Exhibit 10.9

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY COMPARABLE STATE SECURITIES LAW. EXCEPT AS EXPRESSLY PROVIDED HEREIN,
NEITHER THIS NOTE NOR ANY PORTION HEREOF OR INTEREST HEREIN MAY BE SOLD,
ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS
REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE COMPANY HAS RECEIVED
EVIDENCE OF SUCH EXEMPTION REASONABLY SATISFACTORY TO THE COMPANY. THIS
INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN
THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SHAREHOLDER NOTE
SUBORDINATION AGREEMENT (AS AMENDED, MODIFIED, RESTATED OR REPLACED FROM TIME TO
TIME, THE “SUBORDINATION AGREEMENT”), DATED AS OF NOVEMBER 25, 2019 BETWEEN SG
BROADCASTING LLC AND GACP FINANCE CO., LLC, IN ITS CAPACITY AS AGENT. 
NOTWITHSTANDING ANY CONTRARY STATEMENT CONTAINED IN THE WITHIN INSTRUMENT, NO
PAYMENT ON ACCOUNT OF THE PRINCIPAL THEREOF OR INTEREST THEREON SHALL BECOME DUE
OR PAYABLE EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS OF THE SUBORDINATION
AGREEMENT.

 

MEDIACO HOLDING INC.

 

UNSECURED CONVERTIBLE PROMISSORY NOTE

 

November 25, 2019

 

$6,250,000.00

 

MediaCo Holding Inc., an Indiana corporation (the “Company”), hereby promises to
pay to SG Broadcasting LLC, a Delaware limited liability company (the “Holder”),
the principal amount of $6,250,000.00, together with interest thereon calculated
from the date hereof in accordance with the provisions of this Unsecured
Promissory Note (as amended, amended and restated, modified or supplemented,
this “Note”).

 

This Note was issued in connection with the consummation of the transactions
contemplated by that certain Contribution and Distribution Agreement, dated as
of June 28, 2019 (as amended, amended and restated, modified or supplemented,
the “Contribution Agreement”), by and among Emmis Communications Corporation, an
Indiana corporation, the Holder and the other parties identified therein. Except
as defined in Section 6 hereof or unless otherwise indicated herein, capitalized
terms used in this Note have the same meanings set forth in the Contribution
Agreement.

 

1.                                      Interest Accrual and Payment.  Subject
to Section 4(b)(ii) below, interest shall accrue on the principal sums
outstanding at a rate per annum equal to the Base Rate, plus an increase of
1.00% following the second anniversary of the date hereof and additional
increases of 1.00% following each anniversary of the date of this Note
thereafter (the “Applicable Interest”).  The Applicable Interest shall become
due and payable in accordance with Section 2.  Any accrued interest which for
any reason has not theretofore been paid shall be paid in full on the Maturity
Date.

 

2.                                      Payment of Principal and Interest on
Note.

 

(a)                                 Scheduled Payments.  The Company shall pay
the Applicable Interest solely in kind annually on the date of this Note, with
such interest shall be added to the principal amount of this Note on such
payment date.  The Company shall pay the entire principal amount of this Note,
together with all accrued interest thereon, on the Maturity Date or such earlier
date as required by the terms hereof.

 

(b)                                 Optional Prepayments.  The Company may, at
any time and from time to time, no later than five (5) days after providing
notice thereof to the Holder, without premium or penalty, prepay all or any
portion of the outstanding principal amount of, or interest on, this Note;
provided that such prepayment is not prohibited by Section 3 hereof or any
applicable subordination agreement executed by the Holder. In connection with
each prepayment of principal hereunder, the Company shall also pay all then
accrued and unpaid interest hereunder.

 

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(c)                                  Mandatory Prepayments.  Upon the first to
occur of (i) a Sale of the Company or (ii) a Change of Control, the Company
shall pay the outstanding principal amount of this Note, together with all
accrued and unpaid interest on the principal amount being repaid.

 

(d)                                 Application of Payments.  Payments under
this Note shall be applied (i) first, to the payment of then accrued interest
hereunder until all such interest is paid and (ii) second, to the repayment of
the principal outstanding hereunder.

 

3.                                      Subordination.  If at any time a Senior
Lender requires this Note to be subordinated to such Senior Lender’s Company
Senior Debt, Holder hereby agrees to subordinate this Note to such Senior
Lender’s Company Senior Debt upon commercially reasonable terms and conditions
and execute all documents, including any amendments to this Note, requested by
such Senior Lender to evidence such subordination.  Such subordination agreement
shall permit payments pursuant to Section 1 hereof.

 

4.                                      Events of Default.

 

(a)                                 Definition.  For purposes of this Note, an
“Event of Default” shall be deemed to have occurred if:

 

(i)                                     subject to any applicable subordination
agreement executed by the Holder and the Company Senior Debt, the Company fails
to pay the full principal amount of this Note together with accrued and unpaid
interest thereon on the date the same becomes due and payable hereunder, and
such failure to pay is not cured within fifteen (15) days after the occurrence
thereof;

 

(ii)                                  the Company fails to comply with any other
provision of this Note and such failure is not cured within thirty (30) days
after the occurrence thereof; or

 

(iii)                               an Insolvency Event occurs.

 

The foregoing shall constitute Events of Default whatever the reason or cause
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court of competent jurisdiction or any order, rule or regulation of any
administrative or governmental body having jurisdiction therein.

 

(b)                                 Consequences of Events of Default.

 

(i)                                     Subject to Section 3 above, any
applicable subordination agreement executed by the Holder, and the Company
Senior Debt, if an Event of Default other than of the type described in
Section 4(a)(ii) has occurred, the Holder may declare the aggregate principal
amount of this Note (together with all accrued interest thereon and all other
amounts due and payable with respect thereto, including without limitation all
interest accrued pursuant to Section 4(b)(ii), below) to be immediately due and
payable and the Company shall immediately thereafter pay to the Holder all
amounts due and payable with respect to this Note.

 

(ii)                                  Upon and during the continuance of an
Event of Default, the Applicable Interest shall be equal to the Base Rate plus
four percentage points (4.0%).

 

(iii)                               Subject to Section 3 above, any applicable
subordination agreement executed by the Holder, and the Company Senior Debt, the
Holder shall also have any other rights which the Holder may have pursuant to
applicable law.

 

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5.                                      Conversion.

 

(a)                                 Optional Conversion. On or after the date
that is six (6) months after the date hereof, all or a portion of the
outstanding principal and any accrued but unpaid interest hereunder (the
“Conversion Amount”) shall be convertible, at the option of the Holder upon
notice to the Company, into shares of the Class A Common Stock, par value $0.01
per share (the “Class A Stock”), of the Company, at a conversion price equal to
the 30-Day VWAP of the Class A Stock determined as of the Conversion Date.  The
“Conversion Date” shall be the fifth (5th) Business Day after the date on which
the Holder gives notice of such conversion.

 

(b)                                 Conversion Procedure; Effect of Conversion. 
If this Note is to be converted pursuant to Section 5(a), the Holder shall
surrender this Note (or a notice to the effect that the original Note has been
lost, stolen or destroyed and an agreement acceptable to the Company whereby the
Holder agrees to indemnify the Company from any loss incurred by it in
connection with this Note) for cancellation.  Upon conversion of this Note in
part, the Company shall reissue the Holder a replacement note in an amount equal
to the aggregate of the outstanding amount and accrued but unpaid interest not
included in the Conversion Amount.  Upon conversion of this Note in full and the
payment of the amounts specified in this section, the Company shall be forever
released from all of its obligations and liabilities under this Note, and this
Note shall be deemed of no further force or effect, whether or not the original
of this Note has been delivered to the Company for cancellation.

 

6.                                      Definitions.  For purposes of this Note,
the following capitalized terms have the following meaning.

 

“30-Day VWAP” means the price equal to the average of the volume-weighted
average prices of the Class A Stock on the Trading Market for the last thirty
(30) Trading Days prior to the date of determination; provided, that if there is
no Trading Market for any such day, then the price used for such day shall be
the average of the highest closing bid price and the lowest closing ask price of
any of the market makers for such security as reported in the OTCQX, OTCQB, Pink
or Grey markets (in that order) operated by OTCMarkets.

 

“Base Rate” means the interest rate on the Company Senior Debt, or if no Company
Senior Debt is outstanding, 6.00%.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized or required to close under the laws of, or are
in fact closed in the State of New York.

 

“Capital Stock” means any and all shares, interests, participations, units or
other equivalents (however designated) of capital stock of a corporation,
membership interests in a limited liability company, partnership interests of a
limited partnership, any and all equivalent ownership interests in a Person, and
in each case any and all warrants, rights or options to purchase, and all
conversion or exchange rights, voting rights, calls or rights of any character
with respect to, any of the foregoing.

 

“Change of Control” means the occurrence of any of the following:

 

(a)                         the SG Affiliates (taken as a whole) at any time
ceasing (i) to own and control, directly or indirectly, beneficially and of
record, on a fully diluted basis, at least 51.0% on a fully diluted basis of the
outstanding Voting Stock of the Company or (ii) to have or exercise the power to
elect a majority of the board of directors or other managing body of the
Company;

 

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(b)                         any “person” or “group” (within the meaning of
Sections 13(d) and 14(d) of the Exchange Act) becoming the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of a
greater amount of Voting Stock of the Company than is owned and controlled,
directly or indirectly, by the SG Affiliates (taken as a whole);

 

(c)                          the completion of a sale of any Capital Stock of
the Company pursuant to a registration statement which has become effective
under the Securities Act; or

 

(d)                         a “change of control” (or any comparable term or
provision) (i) as defined in any Company Senior Debt document, or any term of
similar effect under any document executed in connection with any other Company
Senior Debt document or (ii) under or with respect to any documents or
agreements governing the Capital Stock of the Company.

 

“Company Senior Debt” means all principal of, premium (if any), interest
(including, without limitation, interest accruing or that would have accrued but
for the filing of a bankruptcy, reorganization or other insolvency proceeding
whether or not such interest constitutes an allowable claim in such proceeding)
on, and any and all other fees, expense reimbursement obligations, and other
amounts due pursuant to the terms of all agreements, documents and instruments
providing for, creating, securing or evidencing or otherwise entered into in
connection with (i) indebtedness for borrowed money of the Company (including,
without limitation, guarantees and other contingent obligations with respect to
indebtedness for borrowed money of its Subsidiaries) of the type typically held
by commercial banks, investment banks, insurance companies and other recognized
lending institutions, entities and funds or subsidiaries thereof, whether now
outstanding or hereafter created, incurred, assumed or guaranteed which is not
by its terms on parity with or subordinated to the Company’s obligations under
this Note, (ii) obligations evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, of the type
typically held by commercial banks, investment banks, insurance companies and
other recognized lending institutions, entities and funds or subsidiaries
thereof, whether now outstanding or hereafter created, incurred, assumed or
guaranteed which is not by its terms on parity with or subordinated to the
Company’s obligations under this Note, or (iii) capital leases and similar types
of financing, together with renewals, extensions, refundings, refinancings,
deferrals, restructurings, amendments and modifications of the items described
in (i), (ii), or (iii) above; provided that Company Senior Debt shall not
include any of the foregoing to the extent owing to an Affiliate of the Company.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Insolvency Event” means the occurrence of any of the following: (i) the Company
makes a general assignment for the benefit of creditors; (ii) an order, judgment
or decree is entered adjudicating the Company bankrupt or insolvent; (iii) any
order for relief with respect to the Company is entered under any applicable
bankruptcy law; (iv) the Company petitions or applies to any tribunal for the
appointment of a custodian, trustee, receiver or liquidator of the Company or of
any substantial part of the assets of the Company, or commences any proceeding
relating to the Company under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction; or (v) any such petition or application is filed, or any such
proceeding is commenced, against the Company and not dismissed or stayed within
60 days.

 

“Maturity Date” means the date that is six (6) months after the fifth (5th)
anniversary of the date hereof.

 

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust (including any
beneficiary thereof), a joint venture, an

 

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unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.

 

“Sale of the Company” means the sale of the Company to a third party or group of
third parties pursuant to which such party or parties acquire all or
substantially all of the assets or business of the Company on a consolidated
basis.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Senior Lender” means any holders of Company Senior Debt.

 

“SG Affiliates” means Standard General, L.P. and the funds for which is serves
as an investment advisor and their respective Affiliates.

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof.  For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.

 

“Trading Day” means (a) any day on which the Class A Stock is listed or quoted
and traded on its Trading Market or (b) if the Class A Stock is not then listed
or quoted and traded on any Trading Market, then a day on which trading occurs
on the Nasdaq Global Select Market (or any successor thereto).

 

“Trading Market” means the following market(s) or exchange(s) on which the
Class A Stock is primarily listed or quoted for trading on the date in question
(as applicable): the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the NYSE American or the New York Stock Exchange (or any
successors to any of the foregoing).

 

“Voting Stock” means, with respect to any Person, shares of such Person’s
Capital Stock having the right to vote for the election of directors (or Persons
acting in a comparable capacity) of such Person under ordinary circumstances.

 

7.                                      Amendment and Waiver.  Subject to any
applicable subordination agreement, this Note may be amended only with the
written consent of the Company and the Holder.

 

8.                                      Assignment and Transfer.  Except as set
forth below, the Holder shall not sell, assign, transfer, pledge, hypothecate,
mortgage, or otherwise encumber this Note; provided, however, that the Holder
may assign or transfer all or any portion of this Note with the prior written
consent of the Company, in its sole discretion (provided that any such assignee
agrees to be bound by and subject to the terms and conditions of this Note and
any applicable subordination agreement executed by the Holder). The Company
shall not assign its interest in this Note, either voluntarily or by operation
of law, without the prior written consent

 

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of the Holder; provided, that the Company shall be permitted to assign this Note
to any Affiliate of equivalent or greater net worth as the Company at the time
of such assignment.

 

9.                                      Cancellation.  After all principal and
then accrued interest at any time owed on this Note has been paid in full, this
Note shall be surrendered to the Company for cancellation and shall not be
reissued.

 

10.                               Payments.  All payments to be made to the
Holder shall be made in U.S. Dollars by check or wire transfer of immediately
available funds.

 

11.                               Place of Payment.  Payments of principal and
interest shall be delivered to the Holder at such address as is specified by
timely prior written notice by the Holder.

 

12.                               Governing Law.  All questions concerning the
construction, validity, and interpretation of this Note will be governed by and
construed in accordance with the domestic laws of the State of New York, without
giving effect to any choice of law or conflicts of laws provision or
rule (whether of the State of New York or any other jurisdiction) that would
compel the application of the substantive laws of any jurisdiction other than
the State of New York.

 

13.                               Business Days.  If any payment is due, or any
time period for giving notice or taking action expires, on a day which is not a
Business Day, the payment shall be due and payable on, and the time period shall
automatically be extended to, the next day Business Day, and interest shall
continue to accrue at the required rate hereunder until any such payment is
made.

 

14.                               Notice.  The notice provisions set forth in
Section 13.2 of the Contribution Agreement are incorporated by reference in this
Note and made a part hereof as if they were set forth herein.

 

15.                               Acknowledgement. The Holder (a) is, by reason
of its and its advisors’ business and financial experience, capable of
evaluating the merits and risks of this Note and making an informed investment
decision with respect hereto and with respect to the Company’s ability to repay
the Note, in each case without reliance upon any Affiliate of the Company,
(b) has had full access to such other information (including the opportunity to
ask questions and receive answers) concerning the Company as the Holder has
deemed appropriate, and has made its own investigation, without reliance upon
the Company (other than as set forth in the Contribution Agreement and the
documents referred to therein) or any of its Affiliates, into the business,
prospects, operations, property, financial, and other condition and
creditworthiness of the Company, and (c) is able to bear the economic and
financial risk of the Note.

 

16.                               Usury Laws.  It is the intention of the
Company and the Holder to conform strictly to all applicable usury laws now or
hereafter in force, and any interest payable under this Note shall be subject to
reduction to the amount not in excess of the maximum legal amount allowed under
the applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters. The aggregate of all interest (whether
designated as interest, service charges, points, or otherwise) contracted for,
chargeable, or receivable under this Note shall under no circumstances exceed
the maximum legal rate upon the unpaid principal balance of this Note remaining
unpaid from time to time.  If such interest does exceed the maximum legal rate,
it shall be deemed a mistake and such excess shall be canceled automatically
and, if theretofore paid, rebated to the Company or credited on the principal
amount of this Note, or if this Note has been repaid, then such excess shall be
rebated to the Company.

 

17.                               Waiver of Jury Trial.  TO THE EXTENT PERMITTED
BY APPLICABLE LAW, EACH OF THE PARTIES TO THIS NOTE HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

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IN WITNESS WHEREOF, each of the Company and the Holder has executed and
delivered this Unsecured Promissory Note on the date first above written.

 

 

MEDIACO HOLDING INC.

 

 

 

 

 

By:

/s/ J. Scott Enright

 

Name: J. Scott Enright

 

Title: Executive Vice President, General Counsel and Secretary

 

 

ACCEPTED AND AGREED:

 

 

 

SG BROADCASTING LLC

 

 

 

 

 

By:

/s/ Soohyung Kim

 

 

Name: Soohyung Kim

 

Title: Managing Member

 

 

[Signature Page to Unsecured Promissory Note]

 

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