordance with the above procedures, the Corporation shall
execute and deliver to the transferor, without charge, a new certificate
evidencing the number of shares of Class B Common Stock not sold or otherwise
transferred.
For the purpose of paragraph (b) above, a "Permitted Transferee" is defined
as:
(i) (A) any Controlling Stockholder; (B) the estate of a Controlling
Stockholder; (C) the spouse or former spouse of a Controlling Stockholder; (D)
any lineal descendent of a Controlling Stockholder, any spouse of such lineal
descendent, a Controlling Stockholder's grandparent, parent, brother or sister
or a Controlling Stockholder's spouse's brother or sister; (E) any guardian or
custodian (including a custodian for purposes of the Uniform Gift to Minors Act
or Uniform Transfers to Minors Act) for, or any conservator or other legal
representative of, one or more Permitted Transferees; or (F) any trust or
savings or retirement account, including an individual retirement account for
purposes of federal income tax laws, whether or not involving a trust,
principally for the benefit of one or more Permitted Transferees, including any
trust in respect of which a Permitted Transferee has any general or special
testamentary power of appointment or general or special non-testamentary power
of appointment which is limited to any other Permitted Transferee;
(ii) the Corporation;
(iii) any employee benefit plan or trust thereunder sponsored by the
Corporation or any of its subsidiaries;
(iv) any trust principally for the benefit of one or more of the
individuals, persons, firms or entities ("Persons") referred to in (i) through
(iii) above;
(v) any corporation, partnership, or other entity if all of the beneficial
ownership is held by one or more of the Persons referred to in (i) through (iv)
above;
(vi) any voting trust for the benefit of one or more of the Persons
referred to in (i) through (iv) above; and
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(vii) any broker or dealer in securities, clearing house, bank, trust
company, savings and loan association or other financial institution which holds
the Class B Common Stock for the benefit of a Controlling Stockholder or
Permitted Transferee thereof.
(c) Notwithstanding anything to the contrary set forth herein, any holder
of Class B Common Stock may pledge his shares of Class B Common Stock to a
pledgee pursuant to a bona fide pledge of such shares as collateral security for
indebtedness due to the pledgee without causing an automatic conversion of such
shares into Class A Common Stock, provided that such shares may not be
transferred to or registered in the name of the pledgee unless such pledgee is a
Permitted Transferee. In the event of foreclosure or other similar action by a
pledgee who is not a Permitted Transferee, such pledged shares of Class B Common
Stock shall be converted automatically, without any act or deed on the part of
the Corporation or any other person, into shares of Class A Common Stock as
provided above.
(d) Each share of Class B Common Stock shall be convertible, at the option
of its holder, into one fully paid and non-assessable share of Class A Common
Stock at any time. In the event of such voluntary conversion, the procedures set
forth in paragraph (a) above shall be followed.
(e) Shares of Class B Common Stock that are converted into shares of Class
A Common Stock due to a sale, transfer, or voluntary conversion shall continue
to be authorized shares of Class B Common Stock and available for reissue by the
Corporation as determined by the Board of Directors.
(f) The Corporation hereby reserves and shall at all times reserve and keep
available, out of its authorized and unissued Class A Common Stock, for the
purpose of effecting the conversions provided for herein, a sufficient number of
shares of Class A Common stock to effect the conversion of all Class B Common
Stock. All of the Common Stock so issuable shall, when issued be duly and
validly issued, fully paid and non-assessable, and free from liens and charges
with respect to the issue. The Corporation will take such action as may be
necessary to ensure that all such Common Stock may be so issued without
violation of any applicable law or regulation, or of any requirements of any
stock exchange or market on which any of the Common Shares are listed or quoted.
(g) In any merger, consolidation, or business combination, the
consideration to be received per share by the holders of Class A Common Stock
and Class B Common Stock must be identical for each class of stock, except that
in any such transaction in which shares of common stock are to be distributed,
such shares may differ as to voting rights to the extent that voting rights
differ among Class A Common Stock and Class B Common Stock as provided herein.
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SIXTH: Preferred Stock. The Board of Directors shall have authority to
classify and reclassify any of the unissued shares of Preferred Stock from time
to time by setting or changing in any one or more respects the liquidation or
dividend preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of redemption
of the Preferred Stock; provided, however, that the Board of Directors shall not
classify or reclassify any such shares into Common Shares, or into any class or
series of stock which has the same or lower liquidation priority as the Common
Shares; provided further, that nothing herein shall prevent the Board of
Directors from classifying or reclassifying any such shares as Preferred Stock
convertible into Common Shares that have already been authorized pursuant to
Article Third hereof. Any and all shares issued and for which full consideration
has been paid or delivered shall be deemed fully paid stock, and the holder
thereof shall not be liable for any further payment thereon. Notwithstanding
anything in these Articles to the contrary, as long as any of the Common Shares
shall be listed and quoted on the NASDAQ National Market System, no Preferred
Stock may be issued pursuant to the provisions of this ARTICLE SIXTH which would
violate the applicable Voting Rights Policy of the NASDAQ National Market
System, as the same may be amended from time to time.
SEVENTH: Other Stock Rights.
(a) Except as provided hereinabove, each of the Common Shares issued and
outstanding shall be identical in all respects, and no dividends shall be paid
on any of the common Shares unless the same dividend is paid on all of the
Common Shares at the time of such payment. Except for and subject to those
special voting rights expressly granted herein to the holders of the Class B
Common Stock, the holders of the Common Stock shall have exclusively all other
rights of stockholders including, but not limited to, (i) the right to receive
dividends, when and as declared by the Board of Directors out of assets lawfully
available therefor, and (ii) in the event of any distribution of assets upon
liquidation, dissolution or winding up of the Corporation or otherwise, the
right to receive ratably all of the assets and funds of the Corporation
remaining after the payment to the creditors of the Corporation.
(b) Stock Splits and Combinations. If the Corporation shall in any manner
subdivide (by stock split, reclassification, stock dividend, recapitalization,
or otherwise) or combine (by reverse stock split or otherwise) the outstanding
shares of Class A Common Stock or Class B Common Stock, then the outstanding
shares of each other class of Common Shares shall be subdivided or combined, as
the case may be, to the same extent, share and share alike.
(c) As long as any of the Common Shares shall be listed and quoted on the
NASDAQ National Market, the Board of Directors of the Corporation shall ensure,
and shall have all powers necessary to ensure, that the membership of the Board
of Directors
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shall at all times include such number of "Independent Directors" (as such term
is defined in Part III, Section 6(c) of Schedule D to the By-Laws of the
National Association of Securities Dealers, Inc. ("NASD"), as the same may be
amended from time to time as shall be required by the By-Laws of the NASD for
the Common Shares to be eligible for listing and quotation of the NASDAQ
National Market. In the event that the Common Shares shall cease to be listed
and quoted on the NASDAQ National Market, and subsequently are listed and quoted
on an exchange or other trading system, the Board of Directors of the
Corporation shall ensure, and shall have all powers necessary to ensure, that
the membership of the Board of Directors shall at all times be consistent with
the applicable rules and regulations, if any, for the Common Shares to be
eligible for listing and quotation on such exchange or other trading system.
(d) No holder of Common Shares or Preferred Shares shall be entitled to
preemptive or subscription rights.
EIGHTH: Principal Office & Registered Agent. The post office address of the
principal office of the Corporation in this State is 2000 W. 41st Street,
Baltimore, Maryland 21211. The name and post office address of the resident
agent of the Corporation in this State is Steven A. Thomas, Esquire, Thomas &
Libowitz, P.A., 100 Light Street, Suite 1100 Baltimore, Maryland 21202.
NINTH: Participation of Non-Citizens. The following provisions are included
for the purpose of ensuring that control and management of the Corporation
remains with citizens of the United States and/or corporations formed under the
laws of the United States or any of the states of the United States, as required
by the Communications Act of 1934, as the same may be amended from time to time:
(a) The Corporation shall not issue to (i) a person who is a citizen of a
country other than the United States; (ii) any entity organized under the laws
of a government other than the government of the United States or any state,
territory, or possession of the United States; (iii) a government other than the
government of the United States or of any state, territory, or possession of the
United States; (iii) a government other than the government of the United States
or of any state, territory, or possession of the United States; or (iv) a
representative of, or an individual or entity controlled by, any of the
foregoing (individually, an "Alien"; collectively, "Aliens") any shares of
capital stock of the Corporation if such issuance would result in the total
number of shares of such capital stock held or voted by Aliens exceeding 25% of
(i) the total number of all shares of such capital stock outstanding at any time
and from time to time, or (ii) the total voting power of all shares of such
capital stock outstanding and entitled to vote at any time and from time to time
and shall not permit the transfer on the books of the Corporation of any capital
stock to any Alien that would result in the total number of shares of such
capital stock held or voted by Aliens exceeding such 25% limits
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as such limits greater or lesser than 25% may subsequently be imposed by statute
or regulation.
(b) No Alien or Aliens, individually or collectively, shall be entitled to
vote or direct or control the vote of more than 25% of (i) the total number of
all shares of capital stock of the Corporation outstanding at any time and from
time to time, or (ii) the total voting power of all shares of capital stock of
the Corporation outstanding and entitled to vote at any time and from time to
time as such limits greater or lesser than 25% may subsequently be imposed by
statute or regulation.
(c) No Alien shall be qualified to act as an officer of the Corporation and
no more than one-fourth of the total number of directors of the Corporation at
any time may be Aliens except as may be permitted by law or regulation.
(d) The Board of Directors shall have all powers necessary to implement the
provisions of this ARTICLE NINTH and to ensure compliance with the alien
ownership restrictions (the "Alien Ownership Restrictions") of the
Communications Act of 1934, as amended, and the rules and regulations
promulgated thereunder, as the same may be amended from time to time
(collectively, the "Communications Act"), including, without limitation, the
power to prohibit the transfer of any shares of capital stock of the Corporation
to any Alien and to take or cause to be taken such action as it deems
appropriate to implement such prohibition.
(e) Without limiting the generality of the foregoing and notwithstanding
any other provision of these Amended and Restated Articles of Incorporation to
the contrary, any shares of capital stock of the Corporation determined by the
Board of Directors to be owned beneficially by an Alien or Aliens shall always
be subject to redemption by the Corporation by action of the Board of Directors,
pursuant to Section 2-310 of the Maryland General Corporation Law, or any other
applicable provision of law, to the extent necessary in the judgment of the
Board of Directors to comply with the Alien Ownership Restrictions. The terms
and conditions of such redemption shall be as follows:
(i) the redemption price of the shares to be redeemed pursuant to this
ARTICLE NINTH shall be equal to the fair market value of the shares to be
redeemed, as determined by reference to the closing price of such shares on the
last business day before the date of redemption if the shares are traded on a
national exchange or as determined by the Board of Directors in good faith if
the shares are not then being traded on a national exchange;
(ii) the redemption price of such shares may be paid in cash,
securities or any combination thereof;
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(iii) if less than all the shares held by Aliens are to be redeemed,
the shares to be redeemed shall be selected in any manner determined by the
Board of Directors to be fair and equitable;
(iv) at least 10 days' written notice of the redemption date shall be
given to the record holders of the shares selected to be redeemed (unless waived
in writing by any such holder), provided that the redemption date may be the
date on which written notice shall be given to record holders if the cash or
securities necessary to effect the redemption shall have been deposited in trust
for the benefit of such record holders and subject to immediate withdrawal by
them upon surrender of the stock certificates for their shares to be redeemed;
(v) from and after the redemption date, the shares to be redeemed
shall cease to be regarded as outstanding and any and all rights of the holders
in respect of the shares to be redeemed or attaching to such shares of whatever
nature (including, without limitation, any rights to vote or participate in
dividends declared on stock of the same class or series as such shares) shall
cease and terminate, and the holders thereof thenceforth shall be entitled only
to receive the cash or securities payable upon redemption; and
(vi) such other terms and conditions as the Board of Directors shall
determine.
For purposes of this ARTICLE NINTH, the determination of beneficial
ownership of shares of capital stock of the Corporation shall be made pursuant
to Rule 13d-3, 17 C.F.R. ss. 240.13d-3, as amended from time to time,
promulgated under the Securities Exchange Act of 1934, as amended.
TENTH: Directors.
(a) The number of directors of the Corporation which shall constitute
the whole Board shall be not less than three (3) nor more than nine (9)
directors. The exact number of directors shall be fixed from time to time by the
Board of Directors pursuant to a Resolution adopted by a majority of the entire
Board of Directors. Directors shall hold office for a term of one (1) year or
until the first annual meeting of stockholders following their election. Each
director elected shall hold office until his successor shall be elected and
shall qualify.
(b) Newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office, or other cause shall be filled by a majority vote of the remaining
directors, though less than a quorum,
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and the directors so chosen shall hold office for a term expiring at the next
annual meeting of stockholders at which the successors shall be elected and
shall qualify.
(c) At any meeting of the stockholders called for the purpose, any
director may, by a majority vote of all of the shares of stock outstanding and
entitled to vote, be removed from office, but only for cause.
(d) Notwithstanding anything contained in these Amended and Restated
Articles of Incorporation to the contrary, the affirmative vote of stockholders
holding a majority of the votes entitled to be cast for election of directors
shall be required to amend or repeal or adopt any provision inconsistent with
this ARTICLE TENTH.
ELEVENTH: Indemnification. The Corporation shall indemnify (a) its
directors and officers, whether serving the Corporation or at the request of
another entity, and advance expenses to a director or officer of the Corporation
to the fullest extent permitted by and in accordance with Section 2-418 of the
Corporations and Associations Article of the Annotated Code of Maryland, as
amended, and (b) its other employees and agents to such extent as shall be
authorized by the Board of Directors and permitted by law. No amendment of the
Charter of the Corporation shall limit or eliminate the right to indemnification
provided hereunder with respect to acts or omissions occurring prior to such
amendment or repeal.
TWELFTH: Duration. The duration of the Corporation shall be perpetual.
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SINCLAIR BROADCAST GROUP, INC.
ARTICLES SUPPLEMENTARY
SERIES A EXCHANGEABLE PREFERRED STOCK
Sinclair Broadcast Group, Inc., a Maryland corporation, having its
principal office in Baltimore City, Maryland (the "Corporation"), hereby
certifies to the Maryland State Department of Assessments and Taxation (the
"SDAT") as follows:
FIRST: Pursuant to authority expressly vested in the Board of Directors
of the Corporation by Article Sixth of the Charter of the Corporation (the
"Charter"), the Board of Directors has duly divided and classified 1,500,000
shares of the Preferred Stock of the Corporation into a series designated
"Series A Exchangeable Preferred Stock" and has provided for the issuance of
such series.
SECOND: The terms of the Series A Exchangeable Preferred Stock, par
value of $.01 per share, as set by the Board of Directors are as follows:
1. Designation and Amount. The shares of such series shall be
designated as Series A Exchangeable Preferred Stock (the "Series A Preferred
Stock") and the number of shares constituting such series shall initially be
1,500,000, subject to increase by action of the Board of Directors effectuated
by further Articles Supplementary in order to provide for the issuance of
Dividend Shares (as defined herein).
2. Conversion. Each share of the Series A Preferred Stock will
automatically be exchanged for and converted into one share of Series B
Convertible Preferred Stock (the "Series B Preferred Stock") effective at the
time of filing with the SDAT of an amendment to the Charter authorizing the
issuance of Series B Preferred Stock, which shall be filed promptly following
approval of the amendment by the stockholders. The Series B Preferred Stock
shall have the terms, conditions and preferences set forth in Annex A attached
to these Articles Supplementary; provided, however, that such Series B Preferred
Stock shall be effective and may be issued only upon and after the filing of
such amendment with the SDAT. Upon the filing of the amendment with the SDAT and
surrender of a certificate representing shares of Series A Preferred Stock, the
Corporation will issue a certificate representing the same number of shares of
Series B Preferred Stock.
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3. Trigger Event.
(i) Upon the date that is 180 days after the occurrence of
a Trigger Event (as defined below), subject to paragraph 8 hereof, the holders
of shares of Series A Preferred Stock, in preference to the holders of any other
class of capital stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
cumulative quarterly dividends payable in cash or, at the Corporation's option,
additional shares of Series A Preferred Stock ("Dividend Shares") on the last
day of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the date that is 180 days after the
occurrence of the Trigger Event, in an amount per share (rounded to the nearest
cent) equal to (a) with respect to the first four Quarterly Dividend Payment
Dates, Three Dollars and Seventy-Five Cents ($3.75) and (b) with respect to the
fifth and each succeeding Quarterly Dividend Payment Date, Five Dollars ($5.00).
In the event a quarterly dividend is paid (in whole or in part) in Dividend
Shares, the number of Dividend Shares to be issued in respect of such dividend
payment for each share of Series A Preferred Stock then outstanding shall equal
(x) that portion of the quarterly dividend paid in Dividend Shares (expressed in
Dollars) divided by (y) 100.
(ii) Whether or not declared, dividends shall begin to
accrue and be cumulative on initially outstanding shares of Series A Preferred
Stock from the 180th day following the Trigger Event. Whether or not declared,
dividends shall begin to accrue and be cumulative on Dividend Shares from the
date of the applicable Quarterly Dividend Payment Date. All dividends shall
accrue on each share on a daily basis, whether or not there are unrestricted
funds legally available for the payment of such dividends and whether or not
declared, from and after the date such dividends are payable and be rounded to
the nearest cent. Any dividends that become payable for any partial dividend
period shall be computed on the basis of the actual days elapsed in such period.
Dividends paid on the shares of Series A Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated equally among all such shares at the time outstanding.
If a portion of a dividend is paid in cash and a portion is paid in Dividend
Shares, then the proportion paid in cash and the proportion paid in Dividend
Shares shall be the same for each share. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date fixed for the
payment thereof.
(iii) At any time after the occurrence of a Trigger Event,
the Corporation shall have the right to purchase all of the shares of Series A
Preferred Stock then held by a holder at a purchase price per share equal to (a)
One Hundred Dollars ($100.00) plus (b) the amount of any accrued and unpaid
dividends and distributions on such share, whether or not declared, to the date
of such payment. If the Corporation elects to exercise its right to repurchase
pursuant to this paragraph, the Corporation shall fix the date for redemption
and shall give notice of such redemption not less than 30 nor more than 60 days
prior to the date fixed for redemption; provided, however, that the redemption
date shall not be sooner than 180 days after the Trigger Event Notice, and the
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Corporation may give notice of a redemption to occur on such 180th day at any
time after the Trigger Event Notice and before the 30th day preceding such 180th
day. The notice given under this Section 3(iii) should state (i) the time and
place at which the redemption will occur; (ii) the redemption price; and (iii)
the procedure for giving a Retention Notice and the Conversion Price applicable
to the Series B Stock into which a holder's shares of Series A Preferred Stock
will be exchanged if such holder gives a Retention Notice.
(iv) At any time following issuance of a notice of
redemption and prior to the date of redemption set forth therein, any holder of
Series A Preferred Stock may deliver a notice (a "Retention Notice") of its
intent to retain the shares of Series A Preferred Stock held by such holder, and
such holder's shares shall not be redeemed but, as of the redemption date, will
have only such rights as such holder would have if its shares of Series A
Preferred Stock were exchanged for Series B Preferred Stock on the redemption
date and converted on such date into shares of Class A Common Stock. Each share
of Series A Preferred Stock held by a holder who gives a Retention Notice will
automatically be exchanged for and converted into one share of Series B
Preferred Stock effective at the time of filing with the SDAT of an amendment to
the Charter authorizing the issuance of Series B Preferred Stock and such shares
of Series B Preferred Stock shall on such date automatically be converted into
Class A Common Stock on the terms set forth in Annex A hereto as if such
conversion had occurred on the redemption date.
(v) A "Trigger Event" means the termination of Barry
Baker's employment with the Corporation prior to the expiration of the initial
five-year Agreement Term under the Employment Agreement dated as of April 10,
1996 between Barry Baker and the Corporation (the "Employment Agreement") (x) by
the Corporation for any reason other than "for cause" under Section 9 of the
Employment Agreement, or (y) by Barry Baker under Section 10.3.1 of the
Employment Agreement.
(vi) The Corporation shall give each holder of Series A
Preferred Stock notice of the occurrence of a Trigger Event (the "Trigger Event
Notice") within 30 days following the occurrence of the Trigger Event. The
Trigger Event Notice shall advise the holders of Series A Preferred Stock of the
type of Trigger Event that has occurred and the date on which such Trigger Event
occurred.
4. Dividends. Subject to paragraph 8 hereof, so long as any
shares of Series A Preferred Stock remain outstanding, the Corporation shall not
declare or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration (whether cash, securities or
property) any shares of capital stock except as permitted with respect to the
Series A Preferred Stock under Paragraph 3 of this Article Second.
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5. Preference Upon Liquidation, Dissolution or Winding Up.
(i) Subject to the provisions of paragraph 8 hereof, upon
any liquidation, dissolution or winding up of the Corporation, the holders of
Series A Preferred Stock shall be entitled to receive from assets available for
distribution to stockholders, in priority over any other class of capital stock
of the Corporation, an amount in cash (and, to the extent sufficient cash is not
available for such payment, property at its fair market value), per share, equal
to the Liquidation Price of the Series A Preferred Stock as of the date of
payment or distribution. In addition, after the payment of the Liquidation
Price, holders of Series A Preferred Stock shall be entitled to receive from
assets available for distribution to stockholders, on a pari passu basis and
concurrent with payments or distributions made upon liquidation, dissolution or
winding-up to the holders of the Corporation's Common Stock (as defined in the
Charter), an amount per share equal to the excess, if any, of (i) the amount
that would have been payable with respect to such share if it had been exchanged
for Series B Preferred Stock and converted into Common Stock on the terms set
forth in Annex A immediately prior to such payment or distribution (assuming for
such purposes that the Liquidation Price in respect of shares of Series A
Preferred Stock had not been previously paid) over (ii) the Liquidation Price
paid with respect to such share.
(ii) The "Liquidation Price" of any share of Series A
Preferred Stock will be the sum of (i) the Agreed Value of such share plus (ii)
all accrued and unpaid dividends on such share through and including the
determination date. The Agreed Value of any share of Series A Preferred Stock
will be One Hundred Dollars ($100.00).
(iii) A merger or consolidation of the Corporation in
which the holders of shares of capital stock of the Corporation immediately
prior to the merger or consolidation hold less than 50% of the votes of capital
stock immediately after the merger or consolidation, or a sale of all or
substantially all of the Corporation's assets, shall be deemed to be a
"liquidation, dissolution or winding-up of the Corporation" for purposes of this
paragraph 5.
6. Voting Rights. (i) The holders of Series A Preferred Stock
shall be entitled to vote on all matters as to which holders of the
Corporation's Class A Common Stock (as defined in the Charter) are entitled to
vote, with each share of Series A Preferred Stock being entitled to one vote and
with the holders of Series A Preferred Stock voting together with the holders of
Class A Common Stock as a single class. In addition, holders of Series A
Preferred Stock will be entitled to notice of, and to attend, all meetings of
stockholders of the Corporation and to vote as a separate class on all matters
submitted to the Corporation's stockholders with respect to which holders of
stock are required to vote as a separate class under Maryland law.
(ii) Without the consent of the holders of a majority of
the Series A Preferred Stock, voting separately as a single class, the
Corporation will not:
(a) increase, decrease or effect a subdivision,
combination or consolidation of the authorized amount of Series A Preferred
Stock or issue or authorize the issuance
- 13 -
of authorized but unissued shares of Series A Preferred Stock (in each case,
other than for the payment of Dividend Shares pursuant to Section 3(i) hereof);
(b) amend, alter or repeal any provision of its
Charter or bylaws so as to effect any change in the rights, privileges, powers
or preferences of the holders of the Series A Preferred Stock (provided that
such separate class voting right shall not apply with respect to an amendment,
alteration or repeal of any provision that solely effects a change in the terms
of the Corporation's Class A Common Stock, as to which the holders of Series A
Preferred Stock will vote together with the holders of Common Stock); or
(c) amend, alter or repeal any resolution of the
Corporation's Board of Directors or any other instrument establishing and
designating the Series A Preferred Stock or any other capital stock of the
Corporation, and determining the relative rights and preferences thereof, so as
to effect any change in the rights, privileges, powers or preferences of the
holders of the Series A Preferred Stock (provided that such separate class
voting right shall not apply with respect to an amendment, alteration or repeal
of any provision that solely effects a change in the terms of the Corporation's
Class A Common Stock, as to which the holders of Series A Preferred Stock will
vote together with the holders of Common Stock).
7. Preemptive Rights. None.
8. Priority and Ranking of New Securities Offering.
Notwithstanding any other provision of these Articles Supplementary, (i) the
Corporation shall have the right to issue additional equity securities (the "New
Securities") in order to raise up to $400,000,000 and (ii) the New Securities
may bear dividends payable in cash or other consideration, be exchangeable for
or convertible into other securities of the Corporation, and will be senior to
and have priority over the Series A Preferred Stock in all respects (including
without limitation with respect to dividends and distributions upon liquidation,
dissolution and winding up of the Corporation), except that upon and after the
occurrence of a Trigger Event, the New Securities will rank pari passu with the
Series A Preferred Stock in respect of dividends, distributions upon
liquidation, dissolution and winding up of the Corporation; provided, however,
that the New Securities shall not be issued prior to the Closing Date under the
Asset Purchase Agreement by and between River City Broadcasting, L.P. and the
Corporation dated as of April 10, 1996 without the consent of the Seller
thereunder.
9. Miscellaneous
(a) All notices from the Corporation to the holders shall be
given by one of the methods specified in paragraph 9(b).
(b) All notices and other communications hereunder shall be
deemed given (i) on the first business day following the date received, if
delivered personally, (ii) on the business day following timely deposit with an
overnight courier service, if sent by overnight courier specifying next day
delivery and (iii) on the first business day that is five days following deposit
in the mails,
- 14 -
if sent by first class mail to (x) a holder at its last address as it appears on
the transfer records oregistry for the Series A Preferred Stock and (y) the
Corporation at the following address (or at such other address as the
Corporation shall specify in a notice pursuant to this paragraph 9(b)): Sinclair
Broadcast Group, Inc., 2000 West 41st Street, Baltimore, Maryland 21211;
Attention: Corporate Secretary.
(c) The Corporation shall establish and maintain a register,
or cause a transfer agent to establish and maintain a register, identifying the
holders of shares of Series A Preferred Stock and shall, upon presentation of
certificates endorsed for transfer or accompanied by duly executed powers of
transfer, register the transfer of shares as evidenced by such certificates or
powers of transfer.
(d) Any shares of Series A Preferred Stock which have been
converted, redeemed, exchanged or otherwise acquired by the Corporation shall,
after such conversion, redemption, exchange or acquisition, as the case may be,
be retired and promptly canceled and the Corporation shall take all appropriate
action to cause such shares to obtain the status of authorized but unissued
shares of Preferred Stock without designation as to series, until such shares
are once more designated as part of a particular series by the Board of
Directors. The Corporation may cause a certificate setting forth a resolution
adopted by the Board of Directors that none of the authorized shares of Series A
Preferred Stock are outstanding to be filed with the Maryland State Department
of Assessments and Taxation. When such certificate becomes effective, all
references to Series A Preferred Stock shall be eliminated from the Charter and
the shares of Preferred Stock designated hereby as Series A Preferred Stock
shall have the status of authorized and unissued shares of Preferred Stock and
may be reissued as part of any new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors.
(e) The Corporation shall be entitled to recognize the
exclusive right of a holder registered according to the Corporation's register
as the holder of shares of Series A Preferred Stock, and such record holder
shall be deemed the holder of such shares for all purposes.
(f) Any registered holder of Series A Preferred Stock may
proceed to protect and enforce its rights by any available remedy by proceeding
at law or in equity to protect and enforce any such rights, whether for the
specific enforcement of any provision in these Articles Supplementary or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
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ANNEX A TO
ARTICLES SUPPLEMENTARY
Terms of Series B Preferred Stock
---------------------------------
1. Designation and Amount. The series shall be designated
Series B Convertible Preferred Stock (the "Series B Preferred Stock"). The
number of authorized shares of Series B Preferred Stock shall initially be
1,500,000 subject to increase by action of the Board of Directors effectuated by
further Articles Supplementary in order to provide for the issuance of Dividend
Shares (as defined herein).
2. Par Value. The Series B Preferred Stock shall have a par
value of $.01 per share.
3. Conversion. (a) Subject to the terms and conditions of this
paragraph 3, each holder of Series B Preferred Stock (a "Convertible Holder")
shall have the right (a "Conversion Right"), at its option at any time, to
convert any or all shares of Series B Preferred Stock held by such Convertible
Holder into such number of fully paid and nonassessable shares of Class A Common
Stock, par value $.01 per share, of the Corporation as is obtained by (i)
multiplying the number of shares of Series B Preferred Stock to be converted by
$100.00 per share and (ii) dividing the result by the conversion price of $27.50
or, in case an adjustment of such price has taken place pursuant to the
provisions of paragraph 4, then by the conversion price as last adjusted and in
effect at the date any share or shares of Series B Preferred Stock are
surrendered for conversion (such prices, or such price as last adjusted, being
referred to individually as a "Conversion Price" and collectively as the
"Conversion Prices"). After the occurrence of a Trigger Event (as defined
herein), each Convertible Holder shall be required to convert all shares if the
Holder elects to convert any shares. Such Conversion Rights shall be exercised
by a Convertible Holder by giving written notice that such Convertible Holder
elects to convert its shares of Series B Preferred Stock into Class A Common
Stock and by surrender of a certificate or certificates for the shares so to be
converted to the Corporation at its principal office (or such other office or
agency of the Corporation as the Corporation may designate by notice in writing
to the Convertible Holders) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Class A
Common Stock shall be issued.
(b) All shares of Series B Preferred Stock shall
automatically convert into shares of Class A Common Stock on May 31, 2001 at the
Conversion Price then in effect.
(c) Notwithstanding anything herein to the contrary, with
respect to (i) shares of Series B Preferred Stock which the Corporation has
called for redemption pursuant to
- 1 -
paragraph 5 and redeemed, Conversion Rights shall terminate at the close of
business on the redemption date, (ii) a liquidation of the Corporation,
Conversion Rights shall terminate at the close of business on the business day
fixed for payment of the amount distributable on the Series B Preferred Stock
and (iii) Dividend Shares (as hereinafter defined), no conversion to Class A
Common Stock shall be permitted and any such Dividend Shares shall be deemed to
have been surrendered for cancellation as of the effective time of the
conversion of the other shares of Series B Preferred Stock held by the holder of
such Dividend Shares.
(d) Promptly after surrender of the certificate or
certificates for the share or shares of Series B Preferred Stock to be
converted, the Corporation shall issue and deliver, or cause to be issued and
delivered, to the holder, registered in such name or names as such holder may
direct, a certificate or certificates for the number of whole shares of the
applicable class of Class A Common Stock issuable upon the conversion of such
share or shares of Series B Preferred Stock. No fractional shares of Class A
Common Stock will be issued, and a cash payment will be made in lieu of any
fractional share in an amount equal to the same fraction of the Conversion
Price. To the extent permitted by law, such conversion shall be deemed to have
been effected as of the close of business on the date a certificate or
certificates are delivered pursuant to paragraph (a) above or on the date of
automatic conversion pursuant to paragraph (b) above (whether or not such
certificate or certificates for such share or shares shall have been surrendered
on such date) and at such time the rights of the Convertible Holder shall cease,
and the person or persons in whose name or names any certificate or certificates
for shares of Class A Common Stock shall be issuable upon such conversion shall
be deemed to have become the holder or holders of record of the shares
represented thereby. If any certificate or certificates for Series B Preferred
Shares shall have been lost, stolen or destroyed, the holder shall, in lieu of
delivering such certificate or certificates, deliver to the Corporation or its
transfer agent or agents therefor an affidavit of lost certificate or any other
document reasonably satisfactory to the Corporation.
(e) If any Convertible Holder shall deliver shares for
conversion after the Corporation gives a Redemption Notice pursuant to paragraph
5(iii), below, and the Corporation fails to redeem all shares subject to such
Redemption Notice and not converted, then the Corporation shall give all
converting shareholders notice of its failure to redeem and each converting
Convertible Holder may, for a period of 30 days after such notice of failure to
redeem, withdraw its conversion and receive back shares of Series B Preferred
Stock together with any dividends paid on Series B Preferred Stock (or which
would have been paid on Series B Preferred Stock) during the period such
Convertible Holder held shares of Class A Common Stock (less any dividends
received with respect to such shares of Class A Common Stock).
4. Adjustment to Conversion Price. The Conversion Price is
subject to adjustment after April 10, 1996 from time to time as follows:
(a) Adjustment to Conversion Price for Stock Splits and
Combinations and Dividends and Distributions of Common Stock. If the Corporation
(i) pays a dividend or makes a distribution, without consideration, on Common
Stock in shares of Common Stock or in any right
- 2 -
to acquire Common Stock, (ii) subdivides (by stock split, reclassification or
otherwise) its outstanding shares of Common Stock into a greater number of
shares or (iii) combines (by reverse stock split, reclassification or otherwise)
its outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such action will be adjusted so
that the holder of any Series B Preferred Stock thereafter surrendered for
conversion will be entitled to receive the number of shares of Common Stock
which such holder would have been entitled to receive immediately following such
action had the holder's Series B Preferred Stock been converted immediately
prior thereto. An adjustment made pursuant to this Section 4(a) will become
effective immediately after the record date in the case of a dividend or
distribution and will become effective immediately after the effective date in
the case of a subdivision or combination.
(b) Adjustments to Conversion Price for Certain Diluting
Issues.
(i) No Adjustment of Conversion Price. Any provision
herein to the contrary notwithstanding, no adjustment in the Conversion Price
will be made in respect of the issuance of additional shares of Common Stock (A)
unless the issue price for the additional shares of Common Stock issued by the
Corporation is less than the Conversion Price in effect on the date of, and
immediately prior to, such issue; (B) if the issuance of shares of Class A
Common Stock is upon conversion of Series B Preferred Stock; (C) if the issuance
of Class A Common Stock is upon the conversion of Class B Common Stock (as
defined in the Charter); or (D) if the issuance is of shares of Class A Common
Stock that have been reserved for issuance to employees of the Corporation
pursuant to stock options that have been granted or which are available to be
granted under the Corporation's existing stock option plans and stock options to
be granted pursuant to the terms of the Employment Agreement.
(ii) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock. In case the Corporation issues or sells
additional shares of Common Stock, including but not limited to deemed issuances
as provided in paragraph 4(b)(iii), for a consideration per share less than the
then applicable Conversion Price of the Series B Preferred Stock, then, and in
each such case, the Conversion Price of the Series B Preferred Stock will be
adjusted so that the adjusted Conversion Price is equal to:
C*O + N*P + A
O + N
where:
C = the then current Conversion Price;
O = the number of shares of Common Stock outstanding on the record
date for the issuance (including all shares issuable on
conversion of the Series B Preferred Stock
- 3 -
and all other shares issuable pursuant to options or
convertible securities outstanding immediately prior to the
issuance);
N = the total number of additional shares of Common Stock issued
in the issuance, or issuable upon the exercise or conversion
of options or convertible securities;
P = the offering price per share of shares of Common Stock issued
in the issuance or the price per share of Common Stock payable
upon the exercise or conversion of options or convertible
securities, in each case minus the amount per share of any
expenses payable by the Corporation and any underwriting or
similar commissions, compensations or concessions paid or
allowed by the Corporation in connection with the issuance;
and
A = the aggregate consideration, if any, paid to the Corporation
upon the issuance for the issuance of options or convertible
securities minus the amount of any expenses payable by the
Corporation and any underwriting or similar commissions,
compensations or concessions paid or allowed by the
Corporation in connection with the issuance.
(iii) Options and Convertible Securities Deemed Additional
Shares of Common Stock. If the Corporation at any time or from time to time
after April 10, 1996 shall issue any options or convertible securities (other
than in a transaction resulting in an adjustment under paragraph 4(a) or a
transaction described in paragraph 4(b)(i)), then, subject to clause (E) below,
the maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein designed to protect against
dilution) of Common Stock issuable upon the exercise of such options, or, in the
case of convertible securities and options therefor, the conversion or exchange
of such convertible securities and options therefor, shall be deemed to be
additional shares of Common Stock issued as of the time such options or
convertible securities are issued or, in case a record date shall have been
fixed for the determination of holders of any class of securities then entitled
to receive any such options or convertible securities, as of the close of
business on such record date, provided that in any such case in which additional
shares of Common Stock are deemed to be issued:
(A) no further adjustments in the Conversion Price
shall be made upon the subsequent issue of convertible securities or shares of
Common Stock upon the exercise of such options or conversion or exchange of such
convertible securities;
(B) if such options or convertible securities by
their terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, or decrease or
increase in the number of shares of Common Stock issuable upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective,
- 4 -
be recomputed to reflect such increase or decrease insofar as it affects such
options or the rights of conversion or exchange under such convertible
securities (provided, however, that no such adjustment of the Conversion Price
shall affect Common Stock previously issued upon conversion of the Series B
Preferred Stock);
(C) upon the expiration of any such options or any
rights of conversion or exchange under such convertible securities which shall
not have been exercised, the Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be recomputed
as if:
(i) in the case of convertible securities
or options for Common Stock, the only additional
shares of Common Stock issued were the shares of
Common Stock, if any, actually issued upon the
exercise of such options or the conversion or
exchange of such convertible securities and the
consideration received therefor was the
consideration actually received by the
Corporation (x) for the issue of all such
options, whether or not exercised, plus the
consideration actually received by the
Corporation upon such exercise, or (y) for the
issue of all such convertible securities which
were actually converted or exchanged, plus the
additional consideration, if any, actually
received by the Corporation upon such conversion
or exchange; and
(ii) in the case of options for convertible
securities, only the convertible securities, if
any, actually issued upon the exercise thereof
were issued at the time of issue of such
options, and the consideration received by the
Corporation for the additional shares of Common
Stock deemed to have been then issued was the
consideration actually received by the
Corporation for the issue of all such options,
whether or not exercised, plus the consideration
deemed to have been received by the Corporation
upon the issue of the convertible securities
with respect to which such options were actually
exercised:
(D) no readjustment pursuant to clause (B) or (C)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the Conversion Price in effect immediately prior
to the original adjustment, or (ii) the Conversion Price that would have
resulted from any issuance of additional shares of Common Stock between the
original adjustment date and such readjustment date if the original adjustment
had not been made;
(E) in the case of any options which expire by their
terms not more than 30 days after the date of issue thereof, no adjustment of
the Conversion Price shall be made
- 5 -
until the expiration or exercise of all such
options, whereupon such adjustment shall be made in the same manner provided in
clause (C) above.
For purposes of this paragraph 4(b)(iii), options means options, warrants or
other rights to subscribe for, purchase or otherwise acquire shares of Common
Stock or convertiblesecurities, and convertible securities means any evidences
of indebtedness, shares (other than the Series A Exchangeable Preferred Stock
and the Series B Preferred Stock) or other securities convertible into or
exchangeable for shares of Common Stock.
(iv) Value of Consideration. For purposes of this
paragraph 4(b), the value of the consideration received by the Corporation for
the issuance of any additional shares of Common Stock will be computed as
follows:
(A) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Corporation, excluding amounts paid
or payable for accrued interest or accrued dividends;
(B) insofar as it consists of publicly traded
securities, be computed based upon the average closing price of such securities
for the 10 consecutive trading days immediately preceding the day on which the
Corporation receives such consideration; and
(C) insofar as it consists of property other than
cash or publicly traded securities, be computed at the fair value thereof at the
time of such issue, as determined in good faith by the Board of Directors.
In the event that additional shares of Common Stock are issued together with
other shares or securities or other assets of the Corporation for consideration
which covers both, the value of such consideration so received that is allocable
to such additional shares of Common Stock will be determined in good faith by
the Board.
(c) Minimum Adjustment. No adjustment in the Conversion Price will be
required unless such adjustment (plus any adjustments not previously made by
reason of this paragraph 4) would require an increase or decrease of at least 1%
in the Conversion Price; provided, that any adjustments which by reason of this
paragraph 4 are not required to be made will be carried forward and taken into
account in any subsequent adjustment. All calculations under this paragraph 4
will be made to the nearest cent.
(d) Certificate of Adjustment. Upon the occurrence of each adjustment
or readjustment of the Conversion Price of the Series B Preferred Stock pursuant
to this paragraph 4, the Corporation will promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of such Series B Preferred Stock a certificate, signed by the Chairman of
the Board, the Chief Executive Officer, the Treasurer/Chief Financial Officer or
any
- 6 -
other officer of the Corporation of equivalent seniority setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustments or readjustment is based.
(e) Dividends and Distributions Payable in Securities of the Company
other than Shares of Common Stock. In case the Corporation makes or issues, or
fixes a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the Company
(other than shares of Common Stock or rights to acquire Common Stock), then and
in each such event provision will be made so that the holders of Series B
Preferred Stock will receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Company which they would have received had their Series B Preferred Stock been
converted into Common Stock on the date of, and immediately prior to such event
and had they thereafter retained such securities (together with any
distributions paid thereon) until the conversion date.
(f) Consolidation, Merger or Sale of Assets. Except as provided in
paragraph 7, if any transaction occurs, including without limitation (i) any
recapitalization or reclassification of shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination of the Common Stock),
(ii) any consolidation or merger of the Corporation with or into another person
or any merger of another person into the Corporation (other than a merger in
which the Corporation is the surviving corporation and that does not result in a
reclassification, conversion, exchange or cancellation of Common Stock), (iii)
any sale, lease or transfer of all or substantially all of the assets of the
Corporation, or (iv) any compulsory share exchange, pursuant to any of which
holders of Common Stock will be entitled to receive other securities, cash or
other property, then appropriate provision will be made so that the holder of
each share of Series B Preferred Stock then outstanding will have the right
thereafter to convert such share only into the kind and amount of the
securities, cash or other property that would have been receivable upon such
recapitalization, reclassification, consolidation, merger, sale, lease,
transfer, or share exchanges by a holder of the number of shares or Common Stock
issuable upon conversion of such share of Series B Preferred Stock immediately
prior to such recapitalization, reclassification, consolidation, merger, sale,
lease, transfer or share exchange, and the Corporation will not enter into any
such merger, consolidation, sale, lease, transfer or share exchange unless the
company formed by such consolidation or resulting from such merger or that
acquires such assets or that acquires the Corporation's shares, as the case may
be, makes appropriate provisions to establish such right.
5. Trigger Event.
(i) Upon the date that is 180 days after the occurrence of
a Trigger Event (as defined below), subject to paragraph 10 hereof, the holders
of shares of Series B Preferred Stock, in preference to the holders of any other
class of capital stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash or, at the Corporation's option, additional
shares of Series B Preferred Stock ("Dividend Shares") on the last day of March,
June, September and December in each year
- 7 -
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the date
that is 180 days after the occurrence of the Trigger Event, in an amount per
share (rounded to the nearest cent) equal to (a) with respect to the first four
Quarterly Dividend Payment Dates, Three Dollars and Seventy-Five Cents ($3.75)
and (b) with respect to the fifth and each succeeding Quarterly Dividend Payment
Date, Five Dollars ($5.00). In the event a quarterly dividend is paid (in whole
or in part) in Dividend Shares, the number of Dividend Shares to be issued in
respect of such dividend payment for each share of Series B Preferred Stock then
outstanding shall equal (x) that portion of the quarterly dividend paid in
Dividend Shares (expressed in Dollars) divided by (y) 100.
(ii) Whether or not declared, dividends shall begin to
accrue and be cumulative on initially outstanding shares of Series B Preferred
Stock from the 180th day following the Trigger Event. Whether or not declared,
dividends shall begin to accrue and be cumulative on Dividend Shares from the
date of the applicable Quarterly Dividend Payment Date. All dividends shall
accrue on each share on a daily basis, whether or not there are unrestricted
funds legally available for the payment of such dividends and whether or not
declared, from and after the date such dividends are payable and be rounded to
the nearest cent. Any dividends that become payable for any partial dividend
period shall be computed on the basis of the actual days elapsed in such period.
Dividends paid on the shares of Series B Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated equally among all such shares at the time outstanding.
If a portion of a dividend is paid in cash and a portion is paid in Dividend
Shares, then the proportion of the dividend paid in cash and the proportion paid
in Dividend Shares shall be the same for each share. The Board of Directors may
fix a record date for the determination of holders of shares of Series B
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
(iii) At any time after the occurrence of a Trigger Event,
the Corporation shall have the right to purchase all of the shares of Series B
Preferred Stock then held by a holder at a purchase price per share equal to (a)
One Hundred Dollars ($100.00) plus (b) the amount of any accrued and unpaid
dividends and distributions on such share, whether or not declared, to the date
of such payment. If the Corporation elects to exercise its right to repurchase
pursuant to this paragraph, the Corporation shall fix the date for redemption
and shall give notice of such redemption (the "Redemption Notice") not less than
30 nor more than 60 days prior to the date fixed for redemption; provided,
however, that the redemption date shall not be sooner than 180 days after the
Trigger Event Notice, and the Corporation may give notice of a redemption to
occur on such 180th day at any time after the Trigger Event Notice and before
the 30th day preceding such 180th day. The Redemption Notice shall specify (i)
the time and date on which the redemption will occur; (ii) the redemption price;
(iii) that the holders of shares of Series B Preferred Stock have the right to
convert such shares into shares of Common Stock at any time prior to the
redemption date; and (iv) the Conversion Price on the date of the Redemption
Notice.
- 8 -
(iv) A "Trigger Event" means the termination of Barry
Baker's employment with the Corporation prior to the expiration of the initial
five-year Agreement Term set forth in the Employment Agreement dated as of April
10, 1996 between Barry Baker and the Corporation (the "Employment Agreement")
(x) by the Corporation for any reason other than "for cause" under Section 9 of
the Employment Agreement, or (y) by Barry Baker under Section 10.3.1 of the
Employment Agreement.
(v) The Corporation shall give each Convertible Holder
notice of the occurrence of a Trigger Event (the "Trigger Event Notice") within
30 days following the occurrence of the Trigger Event. The Trigger Event Notice
shall advise the Convertible Holders of the type of Trigger Event that has
occurred and the date on which such Trigger Event occurred.
6. Dividends. Prior to the date that is 180 days after the
occurrence of a Trigger Event, the Series B Preferred Stock shall not be
entitled to receive any preference with respect to dividends. Notwithstanding
the preceding sentence, prior to the date that is 180 days after the occurrence
of a Trigger Event, the holders of Series B Preferred Stock shall be entitled to
share ratably (with each share of Series B Preferred Stock equivalent to the
number of shares of Class A Common Stock into which such share can be converted
pursuant to paragraphs 3 and 4 hereof), in the payments of any dividends or
other distributions made with respect to Common Stock, including dividends or
distributions made in the form of (i) cash, (ii) securities other than Common
Stock, (iii) other assets, or (iv) warrants or rights to subscribe for
securities other than Common Stock or for other assets.
7. Liquidation Dissolution or Winding Up. (i) Prior to the
occurrence of a Trigger Event, subject to the provisions of paragraph 10 hereof,
upon any liquidation, dissolution or winding up of the Corporation, the holders
of Series B Preferred Stock shall be entitled to receive from assets available
for distribution to stockholders, in priority over the Class A Common Stock and
the Class B Common Stock and after distributions to any other class of capital
stock of the Corporation, an amount in cash (and, to the extent sufficient cash
is not available for such payment, property at its fair market value), per
share, equal to the Liquidation Price of the Series B Preferred Stock as of the
date of payment or distribution. In addition, after the payment of the
Liquidation Price, holders of Series B Preferred Stock shall be entitled to
receive from assets available for distribution to stockholders, on a pari passu
basis and concurrent with payments or distributions made upon liquidation,
dissolution or winding-up to the holders of the Corporation's Class A Common
Stock and Class B Common Stock, an amount per share equal to the excess, if any,
of (i) the amount that would have been payable with respect to such share if it
had been converted into shares of Common Stock pursuant to the conversion
provisions in Paragraph 3 and Paragraph 4 hereof immediately prior to such
payment or distribution (assuming for such purposes that the Liquidation Price
in respect of shares of Series B Preferred Stock had not been previously paid)
over (ii) the Liquidation Price paid with respect to such share.
(ii) After the occurrence of a Trigger Event, subject to the
provisions of paragraph 10 hereof, upon any liquidation, dissolution or winding
up of the Corporation, the holders of Series
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B Preferred Stock shall be entitled to receive from assets available for
distribution to stockholders, in priority over any other class of capital stock
of the Corporation, an amount in cash (and, to the extent sufficient cash is not
available for such payment, property at its fair market value), per share, equal
to the Liquidation Price (as defined below) of the Series B Preferred Stock as
of the date of payment or distribution.
(iii) The Liquidation Price of any share of Series B Preferred
Stock will be the sum of (i) the Agreed Value of such share plus (ii) all
accrued and unpaid dividends on such share through and including the
determination date. The Agreed Value of any share of Series B Preferred Stock
will be One Hundred Dollars ($100.00).
(iv) A merger or consolidation of the Corporation in which the
holders of shares of capital stock of the Corporation immediately prior to the
merger or consolidation hold less than 50% of the votes of capital stock
immediately after the merger or consolidation, or a sale of all or substantially
all of the Corporation's assets, shall be deemed to be a "liquidation,
dissolution or winding-up of the Corporation" for purposes of this paragraph 7.
8. Voting Rights. (a) The holders of Series B Preferred Stock
shall be entitled to vote on all matters as to which holders of the
Corporation's Class A Common Stock are entitled to vote, with each share of
Series B Preferred Stock being entitled to a number of votes equal to the number
of shares of Class A Common Stock into which the share could be converted
pursuant to paragraphs 3 and 4 hereof, and with the holders of Series B
Preferred Stock voting together with the holders of Class A Common Stock as a
single class. In addition, holders of Series B Preferred Stock will be entitled
to notice of, and to attend, all meetings of stockholders of the Corporation and
to vote as a separate class on all matters submitted to the Corporation's
stockholders with respect to which holders of stock are required to vote as a
separate class under Maryland law.
(b) Without the consent of the holders of a majority of
the Series B Preferred Stock, voting separately as a single class, the
Corporation will not:
(i) increase, decrease or effect a subdivision,
combination or consolidation of the authorized amount of Series B Preferred
Stock or issue or authorize the issuance of authorized but unissued shares of
Series B Preferred Stock (in each case, other than for the payment of Dividend
Shares pursuant to Section 5(i) hereof);
(ii) amend, alter or repeal any provision of its
Charter or bylaws so as to effect any change in the rights, privileges, powers
or preferences of the holders of the Series B Preferred Stock (provided that
such separate class voting right shall not apply with respect to an amendment,
alteration or repeal of any provision that solely effects a change in the terms
of the Corporation's Class A Common Stock, as to which the holders of Series B
Preferred Stock will vote together with the holders of Common Stock); or
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(iii) amend, alter or repeal any resolution of the
Corporation's Board of Directors or any other instrument establishing and
designating the Series B Preferred Stock or any other capital stock of the
Corporation, and determining the relative rights and preferences thereof, so as
to effect any change in the rights, privileges, powers or preferences of the
holders of the Series B Preferred Stock (provided that much separate class
voting right shall not apply with respect to an amendment, alteration or repeal
of any provision that solely effects a change in the terms of the Corporation's
Class A Common Stock, as to which the holders of Series B Preferred Stock will
vote together with the holders of Common Stock).
9. Preemptive Rights. None.
10. Priority and Ranking of New Securities Offering.
Notwithstanding any other provisions of these Articles Supplementary, (i) the
Corporation shall have the right to issue additional equity securities (the "New
Securities") in order to raise up to $400,000,000 and (ii) the New Securities
may bear dividends payable in cash or other consideration, be exchangeable for
or convertible into other securities of the Corporation, and will be senior to
and have priority over the Series B Preferred Stock in all respects (including
without limitation with respect to dividends and distributions upon liquidation,
dissolution and winding up of the Corporation), except that upon and after the
occurrence of a Trigger Event, the New Securities will rank pari passu with the
Series B Preferred Stock in respect of dividends, distributions upon
liquidation, dissolution and winding up of the Corporation; provided, however,
that the New Securities shall not be issued prior to the Closing Date under the
Asset Purchase Agreement by and between River City Broadcasting, L.P. and the
Corporation dated as of April 10, 1996 without the consent of the Seller
thereunder.
11. Miscellaneous.
(a) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
stock, for the purpose of effecting the conversion of the shares of Series B
Preferred Stock, such number of its duly authorized shares of Class A Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series B Preferred Stock into such Class A Common Stock at
any time (assuming that, at the time of the computation of such number of
shares, all such Class A Common Stock would be held by a single holder);
provided, however, that nothing contained herein shall preclude the Corporation
from satisfying its obligations in respect of the conversion of the shares by
delivery of purchased shares of Class A Common Stock that are held in the
treasury of the Corporation. All shares of Class A Common Stock which shall be
deliverable upon conversion of the shares of Series B Preferred Stock shall be
duly and validly issued, fully paid and nonassessable. For purposes of this
paragraph 11(a), any shares of Class A Common Stock at any time outstanding
shall not include shares held in the treasury of the Corporation.
(b) The Corporation shall pay any and all issue or other taxes
that may be payable in respect of any issue or delivery of shares of Class A
Common Stock on conversion (or pursuant to redemption or exchange) of shares of
Series B Preferred Stock pursuant hereto. The Corporation
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shall not, however, be required to pay any tax which is payable in respect of
any transfer involved in the issue or delivery of Class A Common Stock in a name
other than that in which the shares of Series B Preferred Stock so converted
were registered, and no such issue or delivery shall be made unless and until
the Convertible Holder requesting such issue has paid to the Corporation the
amount of such tax, or has established, to the satisfaction of the Corporation,
that such tax has been paid.
(c) All notices from the Corporation to the holders shall be
given by one of the methods specified in paragraph 11(d).
(d) All notices and other communications hereunder shall be
deemed given (i) on the first business day following the date received, if
delivered personally, (ii) on the business day following timely deposit with an
overnight courier service, if sent by overnight courier specifying next day
delivery and (iii) on the first business day that is five days following deposit
in the mails, if sent by first class mail to (x) a holder at its last address as
it appears on the transfer records or registry for the Series B Preferred Stock
and (y) the Corporation at the following address (or at such other address as
the Corporation shall specify in a notice pursuant to this paragraph 11(d)):
Sinclair Broadcast Group, Inc., 2000 West 41st Street, Baltimore, Maryland
21211; Attention: Corporate Secretary.
(e) The Corporation shall establish and maintain a register,
or cause a transfer agent to establish and maintain a register, identifying the
holders of shares of Series B Preferred Stock and shall, upon presentation of
certificates endorsed for transfer or accompanied by a duly executed power of
transfer, register the transfer of shares as endorsed by such certificates or
powers of transfer.
(f) Any shares of Series B Preferred Stock which have been
converted, redeemed, exchanged or otherwise acquired by the Corporation shall,
after such conversion, redemption, exchange or acquisition, as the case may be,
be retired and promptly canceled and the Corporation shall take all appropriate
action to cause such shares to obtain the status of authorized but unissued
shares of Preferred Stock without designation as to series, until such shares
are once more designated as part of a particular series by the Board of
Directors; provided, however, that the Corporation shall retain as authorized
but unissued shares of Series B Preferred Stock a sufficient number of such
shares to allow exchange of shares of Class A Common Stock into Series B
Preferred Stock pursuant to paragraph 3(e) hereof or upon the occurrence of a
Trigger Event to the extent holders of Class A Common Stock have the right to
exchange their Common Stock for Series B Preferred Stock. The Corporation may
cause a certificate setting forth a resolution adopted by the Board of Directors
that none of the authorized shares of Series B Preferred Stock are outstanding
to be filed with the Secretary of State of the State of Maryland. When such
certificate becomes effective, all references to Series B Preferred Stock shall
be eliminated from the Charter and the shares of Preferred Stock designated
hereby as Series B Preferred Stock shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of any new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors.
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(g) The Corporation shall be entitled to recognize the
exclusive right of a Convertible Holder registered according to the
Corporation's register as the holder of shares of Series B Preferred Stock, and
such record holder shall be deemed the holder of such shares for all purposes.
(h) Any registered holder of Series B Preferred Stock may
proceed to protect and enforce its rights by any available remedy by proceeding
at law or in equity to protect and enforce any such rights, whether for the
specific enforcement of any provision in these Articles Supplementary or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
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