EXHIBIT 10.2
WARRANT PURCHASE AND REPAYMENT AGREEMENT
THIS WARRANT PURCHASE AND REPAYMENT AGREEMENT ("Agreement"), made and
entered into as of this 29th day of June, 1998, by and between SUNGROUP, INC., a
Tennessee corporation (the "Company"), and CONSECO, INC., an Indiana corporation
and CIHC, INCORPORATED a Delaware corporation (collectively "Conseco").
W I T N E S S E T H:
WHEREAS, Conseco is currently the legal and equitable holder of (1)
Warrant A-1 originally issued by the Company on February 15, 1993, to Bankers
National Life Insurance Company ("Bankers National") initially for the purchase
of up to 592,875 shares of the Company's common stock at total exercise price of
$ 0.11 ("Warrant A-1"), and (2) Warrant A-2 originally issued by the Company on
February 15, 1993, to Western National Life Insurance Company ("Western
National") initially for the purchase of up to 2,892,000 shares of the Company's
common stock at a total exercise price of $ 0.11 ("Warrant A-2", together with
Warrant A-1, collectively referred to herein as the "Warrants");
WHEREAS, the Company is indebted to Conseco pursuant to that certain
Promissory Note dated February 15, 1993, originally payable to Bankers National
in the original principal amount of $880,000 (the "Bankers National Note"), and
pursuant to that certain Promissory Note dated February 15, 1993, originally
payable to Western National in the original principal amount of $4,000,000 (the
"Western National Note", and together with the Bankers National Note, the
"Promissory Notes"), which Promissory Notes were subsequently endorsed to the
order of Conseco by Bankers National and Western National (the indebtedness
evidenced by the Promissory Notes, including all principal, interest and fees
with respect thereto is referred to herein as the "Conseco Indebtedness");
WHEREAS, in conjunction with the aforementioned assignment of the
Promissory Notes to Conseco, Bankers National transferred Warrant A-1, and
Western National transferred Warrant A-2 to Conseco;
WHEREAS, pursuant to certain adjustments required by each of the
Warrants, the number of shares of the Company's common stock exercisable under
the Warrants has been adjusted to a total of 7,290,136.20 shares of the
Company's total common stock of 14,498,838.20 shares on a fully diluted basis;
WHEREAS, the Company has entered into an Asset Purchase Agreement dated
as of February 6, 1998, between the Company (and the Company's subsidiaries) and
SunBurst Media, L.P.(the "Asset Purchase Agreement"), whereby the Company has
agreed to sell and SunBurst Media, L.P. has agreed to purchase substantially all
the assets of the Company (the "Sale Transaction") subject to the terms and
conditions set forth therein; and
WHEREAS, upon the consummation of the Sale Transaction, the parties
hereto desire that the Warrants be purchased by the Company and that the Conseco
Indebtedness be paid in accordance with and subject to the terms and conditions
set forth herein;
NOW, THEREFORE, for and in consideration of the mutual promises set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. RECITALS. The recitals set forth above (including the capitalized
terms defined therein) are hereby incorporated into this Agreement by this
reference and the parties hereto acknowledge and agree to accuracy thereof.
2. GENERAL CONDITION. The parties hereto agree that the purchase of
the Warrants by the Company in accordance with terms set forth in this Agreement
is expressly conditioned upon the consummation and closing of the Sale
Transaction (the "Sale Transaction Closing") on substantially the same terms and
conditions as are set forth in the Asset Purchase Agreement.
3. TERM OF AGREEMENT. In the event (i) the Asset Purchase Agreement is
terminated as provided in the Asset Purchase Agreement or (ii) the Sale
Transaction is not fully consummated by October 30, 1998, either party shall
have the right to terminate this Agreement upon written notice to the other
party, and upon delivery of such notice, this Agreement shall be deemed
terminated and of no further effect and neither the Company nor Conseco shall
have any further obligations or rights under this Agreement, provided, however,
(i) notwithstanding such termination the interest accrued under Section 4(D)
through the termination date (the "Section 4(D) Interest") shall be payable on
the termination date unless paid prior to that time, and (ii) any payments made
in respect of the Settlement Amount (as defined below) shall be applied and
retained by Conseco as provided herein.
4. PURCHASE OF WARRANTS AND REPAYMENT OF NOTES.
A. PURCHASE. Conseco agrees to sell to the Company and the
Company agrees to purchase from Conseco the Warrants subject to the terms and
conditions hereof and in reliance upon the representations, warranties and
covenants of each of the parties contained herein. Upon payment in full of the
Warrant Purchase Price, Conseco will deliver the original Warrants free and
clear of all liens, encumbrances, restrictions and claims, together with any
assignments executed by Conseco necessary to effectuate the transfer of the
Warrants to the Company. At such time, the Warrants will be cancelled and will
be of nor further force or effect. The Warrant Purchase Price is equal to
$10,300,000 less the amount of the Conseco Indebtedness at the time the Warrant
Purchase Price is paid.
B. PURCHASE PRICE AND REPAYMENT AMOUNT. Subject to payment of
interest as set forth in Section 4(D) below, the Warrant Purchase Price and the
payment Conseco will accept for the cancellation of the Promissory Notes shall
equal the total sum of Ten Million Three Hundred Thousand and No/100 Dollars
($10,300,000) (the "Settlement Account"). TO AVOID ANY CONFUSION AND TO REMOVE
ANY DOUBT, UPON DELIVERY TO CONSECO OF GOOD FUNDS IN THE TOTAL AMOUNT OF
$10,300,000 AND PAYMENT OF THE SECTION 4(D) INTEREST CONSECO SHALL (i) DELIVER
THE ORIGINAL WARRANTS TO THE COMPANY AS PROVIDED ABOVE, (ii) DELIVER THE
ORIGINAL PROMISSORY NOTES TO THE COMPANY MARKED "PAID IN FULL" AND (iii) RELEASE
ALL COLLATERAL, LIENS, PLEDGES AND ANY OTHER SECURITY FOR THE PROMISSORY NOTES
(INCLUDING WITHOUT LIMITATION THE RELEASE OF ANY STOCK PLEDGED TO SECURE THE
PROMISSORY NOTES THE FILING OF ANY NECESSARY UCC-3 TERMINATION STATEMENTS OR
SIMILAR INSTRUMENTS).
C. PAYMENT DATE. The Settlement Amount shall be payable at the
Sale Transaction Closing. Provided, however, in the event the Sale Transaction
is closed as two separate transactions, (i.e. the sale of the Schreveport and
Albuquerque radio stations [the "First Closing"], and then the later sale of the
Texas radio stations [the "Second Closing"]) then at the First Closing, the
Company shall pay to Conseco an amount equal to the gross receipts of the
Company from the First Closing less sale expenses and the amount of debt paid by
the Company which constituted a lien on assets sold at such closing (the "First
Installment"). The First Installment shall be applied first to the Section 4(D)
Interest accrued on the Settlement Amount, then to the Warrant Purchase Price
and then to the Conseco Indebtedness. At the Second Closing the unpaid balance
of the Settlement Amount plus any accrued and unpaid Section 4(D) Interest shall
be paid to Conseco.
D. INTEREST. In the event the Settlement Amount is not paid to
Conseco on or before July 23, 1998, then from such date until the date of the
payment in full of the Settlement Amount to Conseco, the unpaid balance of the
Settlement Amount shall accrue interest at the fixed rate of eighteen percent
(18%) per annum, which interest shall be payable at the time of payment in full
of the Settlement Amount or termination of this Agreement to the extent not paid
at the First Closing as provided in paragraph C above.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CONSECO. Conseco
hereby acknowledges, represents, warrants and covenants to the Company as of the
date hereof through the dates of the Sale Transaction Closing and the payment of
the Settlement Amount:
A. WARRANTS. Conseco is the registered holder of, and has good
right, title and interest in and to, the Warrants to be transferred to the
Company pursuant to this Agreement. Since the date of original issuance, none of
the Warrants have been exercised or transferred (in whole or in part) except for
the transfer of Warrant A-1 from Bankers National to Conseco and the transfer of
Warrant A-2 from Western National to Conseco. There is no lien, claim,
encumbrance or restriction against or affecting the Warrants or against or
affecting Conseco which might adversely affect the Warrants or transactions
contemplated by this Agreement. As of the date hereof the Warrants are
collectively exercisable for 7,290,136.20 shares of the Company's common stock
for a collective exercise price of $ 0.22.
B. INTEREST IN THE COMPANY. Except for the Warrants, Conseco
has no other equity or potential equity interest in the Company, including
without limitation, any capital stock options, warrants, convertible securities,
rights of refusal or any other rights with respect to the equity capital of the
Company.
C. STANDSTILL. During the term of this Agreement, so long as
the Company is not in breach hereof, Conseco agrees and covenants not to (i)
exercise the Warrants in whole or in part, or (ii) sell or transfer the
Warrants, the Promissory Notes, or any part thereof, whether by way of sale,
pledge, gift, assignment, hypothecation, operation of law or otherwise.
D. RELEASE. Upon the payment in full of the Settlement Amount
and the Section 4(D) Interest thereon, Conseco shall release the Company, its
directors, officers, shareholders, agents and representatives, from any and all
claims, demands, distributions, obligations or indebtedness, known or unknown,
to which Conseco (including its directors, officers, shareholders, agents and
representatives) may be entitled as it may relate to the Conseco Indebtedness,
the Warrants or relationship between Conseco and the Company on or
prior to the date of payment of the Settlement Amount provided no claim of
preference or improper payment is made by the Company or any other party.
E. CONFIDENTIALITY. Conseco shall not at any time, directly or
indirectly, without the prior written consent of the Company, divulge, or permit
any of its affiliates to divulge, to any person any nonpublic or proprietary
information concerning the business or financial or other affairs of the
Company, or the transactions contemplated by this Agreement, that could be used
to the detriment of Company, except to the extent required by law or in order to
preserve or enforce Conseco's rights under this Agreement.
F. EXECUTION, DELIVERY, BINDING EFFECT. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the board of directors of Conseco, and no
other corporate proceedings on the part of Conseco are necessary to authorize,
execute and deliver this Agreement or to carry out the transactions contemplated
hereby. This Agreement is a valid and binding obligation of Conseco enforceable
against it in accordance with its terms.
G. PROMISSORY NOTES. Conseco is the lawful owner and holder
of, and has good right, title and interest in and to, the Promissory Notes. The
Promissory Notes are past due, but Conseco agrees that during the term of this
Agreement, Conseco will forebear from bringing any action to collect the
Promissory Notes so long as the Company is not in breach of this Agreement, or
is not the subject of any insolvency proceedings.
This agreement to forebear shall not constitute a waiver or
impair any rights or remedies Conseco may have with respect to collection of the
Promissory Notes after termination of this Agreement.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby acknowledges, represents, warrants and covenants to Conseco as
follows:
A. EXECUTION, DELIVERY, BINDING EFFECT. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the board of directors of the Company, and
no other corporate proceedings on the part of the Company are necessary to
authorize, execute and deliver this Agreement or to carry out the transactions
contemplated hereby. This Agreement is a valid and binding obligation of the
Company enforceable against it in accordance with its terms.
B. CONFIDENTIALITY. The Company shall not at any time,
directly or indirectly, without the prior written consent of Conseco, divulge,
or permit any of its affiliates to divulge, to any person any nonpublic or
proprietary information concerning the transactions contemplated by this
Agreement, that could be used to the detriment of Conseco, except to the extent
required by law or in order to preserve or enforce the Company's rights under
this Agreement.
7. SETTLEMENT AGREEMENT COVENANTS. Until the Settlement Amount and
Section 4(D) Interest is paid in full as provided herein, the covenants set
forth in paragraph 9 of the Settlement Agreement dated as of February 15, 1993
by and among Bankers National Life Insurance Company, Western National Life
Insurance Company, Conseco, Inc., SunGroup, Inc. Xxxx X. Xxxxxxxxx, Xxxxx X.
Xxxxxxx, Xxxxx X. Xxxxx and Xxxxxx X. Xxxxxx (the "Settlement Agreement") shall
continue in effect and shall continue to apply.
8. NOTICES. Any notice or communication given pursuant hereto shall be
in writing and deemed given when delivered personally or when received in mail
by certified mail, postage prepaid, as follows:
If to the Company, as follows:
SunGroup, Inc.
0000 Xxxxx Xxxxx, Xxxxx 000X
Xxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxxx
Facsimile # 850/482-3049
If to Conseco, as follows:
Conseco, Inc.
00000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx
Facsimile # 317/817-6327
CIHC, Inc.
00000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx
Facsimile # 317/817-6327
or to such other address or addresses as hereinafter shall be furnished by any
of the parties hereto to any of the other parties hereto.
9. FURTHER ASSURANCES. At any time and from time to time after the
date hereof, the parties hereto shall execute and deliver, or cause to be
executed and delivered, to the other such other instruments, certificates or
documents, and take such other action as each party may reasonably request to
carry out the intent and purpose of this Agreement and transactions contemplated
hereby.
10. SURVIVAL. The representations and warranties of each party
contained hereby shall survive the termination of this Agreement and the
purchase of the Warrants.
11. ASSIGNMENT. Neither party shall assign its rights or delegate its
duties under this Agreement without the prior written consent of the other party
hereto. This Agreement shall be binding upon and shall inure to the benefit of
each party and their respective successors and permitted assigns.
12. ADDITIONAL TERMS AND CONDITIONS. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof,
supersedes all prior agreements or understandings of the parties relating
thereto and shall not be modified or amended in any fashion except by instrument
in writing signed by the party charged with such modification or amendment.
Nothing expressed or referred to in this Agreement is intended or shall be
construed to give any person other than the parties to this Agreement or their
respective successors or permitted assigns any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein, it being the intention of the
parties to this Agreement that this Agreement shall be for the sole and
exclusive benefit of such parties or such successors and assigns and not for the
benefit of any other person. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument. This Agreement shall be construed
in accordance with the laws of the State of Tennessee applicable to contracts
made and to be performed entirely within such state. Conseco shall be entitled
to recover attorney fees and other costs incurred in enforcing its rights
hereunder.
IN WITNESS HEREOF, the parties hereto have executed this Agreement as
of the day and date first above written.
COMPANY:
SUNGROUP, INC.
By: /s/ XXXX X. XXXXXXXXX
Title: President
CONSECO, INC.
By: /s/ XXXXXX XXXXX
Title: Executive Vice President
CIHC, INCORPORATED
By: /s/ XXXXXX XXXXX
Title: Executive Vice President
