PROPOSAL 1:
ISSUANCEELECTION OF
ADDITIONAL CLASSDIRECTORSTwo directors are to be elected by the holders of Common Shares. J. Scott Enright and Mary Beth McAdaragh have each been nominated for a term of three years and until their respective successors have been elected and qualified. Mr. Enright, the Class A SHARES
The Company is seeking shareholder approvalDirector, will be elected by the Class A Shares voting separately as a single class. Ms. McAdaragh, the Class B Director, will be elected by the holder of the potential issuanceClass B Shares voting separately as a single class. Both nominees are currently members of the board of directors.
If, at the time of the annual meeting, any nominee is unable or declines to serve, the discretionary authority provided in the proxy may be exercised to vote for a substitute or substitutes. The board of directors has no reason to believe that any substitute nominee or nominees will be required.
Recommendation of the Board of Directors
Our board of directors unanimously recommends that holders of Class A Shares in excessvote FOR J. Scott Enright and holders of 19.9%Class B Shares vote FOR Mary Beth McAdaragh, the persons nominated by the board to be elected as directors.
Under the terms of the numberCompany’s Amended and Restated Articles of outstanding sharesIncorporation, Mr. Enright’s nomination as a Class A Director is based upon the recommendation of common stockEmmis Operating Company (“EOC”). EOC, a wholly owned subsidiary of Emmis Communications (“Emmis”), is entitled to nominate each of the Company, as such outstanding shares are calculated as of June 30, 2022, without taking into consideration the number ofthree Class A Shares issuable upon conversion of the May 2021 SG Broadcasting Promissory Note (as defined below).
Background
OnDirectors so long as either that certain Management Agreement, dated November 25, 2019, SG Broadcasting contributedbetween MediaCo and EOC (the “Management Agreement”) remains in effect, or that certain Unsecured Promissory Note, dated November 25, 2019, from MediaCo to Emmis Communications Corporation (the “Emmis Promissory Note”) remains outstanding. While the Management Agreement terminated in November 2021, the Emmis Promissory Note currently remains outstanding.
The board believes that well-functioning boards consist of a diverse collection of individuals that bring a variety of complementary skills. Although the board of directors does not have a formal policy with regard to the Company $6,250,000,consideration of diversity in exchangeidentifying directors, diversity is one of the factors that the board may, pursuant to its charter, take into account in identifying director candidates. Subject to any contractual commitments, the board generally considers each director eligible for whichnomination in the Company issuedbroad context of the overall composition of our board of directors with a view toward constituting a board that, as a body, possesses the appropriate mix of skills and experience to SG Broadcastingoversee our business. The board of directors may actively seek candidates that embody elements of diversity in skills, ability, industry knowledge, experience, gender, race and ethnicity. The experience, qualifications, attributes, or skills that led the board to conclude that each of the members of the board of directors should serve on the board are generally described below.
Name, Age, Principal Occupation(s) and Business Experience
Nominees for terms expiring in 2026:
J. Scott Enright, Age 60 – Class A Director (Director since November 2019)
Scott Enright serves as Executive Vice President, General Counsel and Secretary of Emmis, a promissory note (the “Original SG Broadcasting Promissory Note”). Onposition he has held since March 2009. With Emmis’ launch of a special purpose acquisition corporation in January 2021, Mr. Enright was also appointed Executive Vice President, General Counsel and Secretary of Monument Circle Acquisition Corp. Formerly, he served as our Executive Vice President, General Counsel and Secretary from June 2019 through June 2021, and he served as Senior Vice President, Associate General Counsel and Secretary of Emmis from September 2006 to February 28, 2020,2009 and as Vice President, Associate General Counsel and Assistant Secretary from the Company replaceddate he joined Emmis in October 1998, previously being a partner at the Original SG Broadcasting Promissory Note with an amendedlaw firm Bose McKinney & Evans. Mr. Enright serves on the board of Broadcaster Traffic Consortium, LLC (an aggregator of radio broadcast spectrum used to distribute traffic data to in dash and restated promissory note (the “Amendedhandheld mapping devices), as well as on the boards of charitable organizations such as Goodwill of Central and Restated SG Broadcasting Promissory Note”)Southern Indiana, Inc., increasingEdChoice, Inc. (formerly the potential aggregate outstanding principal amount thereunderMilton and Rose D. Friedman Foundation) and the Endowment of the Second Presbyterian Church of Indianapolis.
Mr. Enright was recommended by EOC and, as such, pursuant to $10,250,000, together with interest thereon calculated in accordance therewith. On March 27, 2020, the Company replaced theMediaCo’s Amended and Restated SG Broadcasting Promissory Note withArticles of Incorporation, our board is currently required to nominate him as a further amended and restated promissory note (the “Second Amended and Restated SG Broadcasting Promissory Note”), further increasing the potential aggregate outstanding principal amount thereunder to $20,000,000, together with interest thereon calculated in accordance therewith. The entire $20,000,000 principal amount borrowable under the Second Amended and Restated SG Broadcasting Promissory Note is outstanding as of June 30, 2022, together with accrued but unpaid interest of $4,855,372.48.
On September 30, 2020, SG Broadcasting loaned an additional $250,000 to the Company pursuant to an additional promissory note (the “Second SG Promissory Note”). The entire $250,000 principal amount borrowable under the Second SG Promissory Note is outstanding as of June 30, 2022, together with accrued but unpaid interest of $47,949.64. On May 19, 2021, the Company issued to SG Broadcasting an additional promissory note (the “May 2021 SG Broadcasting Promissory Note” and, collectively with the Second Amended and Restated SG Promissory Note and the Second SG Promissory Note, the “SG Broadcasting Notes”). Up to $7,000,000 may be borrowed pursuant to the May 2021 SG Broadcasting Promissory Note. Of such amount, $4,000,000 in original principal amount is outstanding as of June 30, 2022, together with accrued but unpaid interest of $491,564.14.
The SG Broadcasting Notes carry interest at a base rate equal to the interest on any senior credit facility, or if no senior credit facility is outstanding, of 6.0%, and an additional increase of 1.0% on November 25, 2021 and additional annual increases of 1.0% following each successive anniversary thereafter. The May 2021 SG Broadcasting Promissory Note matures on May 25, 2025 and interest is payable in kind through maturity. Subject to prior shareholder approval of the issuance of the shares, the May 2021 SG Broadcasting Promissory Note is convertible into MediaCo Class A common stock at the optionDirector. Mr. Enright is a lawyer with extensive experience in a wide range of SG Broadcasting at a strike price equal to the thirty day volume weighted average price of the MediaCo Class A common stock on the date of conversion.
The SG Broadcasting Notes carry interest at a base rate equal to the interest on any senior credit facility, or if no senior credit facility is outstanding, of 6.00%,legal issues facing publicly traded media companies, including corporate governance and an additional increase of 1.00% on November 25, 2021 and additional annual increases of 1.0% following each successive anniversary thereafter. The SG Broadcasting Notes have a maturity date of six (6) months after the fifth (5th) anniversary of execution of the Original SG Promissory Note. Additionally, the SG Broadcasting Notes are payable in interest in kind through maturity. The SG Broadcasting Notes are convertible into Class A Shares at the option of SG Broadcasting at a strike price equal to the thirty (30) day volume weighted average price of the Class A Shares on the date of conversion.
Each of the SG Broadcasting Notes contains a limitation on conversion of the outstanding principal and any accrued but unpaid interest thereunder into Class A Shares, such that the maximum number of Class A Shares to be issued in connection with the conversion of the Second SG Promissory Note shall not, without the prior approval of the shareholders of the Company, (i) exceed a number of shares equal to 19.9% of the outstanding shares of common stock of the Company immediately prior to the date of issuance of such note, without taking into consideration the number of Class A Shares issuable upon conversion of such note, (ii) exceed a number of shares that would evidence voting power greater than 19.9% of the combined voting power of the outstanding voting securities of the Company immediately prior to the date of issuance of such note, without taking into consideration the number of Class A Shares issuable upon conversion of such note, or (iii) otherwise exceed such number of shares of capital stock of the Company that would violate applicable listing rules of Nasdaq, in each of subsections (i) through (iii), only to the extent required by applicable Nasdaq rules and guidance (the “Share Cap”). In the event the number of Class Aregulatory matters.