UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
PAXSON COMMUNICATIONS CORPORATION
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(Name of Issuer)
Class A Common Stock, Par Value $0.001 Per Share
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(Title of Class of Securities)
70423110
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(CUSIP Number)
Elizabeth A. Newell, Assistant Secretary
NBC Universal, Inc.
30 Rockefeller Plaza, New York, NY 10012
(212) 664-3307
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 7, 2005
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g) check the
following box [_].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
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CUSIP No. 70423110 Page 2 of 26 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NBC PALM BEACH INVESTMENT I, INC. 13-4078684
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See
Instructions)
(a) /_/
(b) /x/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- --------------------------------- ---------- -----------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 303,035,000*
BENEFICIALLY ---------- -----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING ---------- -----------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 303,035,000*
- --------------------------------- ---------- -----------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
303,035,000*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.4%**
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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* Represents 303,035,000 shares of Class A Common Stock issuable upon
conversion of 60,607 shares of Preferred Stock by NBC Palm Beach I.
Shares of Preferred Stock are not currently convertible and the right
to convert is subject to material conditions, including, without
limitation, those contained in the Agreements and the applicable FCC
regulations.
** Based on 64,582,424 shares of Class A Common Stock outstanding as of
November 2, 2005 as reported by the Company in the Master Transaction
Agreement and 303,035,000 shares of Class A Common Stock issuable upon
conversion of 60,607 shares of Preferred Stock by NBC Palm Beach I.
SCHEDULE 13D
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CUSIP No. 70423110 Page 3 of 26 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NBC PALM BEACH INVESTMENT II, INC. 13-4078685
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See
Instructions)
(a) /_/
(b) /x/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- --------------------------------- ---------- -----------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY ---------- ----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING ---------- -----------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
- --------------------------------- ---------- -----------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,455,062*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
23.9%**
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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* Represents 15,455,062 shares of Class A Common Stock issuable upon
exercise of the Call Right by NBC Palm Beach II pursuant to the Call
Agreement. The Call Right is not currently exercisable and is subject
to material conditions, including, without limitation, those contained
in the Agreements and the applicable FCC regulations.
** Based on 64,582,424 shares of Class A Common Stock outstanding as of
November 2, 2005 as reported by the Company in the Master Transaction
Agreement.
SCHEDULE 13D
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CUSIP No. 70423110 Page 4 of 26 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NBC UNIVERSAL, INC. 14-1682529
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See
Instructions)
(a) /_/
(b) /x/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY ---------- -----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING ---------- -----------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
- --------------------------------- ---------- -----------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
318,490,062*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
86.6%**
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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* Represents 303,035,000 shares of Class A Common Stock issuable upon
conversion of 60,607 shares of Preferred Stock by NBC Palm Beach I and
15,455,062 shares of Class A Common Stock issuable upon exercise of the
Call Right by NBC Palm Beach II. Shares of Preferred Stock and the Call
Right are not currently convertible or exercisable and the right to
convert or exercise is subject to material conditions, including,
without limitation, those contained in the Agreements and the
applicable FCC regulations.
** Based on 64,582,424 shares of Class A Common Stock outstanding as of
November 2, 2005 as reported by the Company in the Master Transaction
Agreement and 303,035,000 shares of Class A Common Stock issuable upon
conversion of 60,607 shares of Preferred Stock by NBC Palm Beach I.
SCHEDULE 13D
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CUSIP No. 70423110 Page 5 of 26 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
NATIONAL BROADCASTING COMPANY HOLDING, INC. 13-3448662
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See
Instructions)
(a) /_/
(b) /x/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES Disclaimed (See 11 below)
BENEFICIALLY ---------- -----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING ---------- -----------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH Disclaimed (See 11 below)
- --------------------------------- ---------- -----------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Beneficial ownership of all shares of Class A Common Stock
disclaimed by National Broadcasting Company Holding, Inc.*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions) [_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Not Applicable (See 11 above)
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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* NEITHER THE FILING OF THIS SCHEDULE 13D NOR ANY OF ITS CONTENTS SHALL
BE DEEMED TO CONSTITUTE AN ADMISSION THAT NATIONAL BROADCASTING COMPANY
HOLDING, INC. IS THE BENEFICIAL OWNER OF ANY OF THE CLASS A COMMON
STOCK REFERRED TO HEREIN FOR THE PURPOSES OF SECTION 13(D) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OR FOR ANY OTHER PURPOSE,
AND SUCH BENEFICIAL OWNERSHIP IS EXPRESSLY DISCLAIMED.
SCHEDULE 13D
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CUSIP No. 70423110 Page 6 of 26 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
GENERAL ELECTRIC COMPANY 14-0689340
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See
Instructions)
(a) /_/
(b) /x/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED /_/
PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
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NUMBER OF 7 SOLE VOTING POWER
SHARES Disclaimed (See 11 below)
BENEFICIALLY ---------- -----------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING ---------- -----------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH Disclaimed (See 11 below)
- --------------------------------- ---------- -----------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Beneficial ownership of all shares of Class A Common Stock
disclaimed by General Electric Company.*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) /_/
EXCLUDES CERTAIN SHARES (See Instructions)
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Not Applicable (See 11 above)
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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* NEITHER THE FILING OF THIS SCHEDULE 13D NOR ANY OF ITS CONTENTS SHALL
BE DEEMED TO CONSTITUTE AN ADMISSION THAT GENERAL ELECTRIC COMPANY IS
THE BENEFICIAL OWNER OF ANY OF THE CLASS A COMMON STOCK REFERRED TO
HEREIN FOR THE PURPOSES OF SECTION 13(D) OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, OR FOR ANY OTHER PURPOSE, AND SUCH BENEFICIAL
OWNERSHIP IS EXPRESSLY DISCLAIMED.
This Amendment No. 2 to Schedule 13D ("Amendment No. 2") amends the
Schedule 13D filed on September 27, 1999 (the "Initial Schedule 13D"), as
amended by Amendment No. 1 filed on February 14, 2003 (together with the Initial
Schedule 13D, the "Schedule 13D"), which relate to shares of Class A Common
Stock ("Class A Common Stock"), par value $0.001 per share, of Paxson
Communications Corporation (the "Company"). Capitalized terms used but not
defined herein shall have the meanings attributed to them in the Schedule 13D.
All items or responses not described herein remain as previously reported in the
Schedule 13D.
Item 2. Identity and Background.
Paragraph 1 of Item 2 is hereby amended by adding the following
paragraph immediately following the last sentence thereof:
"This Amendment is being filed by NBC Palm Beach Investment I, Inc.
("NBC Palm Beach I"), and NBC Palm Beach Investment II, Inc. ("NBC Palm Beach
II"), for and on behalf of themselves, NBC Universal, Inc. (f/k/a National
Broadcasting Company, Inc.) ("NBCU"), NBC Holding and GE. The transactions
disclosed in the Schedule 13D are herein referred to as the "Investment" and the
transactions described in Amendment No. 2 are referred to herein as the "Amended
Investment." NBC Palm Beach I and NBC Palm Beach II are wholly owned
subsidiaries of NBCU. NBCU is an 80% owned subsidiary of NBC Holding, and NBC
Holding is a wholly owned subsidiary of GE. NBC Palm Beach I, NBC Palm Beach II,
NBCU are referred to herein as the "NBCU Entities" and the NBCU Entities, NBC
Holding and GE are referred to herein as the "Reporting Persons." An agreement
among the Reporting Persons with respect to the filing of Amendment No. 2 is
attached hereto as Exhibit 19."
Paragraph 5 of Item 2 is hereby amended and restated in its entirety to
read as follows:
"As of the date hereof, the name, business address, present principal
occupation or employment, and citizenship of each director and executive officer
of NBC Palm Beach I, NBC Palm Beach II, NBCU, NBC Holding and GE are set forth
on Schedules A, B, C, D and E attached hereto, respectively."
Item 3. Source and Amount of Funds or Other Considerations.
Item 3 is hereby amended by adding the following paragraph immediately
after the last sentence thereof:
"On November 7, 2005, in connection with the Amended Investment, the
Shares of 8% Series B Convertible Exchangeable Preferred Stock ("Original
Preferred Stock") issued to NBC Palm Beach I in 1999, as well as accrued
dividends thereon declared and paid in the form of Original Preferred Stock,
have been redesignated as 11% Series B Convertible Exchangeable Preferred Stock
of the Company ("Preferred Stock"), par value $0.001 per share. In addition, NBC
Palm Beach I agreed to acquire 250 shares (the "New Shares") of Preferred Stock,
convertible into 1,250,000 shares of Class A Common Stock (subject to adjustment
under the terms of the Certificate of Designation). Preferred Stock, consisting
of the New Shares, the Shares and all accrued stock dividends on the Shares, may
be convertible into 303,035,000 shares of Class A Common Stock in the aggregate.
However, shares of Preferred Stock are not currently convertible and the right
to convert is subject to material conditions, including, without limitation,
those contained in the Agreements (as defined below) and the applicable Federal
Communications Commission ("FCC") regulations. An aggregate purchase price of
$2.5 million for the New Shares was paid by NBC Palm Beach I. NBC Palm Beach I
received the funds necessary to pay the purchase price as a capital contribution
from NBCU. NBCU made such capital contribution out of its working capital."
Item 4. Purpose of Transaction.
Item 4 is hereby amended and supplemented to read as follows:
"Since the Investment in 1999, certain disputes have arisen among Mr.
Lowell W. Paxson, Second Crystal Diamond Limited Partnership, Paxson Enterprises
Inc. (collectively, the "Paxson Stockholders"), the NBCU Entities and the
Company as to the rights and obligations under the Investment. The NBCU
Entities, the Paxson Stockholders and the Company have agreed to modify the
terms of the Investment, engage in the Amended
Page 7 of 26 Pages
Investment and settle all outstanding disputes. On November 7, 2005, the parties
entered into a Master Transaction Agreement (the "Master Transaction Agreement")
to amend and restate certain agreements dated as of September 15, 1999, which
were described in and filed as exhibits to the Initial Schedule 13D, and to
effectuate the transactions contemplated by the various transaction agreements,
including the agreements described herein (the "Agreements"). This description
is not complete and is subject to the terms of the Master Transaction Agreement,
attached as Exhibit 11. Each of the Agreements is filed as an exhibit hereto (as
indicated below) and incorporated by reference herein.
In connection with the Amended Investment, the NBCU Entities have
agreed, among other things, to cancel the Warrants held by NBC Palm Beach I and
enter into the Agreements on November 7, 2005.
NBCU and the Company entered into an Amended and Restated Investment
Agreement amending and restating the original Investment Agreement dated as of
September 15, 1999, previously filed as Exhibit 2 to the Initial Schedule 13D,
whereby the parties agreed to amend certain provisions and redefine the rights
of NBCU as an investor. The Company is required to obtain the consent of NBCU or
its permitted transferee with respect to certain corporate actions and NBCU has
a right of first refusal, which terminates upon the earlier of the closing of
the Call Right (as defined below) or the date the Call Right expires
unexercised, to purchase any Company television station serving a top 50 market
that the Company proposes to sell. This description is not complete and is
subject to the terms of the Amended and Restated Investment Agreement, attached
as Exhibit 12.
NBCU, the Company and the Paxson Stockholders entered into an Amended
and Restated Stockholder Agreement (the "Stockholder Agreement"), amending and
restating the original Stockholder Agreement dated as of September 15, 1999,
previously filed as Exhibit 3 to the Initial Schedule 13D. The Stockholder
Agreement provides, in part, that the Company will use reasonable best efforts
to fill the existing four vacancies on the board of directors with independent
directors. In connection with the selection and appointment of new directors,
the Company also amended its by-laws with respect to the chairman of the board
of directors. The Paxson Stockholders have agreed to vote (or cause to be voted)
all shares beneficially owned by them (A) in favor of, among other matters, the
following proposals: (i) an amendment to the Company's certificate of
incorporation to increase the number of authorized shares of Class A and
non-voting Class C Common Stock; (ii) an amendment to the stock-based
compensation plan to increase the number of shares of Class A Common Stock
authorized for issuance thereunder; (iii) the issuance of shares of Common Stock
if and to the extent necessary to satisfy the listing thereof under applicable
rules of the American Stock Exchange; and (iv) any other matters necessary to
consummate the transactions contemplated by the various transaction agreements,
including the Agreements listed as exhibits hereto, (B) against any proposal
that would result in a change of control and (C) in the same proportion as the
public stockholders on the election of the directors to the board. The Paxson
Stockholders granted an irrevocable proxy to a grantee to vote in favor of the
stockholder approvals numbered (i), (ii) and (iii) above.
The Stockholder Agreement further provides that upon the earliest to
occur of (a) the exercise of the Call Right by NBC Palm Beach II or a permitted
transferee, (b) the transfer of the Call Right by NBC Palm Beach II and (c) the
transfer by NBC Palm Beach I of Preferred Stock which would constitute a change
of control of the Company, NBCU or such permitted transferee will commence a
cash tender offer (the "Tender Offer") for all of the outstanding shares of
Class A Common Stock. The Tender Offer price is $1.25 per share of Class A
Common Stock, which increases at an annual rate equal to 10% starting from
October 1, 2005 through the date of the commencement of the Tender Offer. The
Paxson Stockholders acknowledged that they would be unable to tender 15,455,062
shares of Class A Common Stock owned by them in the Tender Offer because these
shares are subject to the Call Right.
In the event NBC Palm Beach II chooses not to exercise or transfer the
Call Right, or NBCU or a permitted transferee, as applicable, fails to commence
the Tender Offer within the time period specified in the Stockholder Agreement,
(i) NBCU is required to surrender to the Company shares of Preferred Stock with
an aggregate liquidation preference plus accrued and unpaid dividends equal to
$105 million plus accretion of 10% per year from October 1, 2005 (the "Investor
Call Right Termination Amount"), and (ii) if, at the time of such surrender,
there are any holders of Class A Common Stock who would have been eligible to
participate in the Tender Offer, the Company will distribute to such holders,
shares of Preferred Stock (or, at the Company's option, another class or series
of preferred stock of the Company with substantially identical economic rights)
with an aggregate liquidation preference equal to the Investor Call Right
Termination Amount.
Page 8 of 26 Pages
Pursuant to the Stockholder Agreement, NBCU and its affiliates may
facilitate the commencement of an early tender offer by a third party (an "Early
Tender Offer") at any time prior to the occurrence of an event as described
above that would trigger a Tender Offer. In the event of an Early Tender Offer,
if NBC Palm Beach II or a permitted transferee, as applicable, fails to exercise
the Call Right within a certain specified time period, NBCU will pay to the
Company $2,410,375.30 as liquidated damages. In addition, NBCU has agreed to
restrict its ability to freely transfer the shares of Preferred Stock prior to
the earlier of the exercise or termination of the Call Right and the Company has
agreed to limit its ability to issue additional shares of Class A Common Stock
or other securities which are exchangeable or exercisable for or convertible
into shares of Class A Common Stock prior to the earlier of the consummation of
the Tender Offer or an Early Tender Offer, as the case may be, or the closing or
termination of the Call Right. This description of the Stockholder Agreement is
not complete and is subject to the terms of the Stockholder Agreement, attached
as Exhibit 13.
NBC Palm Beach II and the Paxson Stockholders also entered into a Call
Agreement (the "Call Agreement"), which supersedes the original 1999 call
agreement which was described in and previously filed as Exhibit 5 to the
Initial Schedule 13D. The Call Agreement gives NBC Palm Beach II the right (the
"Call Right") to purchase, in whole but not in part, (i) 8,311,639 shares of
Class B Common Stock and (ii) 15,455,062 shares of Class A Common Stock owned
and held by the Paxson Stockholders (and any other shares received by the Paxson
Stockholders as a result of a stock dividend, stock split, merger,
recapitalization, combination or other transaction involving the Company). In
consideration for the grant of the Call Right, NBC Palm Beach II paid to the
Paxson Stockholders $25,013,446.85, equal to (1) $1.15 per share for 8,311,639
share of Class B Common Stock and (2) $1.00 per share for 15,455,062 shares of
Class A Common Stock. The Call Right is exercisable at a price of $0.29 per
share of Class B Common Stock and $0.25 per share of Class A Common Stock and
expires on the earlier of May 6, 2007 or 75 days after consummation of an Early
Tender Offer, subject to certain exceptions.
Under the Call Agreement, NBC Palm Beach II may transfer the Call Right
to a permitted transferee who meets the requirements specified in the Call
Agreement and is approved by the board of directors of the Company in the
reasonable exercise of its business judgment rule. Under existing FCC
regulations, NBC Palm Beach II cannot exercise the Call Right. As a result, NBC
Palm Beach II intends to seek a permitted transferee of the Call Right, who will
then exercise the Call Right. In addition, NBCU agreed to place in escrow
$3,863,765.50, the exercise price of the Call Right with respect to 15,455,062
shares of Class A Common Stock, and the Paxson Stockholders agreed to deposit
all such shares of Class A Common Stock into escrow pursuant to the Escrow
Agreement. This description is not complete and is subject to the terms of the
Call Agreement the Escrow Agreement, attached as Exhibits 14 and 17,
respectively.
The Company amended and restated the Certificate of Designation (the
"Certificate of Designation") with respect to the Original Preferred Stock and
redesignated the Original Preferred Stock as Preferred Stock. As of September
30, 2005, the aggregate liquidation preference plus accrued and unpaid dividends
on 41,500 shares of Original Preferred Stock was $703,572,555, based on a 28.3%
dividend rate that was reset on September 15, 2004. Such reset 28.3% dividend
rate was the subject of litigation between the Company and NBCU, which was
settled pursuant to the Settlement Agreement between the Company and NBCU. This
description is not complete and is subject to the terms of the Settlement
Agreement, attached as Exhibit 18.
In connection with the Amended Investment, the Company declared and
paid a stock dividend of an additional 18,857 shares of Original Preferred Stock
to NBC Palm Beach I, which NBC Palm Beach I and NBCU have agreed to accept in
full satisfaction of the accrued and unpaid dividends on the Original Preferred
Stock through and including September 30, 2005, with the result that the
aggregate liquidation preference of the Original Preferred Stock outstanding as
of September 30, 2005 was $603,570,000. Those 60,357 shares of Original
Preferred have been redesignated as 60,375 shares of Preferred Stock, with a
liquidation preference of $10,000 per share. Starting from October 1, 2005,
Preferred Stock accrues cumulative, non-compounded dividends at the rate of 11%
per year.
Pursuant to the Certificate of Designation, NBC Palm Beach I may, at
any time after the closing of the Call Right, convert the shares of Preferred
Stock into shares of Class A Common Stock. The initial conversion price is $2
per share, increasing at a rate equal to the dividend rate on Preferred Stock.
If NBC Palm Beach I determines that FCC regulations prohibit it from holding
shares of Class A Common Stock, NBC Palm Beach I may convert the shares of
Preferred Stock into an equal number of shares of non-voting Class C Common
Stock of the Company.
Page 9 of 26 Pages
Such non-voting common stock will be immediately convertible into Class A Common
Stock upon transfer by NBC Palm Beach I to a permitted transferee. Shares of
Preferred Stock may also be exchanged for New Exchange Debentures (as defined in
the Certificate of Designation), in whole or in part, on a pro rata basis, at
the option of NBC Palm Beach I or its transferee (the "Exchange Right"). The
exchange rate shall be $1.00 principal amount of New Exchange Debentures for
each $1.00 of liquidation preference and accumulated and unpaid dividends of the
shares of Preferred Stock. Certain limitations and qualifications of the
Exchange Right are set forth in the Certificate of Designation and the Form of
Indenture. This description is not complete and is subject to the terms of the
Certificate of Designation, attached as Exhibit 15, and the Form of Indenture,
filed as Exhibit 9 to the Initial Schedule 13D and incorporated herein by
reference.
The Company and NBCU also amended (the "Registration Rights Amendment")
certain provisions of the Registration Rights Agreement entered into between the
parties in 1999, a copy of which was filed as Exhibit 4 to the Initial Schedule
13D and is incorporated herein by reference. The Registration Rights Amendment
provides that the Company must register, under certain circumstances, shares of
Class A Common Stock issuable upon the conversion of (i) the shares of Preferred
Stock, including any shares of Preferred Stock deliverable by the NBCU as a
result of NBC Palm Beach II's failure to exercise or transfer the Call Right or
NBCU or a permitted transferee's failure to timely consummate the Tender Offer
as described above in the summary of the Stockholder Agreement, (ii) New
Exchange Debentures for which any of the shares of Preferred Stock have been
exchanged, or (iii) the shares of Class B Common Stock purchased under the Call
Agreement. The Registration Rights Amendment also lowers the minimum market
value thresholds for shares eligible to demand registration. This description is
not complete and is subject to the terms of the Registration Rights Amendment,
attached as Exhibit 16.
Except as set forth above, none of the Reporting Persons have any
present plans or proposals which relate to or would result in any actions
described in Item 4 of the Schedule 13D."
Item 5. Interest in Securities of the Issuer.
Item 5 is amended and restated in its entirety to read as follows:
"(a) The responses of the Reporting Persons to Rows (7) through (13) of the
cover page of this statement on Amendment No. 2 are incorporated herein by
reference. After giving effect to the Amended Investment, NBC Palm Beach I holds
60,607 shares of Preferred Stock convertible into 303,035,000 shares of Class A
Common Stock and NBC Palm Beach II has the Call Right to purchase 15,455,062
shares of Class A Common Stock and 8,311,639 shares of Class B Common Stock. The
NBCU Entities would hold, in the aggregate, 318,490,062 shares of Class A Common
Stock upon conversion of Preferred Stock and upon the exercise of the Call
Right, which represent beneficial ownership of 86.6% of the outstanding Class A
Common Stock of the Company, and 8,311,639 shares of Class B Common Stock, which
represent beneficial ownership of 100% of the outstanding Class B Common Stock.
However, the right to acquire such shares of Class A Common Stock or Class B
Common Stock upon conversion or exercise is subject to material conditions,
including, without limitation, those contained in the Agreements and the
applicable FCC regulations.
Except as disclosed in this Item 5(a), none of the Reporting Persons,
nor, to the best of their knowledge, any of their directors or executive
officers, beneficially owns any shares of Class A Common Stock or Class B Common
Stock.
(b) The responses of the Reporting Persons to (i) Rows (7) through (13) of
the cover pages of this statement on Amendment No. 2 and (ii) Item 5(a) hereof
are incorporated herein by reference. Upon conversion of all of the shares of
Preferred Stock, NBC Palm Beach I would have the sole power to dispose of
303,035,000 shares of Class A Common Stock. Upon exercise of the Call Right by
NBC Palm Beach II, NBC Palm Beach II would have the sole power to dispose of
15,455,062 shares of Class A Common Stock and 8,311,639 shares of Class B Common
Stock. However, neither the shares of Preferred Stock are currently convertible
nor is the Call Right currently exercisable. The right to acquire such shares of
Class A Common Stock or Class B Common Stock upon conversion or exercise is
subject to material conditions, including, without limitation, those contained
in the Agreements and the applicable FCC regulations.
Page 10 of 26 Pages
Except as disclosed in this Item 5(b), none of the Reporting Persons,
nor to the best of their knowledge, any of their directors or executive
officers, presently has the power to vote or to direct the vote or to dispose or
direct the disposition of any of the shares of Class A Common Stock or other
securities of the Company which they may be deemed to beneficially own.
(c) Except as disclosed in Items 3 and 4 hereof, none of the Reporting
Persons, nor, to the best of their knowledge, any of their directors or
executive officers, has effected any transaction in the Class A Common Stock
of the Company during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Neither the filing of this Schedule 13D or any amendment thereto,
nor anything contained herein is intended as, or should be construed as, an
admission that NBC Holding or GE is the "beneficial owner" of any shares of
Class A Common Stock or other securities of the Company."
Item 7. Materials to be Filed as Exhibits.
Exhibit No. Description
Exhibit 11 Master Transaction Agreement, dated as of November 7, 2005, among Paxson Communications
Corporation, NBC Universal, Inc., Mr. Lowell W. Paxson, Second Crystal Diamond Limited
Partnership, Paxson Enterprises, Inc., Paxson Management Corporation, NBC Palm Beach
Investment I, Inc. and NBC Palm Beach Investment II, Inc.
Exhibit 12 Amended and Restated Investment Agreement, dated as of November 7, 2005, between Paxson
Communications Corporation and NBC Universal, Inc.
Exhibit 13 Amended and Restated Stockholder Agreement, dated as of November 7, 2005, among Paxson
Communications Corporation, NBC Universal, Inc., Mr. Lowell W. Paxson, Second Crystal
Diamond Limited Partnership and Paxson Enterprises, Inc.
Exhibit 14 Call Agreement, dated as of November 7, 2005, among NBC Palm Beach Investment II, Inc., Mr.
Lowell W. Paxson, Second Crystal Diamond Limited Partnership and Paxson Enterprises, Inc.
Exhibit 15 Amended and Restated Certificate of Designation, dated as of November 7, 2005, by Paxson
Communications Corporation.
Exhibit 16 Letter Amendment to the Registration Rights Agreement, dated as of November 7, 2005, between
Paxson Communications Corporation and NBC Universal, Inc.
Exhibit 17 Escrow Agreement, dated as of November 7, 2005, among NBC Universal, Inc., Mr. Lowell W.
Paxson, Second Crystal Diamond Limited Partnership, Paxson Enterprises, Inc. and The Bank of
New York, as the Escrow Agent.
Exhibit 18 Settlement Agreement, dated as of November 7, 2005, between Paxson Communications
Corporation and NBC Universal, Inc.
Exhibit 19 Joint Filing Agreement, dated as of November 7, 2005, among NBC Palm Beach Investment I,
Inc., NBC Palm Beach Investment II, Inc., NBC Universal, Inc., National Broadcasting Company
Holding, Inc. and General Electric Company.
Page 11 of 26 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
GENERAL ELECTRIC COMPANY
By: /s/ Richard Cotton
-----------------------
Name: Richard Cotton
Title: Corporate Officer
NATIONAL BROADCASTING COMPANY HOLDING, INC.
By: /s/ Elizabeth A. Newell
---------------------------
Name: Elizabeth A. Newell
Title: Assistant Secretary
NBC UNIVERSAL, INC.
By: /s/ Elizabeth A. Newell
---------------------------
Name: Elizabeth A. Newell
Title: Assistant Secretary
NBC PALM BEACH Investment I, INC.
By: /s/ Elizabeth A. Newell
-----------------------------
Name: Elizabeth A. Newell
Title: Assistant Secretary
NBC PALM BEACH Investment II, INC.
By: /s/ Elizabeth A. Newell
-----------------------------
Name: Elizabeth A. Newell
Title: Assistant Secretary
Dated: November 8, 2005
Page 12 of 26 Pages
SCHEDULE A
Directors and Executive Officers of
NBC Palm Beach Investment I, Inc.
DIRECTORS
Name Present Principal Occupation Present Business Address Citizenship
Robert C. Wright President & CEO, NBC Universal 30 Rockefeller Plaza United States
New York, NY 10112
Randel A. Falco Vice President & Group 30 Rockefeller Plaza United States
President, NBC TV Network New York, NY 10112
Jay Ireland President, NBC & Telemundo 30 Rockefeller Plaza United States
Television Stations New York, NY 10112
Lynn Calpeter Chief Financial Officer, NBC 30 Rockefeller Plaza United States
Universal New York, NY 10112
EXECUTIVE OFFICERS
Name Present Principal Occupation Present Business Address Citizenship
Robert C. Wright President 30 Rockefeller Plaza United States
New York, NY 10112
Randel A. Falco Vice President 30 Rockefeller Plaza United States
New York, NY 10112
Jay Ireland Vice President 30 Rockefeller Plaza United States
New York, NY 10112
Lynn Calpeter Treasurer 30 Rockefeller Plaza United States
New York, NY 10112
Richard Cotton Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Todd Davis Assistant Treasurer 30 Rockefeller Plaza United States
New York, NY 10112
Brian O'Leary Assistant Treasurer 30 Rockefeller Plaza United States
New York, NY 10112
Bill LeBeau Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Elizabeth A. Newell Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
i
SCHEDULE B
Directors and Executive Officers of
NBC Palm Beach II, Inc.
DIRECTORS
Name Present Principal Occupation Present Business Address Citizenship
Robert C. Wright President & CEO, NBC Universal 30 Rockefeller Plaza United States
New York, NY 10112
Randel A. Falco Vice President & Group 30 Rockefeller Plaza United States
President, NBC TV Network New York, NY 10112
Jay Ireland President, NBC & Telemundo 30 Rockefeller Plaza United States
Television Stations New York, NY 10112
Lynn Calpeter Chief Financial Officer, NBC 30 Rockefeller Plaza United States
Universal New York, NY 10112
EXECUTIVE OFFICERS
Name Present Principal Occupation Present Business Address Citizenship
Robert C. Wright President 30 Rockefeller Plaza United States
New York, NY 10112
Randel A. Falco Vice President 30 Rockefeller Plaza United States
New York, NY 10112
Jay Ireland Vice President 30 Rockefeller Plaza United States
New York, NY 10112
Lynn Calpeter Treasurer 30 Rockefeller Plaza United States
New York, NY 10112
Richard Cotton Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Todd Davis Assistant Treasurer 30 Rockefeller Plaza United States
New York, NY 10112
Brian O'Leary Assistant Treasurer 30 Rockefeller Plaza United States
New York, NY 10112
Bill LeBeau Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Elizabeth A. Newell Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
ii
SCHEDULE C
Directors and Executive Officers of
NBC Universal, Inc.
DIRECTORS
Name Present Business Address Present Principal Occupation
J.R. Immelt General Electric Company Chairman of the Board and Chief Executive
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06431
R.C. Wright NBC Universal, Inc. Vice Chairman of the Board and Executive Officer,
30 Rockefeller Plaza General Electric Company; Chairman and Chief
New York, NY 10112 Executive Officer, NBC Universal, Inc.
L. Calpeter NBC Universal, Inc. Executive Vice President and Chief Financial
30 Rockefeller Plaza Officer, NBC Universal, Inc.
New York, NY 10112
R. De Metz(*) Vivendi Universal S.A. Executive Vice President, Mergers and
42 Avenue de Friedland Acquisitions, Vivendi Universal S.A.
75380 Paris Cedex, 08
France
D. Ebersol NBC Universal, Inc. Chairman, NBCU Sports & Olympics, NBC
30 Rockefeller Plaza Universal, Inc.
New York, NY 10112
R. A. Falco NBC Universal, Inc. President, NBCU TV Networks Group, NBC Universal,
30 Rockefeller Plaza Inc.
New York, NY 10112
Jean-Rene Fourtou (*) Vivendi Universal S.A. Chairman, Chief Executive Officer, and Director,
42 Avenue de Friedland Vivendi Universal S.A.
75380 Paris Cedex, 08
France
J. W. Ireland III NBC Universal, Inc. President, NBCU TV Stations, NBC Universal, Inc.
30 Rockefeller Plaza
New York, NY 10112
Jean-Bernard Levy (*) Vivendi Universal S.A. Chief Operating Officer, Vivendi Universal S.A.
42 Avenue de Friedland
75380 Paris Cedex, 08
France
R. Meyer Universal Studios, Inc. President,
100 Universal City Plaza Chief Operating Officer, and Director,
Universal City, CA 91608 Universal Studios, Inc. and Vivendi Universal
Entertainment LLLP
K.S. Sherin General Electric Company Senior Vice President and Chief Financial
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06431
iii
S. Snider Universal Pictures Division Chairman, Universal Pictures Group
100 Universal City Plaza
Universal City, CA 91608
T.L. Williams Universal Studios Florida Chairman and Chief Executive Officer,
1000 Universal Studios Plaza Universal Parks & Resorts Group
Orlando, FL 32819
J. Zucker NBC Universal, Inc. President - NBCU TV Group, NBC Universal, Inc.
30 Rockefeller Plaza
New York, NY 10112
Citizenship:
All: United States, except as noted (*). Asterisk denotes 3 individuals as French citizens.
EXECUTIVE OFFICERS
Name Present Business Address Present Principal Occupation
R. C. Wright NBC Universal, Inc. Vice Chairman of the Board
30 Rockefeller Plaza and Executive Officer,
New York, NY 10112 General Electric Company;
Chairman and Chief Executive Officer, NBC
Universal, Inc.
L. Calpeter NBC Universal, Inc. Executive Vice President/
30 Rockefeller Plaza Chief Financial Officer/
New York, NY 10112 Treasurer
R. Cotton NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
D. Ebersol NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
J.W. Eck NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
R.A. Falco NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
J.W. Ireland III NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
A. Perez NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
iv
M. Saperstein NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
E. Whelley NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
D. Zaslav NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
J. Zucker NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
Citizenship: All United States.
v
SCHEDULE D
Directors and Executive Officers of
National Broadcasting Company Holdings, Inc.
DIRECTORS
Name Present Business Address President Principal Occupation
J.I. Cash, Jr. Harvard Business School Professor of Business
Morgan Hall Administration-Graduate
Soldiers Field Road School of Business
Boston, MA 02163 Administration, Harvard University
Sir William Castell GE Healthcare Vice Chairman of the Board and
Pollards Wood, Nightingales Lane Executive Officer, General Electric
Chalfont St. Giles Company; Chairman, GE Healthcare
HP8 4SP Great Britain
Dennis D. Dammerman General Electric Company Vice Chairman of the Board and
3135 Easton Turnpike Executive Officer, General Electric
Fairfield, CT 06431 Company;
Chairman, General Electric Capital
Services, Inc.
A.M. Fudge General Electric Company Former Executive Vice
3135 Easton Turnpike President, Kraft Foods, Inc.
Fairfield, CT 06431
Jeffrey R. Immelt General Electric Company Chairman of the Board and Chief
3135 Easton Turnpike Executive Officer, General Electric
Fairfield, CT 06431 Company
A. Jung Avon Products Chairman and Chief Executive
1345 Avenue of the Americas Officer, Avon Products, Inc.
New York, NY 10105
A.G. Lafley The Proctor & Gamble Company Chairman of the Board, President
1 Proctor & Gamble Plaza and
Cincinnati, OH 45202-3315 Chief Executive Officer, The
Proctor & Gamble Company
R.S. Larsen Johnson & Johnson Former Chairman and Chief
100 Albany Street Executive Officer
Suite 200
New Brunswick, NJ 08901
R.B. Lazarus Ogilvy & Mather Worldwide Chairman and Chief
309 West 49th Street Executive Officer
New York, NY 10019-7316
S. Nunn King & Spalding Partner, King & Spalding
191 Peachtree Stsreet, N.E.
Atlanta, Georgia 30303
R.S. Penske Penske Corporation Chairman of the Board
vi
2555 Telegraph Road and President,
Bloomfield Hills, MI Penski Corporation
48302-0954
R.J. Swieringa S.C. Johnson Graduate School Anne and Elmer Lindseth Dean
Cornell University and Professor of Accounting
207 Sage Hall
Ithaca, NY 14853-6201
D.A. Warner III J.P. Morgan Chase & Co., Retired Chairman of the
The Chase Manhattan Bank and Board
Morgan Guaranty Trust Co. of New York
345 Park Avenue
New York, NY 10154
Robert C. Wright National Broadcasting Company, Inc. Vice Chairman of the Board and
30 Rockefeller Plaza Executive Officer, General Electric
New York, NY 10112 Company;
Chairman & Chief Executive Officer,
National Broadcasting Company, Inc.
Citizenship:
- -----------
Sir William Castell United Kingdom
A. Jung Canada
All Others U.S.A.
EXECUTIVE OFFICERS
Name Present Business Address Present Principal Occupation
Robert C. Wright National Broadcasting Company, Inc. Chairman, Chief
30 Rockefeller Plaza Executive Officer
New York, NY 10112
Lynn Calpeter National Broadcasting Company, Inc. Vice President,
30 Rockefeller Plaza Treasurer
New York, NY 10112
Todd Davis National Broadcasting Company, Inc. Assistant Treasurer
30 Rockefeller Plaza
New York, NY 10112
Brian O'Leary National Broadcasting Company, Inc. Assistant Treasurer
30 Rockefeller Plaza
New York, NY 10112
Benjamin W. Heineman, Jr. General Electric Company Secretary
3135 Easton Turnpike
Fairfield, CT 06431
vii
Eliza Fraser General Electric Company Assistant Secretary
3135 Easton Turnpike
Fairfield, CT 06431
Elizabeth Newell National Broadcasting Company, Inc. Assistant Secretary
30 Rockefeller Plaza
New York, NY 10112
Citizenship:
- -----------
All: U.S.A.
viii
SCHEDULE E
DIRECTORS AND EXECUTIVE OFFICERS OF
GENERAL ELECTRIC COMPANY
DIRECTORS
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
J.I. Cash, Jr. General Electric Company Former Professor of Business
3135 Easton Turnpike Administration-Graduate
Fairfield, CT 06828 School of Business
Administration, Harvard
University
Sir William Castell GE Healthcare Vice Chairman of the Board and
Pollards Wood, Nightingales Lane Executive Officer, General
Chalfont St. Giles Electric Company; Chairman,
HP8 4SP Great Britain GE Healthcare
D.D. Dammerman General Electric Company Vice Chairman of the Board and
3135 Easton Turnpike Executive Officer, General
Fairfield, CT 06828 Electric Company; Chairman,
General Electric Capital
Services, Inc.
A.M. Fudge Young & Rubicam, Inc. Chairman and Chief
285 Madison Avenue Executive Officer,
New York, NY 10017 Young & Rubicam, Inc.
C.X. Gonzalez Kimberly-Clark de Mexico, Chairman of the Board
S.A. de C.V. and Chief Executive Officer,
Jose Luis Lagrange 103, Kimberly-Clark de Mexico,
Tercero Piso S.A. de C.V.
Colonia Los Morales
Mexico, D.F. 11510, Mexico
J.R. Immelt General Electric Company Chairman of the Board
3135 Easton Turnpike and Chief Executive
Fairfield, CT 06828 Officer, General Electric
Company
A. Jung Avon Products, Inc. Chairman and Chief
1345 Avenue of the Americas Executive Officer,
New York, NY 10105 Avon Products, Inc.
A.G. Lafley The Procter & Gamble Company Chairman of the Board, President
1 Procter & Gamble Plaza and Chief Executive
Cincinnati, OH 45202-3315 The Procter & Gamble Company
GENERAL ELECTRIC COMPANY DIRECTORS (CONTINUED)
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
R.W. Lane Deere & Company Chairman and Chief
One John Deere Place Executive Officer
Moline, Illinois 61265 Deere & Company
R.S. Larsen Johnson & Johnson Former Chairman and Chief
100 Albany Street Executive Officer
Suite 200
New Brunswick, NJ 08901
R.B. Lazarus Ogilvy & Mather Worldwide Chairman and Chief
309 West 49th Street Executive Officer
New York, NY 10019-7316
S. Nunn Sam Nunn School of Retired Partner
International Affairs King & Spalding
Georgia Institute of Technology
781 Marietta Street, NW
Atlanta, Georgia 30318
R.S. Penske Penske Corporation Chairman of the Board
2555 Telegraph Road and President, Penske
Bloomfield Hills, MI 48302-0954 Corporation
R.J. Swieringa S.C. Johnson Graduate School Anne and Elmer Lindseth Dean
Cornell University and Professor of Accounting
207 Sage Hall
Ithaca, NY 14853-6201
D.A. Warner III J. P. Morgan Chase & Co., Former Chairman of the Board
The Chase Manhattan Bank and
Morgan Guaranty Trust Co. of New York
270 Park Avenue
New York, NY 10154
R.C. Wright NBC Universal, Inc. Vice Chairman of the Board and
30 Rockefeller Plaza Executive Officer, General
New York, NY 10112 Electric Company; Chairman
and Chief Executive Officer,
NBC Universal, Inc.
Citizenship
-----------
Sir William Castell United Kingdom
Claudio X. Gonzalez Mexico
Andrea Jung Canada
All Others U.S.A.
GENERAL ELECTRIC COMPANY EXECUTIVE OFFICERS
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
J.R. Immelt General Electric Company Chairman of the Board and
3135 Easton Turnpike Chief Executive Officer
Fairfield, CT 06828
P.D. Ameen General Electric Company Vice President and Comptroller
3135 Easton Turnpike
Fairfield, CT 06828
F. Beccalli General Electric Company Senior Vice President-
3135 Easton Turnpike GE Europe
Fairfield, CT 06828
C. T. Begley General Electric Company Senior Vice President
1 Plastics Avenue GE Plastics
Pittsfield, MA 01201
M. W. Begor General Electric Company Senior Vice President
1600 Summer Street GE Consumer Finance - Americas
Stamford, CT 06927
P.T. Bossidy General Electric Company Senior Vice President -
44 Old Ridgebury Road GE Commercial Financial Service
Danbury, CT 06810 Leasing
D.L. Calhoun General Electric Company Vice Chairman of General
3135 Easton Turnpike Electric Company; President
Fairfield, CT 06828 & CEO, GE Infrastructure
J.P. Campbell General Electric Company Senior Vice President -
Appliance Park GE Consumer & Industrial
Louisville, KY 40225
W. H. Cary General Electric Company Vice President -
3135 Easton Turnpike Investor Communications
Fairfield, CT 06828
K.A. Cassidy General Electric Company Vice President and
201 High Ridge Road GE Treasurer
Stamford, CT 06905-3417
Sir William Castell GE Healthcare Vice Chairman of the Board and
Pollards Wood, Nightingales Lane Executive Officer, General
Chalfont St. Giles Electric Company; Chairman,
HP8 4SP Great Britain GE Healthcare
W.J. Conaty General Electric Company Senior Vice President -
3135 Easton Turnpike Human Resources
Fairfield, CT 06828
GENERAL ELECTRIC COMPANY EXECUTIVE OFFICERS (Continued)
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
P. Daley General Electric Company Vice President -
3135 Easton Turnpike Corporate Business
Fairfield, CT 06828 Development
D.D. Dammerman General Electric Company Vice Chairman of the Board and
3135 Easton Turnpike Executive Officer, General
Fairfield, CT 06828 Electric Company; Chairman,
General Electric Capital
Services, Inc.
B.B. Denniston III General Electric Company Vice President and
3135 Easton Turnpike General Counsel
Fairfield, CT 06828
S.C. Donnelly General Electric Company Senior Vice President -
1 Neumann Way GE Aircraft Engines
Cincinnati, OH 05215
S. Fitzsimons General Electric Company Vice President -
3135 Easton Turnpike Corporate Financial Planning
Fairfield, CT 06828 and Analysis
Y. Fujimori General Electric Company Senior Vice President -
21 Mita 1-chome GE Consumer Finance-Asia
Meguro-ku 3d Floor Alto
Tokyo, Japan 153-0062
A.H. Harper General Electric Company Senior Vice President -
260 Long Ridge Road GE Equipment Services
Stamford, CT 06927
B.W. Heineman, Jr. General Electric Company Senior Vice President, Law
3135 Easton Turnpike and Public Affairs
Fairfield, CT 06828
J.M. Hogan General Electric Company Senior Vice President -
Pollards Wood, Nightingales Lane GE Healthcare
Chalfont St. Giles
HP8 4SP Great Britain
J. Krenicki General Electric Company Senior Vice President -
4200 Wildwood Parkway GE Energy
Atlanta, GA 30339
GENERAL ELECTRIC COMPANY EXECUTIVE OFFICERS (Continued)
PRESENT PRESENT
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ---- ---------------- --------------------
M.M. Little General Electric Company Senior Vice President -
One Research Circle GE Global Research
Niskayuna, NY 12309
M.A. Neal General Electric Company Vice Chairman of General
260 Long Ridge Road Electric Company; President
Stamford, CT 06927 & CEO, GE Commercial
Financial Services
D.R. Nissen General Electric Company Senior Vice President -
201 High Ridge Road GE Consumer Finance
Stamford, CT 06905-3417
D. O'Connor General Electric Company Senior Vice President
Woodchester House GE Consumer Finance - Europe
Golden Lake Dublin 8
Dublin 8 IRE
J.A. Parke General Electric Company Senior Vice President -
260 Long Ridge Road General Electric Company
Stamford, CT 06927 Vice Chairman, GE Capital
Corporation
M.E. Pralle General Electric Company Senior Vice President
292 Long Ridge Road GE Commercial Financial Services -
Stamford, CT 06927 Real Estate
R.R. Pressman General Electric Company Senior Vice President -
9201 State Line GE Insurance
Kansas City, KS, 64114-3234
G.M. Reiner General Electric Company Senior Vice President -
3135 Easton Turnpike Chief Information Officer
Fairfield, CT 06828
J.G. Rice General Electric Company Vice Chairman of General
4200 Wildwood Parkway Electric Company; President
Atlanta, GA 30339 & CEO, GE Industrial
K.S. Sherin General Electric Company Senior Vice President - Finance
3135 Easton Turnpike and Chief Financial Officer
Fairfield, CT 06828
L.G. Trotter General Electric Company Executive Vice President
3135 Easton Turnpike
Fairfield, CT 06828
W.A. Woodburn General Electric Company Senior Vice President -
187 Danbury Road GE Industrial
Wilton, CT 06897
GENERAL ELECTRIC COMPANY EXECUTIVE OFFICERS (Continued)
R.C. Wright NBC Universal, Inc. Vice Chairman of the Board and
30 Rockefeller Plaza Executive Officer, General
New York, NY 10112 Electric Company; Chairman
and Chief Executive Officer,
NBC Universal, Inc.
Citizenship
Ferdinando Beccalli Italy
Sir William Castell United Kingdom
Shane Fitzsimons Ireland
Dan O'Connor Ireland
Yoshiaki Fujimori Japan
All Others U.S.A.
EXHIBIT INDEX
-------------
Exhibit No. Description
Exhibit 11 Master Transaction Agreement, dated as of November 7,
2005, among Paxson Communications Corporation, NBC
Universal, Inc., Mr. Lowell W. Paxson, Second Crystal
Diamond Limited Partnership, Paxson Enterprises, Inc.,
Paxson Management Corporation, NBC Palm Beach Investment I,
Inc. and NBC Palm Beach Investment II, Inc.
Exhibit 12 Amended and Restated Investment Agreement, dated as of
November 7, 2005, between Paxson Communications Corporation
and NBC Universal, Inc.
Exhibit 13 Amended and Restated Stockholder Agreement, dated as of
November 7, 2005, among Paxson Communications Corporation,
NBC Universal, Inc., Mr. Lowell W. Paxson, Second Crystal
Diamond Limited Partnership and Paxson Enterprises, Inc.
Exhibit 14 Call Agreement, dated as of November 7, 2005, among NBC
Palm Beach Investment II, Inc., Mr. Lowell W. Paxson, Second
Crystal Diamond Limited Partnership and Paxson Enterprises,
Inc.
Exhibit 15 Amended and Restated Certificate of Designation, dated as
of November 7, 2005, by Paxson Communications Corporation.
Exhibit 16 Letter Amendment to the Registration Rights Agreement,
dated as of November 7, 2005, between Paxson Communications
Corporation and NBC Universal, Inc.
Exhibit 17 Escrow Agreement, dated as of November 7, 2005, among NBC
Universal, Inc., Mr. Lowell W. Paxson, Second Crystal
Diamond Limited Partnership, Paxson Enterprises, Inc. and
The Bank of New York, as the Escrow Agent.
Exhibit 18 Settlement Agreement, dated as of November 7, 2005,
between Paxson Communications Corporation and NBC Universal,
Inc.
Exhibit 19 Joint Filing Agreement, dated as of November 7, 2005,
among NBC Palm Beach Investment I, Inc., NBC Palm Beach
Investment II, Inc., NBC Universal, Inc., National
Broadcasting Company Holding, Inc. and General Electric
Company.
EXHIBIT 11
EXECUTION COPY
MASTER TRANSACTION AGREEMENT
THIS MASTER TRANSACTION AGREEMENT (this "Agreement") is made and entered
into as of November 7, 2005, by and among Mr. Lowell W. Paxson, a resident of
the State of Florida ("Mr. Paxson"), Second Crystal Diamond Limited Partnership,
a Nevada limited partnership ("Second Crystal"), Paxson Enterprises, Inc., a
Nevada corporation ("Paxson Enterprises" and together with Mr. Paxson and Second
Crystal, collectively, the "Paxson Stockholders"), Paxson Communications
Corporation, a Delaware corporation ("PCC"), Paxson Management Corporation, a
Nevada corporation that is wholly owned by Mr. Paxson and his spouse ("PMC"),
NBC Universal, Inc. (f\k\a National Broadcasting Company, Inc.), a Delaware
corporation ("NBCU"), NBC Palm Beach Investment I, Inc., a California
corporation ("NBC Palm Beach I"), and NBC Palm Beach Investment II, Inc., a
California corporation ("NBC Palm Beach II" and, together with NBCU and NBC Palm
Beach I, the "NBCU Entities").
RECITALS
WHEREAS, on September 15, 1999, the NBCU Entities invested $415,000,000 (the
"Initial Investment") in PCC, and, in connection with the Initial Investment,
1. PCC and NBCU entered into an Investment Agreement (the "Original
Investment Agreement"), pursuant to which NBCU purchased certain
securities from PCC;
2. PCC, NBCU and the Paxson Stockholders entered into a Stockholder
Agreement (the "Original Stockholder Agreement"), to provide for
certain matters with respect to the governance of PCC;
3. the Paxson Stockholders and NBC Palm Beach II entered into a Call
Agreement (the "Original Call Agreement"), pursuant to which the
Paxson Stockholders granted NBC Palm Beach II an option to
purchase certain securities of PCC held by them; and
4. PCC and NBCU entered into a Registration Rights Agreement (the
"Registration Rights Agreement" and, together with the Original
Investment Agreement, the Original Stockholder Agreement and the
Original Call Agreement, the "Existing Agreements"), pursuant to
which PCC granted NBCU and certain of its Affiliates certain
registration rights with respect to certain shares of Class A
Common Stock (defined below) held or acquired by NBCU and certain
of its Affiliates;
WHEREAS, since the date of the Initial Investment, certain disputes have
arisen among the parties as to their rights and obligations under the Existing
Agreements, and
the parties have agreed to resolve those disputes and restructure the Initial
Investment, subject to the terms and conditions of the Transaction Agreements
(defined below);
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
AGREEMENTS
1. Definitions. As used in this Agreement, the following terms shall have
the meanings set forth below:
"Affiliation Agreements" has the meaning set forth in Section 2(i).
"Agreement" has the meaning set forth in the Preamble.
"Amended Existing Agreements" means the Existing Agreements (other than the
Registration Rights Agreement and the Original Call Agreement), as amended and
restated as of the date hereof, and the Registration Rights Agreement Amendment.
"Beneficiaries" has the meaning set forth in Section 3(b).
"Burgess Employment Agreement" has the meaning set forth in Section 2(h)(i).
"Burgess Group" has the meaning set forth in Section 6(e).
"Call Agreement" has the meaning set forth in Section 2(a).
"Call Right" has the meaning set forth in Section 2.1 of the Call Agreement.
"Class A Common Stock" means the Class A Common Stock, par value $0.001 per
share, of PCC.
"Class B Common Stock" means the Class B Common Stock, par value $0.001 per
share, of PCC.
"Class C Common Stock" means the Class C Non-Voting Common Stock, par value
$0.001 per share, of PCC.
"CNI" has the meaning set forth in Section 4(e)(i).
"CNI Master Agreement" has the meaning set forth in Section 4(e)(i).
"CNI Station Agreements" has the meaning set forth in Section 4(e)(ii).
"Code" has the meaning set forth in Section 2(d)(ii).
"Collateral Assignment" has the meaning set forth in Section 2(g)(i).
2
"Common Stock" means the Class A Common Stock, the Class B Common Stock and
the Class C Common Stock.
"Conflicting Provisions" has the meaning set forth in Section 7(g).
"Conversion Shares" has the meaning set forth in Section 4(b)(ii).
"Effective Time" means the date hereof.
"Escrow Agreement" has the meaning set forth in Section 3(a).
"Existing Agreements" has the meaning set forth in the Recitals.
"Existing Preferred Stock" has the meaning set forth in Section 4(b).
"FCC" means the Federal Communications Commission or any successor
governmental authority performing functions similar to those performed by the
Federal Communications Commission on the date hereof.
"Final Order" means an action or actions by the FCC that have not been
reversed, stayed, enjoined, set aside, annulled, or suspended, and with respect
to which no requests are pending for administrative or judicial review,
reconsideration, appeal, or stay, and the time for filing any such requests and
the time for the FCC to set aside the action on its own motion have expired.
"GE" means General Electric Company and its successors.
"Goodman Employment Agreement" has the meaning set forth in Section
2(h)(ii).
"Goodman Noncompete Agreement" has the meaning set forth in Section
2(h)(iv).
"Governmental Authority" means any federal, national, supranational, state,
provincial, local or other government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Initial Investment" has the meaning set forth in the Preamble.
"Letter Agreements" shall mean the three letter agreements, each dated
September 15, 1999, between NBCU and PCC in respect of joint sales of
advertising and other joint services by NBCU, PCC and their respective
Affiliates.
"Letter of Credit" has the meaning set forth in Section 3(b).
3
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or security agreement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement or any financing lease having substantially the same
effect as any of the foregoing).
"Mr. Burgess" has the meaning set forth in Section 2(h)(i).
"Mr. Goodman" has the meaning set forth in Section 2(h)(ii).
"Mr. Paxson" has the meaning set forth in the Preamble.
"NBC Palm Beach I" has the meaning set forth in the Preamble.
"NBC Palm Beach II" has the meaning set forth in the Preamble.
"NBCU" has the meaning set forth in the Preamble.
"NBCU Entities" has the meaning set forth in the Preamble.
"Original Call Agreement" has the meaning set forth in the Recitals.
"Original Investment Agreement" has the meaning set forth in the Recitals.
"Original Series B Certificate of Designation" means the Certificate of
Designation of the Original Series B Preferred Stock executed and filed with the
Secretary of State of the State of Delaware on September 15, 1999.
"Original Series B Preferred Stock" means the 8% Series B Convertible
Exchangeable Preferred Stock, par value $0.001 per share, of PCC, with a
liquidation preference of $10,000 per share.
"Original Stockholder Agreement" has the meaning set forth in the Recitals.
"Paxson Enterprises" has the meaning set forth in the Preamble.
"Paxson Noncompete Agreement" has the meaning set forth in Section
2(h)(iii).
"Paxson Stockholders" has the meaning set forth in the Preamble.
"PCC" has the meaning set forth in the Preamble.
"PCC Board" means the Board of Directors of PCC.
"PCC Stock Purchase Agreement" has the meaning set forth in Section 2(b).
"PCC Television Stations" means the broadcast television stations, including
low power television and television translator stations, at any time owned and
operated by PCC or any of its subsidiaries.
4
"Person" means an individual, corporation, unincorporated association,
partnership, group (as defined in subsection 13(d)(3) of the Exchange Act),
trust, joint stock company, joint venture, business trust or unincorporated
organization, limited liability company, governmental entity or any other entity
of whatever nature.
"PMC" has the meaning set forth in the Preamble.
"PMC Management Agreement" has the meaning set forth in Section 2(f)(i).
"Registration Rights Agreement" has the meaning set forth in the Recitals.
"Registration Rights Agreement Amendment" has the meaning set forth in
Section 2(k)(iii).
"Sales Agreements" means (i) the Network Sales Agreement, dated as of
November 19, 1999, between PCC and NBCU, (ii) the National Sales Agreement,
dated as of July 16, 2001, between PCC and NBCU, (iii) the Joint Sales
Agreements entered into by subsidiaries of NBCU or NBCU and subsidiaries of PCC
or PCC for various local television markets and (iv) the Letter Agreements.
"Second Crystal" has the meaning set forth in the Preamble.
"Securities Act" has the meaning set forth in Section 6(d).
"Series B Certificate of Designation" means the Amended and Restated
Certificate of Designation of the Series B Preferred Stock to be executed and
filed with the Secretary of State of the State of Delaware immediately following
the Effective Time, which shall be in the form of Exhibit A attached hereto.
"Series B Preferred Stock" means the 11% Series B Convertible Exchangeable
Preferred Stock, par value $0.001 per share, of PCC, with a liquidation
preference of $10,000 per share.
"Settlement Agreement" means the Settlement Agreement, dated as of the date
hereof, between NBCU and PCC, as from time to time amended, modified or
supplemented.
"Split Dollar Agreement" has the meaning set forth in Section 2(g).
"Station Level Restructuring" has the meaning set forth in Section 2(f).
"Stockholder Agreement" has the meaning set forth in Section 2(k)(ii).
"Transaction Agreements" means this Agreement, the Series B Certificate of
Designation, the Call Agreement, the PCC Stock Purchase Agreement, the PMC
Management Agreement, the Goodman Employment Agreement, the Burgess Employment
Agreement, the Paxson Noncompete Agreement, the Goodman Noncompete Agreement,
the Affiliation Agreements, the Amended Existing Agreements,
5
the Registration Rights Agreement, the Split Dollar Agreement, the Collateral
Assignment, the Settlement Agreement, the Escrow Agreement and the Letter of
Credit.
"Warrants" means the Class A Common Stock Purchase Warrant, dated September
15, 1999 (Warrant No. 1999-A), issued by PCC to NBC Palm Beach II, for the
purchase of up to 13,065,507 shares of Class A Common Stock and the Class A
Common Stock Purchase Warrant, dated September 15, 1999 (Warrant No. 1999-B),
issued by PCC to NBC Palm Beach II, for the purchase of up to 18,966,620 shares
of Class A Common Stock.
2. Effective Time Actions. Concurrently with or immediately following the
Effective Time, the parties shall take the following actions, all of which shall
be deemed to be taken simultaneously:
(a) Call Agreement. The Paxson Stockholders and NBC Palm Beach II shall
enter into a Call Agreement in the form attached hereto as Exhibit B (the "Call
Agreement").
(b) PCC Stock Purchase Agreement. The Paxson Stockholders and PCC shall
enter into a Stock Purchase Agreement in the form attached hereto as Exhibit C
(the "PCC Stock Purchase Agreement").
(c) Redesignation of Series B Preferred Stock.
(i) NBC Palm Beach I shall execute and deliver to PCC a written
consent in the form attached hereto as Exhibit D.
(ii) PCC shall execute and file with the Secretary of State of the
State of Delaware the Series B Certificate of Designation.
(d) Satisfaction of Accrued Dividends on Series B Preferred.
(i) Through September 30, 2005, the aggregate liquidation
preference plus accrued and unpaid dividends on the Original Series B Preferred
Stock based on an asserted 28.3% dividend rate in effect from September 15,
2004, was $703,572,555. In connection with the amendment and redesignation of
the Original Series B Preferred Stock to become the Series B Preferred Stock,
PCC has declared a stock dividend of an additional 18,857 shares of Original
Series B Preferred Stock on the Original Series B Preferred Stock, which shall
be paid on the date hereof to NBC Palm Beach I, and which NBC Palm Beach I and
NBCU have agreed to accept in full satisfaction of all accrued and unpaid
dividends on the Original Series B Preferred Stock through and including
September 30, 2005. As a result, the aggregate liquidation preference of the
Original Series B Preferred Stock as of September 30, 2005, and of the
redesignated Series B Preferred Stock issued in exchange therefor, shall be
$603,570,000 and dividends on the Series B Preferred Stock shall accrue
thereafter at the rate of 11% per annum on such amount.
6
(ii) Each of PCC and NBC Palm Beach I agree to treat the
declaration of the stock dividend on the Original Series B Preferred Stock
described in this Section 2(d) as a non-taxable distribution of stock under
Section 305(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and the exchange of Series B Preferred Stock for the Original Series B Preferred
Stock as a tax-free recapitalization pursuant to Section 368(a) of the Code, in
each case, for all U.S. federal, state, local and foreign tax purposes. No party
hereto shall take a position inconsistent with this treatment on any tax return,
unless otherwise required by applicable law.
(e) Cancellation of Warrants. NBC Palm Beach II shall deliver the
Warrants to PCC for cancellation and PCC shall take all actions necessary to
cancel the Warrants.
(f) Station Level Restructuring. PCC, Mr. Paxson and PMC shall take all
steps necessary to complete the transfer of control of the FCC licensees of the
PCC Television Stations from PCC to PMC (the "Station Level Restructuring"),
including, but not limited to, the following:
(i) The PMC Management and Proxy Agreement in the form attached
hereto as Exhibit E (the "PMC Management Agreement") shall be executed by PCC,
PMC and the Grantors and Station Subsidiaries identified on the relevant
signature pages thereof;
(ii) PCC shall cause Mr. Paxson to be elected as the sole director
of each of the Station Subsidiaries that is a corporation (as defined in the PMC
Management Agreement) for the longest term permitted by applicable law, but for
no longer than seven years and for Marla Paxson to succeed Mr. Paxson as
director in the event of his death or permanent disability, and the resolutions
or written action adopted pursuant to this Section (f)(ii) shall not be revoked,
amended, modified or superceded.
(iii) PMC shall file, or cause to be filed, no later than the
second business day following the Effective Time, with the FCC notices of
consummation of the Station Level Restructuring and shall cause a copy of the
pertinent notice of consummation to be promptly placed in the public inspection
files maintained for the affected PCC Television Stations; and
(iv) PMC shall file, or cause to be filed, no later than 30 days
following the Effective Time, with the FCC post-consummation ownership reports
on Form 323 with respect to the Station Level Restructuring and shall cause
copies of such post-consummation ownership reports to be promptly placed in the
public inspection files maintained for the affected PCC Television Stations.
(g) Resignation of Mr. Paxson; Appointment of New PCC CEO.
(i) Mr. Paxson shall resign as a director, chairman of the PCC
Board and chief executive officer of PCC, and PCC and Mr. Paxson shall enter
into a Resignation Agreement in the form attached hereto as Exhibit F. In
connection with such resignation, PCC and The Lowell W. Paxson Irrevocable
Dynasty Trust (the "Trust")
7
shall enter into the Split Dollar Agreement in the form attached hereto as
Exhibit G (the "Split Dollar Agreement") and the Trust shall assign certain
rights and interests under a policy issued by Metropolitan Life Insurance
Company to PCC pursuant to a Collateral Assignment in the form attached hereto
as Exhibit H (the "Collateral Assignment").
(ii) The PCC Board shall appoint a new chief executive officer of
PCC, effective as of the Effective Time.
(h) Employment, Consulting and Noncompete Agreements.
(i) PCC and Mr. Brandon Burgess ("Mr. Burgess") shall enter into
an Employment Agreement in the form attached hereto as Exhibit I (the "Burgess
Employment Agreement").
(ii) PCC and Mr. Dean Goodman ("Mr. Goodman") shall enter into an
Employment Agreement in the form attached hereto as Exhibit J (the "Goodman
Employment Agreement").
(iii) NBCU, PCC and Mr. Paxson shall enter into a Consulting and
Noncompetition Agreement in the form attached hereto as Exhibit K (the "Paxson
Noncompete Agreement").
(iv) NBCU and Mr. Goodman shall enter into a Noncompetition
Agreement in the form attached hereto as Exhibit L (the "Goodman Noncompete
Agreement").
(i) Affiliation Agreements. PCC and the licensees of each of the
full-power PCC Television Stations shall enter into an Affiliation Agreement in
the form attached hereto as Exhibit M, modified only by the addition of the name
of the applicable PCC licensee subsidiary, station call sign and community of
license (collectively, the "Affiliation Agreements").
(j) Dismissal of all Litigation and Arbitration; Settlement Agreement.
PCC and NBCU shall execute and deliver to each other the Settlement Agreement in
the form attached hereto as Exhibit N.
(k) Amending and Restating the Existing Agreements.
(i) PCC and NBCU shall amend and restate the Original Investment
Agreement by entering into an Amended and Restated Investment Agreement in the
form attached hereto as Exhibit O.
(ii) PCC, NBCU and the Paxson Stockholders shall amend and restate
the Original Stockholder Agreement by entering into an Amended and Restated
Stockholder Agreement (the "Stockholder Agreement") in the form attached hereto
as Exhibit P.
8
(iii) PCC and NBCU shall enter into a letter agreement in the form
attached hereto as Exhibit Q (the "Registration Rights Agreement Amendment")
amending the Registration Rights Agreement.
3. Post Effective Time Actions.
(a) Escrow Agreement. Within three business days following the
Effective Time, NBCU and Mr. Paxson shall designate a mutually acceptable escrow
agent and enter into an Escrow Agreement (the "Escrow Agreement") substantially
in the form attached hereto as Exhibit R, with such changes as the escrow agent
may require, pursuant to which NBCU shall place into escrow $3,863,765.50 in
cash and the Paxson Stockholders shall place the shares of Class A Common Stock
owned by them into escrow.
(b) Letter of Credit. Within three business days following the
Effective Time, PCC shall establish a $2,410,375 Irrevocable Standby Letter of
Credit, issued by Citibank, N.A. (the "Letter of Credit"), for the benefit of
the holders of Class B Common Stock ("Beneficiaries"), permitting draw by such
Beneficiaries upon unilateral notice to Citibank, N.A. certifying that payment
is due under the PCC Stock Purchase Agreement, and that payment has not been
otherwise made by PCC.
(c) Cooperation. Each party shall execute and deliver such additional
instruments and other documents and shall take such further actions as may be
necessary or appropriate to effectuate, carry out and comply with all of the
terms of each of the Transaction Agreements to which it is a party and the
transactions contemplated thereby, including, without limitation, making
application as soon as practicable for all consents and approvals required in
connection with the transactions contemplated thereby and diligently pursuing
the receipt of such consents and approvals in good faith.
(d) Inconsistent Actions.
(i) Once the application to the FCC in respect of the purchase of
the Call Shares pursuant to the Call Right (as such terms are defined in the
Call Agreement) has been filed with the FCC, none of NBC Palm Beach I, the
Permitted Transferee (as defined in the Call Agreement) or the Paxson
Stockholders shall take any action that could reasonably be expected to delay or
hinder the grant of such application. NBCU hereby agrees that it will not, and
it shall not permit any of the NBCU Entities to, file a petition to deny or
otherwise object to or oppose the grant of the FCC Application (as defined in
the Call Agreement).
(ii) Once the application in respect of the purchase of the Call
Shares pursuant to the PCC Stock Purchase Agreement has been filed with the FCC,
none of the NBCU Entities shall file a petition to deny or otherwise object to
or oppose the grant of such application.
(e) Sales Agreements. PCC and NBCU acknowledge that the Sales
Agreements shall remain in full force and effect, provided that the obligations
of the
9
parties thereunder have been and shall continue to be suspended unless the
parties thereto mutually agree in writing to revoke such suspension.
(f) Stock-Based Compensation. Upon approval of the Stockholder
Proposals (as defined in the Stockholder Agreement), PCC shall reserve an
additional 50,000,000 shares of Class A Common Stock for issuance in connection
with the stock-based compensation to be granted to certain senior executives
following the Effective Time pursuant to the Stockholder Agreement.
(g) Additional NBCU Investment. Promptly following the acceptance of
the filing of the Certificate of Designation with the Secretary of State of the
State of Delaware, PCC shall issue and sell to NBC Palm Beach I, and NBC Palm
Beach I shall purchase from PCC, 250 shares of Series B Preferred Stock for the
purchase price of $2,500,000 which amount NBC Palm Beach I shall deliver to PCC
by wire transfer of immediately available funds to the account or accounts
specified in writing by PCC. NBC Palm Beach I agrees not to exchange any of such
250 shares for New Exchange Debentures (as defined in the Series B Certificate
of Designation) prior to April 18, 2010 and will not Transfer any of such shares
unless the transferee agrees in writing to be bound by the foregoing.
4. Representations and Warranties of PCC. PCC hereby represents and warrants
to NBCU and the Paxson Stockholders that on and as of the date hereof:
(a) PCC is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
necessary power and authority to enter into each of the Transaction Agreements
to which it is a party, to carry out its obligations thereunder and to
consummate the transactions contemplated thereby. PCC is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except to the extent that the failure to
be so licensed or qualified and in good standing would not adversely affect the
ability of PCC to carry out its obligations under, and to consummate the
transactions contemplated by, each of the Transaction Agreements to which it is
a party. The execution and delivery by PCC of each of the Transaction Agreements
to which it is a party, the performance by PCC of its obligations thereunder and
the consummation by PCC of the transactions contemplated thereby have been duly
authorized by all requisite action on the part of PCC and approved by the
special committee of the PCC Board. Each of the Transaction Agreements to which
it is a party has been or, upon execution, shall have been duly executed and
delivered by PCC, and (assuming due authorization, execution and delivery by the
other parties) each of the Transaction Agreements to which it is a party
constitutes or, upon execution, shall constitute legal, valid and binding
obligations of PCC, enforceable against PCC in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency (including all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting creditors' rights generally and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding at law or
in equity). PCC's by-laws have been validly amended and restated in connection
with the transactions
10
contemplated by the Transaction Agreements and true and correct copies of such
amended and restated by-laws have been supplied to NBCU.
(b) (i) As of the date hereof, the authorized capital stock of PCC
consists of (A)(1) 215,000,000 shares of Class A Common Stock of which, as of
November 2, 2005, 64,582,424 shares were issued and outstanding, (2) 35,000,000
shares of Class B Common Stock of which 8,311,639 shares are issued and
outstanding and (3) 77,500,000 shares of Class C Common Stock of which no shares
are issued and outstanding, and (B) 1,000,000 shares of preferred stock of which
(1) 72,000 shares have been designated as 14 1/4% Cumulative Junior Exchangeable
Preferred Stock of which 49,610 shares are issued and outstanding, (2) 17,500
shares have been designated as 9 3/4% Convertible Preferred Stock, with a
current conversion price of $16.00 per share, of which 15,162 shares are issued
and outstanding, and (3) 60,607 shares have been designated as Series B
Preferred Stock all of which are issued and outstanding (collectively, with any
additional shares of preferred stock that may be issued as dividends thereon,
the "Existing Preferred Stock"). As of November 2, 2005, no shares of capital
stock were held in treasury, and no shares of capital stock were reserved for
issuance except for (i) 2,211,298 shares of Class A Common Stock reserved in
respect of stock options outstanding as of such date, (ii) 10,937,500 shares of
Class A Common Stock reserved in respect of the 9 3/4% Series A Convertible
Preferred Stock, (iii) 32,032,127 shares of Class A Common Stock reserved in
respect of the Warrants, (iv) 8,311,639 shares of Class A Common Stock reserved
in respect of the Class B Common Stock and (v) 31,896,032 shares of Class A and
Class C Common Stock reserved in respect of the Series B Preferred Stock. All of
the issued and outstanding shares of PCC's capital stock have been duly and
validly authorized and issued and are fully paid and nonassessable and not
subject to preemptive rights. Since November 2, 2005, PCC has not issued any
shares of capital stock of PCC or granted or entered into any options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
of any character relating to the capital stock of PCC or obligating PCC to issue
or sell any capital stock of PCC, or any other interest in, PCC, other than
pursuant to one or more of the Transaction Agreements or pursuant to the
exercise of options to acquire shares of Class A Common Stock outstanding on
November 2, 2005 in an amount not in excess of the amount set forth in clause
(i) of this Section 4(b).
(ii) The PCC Board has adopted a resolution to amend PCC's certificate
of incorporation, and declared its advisability, to increase the number of
authorized shares of Common Stock, Class A Common Stock and Class C Common Stock
to 857,000,000, 505,000,000 and 317,000,000, respectively, of which the PCC
Board has determined to reserve for issuance, subject to the approval of such
amendment by the stockholders of PCC at a duly convened meeting and the filing
of a certificate of amendment with the Secretary of State of the State of
Delaware, 303,035,000 shares of Class A and Class C Common Stock into which the
Series B Preferred Stock will be convertible (the "Conversion Shares") and, when
issued upon conversion of the Series B Preferred Stock in accordance with the
terms thereof, such Conversion Shares will be duly and validly authorized and
issued, fully paid and nonassessable and not subject to preemptive rights, and
the owner of such shares will
11
have good title thereto, free and clear of all Liens (other than any Lien
created by such owner).
(iii) Other than (A) the requirement to issue the Conversion Shares,
(B) the shares referred to in subsection (b)(i) and (C) as contemplated by the
Transaction Agreements, (1) no equity securities of PCC are or may become
required to be issued by reason of any options, warrants, rights to subscribe
to, calls, preemptive rights, or commitments of any character whatsoever, (2)
there are outstanding no securities or rights convertible into or exchangeable
for shares of any capital stock of PCC and (3) there are no contracts,
commitments, understandings or arrangements by which PCC is or will be bound to
issue additional shares of its capital stock or securities or rights convertible
into or exchangeable for shares of its capital stock or options, warrants or
rights to purchase or acquire any additional shares of its capital stock. Except
as required by the terms of the Existing Preferred Stock, PCC is not subject to
any obligation (contingent or otherwise) to repurchase, redeem or otherwise
acquire or retire any of its capital stock.
(iv) The consummation of the transactions contemplated by each of the
Transaction Agreements will not trigger the anti-dilution provisions or other
price adjustment mechanisms of any outstanding subscriptions, options, warrants,
calls, contracts, preemptive rights, demands, commitments, conversion rights or
other agreements or arrangements of any character or nature whatsoever under
which PCC is or may be obligated to issue or acquire its capital stock.
(c) Assuming that all consents, approvals, authorizations and other
actions described in Section 4(d) have been obtained, all filings required by
Section 2(f)(ii) and (iii) have been made, all filings and notifications listed
in Schedule 4(d) have been made and any applicable waiting period has expired or
been terminated, and except as may result from any facts or circumstances
relating solely to any NBCU Entity, the execution, delivery and performance by
PCC of each of the Transaction Agreements to which PCC is a party do not and
will not (i) violate, conflict with or result in the breach of the certificate
of incorporation or by laws (or similar organizational documents) of PCC, (ii)
conflict with or violate any law or Governmental Order applicable to PCC or any
of its subsidiaries or (iii) result in any breach of, constitute a default (or
event which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, acceleration or cancellation of, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which PCC or any of its subsidiaries is a
party, except, in the case of clauses (ii) and (iii), as would not materially
and adversely affect the ability of PCC to carry out its obligations under, and
to consummate the transactions contemplated by, each of the Transaction
Agreements to which PCC is a party.
(d) The execution, delivery and performance by PCC of each of the
Transaction Agreements to which PCC is or will be a party and the transactions
contemplated thereby do not and will not require any consent, approval,
authorization or other order of, action by, filing with or notification to, any
Governmental Authority,
12
except (i) as described in Schedule 4(d), (ii) the pre-merger notification and
waiting period requirements of the HSR Act and the approval by the FCC pursuant
to Section 310(d) of the Communications Act in the event of the exercise of the
Call Right, the conversion of a sufficient number of shares of Series B
Preferred Stock such that, following such conversion, a Paxson Stockholder is no
longer the Single Majority Stockholder of PCC (as that term is defined by the
FCC), or the purchase of the Class B Common Stock by PCC pursuant to the PCC
Stock Purchase Agreement, (iii) where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would not
prevent or materially delay the consummation by PCC of the transactions
contemplated by each of the Transaction Agreements to which it is a party or
(iv) as may be necessary as a result of any facts or circumstances relating
solely to the other parties hereto. Prior to the date hereof, PCC filed with the
FCC all of the applications necessary to obtain the approvals required to
consummate the Station Level Restructuring. By public notice released on
September 2, 2005, the FCC announced the grant of the initial approvals required
to consummate the Station Level Restructuring with respect to all PCC Television
Stations other than those licensed to Paxson Communications LPTV, Inc., and, by
public notice released on September 12, 2005, the FCC announced the grant of the
initial approvals required to consummate the Station Level Restructuring with
respect to all PCC Television Stations licensed to Paxson Communications LPTV,
Inc. The foregoing FCC grants have become Final Orders.
(e) PCC has furnished or made available to NBCU true and complete
copies, including all amendments thereto, of the following agreements:
(i) Master Agreement for Overnight Programming, Use of Digital
Capacity and Public Interest Programming, dated as of September 10, 1999
(the "CNI Master Agreement"), between The Christian Network, Inc., a Florida
not-for-profit corporation ("CNI"), and PCC, as amended by the First
Amendment to CNI Master Agreement, dated as of June 13, 2005, between CNI
and PCC.
(ii) Each of the Station Agreements for Overnight Programming, Use
of Digital Capacity and Public Interest Programming (the "CNI Station
Agreements") between CNI and each of PCC's television stations, as amended
by the First Amendments to the CNI Station Agreements, dated as of August
23, 2005, between subsidiaries of CNI and subsidiaries of PCC.
(iii) Letter Agreement, dated June 13, 2005, between CNI and PCC
with respect to the PCC's provision to CNI of certain satellite uplink and
related services.
(f) The Special Committee of the PCC Board has received (i) a written
opinion from an independent investment banking firm of national standing, dated
as of November 6, 2005, with respect to the fairness, from a financial point of
view, of the consideration to be offered to, distributed to or retained by, as
applicable, the Eligible Stockholders, which is in form and substance acceptable
to the Special Committee of the PCC Board and subject to the qualifications,
assumptions and other limitations provided
13
therein; and (ii) an independent investment banking firm of national standing,
dated as of November 6, 2005, as required by certain debt and preferred stock
instruments of PCC, that certain of the transactions contemplated by the
Transaction Agreements are fair, from a financial point of view, to PCC and its
Restricted Subsidiaries (as such term is defined in the applicable debt and
preferred stock instruments of PCC). True and correct copies of such opinions
have been furnished to NBCU.
5. Representations and Warranties of the Paxson Stockholders. Each of the
Paxson Stockholders, on behalf of itself only, hereby represents and warrants to
PCC and NBCU that on and as of the date hereof:
(a) Each of the Paxson Stockholders that is an individual has full
legal right and capacity to execute and deliver each of the Transaction
Agreements to which he is a party and each of the Paxson Stockholders that is
not an individual is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and each of the Paxson
Stockholders has all necessary power and authority to enter into each of the
Transaction Agreements to which it is a party, to carry out its obligations
thereunder and to consummate the transactions contemplated thereby. Each of the
Paxson Stockholders that is not an individual is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary, except to the extent that the failure to be so licensed
or qualified and in good standing would not adversely affect the ability of such
Paxson Stockholder to carry out its obligations under, and to consummate the
transactions contemplated by, each of the Transaction Agreements to which it is
a party. The execution and delivery by each Paxson Stockholder of each of the
Transaction Agreements to which it is a party, the performance by each Paxson
Stockholder of its obligations thereunder and the consummation by each Paxson
Stockholder of the transactions contemplated thereby have been duly authorized
by all requisite action on the part of each Paxson Stockholder and its
stockholders or partners, as the case may be. Each of the Transaction Agreements
to which it is a party has been or, upon execution, shall have been duly
executed and delivered by each Paxson Stockholder, and (assuming due
authorization, execution and delivery by the other parties) constitutes or, upon
execution, shall constitute legal, valid and binding obligations of each Paxson
Stockholder, enforceable against each Paxson Stockholder in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency (including
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting creditors' rights generally and subject to the effect of
general principles of equity (regardless of whether considered in a proceeding
at law or in equity).
(b) Assuming that all consents, approvals, authorizations and other
actions described in Section 5(c) have been obtained, all filings required by
Section 2(f)(ii) and (iii) have been made and any applicable waiting period has
expired or been terminated, and except as may result from any facts or
circumstances relating solely to any NBCU Entity, the execution, delivery and
performance by each Paxson Stockholder of each of the Transaction Agreements to
which such Paxson Stockholder is a party do not and will not (i) violate,
conflict with or result in the breach of the certificate of
14
incorporation or by laws (or similar organizational documents) of such Paxson
Stockholder (other than Mr. Paxson), (ii) conflict with or violate any law or
Governmental Order applicable to such Paxson Stockholder or (iii) conflict with,
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, acceleration or
cancellation of, any note, bond, mortgage or indenture, contract, agreement,
lease, sublease, license, permit, franchise or other instrument or arrangement
to which such Paxson Stockholder or any of its subsidiaries is a party, except,
in the case of clauses (ii) and (iii), as would not materially and adversely
affect the ability of such Paxson Stockholder to carry out its obligations
under, and to consummate the transactions contemplated by, each of the
Transaction Agreements to which such Paxson Stockholder is a party.
(c) The execution, delivery and performance by each Paxson Stockholder
of each of the Transaction Agreements to which a Paxson Stockholder is a party
and the transactions contemplated thereby do not and will not require any
consent, approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority, except (i) the pre-merger
notification and waiting period requirements of the HSR Act and the approval by
the FCC pursuant to Section 310(d) of the Communications Act in the event of the
exercise of the Call Right, the conversion of a sufficient number of shares of
Series B Preferred Stock such that, following such conversion, a Paxson
Stockholder is no longer the Single Majority Stockholder of PCC (as that term is
defined by the FCC) and the purchase of the Class B Common Stock by PCC pursuant
to the PCC Stock Purchase Agreement (ii) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not prevent or materially delay the consummation by such Paxson Stockholder of
the transactions contemplated by each of the Transaction Agreements, (iii) as
may be necessary as a result of any facts or circumstances relating solely to
the other parties hereto or (iv) filings with the Securities and Exchange
Commission pursuant to Section 16 of the Securities Exchange Act of 1934.
6. Additional Representations and Warranties of NBCU Entities. Each of the
NBCU Entities, on behalf of itself only, hereby represents and warrants to PCC
and the Paxson Stockholders on and as of the date hereof:
(a) Each of the NBCU Entities is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and each
of the NBCU Entities has all necessary power and authority to enter into each of
the Transaction Agreements to which it is a party, to carry out its obligations
thereunder and to consummate the transactions contemplated thereby. Each of the
NBCU Entities is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it or
the operation of its business makes such licensing or qualification necessary,
except to the extent that the failure to be so licensed or qualified and in good
standing would not adversely affect the ability of such NBCU Entity to carry out
its obligations under, and to consummate the transactions contemplated by, each
of the Transaction Agreements to which it is a party. The execution and delivery
by each of the NBCU Entities of each of the Transaction
15
Agreements to which it is a party, the performance by each NBCU Entity of its
obligations thereunder and the consummation by each NBCU Entity of the
transactions contemplated thereby have been duly authorized by all requisite
action on the part of each NBCU Entity and its stockholders. Each of the
Transaction Agreements to which it is a party has been or, upon execution, shall
have been duly executed and delivered by each NBCU Entity, and (assuming due
authorization, execution and delivery by the other parties) constitutes or, upon
execution, shall constitute legal, valid and binding obligations of each NBCU
Entity, enforceable against each NBCU Entity in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency (including all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting creditors' rights generally and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding at law or
in equity).
(b) Assuming that all consents, approvals, authorizations and other
actions described in Section 6(c) have been obtained and any applicable waiting
period has expired or been terminated, and except as may result from any facts
or circumstances relating solely to PCC and the Paxson Stockholders, the
execution, delivery and performance of each of the Transaction Agreements to
which any NBCU Entity is a party do not and will not (i) violate, conflict with
or result in the breach of the certificate of incorporation or by laws (or
similar organizational documents) of such NBCU Entity, (ii) conflict with or
violate any law or Governmental Order applicable to such NBCU Entity or (iii)
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
acceleration or cancellation of, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which such NBCU Entity or any of its subsidiaries
is a party, except, in the case of clauses (ii) and (iii), as would not
materially and adversely affect the ability of such NBCU Entity to carry out its
obligations under, and to consummate the transactions contemplated by, each of
the Transaction Agreements to which such NBCU Entity is a party.
(c) The execution, delivery and performance by each of the NBCU
Entities of each of the Transaction Agreements to which it is a party and the
transactions contemplated thereby do not and will not require any consent,
approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority, except (i) the pre-merger
notification and waiting period requirements of the HSR Act and the approval by
the FCC pursuant to Section 310(d) of the Communications Act in the event of the
exercise of the Call Right and/or the conversion of a sufficient number of
shares of Series B Preferred Stock such that, following such conversion, a
Paxson Stockholder is no longer the Single Majority Stockholder of PCC (as that
term is defined by the FCC), (ii) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not prevent or materially delay the consummation by such NBCU Entity of the
transactions contemplated by each of the Transaction Agreements or (iii) as may
be necessary as a result of any facts or circumstances relating solely to the
other parties hereto.
16
(d) Each NBCU Entity that may acquire any securities of PCC pursuant to
any of the Transaction Agreements: (i) will acquire such securities of PCC
solely for its own account for the purpose of investment and not with a view to,
or for resale in connection with, any distribution thereof in violation of the
Securities Act of 1933, as amended (the "Securities Act"); (ii) has had access
to the financial and other information concerning PCC and such securities; (iii)
has received and reviewed such reports, schedules, registration statements and
proxy statements filed by PCC with the Securities and Exchange Commission and
such financial statements that it has deemed appropriate; (iv) is an "accredited
investor" as defined in Rule 501(a) under the Securities Act; (v) has such
knowledge, sophistication, and experience in business and financial matters so
as to be capable of evaluating the risks of such investment in PCC and such
securities; (vi) has so evaluated the merits and risks of such investment; (vii)
is able to bear the economic risk of such investment; and (viii) is able to
afford a complete loss of such investment.
(e) Neither Mr. Burgess, nor any member of his immediate family, nor
any entity owned or controlled by him (collectively, but not including Mr.
Burgess, the "Burgess Group") is, or during his employment with the Company will
be, an agent of NBCU or of any subsidiary or affiliate of NBCU. Furthermore,
there are, and during his employment with the Company will be, no commitments,
arrangements or understandings, written or oral, between Mr. Burgess or any
members of the Burgess Group, on the one hand, and NBCU or any subsidiary or
affiliate of NBCU on the other hand, pursuant to which Mr. Burgess or any member
of the Burgess Group has or will have any legal or financial obligation to NBCU
or any subsidiary or affiliate of NBCU, or is or will be entitled to receive now
or in the future from NBCU or any subsidiary or affiliate of NBCU any
compensation or benefits of any kind, or other valuable consideration (including
but not limited to any offer of future positions with NBCU or any of its
subsidiaries or affiliates), other than (i) as set forth in the Separation
Agreement between Mr. Burgess and NBCU, a copy of which has been furnished to
the Company with dollar amounts redacted, (ii) pursuant to benefit plans in
which Mr. Burgess is vested, specifically the GE Pension Plan and the GE Savings
and Security Plan (401(k) Plan), (iii) as might be received by or due to Mr.
Burgess or any member of the Burgess Group through ordinary arms' length
consumer transactions involving GE or its affiliates, including transactions in
publicly-traded debt and equity securities of GE or its affiliates in the public
market (so long as any such transaction does not cause Mr. Burgess or any member
of the Burgess Group to have an attributable interest in, or attributable
relationship with, NBCU or its subsidiaries or affiliates under the FCC's rules)
or (iv) as might be received by or due to Mr. Burgess or any member of the
Burgess Group through ordinary consumer transactions prior to the date hereof
that were generally available only to employees of GE or its affiliates during
the term of their employment with GE or any of its affiliates. Notwithstanding
the foregoing, if GE were in the future to acquire a company where an immediate
family member of Mr. Burgess works, this provision shall not require such
company to terminate his or her employment or Mr. Burgess's immediate family
member to terminate his or her employment with such company. The word
"affiliates" as used in this provision is not intended to refer to broadcast
stations which may be affiliated with television networks owned and operated by
NBCU or any subsidiary or affiliate of NBCU.
17
7. Miscellaneous.
(a) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties. Transmission by telecopier of an
executed counterpart of this Agreement shall be deemed to constitute due and
sufficient delivery of such counterpart.
(b) Entire Agreement. The Transaction Agreements and the Exhibits and
Schedules thereto contain the entire agreement among the parties thereto with
respect to the subject matter thereof, and supersede all previous agreements,
negotiations, discussions, writings, understandings, commitments and
conversations with respect to such subject matter, and there are no agreements
or understandings among the parties with respect to such subject matter other
than those set forth or referred to therein.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
executed and performed within such state, and each party hereby submits to the
jurisdiction of the Delaware Chancery Court. In the event the Delaware Chancery
Court does not have jurisdiction over any dispute arising out of this Agreement,
each party hereby submits to the jurisdiction of the United States District
Court for the Southern District of New York, provided that in the event such
court does not have jurisdiction over any dispute arising out of this Agreement,
each party hereby submits to the jurisdiction of the Supreme Court of the State
of New York, New York County. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER THIS AGREEMENT.
(d) Assignability. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that no party hereto may assign its respective rights or
delegate its respective obligations under this Agreement without the express
prior written consent of each of the other parties hereto; provided further that
any Paxson Stockholder may assign this Agreement to a Paxson Estate Planning
Affiliate (as defined in the Stockholder Agreement).
(e) Third Party Beneficiaries. The provisions of this Agreement are
solely for the benefit of the parties and their successors and permitted assigns
and are not intended to confer upon any Person except the parties hereto and
their successors and permitted assigns any rights or remedies hereunder, and
there are no third party beneficiaries of this Agreement, and this Agreement
shall not provide any third Person with any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
18
(f) Notices. Except as otherwise expressly provided herein, all
notices, demands and requests required or permitted to be given under the
provisions of this Agreement shall be in writing and shall be deemed to have
been duly delivered and received (a) on the date of personal delivery, (b) on
the date of receipt (as shown on the return receipt) if mailed by registered or
certified mail, postage prepaid and return receipt requested, (c) on the next
business day after delivery to a courier service that guarantees delivery on the
next business day if the conditions to the courier's guarantee are complied
with, or (d) on the date of receipt (if such date is a business day, otherwise
on the next business day) by telecopy, in each case addressed as follows:
If to Mr. Paxson, Second Crystal or Paxson Enterprises:
Lowell W. Paxson
529 South Flagler Drive, 26H
West Palm Beach, Florida 33401
Tel: 561-835-8080
Fax: 561-832-5656
With a copy, which shall not constitute notice, to:
Wiley, Rein & Fielding LLP
1776 K Street NW
Washington, DC 20006
Attention: Fred Fielding
Tel: 202-719-7000
Fax: 202-719-7049
If to NBCU, NBC Palm Beach I or NBC Palm Beach II:
NBC Universal, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Tel: 212-646-7024
Fax: 212-646-4733
With a copy, which shall not constitute notice, to:
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Attention: John A. Marzulli, Jr.
Tel: 212-848-8590
Fax: 646-848-8590
19
If to PCC:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, FL 33401-6233
Attention: General Counsel
Tel: 561-659-4122
Fax: 561-655-9424
With a copy, which shall not constitute notice, to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W., Suite 800
Washington, DC 20036
Attention: John R. Feore, Jr.
Tel: 202-776-2000
Fax: 202-776-2222
and
Holland & Knight LLP
222 Lakeview Avenue, Suite 1000
West Palm Beach, Florida 33401
Attention: David L. Perry
Tel: 561-650-8314
Fax: 561-650-8399
Any party may, by notice to the other parties, change the address to which such
notices are to be given.
(g) Severability. If one or more provisions of this Agreement or the
application thereof to any Person or circumstances is determined by a court or
agency of competent jurisdiction to violate any law or regulation, including,
without limitation, any rule or policy of the FCC, or to be invalid, void or
unenforceable to any extent (a "Conflicting Provision"), the Conflicting
Provision shall have no further force or effect, but the remainder of this
Agreement and the application of the Conflicting Provision to other Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable shall not be affected thereby and shall be enforced to
the greatest extent permitted by law, so long as any such violation, invalidity
or unenforceability does not change the basic economic or legal positions of the
parties. In such event, the parties shall negotiate in good faith such changes
in other terms as shall be practicable in order to effect the original intent of
the parties.
(h) Publicity. Prior to any public announcement or disclosure regarding
any of the transactions contemplated by this Agreement or any of the Transaction
Agreements by any of the parties to this Agreement, such party shall provide the
other parties to this Agreement with a copy of the proposed public announcement
or disclosure, and the parties shall consult with each other regarding the
content of such
20
announcement or disclosure. Except as required by applicable law
(including applicable securities laws) or the rules of the American Stock
Exchange, no party to this Agreement shall make, or cause to be made, any press
release or other public announcement regarding any of such transactions without
the prior consent of each of the other parties to this Agreement.
(i) Expenses. Except as expressly provided herein or in another
Transaction Agreement, each party shall each bear its own costs and expenses
(including legal, accounting and broker fees and expenses) incurred in
connection with this Agreement, the other Transaction Agreements and the
transactions contemplated hereby or thereby.
(j) Waivers of Default. Waiver by any party of any default by any other
party of any provision of this Agreement shall not be deemed a waiver by the
waiving party of any subsequent or other default, nor shall it prejudice the
rights of any other party.
(k) Amendments. No provisions of this Agreement shall be deemed waived,
amended, supplemented or modified by any party, unless such waiver, amendment,
supplement or modification is in writing and signed by the authorized
representative of the party against whom such waiver, amendment, supplement or
modification it is sought to be enforced.
(l) Disclaimer of Representations and Warranties. EXCEPT AS EXPRESSLY
PROVIDED IN A TRANSACTION AGREEMENT, NONE OF THE PARTIES HERETO MAKES ANY
REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY OF THE TRANSACTIONS (INCLUDING ANY CONSENTS OR APPROVALS REQUIRED
IN CONNECTION HEREWITH OR THEREWITH) OR THE BUSINESS, ASSETS, CONDITION OR
PROSPECTS (FINANCIAL OR OTHERWISE) OF, OR ANY OTHER MATTERS INVOLVING, THE
ASSETS, BUSINESS OR LIABILITIES OF PCC, ITS SUBSIDIARIES OR THE TELEVISION
STATIONS OWNED BY PCC.
(m) Interpretation. In the Transaction Agreements, unless otherwise
specified or where the context otherwise requires:
(i) the Section and paragraph headings contained in such
Transaction Agreements are for reference purposes only and shall not affect in
any way the meaning or interpretation of such Transaction Agreements;
(ii) a reference to a Recital is to the relevant Recital to such
Transaction Agreement, to a Section is to the relevant Section of such
Transaction Agreement and to an Exhibit is to the relevant Exhibit to such
Transaction Agreement;
(iii) words importing any gender shall include other genders;
(iv) words importing the singular only shall include the plural
and vice versa;
21
(v) the words "include", "includes" or "including" shall be deemed
to be followed by the words "without limitation";
(vi) the words "hereof", "herein", "hereunder" and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
such Transaction Agreement as a whole and not to any particular provision of
such Transaction Agreement;
(vii) references to any Person shall include such Person's
successors and permitted assigns;
(viii) the parties to the Transaction Agreements have participated
jointly in the negotiation and drafting of the Transaction Agreements to which
they are parties, and, in the event an ambiguity or question of intent or
interpretation arises, the Transaction Agreements shall be construed as if
drafted jointly by the parties thereto, and no presumption or burden of proof
shall arise favoring or disfavoring any party thereto by virtue of the
authorship of any provisions of the Transaction Agreements; and
(ix) unless otherwise expressly provided therein, any contract or
law defined or referred to therein or in any contract that is referred to
therein means such contract or law as from time to time amended, modified or
supplemented, including (in the case of a contract) by waiver or consent and (in
the case of a law) by succession of comparable successor laws to all attachments
thereto and instruments incorporated therein, and any reference in the
Transaction Agreement to a law shall be deemed to include any rules and
regulations promulgated thereunder.
[Remainder of page intentionally left blank]
22
IN WITNESS WHEREOF, the parties hereby have executed this Master Transaction
Agreement as of the date first above written.
/s/ Lowell W. Paxson
---------------------------
Lowell W. Paxson
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP
By: Paxson Enterprises, Inc., its general partner
By: /s/ Lowell W. Paxson
---------------------------
Name: Lowell W. Paxson
Title: President
PAXSON ENTERPRISES, INC.
By: /s/ Lowell W. Paxson
---------------------------
Name: Lowell W. Paxson
Title: President
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Dean M. Goodman
---------------------------
Name: Dean M. Goodman
Title: President and Chief Operating Officer
PAXSON MANAGEMENT CORPORATION
By: /s/ Lowell W. Paxson
---------------------------
Name: Lowell W. Paxson
Title: President
NBC UNIVERSAL, INC.
By: /s/ Robert C. Wright
--------------------------
Name: Robert C. Wright
Title: President and Chief Executive Officer
NBC PALM BEACH INVESTMENT I, INC.
By: /s/ Robert C. Wright
--------------------------
Name: Robert C. Wright
Title: Director and President
NBC PALM BEACH INVESTMENT II, INC.
By: /s/ Robert C. Wright
--------------------------
Name: Robert C. Wright
Title: Director and President
List of Exhibits
Exhibit A Series B Certificate of Designation
Exhibit B Call Agreement
Exhibit C PCC Stock Purchase Agreement
Exhibit D Written Consent
Exhibit E PMC Management Agreement
Exhibit F Resignation Agreement
Exhibit G Split Dollar Agreement
Exhibit H Collateral Assignment
Exhibit I Burgess Employment Agreement
Exhibit J Goodman Employment Agreement
Exhibit K Paxson Noncompete Agreement
Exhibit L Goodman Noncompete Agreement
Exhibit M Affiliation Agreement
Exhibit N Settlement Agreement
Exhibit O Amended and Restated Investment Agreement
Exhibit P Stockholder Agreement
Exhibit Q Registration Rights Agreement Amendment
Exhibit R Escrow Agreement
Schedule 4(d)
A. The following documents are required to be filed with the FCC pursuant to
Section 73.3613 of the FCC's rules:
1. Master Transaction Agreement
2. Series B Certificate of Designation
3. Call Agreement
4. PCC Stock Purchase Agreement
5. PMC Management Agreement
6. Resignation Agreement
7. Paxson Noncompete Agreement
8. Affiliation Agreement
9. Settlement Agreement
10. Amended and Restated Investment Agreement
11. Stockholder Agreement
12. Registration Rights Agreement Amendment
B. PCC will make all required filings under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended.
C. The following documents are required to be filed with the Secretary of State
of the State of Delaware:
1. Series B Certificate of Designation
2. Certificate of Amendment relating to the increase in the
authorized number of shares of Common Stock
EXHIBIT 12
EXECUTION COPY
AMENDED AND RESTATED INVESTMENT AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS CORPORATION
AND
NBC UNIVERSAL, INC.
DATED AS OF NOVEMBER 7, 2005
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 2
Section 1.1 Definitions....................................................2
ARTICLE II [INTENTIONALLY OMITTED]............................................12
ARTICLE III [INTENTIONALLY OMITTED]...........................................12
ARTICLE IV CONDUCT OF BUSINESS................................................12
Section 4.1 Conduct of the Business.......................................12
Section 4.2 Modification of Investor Rights...............................15
ARTICLE V OTHER AGREEMENTS....................................................16
Section 5.1 Public Statements.............................................16
Section 5.2 Reasonable Commercial Efforts.................................16
Section 5.3 Government Filings............................................16
Section 5.4 Reservation of Shares.........................................17
Section 5.5 Notification of Certain Matters...............................17
Section 5.6 Further Assurances............................................17
Section 5.7 Company Stockholder Meetings..................................17
Section 5.8 Access to Information.........................................18
ARTICLE VI AFFIRMATIVE AND NEGATIVE COVENANTS.................................18
Section 6.1 Maintenance of Existence and Property; FCC Licenses...........18
Section 6.2 Payment of Obligations........................................18
Section 6.3 Books and Records.............................................19
Section 6.4 Insurance.....................................................19
Section 6.5 Compliance with Laws, Etc.....................................19
Section 6.6 Environmental Matters.........................................19
Section 6.7 Material Adverse Effect.......................................20
Section 6.8 ERISA.........................................................20
Section 6.9 Hazardous Materials...........................................20
Section 6.10 No Impairment of Intercompany Transfers......................20
Section 6.11 Limitation on Certain Asset Sales............................20
Section 6.12 No Restrictive Covenants.....................................21
- i -
ARTICLE VII OPERATING AGREEMENTS..............................................21
Section 7.1 [Intentionally Omitted].......................................21
Section 7.2 Investor Right of First Refusal...............................21
Section 7.3 [Intentionally Omitted].......................................22
Section 7.4 [Intentionally Omitted].......................................22
Section 7.5 [Intentionally Omitted].......................................22
ARTICLE VIII [INTENTIONALLY OMITTED]..........................................22
ARTICLE IX REDEMPTION.........................................................22
Section 9.1 [Intentionally Omitted].......................................22
Section 9.2 Default Redemption............................................22
Section 9.3 Assignment of Redemption Obligation...........................23
Section 9.4 Failure to Redeem.............................................23
Section 9.5 Company Sale..................................................23
ARTICLE X MISCELLANEOUS.......................................................24
Section 10.1 Survival of Representations and Warranties...................24
Section 10.2 Notices......................................................24
Section 10.3 Entire Agreement; Amendment..................................25
Section 10.4 Counterparts.................................................26
Section 10.5 Governing Law; Jurisdiction; Waiver of Jury Trial............26
Section 10.6 Fees and Expenses............................................26
Section 10.7 Indemnification by the Company...............................26
Section 10.8 Successors and Assigns; Third Party Beneficiaries............27
Section 10.9 Remedies.....................................................27
Section 10.10 Headings, Captions and Table of Contents....................28
Section 10.11 Termination.................................................28
Section 10.12 Severability................................................28
- ii -
EXHIBITS
Exhibit A Certificate of Designation
SCHEDULES
Schedule 4.1(g) Certain Permitted Transactions
Schedule 4.1(h) Stock-Based Compensation Plans
Schedule 10.1 Section 10.1 Individuals
- iii -
AMENDED AND RESTATED INVESTMENT AGREEMENT
AMENDED AND RESTATED INVESTMENT AGREEMENT, dated as of November 7, 2005
(this "Agreement"), by and between PAXSON COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Company"), and NBC UNIVERSAL, INC., a Delaware corporation
("NBCU" and, together with its permitted transferees, the "Investor").
Capitalized terms not otherwise defined where used shall have the meanings
ascribed thereto in Article I.
WHEREAS, on September 15, 1999, the Investor and certain of its
Affiliates invested $415,000,000 (the "Initial Investment") in the Company, and,
in connection with the Initial Investment,
1. the Company and the Investor entered into an Investment Agreement
(the "Original Investment Agreement"), pursuant to which the
Investor purchased certain securities from the Company;
2. the Company, the Investor and the Paxson Stockholders entered into
a Stockholder Agreement (the "Original Stockholder Agreement"), to
provide for certain matters with respect to the governance of the
Company;
3. the Paxson Stockholders and an Affiliate of the Investor entered
into a Call Agreement (the "Original Call Agreement"), pursuant to
which the Paxson Stockholders granted an Affiliate of the Investor
an option to purchase certain securities of the Company held by
them; and
4. the Company and the Investor entered into a Registration Rights
Agreement (the "Original Registration Rights Agreement" and,
together with the Original Investment Agreement, the Original
Stockholder Agreement and the Original Call Agreement, the
"Existing Agreements"), pursuant to which the Company granted the
Investor and certain of its Affiliates certain registration rights
with respect to certain shares of Class A Common Stock held or
acquired by the Investor and certain of its Affiliates;
WHEREAS, since the date of the Initial Investment, certain disputes have
arisen among the parties as to their rights and obligations under the Existing
Agreements, and the parties have agreed to resolve those disputes and
restructure the Initial Investment, subject to the terms and conditions of the
Transaction Agreements (defined below);
NOW, THEREFORE, in consideration of the mutual agreements and understandings
set forth herein, the parties hereto hereby agree to amend and restate the
Original Investment Agreement as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
-----------
As used in this Agreement, the following terms shall have the meanings set
forth below:
"Affiliate" shall mean, with respect to any Person, any other Person that
controls, is controlled by, or is under common control with, such Person,
including the executive officers and directors of such Person. As used in this
definition, "control" (including its correlative meanings, "controlled by" and
"under common control with") shall mean the possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"Agreement" shall have the meaning set forth in the preamble hereto.
"Ancillary Documents" shall mean the Certificate of Designation, the Master
Agreement, the Call Agreement, the Stockholder Agreement, the Registration
Rights Agreement and the Settlement Agreement.
"Asset Sale" shall mean the sale, transfer or other disposition (other than
to the Company or any of its Company Subsidiaries) in any single transaction or
series of related transactions involving assets with a fair market value in
excess of $2,000,000 of (a) any capital stock of or other equity interest in any
Company Subsidiary, (b) all or substantially all of the assets of the Company or
of any Company Subsidiary, (c) real property, (d) all or substantially all of
the assets of any media property, or part thereof, owned by the Company or any
Company Subsidiary, or a division, line of business or comparable business
segment of the Company or any Company Subsidiary or (e) any transaction
involving the transfer of an FCC license for a Company Station; provided that
Asset Sales shall not include sales, leases, conveyances, transfers or other
dispositions to the Company or to a wholly owned Company Subsidiary or to any
other Person if after giving effect to such sale, lease, conveyance, transfer or
other disposition such other Person becomes a wholly owned Company Subsidiary.
"Bankruptcy Law" shall mean Title 11, U.S. Code or any similar Federal or
state law for the relief of debtors.
"Board of Directors" shall mean the Board of Directors of the Company as
from time to time constituted.
"Budget" shall mean for any fiscal year the annual operating budget for the
Company, including the Network (but specifically excluding all Company Station
operations and programming, except for Same Market Stations), which shall
include Network programming items (including capital expenditures, general
corporate overhead expenses and other operating expenses), prepared by the
Company, provided that if the Company and the Investor fail to agree on an
annual operating budget for any fiscal year, the Budget shall be the Budget for
the previous year.
2
"Call Agreement" shall mean the Call Agreement, dated as of the date hereof,
among the Investor, NBC Palm Beach Investment II, Inc. and the Paxson
Stockholders, as from time to time amended, modified or supplemented.
"Certificate of Designation" shall mean the Amended and Restated Certificate
of Designation of the Series B Preferred Stock, to be executed and filed with
the Secretary of State of the State of Delaware on or prior to the date hereof,
which shall be substantially in the form of Exhibit A hereto, as from time to
time amended, modified or supplemented.
"Class A Common Stock" shall mean the shares of Class A Common Stock, par
value $0.001 per share, of the Company.
"Class B Common Stock" shall mean the shares of Class B Common Stock, par
value $0.001 per share, of the Company.
"Class C Common Stock" shall mean the shares of Class C Non-Voting Common
Stock, par value $0.001 per share, of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the Class A Common Stock, Class B Common Stock and
Class C Common Stock, and any other class of common stock of the Company
hereafter created and any securities of the Company into which such Common Stock
may be reclassified, exchanged or converted.
"Communications Act" shall mean the Communications Act of 1934, as amended
(including, without limitation, the Cable Communications Policy Act of 1984 and
the Cable Television Consumer Protection and Competition Act of 1992), and all
rules and regulations of the FCC, in each case as from time to time in effect.
"Company" shall have the meaning set forth in the preamble hereto.
"Company CEO" shall mean the chief executive officer of the Company
appointed on the date hereof in connection with the execution of the Transaction
Agreements and any successor unless the initial Company CEO was terminated by
the Company without Cause or the initial Company CEO resigned for Good Reason
(in each case, as such terms are defined in the Burgess Employment Agreement (as
defined in the Master Agreement)).
"Company Plan" shall mean each "employee benefit plan" (within the meaning
of Section 3(3) of ERISA), including, without limitation, multiemployer plans
(within the meaning of ERISA Section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective bargaining,
bonus, incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, under which any
employee or former employee of the Company or its Subsidiaries has any present
or future right to benefits and under which the Company or its Subsidiaries has
any present or future liability.
3
"Company Sale" shall have the meaning set forth in Section 9.5.
"Company Stations" shall mean, collectively, each full service television
station, low power television station and television translator owned and
operated by the Company or any Company Subsidiary.
"Company Subsidiary" shall mean any Subsidiary of the Company.
"Conflicting Provision" shall have the meaning set forth in Section 10.12.
"Conversion Shares" shall mean the shares of Common Stock into which the
Shares are convertible, as such shares may be subject to adjustment from time to
time and any securities into which such shares may be reclassified, exchanged or
converted.
"Custodian" shall mean any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default Redemption Period" shall have the meaning set forth in Section
9.2(b).
"Default Redemption Price" shall mean the greater of (i) the Par Value Price
and (ii) an amount per Conversion Share equal to the average of the closing
prices of the Common Stock on the American Stock Exchange (or other applicable
exchange) for the 45 consecutive trading days ending on the trading date
immediately preceding the date of delivery of the Notice of Default Redemption,
provided that if the applicable Notice of Default Redemption is based upon an
Event of Default under clause (2)(C) of the definition of Event of Default, the
Default Redemption Price shall be the Par Value Price.
"DMA" shall mean a Designated Market Area as determined by Nielsen Media
Research or such successor designation of television markets that may in the
future be recognized by the FCC for determining television markets.
"Environmental Laws" shall mean all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and in each case as amended or supplemented from time to
time, and any applicable judicial or administrative interpretation thereof,
including any applicable judicial or administrative order, consent decree, order
or judgment, imposing liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the environment and natural
resources (including ambient air, surface water, groundwater, wetlands, land
surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. ss.ss. 9601 et seq.)
("CERCLA"); the Hazardous Materials Transportation Authorization Act of 1994 (49
U.S.C. ss.ss. 5101 et seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act (7 U.S.C. ss.ss. 136 et seq.); the Solid Waste Disposal Act (42 U.S.C.
ss.ss. 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. ss.ss. 2601 et
seq.); the Clean Air Act (42 U.S.C. ss.ss. 7401 et seq.); the Federal Water
Pollution Control Act (33 U.S.C. ss.ss. 1251 et seq.); the Occupational Safety
and Health Act (29 U.S.C. ss.ss. 651 et seq.); and the Safe Drinking Water Act
(42 U.S.C. ss.ss. 300(f) et seq.), each as from time to time amended, and any
and all regulations promulgated thereunder, and all
4
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities" shall mean, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a result of
or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" shall mean all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Entity
under any Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation hereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to the Company or any Company
Subsidiary, any trade or business (whether or not incorporated) which, together
with the Company or such Company Subsidiary, are treated as a single employer
within the meaning of Sections 414(b), (c), (m) or (o) of the Code.
"ERISA Event" shall mean, with respect to the Company, any Company
Subsidiary or any ERISA Affiliate (a) any event described in Section 4043(c) of
ERISA with respect to a Title IV Plan; (b) the withdrawal of the Company, any
Company Subsidiary or ERISA Affiliate from a Title IV Plan subject to Section
4063 of ERISA during a plan year in which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal
of the Company, any Company Subsidiary or any ERISA Affiliate from any
Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA; (e) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (f) the failure by the Company, any Company
Subsidiary or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; (i) the loss of a Qualified Plan's qualification or tax exempt status; or
(j) the termination of a Company Plan described in Section 4064 of ERISA.
5
"Event of Default" shall mean:
(1) the Company (i) is in material breach or default under this
Agreement or any Ancillary Document and (ii) either (A) if such breach or
default is not reasonably curable, the Company receives notice of such
breach or default from the Investor or (B) if such breach or default is
reasonably curable, the Company fails to cure such breach or default within
30 days after the Company's receipt of notice from the Investor of such
breach or default;
(2) there is (A) a default in the payment at final maturity of
principal in an aggregate amount of $10,000,000 or more with respect to any
indebtedness of the Company or any Company Subsidiary which default shall
not be cured, waived or postponed pursuant to an agreement with the holders
of such indebtedness within 60 days after written notice, (B) an
acceleration of any such indebtedness aggregating $10,000,000 or more which
acceleration shall not be rescinded or annulled within 20 days after written
notice to the Company of such default by the Investor or (C) a default or
other event that permits the acceleration of any such indebtedness
aggregating $10,000,000 or more which default or other event has not been
cured or waived by the filing deadline for the next SEC report of the
Company on Form 10-K, 10-Q or 8-K or similar report under the Exchange Act;
(3) a court of competent jurisdiction enters a final judgment or
judgments which can no longer be appealed for the payment of money in excess
of $10,000,000 against the Company or any Company Subsidiary and such
judgment remains undischarged for a period of 60 consecutive days during
which a stay of enforcement of such judgment shall not be in effect;
(4) the Company or any Company Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(D) makes a general assignment for the benefit of its creditors,
or
(E) generally is not paying its debts as they become due; or
(5) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Company Subsidiary in
an involuntary case,
6
(B) appoints a Custodian of the Company or any Company Subsidiary
or for all or substantially all of the property of the Company or any
Company Subsidiary, or
(C) orders the liquidation of the Company or any Company
Subsidiary, and the order or decree remains unstayed and in effect for
60 days.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Existing Agreements" shall have the meaning set forth in the recitals
hereto.
"Existing Preferred Stock" shall mean the 14 1/4% Cumulative Junior
Exchangeable Preferred Stock, par value $.001 per share, of the Company, with a
liquidation preference of $10,000 per share, of which 49,610 shares are
outstanding as of the date hereof, and any additional shares issued as payment
of dividends thereon; and the 9 3/4% Series A Convertible Preferred Stock, $.001
par value, of the Company, with a liquidation preference of $10,000 per share,
of which 15,162 shares are outstanding as of the date hereof, and any additional
shares issued as payment of dividends thereon.
"FCC" shall mean the Federal Communications Commission and any successor
Governmental Entity performing functions similar to those performed by the
Federal Communications Commission on the date hereof.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Entity" shall mean any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any self-regulating organization, securities exchange or
securities trading system, including, without limitation, the FCC.
"Hazardous Material" shall mean any substance, material or waste which is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," hazardous constituent," "special waste," toxic substance" or
other similar term or phrase under any Environmental Laws, (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCBs), or
any radioactive substance.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Independent" shall mean, with respect to a director or proposed director,
that such person is (i) "independent", as determined in accordance with Section
121A of the Company Guide of the American Stock Exchange rules and (ii) was not
employed by, engaged by or affiliated with the Company, NBCU or any Paxson
Stockholder or any of their respective Affiliates within the past three years.
7
"Initial Investment" shall have the meaning set forth in the recitals
hereto.
"Investor" shall have the meaning set forth in the preamble hereto.
"Investor Call Right Termination" shall have the meaning set forth in the
Call Agreement.
"Investor Indemnitees" shall have the meaning set forth in Section 10.7(a).
"Investor Nominee" shall have the meaning set forth in the Stockholder
Agreement.
"Investor Recourse Period" shall have the meaning set forth in Section 9.4.
"Investor Rights" shall mean the rights of the Investor set forth in
Articles II, III and IV of the Stockholder Agreement and in Article IV and
Article VI hereof, other than Section 6.12.
"Issue Price" shall mean $10,000 per Share.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or security agreement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement or any financing lease having substantially the same
effect as any of the foregoing).
"Losses" shall have the meaning set forth in Section 10.7(a).
"Master Agreement" shall mean the Master Transaction Agreement, dated as of
the date hereof, among the Company, the Investor, the Paxson Stockholders, NBC
Palm Beach Investment I, Inc. and NBC Palm Beach Investment II, Inc., as from
time to time amended, modified or supplemented.
"Material Adverse Effect" shall mean a material adverse effect on (i) with
respect to the Company, the business, assets, operations or financial or other
condition of the Company and the Company Subsidiaries taken as a whole or (ii)
with respect to any party to this Agreement or the Ancillary Documents, the
ability of such party to perform its obligations under this Agreement or any of
the Ancillary Documents to which it is a party.
"Minimum Investment" shall mean 151,000,000 Conversion Shares; provided that
such number shall be equitably adjusted for any conversions, reclassifications,
reorganizations, stock dividends, stock splits, reverse splits and similar
events which occur with respect to the Common Stock; provided further that such
number shall be reduced pro rata for any reduction in the number of Conversion
Shares underlying the Series B Preferred Stock held by the Investor pursuant to
the payment of the Investor Call Right Termination Amount (as defined in the
Stockholder Agreement). For purposes of the determination of whether the Minimum
Investment is owned, the Investor or its Affiliates and any permitted transferee
holding any Shares shall be deemed to hold the Conversion Shares for such
Shares.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA and to which the Company, any Company Subsidiary or any
ERISA
8
Affiliate is making, is obligated to make, or has made or been obligated
to make, contributions on behalf of participants who are or were employed by any
of them.
"National Coverage" shall mean, with respect to any television network, the
percentage of national television households that receive such network's
broadcast as listed in the Nielsen Television Index or such successor measure of
coverage equivalent thereto generally adopted by the television industry.
"NBCU" shall have the meaning set forth in the preamble hereto.
"Network" shall mean any television broadcast network owned by the Company.
"New Exchange Debentures" shall have the meaning set forth in the
Certificate of Designation.
"Notice of Default Redemption" shall have the meaning set forth in Section
9.2(a).
"Original Call Agreement" shall have the meaning set forth in the recitals
hereto.
"Original Investment Agreement" shall have the meaning set forth in the
recitals hereto.
"Original Stockholder Agreement" shall have the meaning set forth in the
recitals hereto.
"Par Value Price" shall mean, in respect of any redemption of any share of
preferred stock of the Company, the issue price of such preferred stock plus any
accrued and unpaid dividends through and including the date of redemption of
such preferred stock.
"Paxson Stockholders" shall mean Lowell W. Paxson, Second Crystal Diamond
Limited Partnership and Paxson Enterprises, Inc.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Person" shall mean an individual, corporation, unincorporated association,
partnership, group (as defined in Section 13(d)(3) of the Exchange Act), trust,
joint stock company, joint venture, business trust or unincorporated
organization, limited liability company, any Governmental Entity or any other
entity of whatever nature.
"PMC Management Agreement" shall mean the PMC Management and Proxy
Agreement, dated as of the date hereof, between Paxson Management Corporation
and the Company.
"Qualified Plan" shall mean a Company Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.
"Refinance" shall mean, in respect of any capital stock, to refinance,
extend, renew, refund, repay, prepay, repurchase, redeem or retire, or to issue
other capital stock in exchange or replacement for, or to amend the terms of,
such capital stock; provided that the amount paid or the fair market value of
capital stock issued by the Company in connection with such
9
refinancing, extension, renewal, refund, repayment, prepayment, redemption,
retirement or issuance shall not exceed the greater of the applicable Par Value
Price or redemption price of the capital stock to be so refinanced, extended,
renewed, refunded, repaid, prepaid, redeemed, retired or issued, plus the amount
of reasonable expenses incurred by the Company in connection with such
transaction; provided further that if any such capital stock which is Refinanced
or issued in connection with a Refinancing is exchangeable or exercisable for or
convertible into Class A Common Stock, such capital stock shall not be so
exchangeable, exercisable or convertible until the earlier of the closing of the
Tender Offer (as such term is defined in the Stockholder Agreement) or the end
of the Restricted Period. "Refinanced" and "Refinancing" shall have correlative
meanings.
"Registration Rights Agreement" shall mean the Original Registration Rights
Agreement as amended by the letter agreement dated the date hereof, as from time
to time further amended, modified or supplemented.
"Release" shall mean any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Restricted Period" shall mean the period commencing on the date hereof and
ending on the earlier of the Call Closing (as such term is defined in the Call
Agreement) or the date of the Investor Call Right Termination.
"Same Market Station" shall mean any Company Station (i) in which any Person
that holds the Minimum Investment would be permitted to have an attributable
interest under the ownership rules adopted by the FCC in MM Docket Nos. 94-150,
92-51 and 87-154, as such rules may be amended from time to time, and (ii)
which, even if such Person were deemed to have an attributable interest therein,
would not increase such Person's national broadcast coverage as calculated under
the FCC's national ownership rules because such Person has an owned or operated
television station in the same DMA. For the purpose of this definition, a
television station shall be deemed to be "operated" by such Person if such
Person supplies more than 15% of the total weekly broadcast programming hours of
such station.
"SEC" shall mean the United States Securities and Exchange Commission.
"Series B Preferred Stock" shall mean the 11% Series B Convertible
Exchangeable Preferred Stock, par value $0.001 per share, of the Company, with a
liquidation preference of $10,000 per share.
"Settlement Agreement" shall mean the Settlement Agreement, dated as of the
date hereof, between the Investor and the Company, as from time to time amended,
modified or supplemented.
"Shares" shall mean the 60,607 shares of Series B Preferred Stock held by
the Investor after the filing and effectiveness of the Certificate of
Designation and the consummation of the
10
issuance and sale of Series B Preferred Stock pursuant to Section 3(g) of the
Master Agreement and any additional shares of Series B Preferred Stock issued in
respect of such Shares.
"Station Offer Notice" shall have the meaning set forth in Section 7.2(a).
"Station Offer Price" shall have the meaning set forth in Section 7.2(a).
"Station Third Party" shall have the meaning set forth in Section 7.2(a).
"Station Transfer" shall have the meaning set forth in Section 4.1(f).
"Stock-Based Compensation Awards" shall mean options, restricted stock and
any other stock-based compensation awards issued or issuable under any of the
Company's Stock Incentive Plan, 1996 Stock Incentive Plan, 1998 Stock Incentive
Plan or any other stock-based compensation plan approved by the Board of
Directors or any employment, consulting or similar agreements in effect as of
the date hereof or entered into after the date hereof and approved by the Board
of Directors.
"Stockholder Agreement" shall mean the Amended and Restated Stockholder
Agreement, dated as of the date hereof, among the Company, the Investor and the
Paxson Stockholders, as from time to time amended, modified or supplemented.
"Stockholder Proposals" shall have the meaning set forth in the Stockholder
Agreement.
"Subsidiary" shall mean, as to any Person, a corporation, partnership,
limited liability company, joint venture or other entity of which shares of
stock or other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
"Surviving Representations and Warranties" shall mean the representations
and warranties contained in Sections 3.1(c), 3.1(o) and 3.1(u) of the Original
Investment Agreement (and any relevant disclosure schedules with respect
thereto), the terms of which are incorporated herein by reference.
"Tax" or, collectively, "Taxes" shall mean any and all federal, state, local
and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, gains, franchise, withholding, payroll, recapture,
employment, excise, unemployment insurance, social security, business license,
occupation, business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with respect to such
amounts. For purposes of this Agreement, "Taxes" also includes any obligations
under any agreements or arrangements with any other person with respect to Taxes
of such other person (including pursuant to Treas. Reg. Section 1.1502-6 or
comparable provisions of state, local or foreign tax law) and including any
liability for taxes of any predecessor entity.
11
"Title IV Plan" shall mean an employee pension benefit plan, as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan), which is covered by
Title IV of ERISA, and which the Company, any Company Subsidiary or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Transaction Agreements" shall have the meaning set forth in the Master
Agreement.
"Unrestricted Transfer" shall have the meaning set forth in Section 9.4.
ARTICLE II
[INTENTIONALLY OMITTED]
ARTICLE III
[INTENTIONALLY OMITTED]
ARTICLE IV
CONDUCT OF BUSINESS
Section 4.1 Conduct of the Business.
-----------------------
Subject to the provisions of Section 4.2, the Company shall not take, nor
permit any Company Subsidiary or officer or director to take, any of the
following actions without the prior consent of the Investor or a permitted
transferee of the Investor Rights under the Stockholder Agreement:
(a) approval, not to be unreasonably withheld, of (i) a Budget, (ii) any
expenditures that materially exceed budgeted amounts or (iii) any amendments to
a Budget; provided, however, that, the Investor shall withhold its approval of
any proposed Budget by identifying those items of the proposed Budget which are
not approved and providing in writing to the Company the Investor's basis for
withholding such approval and, in such event, the portions of such proposed
Budget which are not identified as unapproved, shall be deemed to be approved
under this Section 4.1(a);
(b) [Intentionally Omitted];
(c) entering into any agreement or arrangement relating to the digital
spectrum of all or any of the Company Stations, except for any agreement which
(i) has a term of not more than 14 months, (ii) is terminable on not more than
14 months notice without payment of any material penalty or any other material
adverse consequence suffered by the Company or (iii) is approved
12
by a majority of the Board of Directors which includes a majority of the
Independent directors and the Company CEO;
(d) [Intentionally Omitted];
(e) entering into any material amendment of the Company's certificate of
incorporation or by-laws, except as may be necessary in connection with (i) the
transactions contemplated by the Master Agreement, including the Stockholder
Proposals, or (ii) issuances of capital stock permitted under this Agreement and
the other Transaction Agreements;
(f) during the Restricted Period, other than with respect to (i) any low
power television stations that do not expand the coverage and cable carriage of
any Company Station, (ii) the Company Stations located in Greenville, NC,
Jacksonville, NC, and Boston, MA (limited to Company Stations WDPX, WPXG and
W40B0), or (iii) low power station WPXO-LP, East Orange, NJ, any sale, lease,
assignment or other disposition of (x) more than 50% of the stock of any Company
Subsidiary that owns the primary operating assets of, or a FCC license of, a
Company Station or (y) the primary operating assets of, or any FCC license of, a
Company Station (each, a "Station Transfer"), in each case, if such Company
Station is located in any of the 50 largest DMAs as of the date of such
disposition;
(g) except for any transactions permitted pursuant to Section 4.1(f) or that
are set forth on Schedule 4.1(g), (i) any sale, transfer, assignment or other
disposition of assets involving, together with all other dispositions of assets
during any 12-month period, assets with a fair market value greater than 20% of
the book value of the Company's consolidated assets reflected on the balance
sheet most recently filed with the SEC, (ii) any acquisition of assets,
including pursuant to a merger, consolidation or other business combination, if
the consideration payable for such assets in any single transaction exceeds 5%
of the book value of the Company's consolidated assets reflected on the balance
sheet most recently filed with the SEC or if the aggregate consideration payable
for such transaction, together with the consideration paid for all such
acquisitions in any 12-month period, exceeds 10% of the book value of the
Company's consolidated assets reflected on the balance sheet most recently filed
with the SEC (excluding, in each case, transactions involving the issuance of
capital stock of the Company that have been approved pursuant to this Section
4.1 and transactions set forth on Schedule 4.1(g) attached hereto), or (iii) any
merger or business combination transaction where the Company is not the
surviving entity or where there is a change of control; provided that the prior
consent of the Investor shall not be required with respect to any transaction
conducted during any Default Redemption Period if such transaction is structured
to ensure that the Investor receives the full Default Redemption Price for its
redeemed Shares or Conversion Shares;
(h) issuance or sale of any capital stock of the Company or any option,
warrants or other rights to acquire capital stock of the Company (including
instruments convertible or exchangeable into or exercisable for capital stock),
other than (i) Stock-Based Compensation Awards issued under the Company's
stock-based compensation plans identified under "Plan Options" and "Non-Plan
Options" on Schedule 4.1(h) and Common Stock issued or issuable in connection
therewith, (ii) reasonable and customary Stock-Based Compensation Awards issued
pursuant to a Stock-Based Compensation Plan approved after the Effective Date by
the Board of Directors and, as necessary or advisable, the stockholders of the
Company and Common Stock
13
issued in connection therewith, (iii) 50,000,000 shares of Common Stock issued
or issuable following the Effective Date to certain officers and employees in
the form of Stock-Based Compensation Awards (upon the authorization thereof by
the stockholders of the Company pursuant to the Stockholder Proposals), (iv)
non-voting capital stock issued to Refinance the Existing Preferred Stock or the
Shares, or non-voting capital stock issued as dividends in accordance with the
terms and conditions of the Existing Preferred Stock or Shares, (v) Common Stock
issued upon conversion of Existing Preferred Stock or Shares, (vi) capital stock
issued in connection with the satisfaction in full of the Company's redemption
obligation set forth in Section 9.2 or the simultaneous satisfaction of the
Company's obligation under Section 9.5, and (vii) the issuance of
non-convertible preferred stock of the Company issued to fund the redemption of
the Existing Preferred Stock with substantially similar terms as the Existing
Preferred Stock so redeemed; provided that the number of shares of Common Stock
issued or issuable pursuant to clauses (i), (ii) and (iii) shall not exceed (A)
2,211,298 shares of Common Stock issued or issuable pursuant to Stock-Based
Compensation Awards granted prior to the Effective Date and (B) 53,446,188
shares of Common Stock issued pursuant to Stock-Based Compensation Awards
granted after the Effective Date plus such number of shares of Common Stock
underlying Stock-Based Compensation Awards granted prior to the Effective Date
that lapse, are forfeited or are otherwise cancelled following the Effective
Date, in each case, provided such grants are made in compliance with Sections
3.8(b) and 3.9 of the Stockholder Agreement;
(i) split, combine or reclassify any of its capital stock in any manner
adverse to the Investor;
(j) other than transactions contemplated by the Master Agreement, entering
into any agreement or transaction or a series of related agreements or
transactions with a Paxson Stockholder or an Affiliate of a Paxson Stockholder
or of the Company or a family member of a Paxson Stockholder, which (i) is not
on an arm's-length basis or (ii) involves an amount in excess of $100,000;
(k) except as provided in the Master Agreement, (i) entering into any
employment, compensation or other agreement with an employee or director of the
Company or any of its Subsidiaries (other than station managers) that (A)
provides for cash compensation (excluding bonus) reasonably expected to be in
excess of $400,000 per year or (B) has longer than a three-year term; or (ii)(A)
increasing the management fee payable pursuant to Section 5.2 of the PMC
Management Agreement or (B) amending such Section of the PMC Management
Agreement;
(l) any increase in the size of the Board of Directors other than any
increases as a result of a Voting Rights Triggering Event (as defined in the
certificates of designation relating to the Company's Existing Preferred Stock);
(m) any voluntary bankruptcy or winding up of the Company or filing for
protection under any Bankruptcy Law; or
(n) entering into any joint sales, joint services, time brokerage, local
marketing or similar agreement or arrangement (other than agreements or
arrangements that may be terminated at no cost to the Company upon six-months'
notice), but only if after entering into such agreement or
14
arrangement, Company Stations representing 20% or more of the Company's National
Coverage would be subject to such agreements or arrangements.
If any member of the Board of Directors, who was an Investor Nominee, votes
in such capacity to approve any matter set forth in Section 4.1 that requires
the consent of the Investor, the Investor shall be deemed to have consented to
such matter for purposes of this Section 4.1. Notwithstanding the foregoing, the
parties agree that there is no expressed or implied agreement to elect any
Investor Nominee to the Board of Directors of the Company.
Section 4.2 Modification of Investor Rights.
-------------------------------
(a) Subject to Section 4.2(b), for so long as NBCU or any of its Affiliates
holds the Minimum Investment, the Investor Rights set forth in Sections 4.1(a),
(f), and (l) shall be deemed to have no force or effect and Sections (g) and (k)
shall be deemed to read as follows:
(i) Section 4.1(g) shall be deemed to read: "(i) any sale, transfer,
assignment or other disposition in any single transaction or
series of related transactions of assets with a fair market value
(as determined by the Board of Directors in good faith) greater
than 20% of the fair market value (as determined by the Board of
Directors in good faith) of the Company's total assets, (ii) any
acquisition of assets, including pursuant to a merger,
consolidation or other business combination, if the consideration
payable for such assets in any single transaction or series of
related transactions exceeds 20% of the fair market value (as
determined by the Board of Directors in good faith) of the
Company's total assets or (iii) any merger or business combination
transaction where the Company is not the surviving entity or where
there is a Change of Control (as defined in the Stockholder
Agreement); provided that the prior consent of the Investor shall
not be required with respect to any transaction conducted during
any Default Redemption Period if such transaction is structured to
ensure that the Investor receives the full Default Redemption
Price for its redeemed Shares or Conversion Shares;"
(ii) Section 4.1(k) shall be deemed to read: "(i) increasing by more
than 20% the aggregate cash compensation (assuming full payment of
any bonus) paid to any one of the Company's ten most highly
compensated executives or (ii)(A) increasing the management fee
payable pursuant to Section 5.2 of the PMC Management Agreement
other than in accordance with such Section or (B) amending such
Section of the PMC Management Agreement;"
At such time that NBCU or any of its Affiliates no longer holds the Minimum
Investment, this Section 4.2(a) shall no longer have any force or effect.
(b) Upon the Investor Call Right Termination, the Investor Rights set forth
in Sections 4.1 (a), (c), (g), (h), (k), (l), and (n) of this Agreement
(including, to the extent applicable, as modified by Section 4.2(a)) shall
terminate and have no further force or effect.
15
ARTICLE V
OTHER AGREEMENTS
Section 5.1 Public Statements.
-----------------
Before any party or any Affiliate of such party shall release any
information concerning the Transaction Agreements or the matters contemplated
hereby or thereby which is intended for or can reasonably be expected to result
in public dissemination, such party shall cooperate with the other party, shall
furnish drafts of all documents or proposed oral statements to the other party,
provide the other party the opportunity to review and comment upon any such
documents or statements and shall not release or permit release of any such
information without the consent of the other party, except to the extent
required by applicable law or the rules of any securities exchange or automated
quotation system on which its securities or those of its Affiliate are traded.
Section 5.2 Reasonable Commercial Efforts.
-----------------------------
Subject to the terms and conditions provided in this Agreement, each party
shall use reasonable commercial efforts to take promptly, or cause to be taken,
all actions, and to do promptly, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, to obtain all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to remove any injunctions or other impediments or delays, legal or
otherwise, in order to consummate and make effective the transactions
contemplated by this Agreement for the purpose of securing to the parties hereto
the benefits contemplated by this Agreement; provided that notwithstanding
anything to the contrary in this Agreement, no party nor any of its Affiliates
shall be required to make any disposition of, or enter into any agreement to
hold separate, any Subsidiary, asset or business, and no party hereto nor any of
its Affiliates shall be required to make any payment of money nor shall any
party or its Affiliates be required to comply with any condition or undertaking
or take any action which, individually or in the aggregate, would materially
adversely affect the economic benefits to such party of the transactions
contemplated hereby and by the other Transaction Agreements, taken as a whole,
or materially adversely affect any other business of such party or its
Affiliates.
Section 5.3 Government Filings.
------------------
(a) Each of the Company and the Investor will make as promptly as
practicable, after notice to such effect by the Investor to the Company, all
filings required to be made, if any, by it, including in connection with a
tender offer pursuant to Section 3.5 of the Stockholder Agreement, under the HSR
Act and any other applicable laws, rules, regulations or orders of any
Governmental Entity with regard to the transactions which are the subject of
this Agreement and the other Transaction Agreements (including, without
limitation, the conversion of the Shares, the purchase of shares pursuant to the
Call Agreement and the holding of the Conversion Shares) and each of them will
take all reasonable steps within its control (including providing information to
the Federal Trade Commission and the Department of Justice) to cause the waiting
periods required by the HSR Act to be terminated or to expire as promptly as
practicable.
16
The Company and the Investor will each provide information and cooperate in all
other respects to assist the other of them in making its filings under the HSR
Act.
(b) Each of the Company and the Investor will make as promptly as
practicable after notice to such effect by the Investor to the Company, all
filings required to be made, if any, by it under the Communications Act or the
rules and regulations related thereto with regard to the transactions which are
subject of this Agreement and the other Transaction Agreements (including
without limitation the conversion of the Shares, the purchase of shares pursuant
to the Call Agreement and the holding of the Conversion Shares) and each of them
will take all reasonable steps within its control (including providing
information to the FCC) to obtain any required consents or approvals as promptly
as practicable. The Company and the Investor will each provide information and
cooperate in all other respects to assist the other of them in making its
filings under the Communications Act.
(c) At any time that the Investor holds an attributable interest in the
Company within the meaning of 47 C.F.R. ss. 73.3555 of the rules of the FCC
(including any successor rule) that it is not permitted to hold pursuant to the
FCC's rules, the parties shall cooperate fully with each other and negotiate in
good faith to agree on such actions as may be necessary so that the Investor
comes into compliance with the FCC's rules, including, without limitation, the
transfer or redemption of shares of Series B Preferred Stock held by the
Investor (however, the parties understand that there shall be no obligation on
the part of the Company to so redeem) or a transfer of shares of Series B
Preferred Stock pursuant to Section 4.1(a)(iii) of the Stockholder Agreement.
Section 5.4 Reservation of Shares.
---------------------
The Company agrees to keep reserved for issuance at all times after the
adoption of the Stockholder Proposals, as contemplated in the Stockholder
Agreement, prior to conversion of the Shares the aggregate number of Conversion
Shares issuable upon conversion of the Shares.
Section 5.5 Notification of Certain Matters.
-------------------------------
Each party to this Agreement shall give prompt notice to the other party of
any failure of any party to comply with or satisfy any covenant or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.5 shall not limit or otherwise
affect any remedies available to the party receiving such notice.
Section 5.6 Further Assurances.
------------------
Each party shall execute and deliver such additional instruments and other
documents and shall take such further actions as may be necessary or appropriate
to effectuate, carry out and comply with all of the terms of this Agreement and
the transactions contemplated hereby, including, without limitation, making
application as soon as practicable for all consents and approvals required in
connection with the transactions contemplated hereby and diligently pursuing the
receipt of such consents and approvals in good faith.
Section 5.7 Company Stockholder Meetings.
----------------------------
17
At the first annual meeting of the stockholders of the Company occurring
after the date hereof, and in any event no later than June 30, 2006, the Company
shall seek stockholder approval of the Stockholder Proposals, provided, however,
that if the Investor exercises the Call Right (as defined in the Call Agreement)
prior to such time, the Company shall seek stockholder approval of the
Stockholder Proposals as soon as practicable. All reasonable and customary
documented expenses incurred by the Company in connection with seeking
stockholder approval of the Stockholder Proposals prior to the annual meeting
referred to in the immediately preceding sentence shall be borne by the
Investor.
Section 5.8 Access to Information.
---------------------
Subject to applicable laws, the Company shall, and shall cause the Company
Subsidiaries to, afford the officers, employees, auditors and other agents of
the Investor reasonable access during normal business hours to their officers,
employees, properties, offices, plants and other facilities, and contracts,
commitments, books and records relating thereto, and shall furnish such Persons
all such documents and such financial, operating and other data and information
regarding such businesses and Persons that are in the possession of such Person
as the Investor through its officers, employees or agents may from time to time
reasonably request. All such information will be provided subject to the terms
of the confidentiality agreement dated May 12, 1999, between the Company and the
Investor.
ARTICLE VI
AFFIRMATIVE AND NEGATIVE COVENANTS
Section 6.1 Maintenance of Existence and Property; FCC Licenses.
---------------------------------------------------
The Company shall do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence and its rights and
franchises material to its business. The Company and each Company Subsidiary
shall maintain in good repair, working order and condition all of the properties
that are material to the Company and the Company Subsidiaries, taken as a whole,
used or useful in the business of such Person and from time to time will make or
cause to be made all appropriate (as reasonably determined by such Person)
repairs, renewals and replacements thereof. The Company shall, and shall cause
each Company Subsidiary to, use its best efforts to keep in full force and
effect all of its material FCC Licenses and shall provide the Investor with a
copy of any (or, in the event of any notice based on knowledge of such Person, a
brief description of such default and the basis of such knowledge) notice from
the FCC of any violation with respect to any material FCC License received by it
(or with respect to which such Person may have any knowledge).
Section 6.2 Payment of Obligations.
----------------------
(a) Subject to Section 6.2(b), except as disclosed in the Company's SEC
filings prior to the date hereof, the Company shall pay and discharge or cause
to be paid and discharged before any penalty accrues thereon all material Taxes
payable by it or any Company Subsidiary.
18
(b) The Company and each Company Subsidiary may in good faith contest, by
appropriate proceedings, the validity or amount of any Taxes described in
Section 6.2(a); provided that (i) adequate reserves with respect to such contest
are maintained on the books of such Person, in accordance with GAAP and (ii)
such Person shall promptly pay or discharge such contested Taxes and all
additional charges, interest, penalties and expenses, if any, if such contest is
terminated or discontinued adversely to such Person or the conditions set forth
in this Section 6.2(b) are no longer met.
Section 6.3 Books and Records.
-----------------
The Company shall, and shall cause each Company Subsidiary to, keep adequate
books and records with respect to its business activities in which proper
entries, reflecting all financial transactions, are made in accordance with GAAP
and on a basis consistent with the Company's audited financial statements for
the twelve month period ended December 31, 2004.
Section 6.4 Insurance.
---------
The Company shall, and shall cause each Company Subsidiary to, maintain or
cause to be maintained, with financially sound and reputable insurers, insurance
with respect to its business and properties, including, without limitation,
business interruption insurance, insurance on fixed assets and directors and
officers' liability insurance, against loss or damage of the kinds customarily
carried or maintained under similar circumstances by entities of established
reputation engaged in similar businesses.
Section 6.5 Compliance with Laws, Etc.
-------------------------
The Company shall, and shall cause each Company Subsidiary to, comply with
all (i) federal, state, local and foreign laws and regulations applicable to it,
including those relating to the Communications Act, ERISA and labor matters and
Environmental Laws and Environmental Permits, except to the extent that any such
non-compliance has not had and could not reasonably be expected to have a
Material Adverse Effect and (ii) provisions of all FCC licenses, certifications
and permits, franchises, or other permits and authorizations relating to the
operation of the Company's business and all other material agreements, licenses
or leases to which it is a party or of which it is a beneficiary and suffer no
loss or forfeiture thereof or thereunder, except to the extent that any such
non-compliance or loss or forfeiture has not had and could not reasonably be
expected to have a Material Adverse Effect.
Section 6.6 Environmental Matters.
---------------------
The Company shall, and shall cause each Company Subsidiary to, and shall
cause each Person within its control to: (a) conduct its operations and keep and
maintain its real estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance which could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions which are appropriate
or necessary to comply with Environmental Laws and Environmental Permits
pertaining to the presence, generation, treatment, storage, use, disposal,
transportation or Release of any Hazardous Material on, at, in, under, above,
to, from or about any of its real estate, except as could not reasonably be
expected to have a Material Adverse Effect; (c) notify the Investor
19
promptly after such Person becomes aware of any violation of Environmental Laws
or Environmental Permits or any Release on, at, in, under, above, to, from or
about any of its real estate which is reasonably likely to have a Material
Adverse Effect; and (d) promptly forward to the Investor a copy of any order,
notice, request for information or any communication or report received by such
Person in connection with any such violation or Release or any other matter
relating to any Environmental Laws or Environmental Permits that could
reasonably be expected to have a Material Adverse Effect, in each case whether
or not the Environmental Protection Agency or any Governmental Entity has taken
or threatened any action in connection with any such violation, Release or other
matter.
Section 6.7 Material Adverse Effect.
-----------------------
The Company shall not make any changes in any of its business objectives,
purposes or operations which could reasonably be expected to have or result in a
Material Adverse Effect on the Company of the type described in clause (ii) of
the definition of Material Adverse Effect.
Section 6.8 ERISA.
-----
The Company shall not, and shall not cause or permit any ERISA Affiliate to,
cause or permit to occur an event which could result in the imposition of a Lien
under Section 412 of the Code or Section 302 or 4068 of ERISA or cause or permit
to occur an ERISA Event to the extent such ERISA Event could reasonably be
expected to have a Material Adverse Effect.
Section 6.9 Hazardous Materials.
-------------------
The Company shall not, and shall not cause or permit any Company Subsidiary
to, cause or permit a Release of any Hazardous Material on, at, in, under,
above, to, from or about any of its real estate where such Release would violate
in any material respect, or form the basis for any material Environmental
Liabilities under, any Environmental Laws or Environmental Permits.
Section 6.10 No Impairment of Intercompany Transfers.
---------------------------------------
Except in connection with any transaction contemplated in any of the
Transaction Agreements, the Company shall not permit any Company Subsidiary to
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation which could directly or indirectly restrict,
prohibit or require the consent of any Person with respect to the payment of
dividends or distributions or the making or repayment of intercompany loans by
any Company Subsidiary to another Company Subsidiary or the Company.
Section 6.11 Limitation on Certain Asset Sales.
---------------------------------
The Company will not, and will not permit any Company Subsidiary to,
consummate an Asset Sale unless (i) the Company or such Company Subsidiary, as
the case may be, receives consideration at the time of such sale or other
disposition at least equal to the fair market value thereof on the date the
Company or the Company Subsidiary (as applicable) entered into the agreement to
consummate such Asset Sale (as determined in good faith by the Company's Board
of Directors, and evidenced by a resolution of the Board of Directors); (ii) not
less than 75% of the consideration received by the Company or such Company
Subsidiary, as the case may be, is
20
in the form of cash or cash equivalents other than in the case where the Company
is exchanging all or substantially all of the assets of one or more media
properties operated by the Company (including by way of the transfer of capital
stock) for all or substantially all of the assets (including by way of transfer
of capital stock) constituting one or more media properties operated by another
Person, provided that at least 75% of the consideration received by the Company
in such exchange, other than the media properties, is in the form of cash or
cash equivalents; and (iii) the proceeds of such Asset Sale received by the
Company or such Company Subsidiary are applied first, to the extent the Company
elects or is required, to prepay, repay or purchase debt under any then existing
indebtedness of the Company or any Company Subsidiary within 180 days following
the receipt of the proceeds of such Asset Sale and second, to the extent of the
balance of the proceeds of such Asset Sale after application as described above,
to the extent the Company elects, to make an Investment in assets (including
capital stock or other securities purchased in connection with the acquisition
of capital stock or property of another Person) used or useful in businesses
similar or ancillary to the business of the Company or any Company Subsidiary as
conducted at the time of such Asset Sale, provided that such investment occurs
or the Company or any Company Subsidiary enters into contractual commitments to
make such investment, subject only to customary conditions (other than the
obtaining of financing), on or prior to the 181st day following receipt of the
proceeds of such Asset Sale and the proceeds of such Asset Sale contractually
committed are so applied within 360 days following the receipt of the proceeds
of such Asset Sale.
Section 6.12 No Restrictive Covenants.
------------------------
The Company and each Company Subsidiary shall not enter into any agreement
that would in any way restrict or limit the Company's ability to redeem the
Shares, or pay the New Exchange Debentures, at maturity.
ARTICLE VII
OPERATING AGREEMENTS
Section 7.1 [Intentionally Omitted].
-----------------------
Section 7.2 Investor Right of First Refusal.
-------------------------------
(a) So long as the Investor owns the Minimum Investment, during the
Restricted Period, the Company or any Company Subsidiary at any time intends to
effect a Station Transfer to any Person other than a wholly owned Company
Subsidiary (a "Station Third Party"), the Company shall give written notice to
the Investor at least 30 days prior to the effectiveness of such Station
Transfer (a "Station Offer Notice"), stating the Company's intention to make
such a Station Transfer, the name of the proposed Station Third Party, the
assets or securities proposed to be transferred, the consideration to be paid
for such assets or securities (the "Station Offer Price") and in reasonable
detail all other material terms and conditions upon which such Station Transfer
is proposed. Notwithstanding the foregoing, the Investor shall not be entitled
to a right of first refusal with respect to the assets or securities of any
Company Station that is not located in one of the fifty largest DMAs.
21
(b) Upon receipt of the Station Offer Notice, the Investor shall have an
option to purchase all of the assets or securities proposed to be transferred at
the Station Offer Price and on the other material terms and condition set forth
in the Station Offer Notice, which option may be exercised by written notice to
the Company given within 30 days of the Investor's receipt of the Station Offer
Notice. If any portion of the consideration to be paid by such Station Third
Party is not cash, the Investor may pay in lieu of such non-cash consideration
cash equal to the fair market value thereof. The fair market value shall be
determined by mutual agreement or, if no such agreement shall be reached within
ten days, by the determination of an independent nationally recognized appraiser
selected by the Company and reasonably acceptable to the Investor.
(c) If the Investor exercises its option pursuant to Section 7.2(b), the
closing of such purchase shall take place within 30 days of the date the
Investor gives notice of such exercise, except to the extent FCC approval is
required or reasonably advisable for the transaction, in which case the closing
shall take place as soon as practicable after receipt of final, non-appealable
approval from the FCC.
(d) If the Investor determines not to exercise its option, then for a period
of 60 days from the earlier of (i) the expiration of the offer to the Investor
and (ii) the receipt of written notice from the Investor stating that the
Investor does not intend to exercise its option, or for such longer period
required or reasonably advisable for FCC approval, the Company shall be free to
sell the proposed assets or securities to the Station Third Party at a price
equal to or greater than the Station Offer Price and on substantially the same
terms as set forth in the Station Offer Notice.
Section 7.3 [Intentionally Omitted].
-----------------------
Section 7.4 [Intentionally Omitted].
-----------------------
Section 7.5 [Intentionally Omitted].
-----------------------
ARTICLE VIII
[INTENTIONALLY OMITTED]
ARTICLE IX
REDEMPTION
Section 9.1 [Intentionally Omitted].
-----------------------
Section 9.2 Default Redemption.
------------------
(a) In the event that an Event of Default occurs, then the Investor will
have the right to require the Company to redeem, by payment in cash, any Shares
or Conversion Shares at a price equal to the Default Redemption Price by
delivering notice to the Company (a "Notice of Default
22
Redemption") following written notice by the Company to the Investor of an Event
of Default or written notice by the Investor to the Company of an Event of
Default; provided that the Investor may only give a Notice of Default Redemption
(i) after the Restricted Period and (ii) if at such time the Event of Default is
continuing.
(b) The Company or its assignee pursuant to Section 9.3 will have a period
of 180 days (the "Default Redemption Period") from the date of any such demand
to consummate the redemption; provided that if at any time during such 180-day
period, the Company's outstanding debt and preferred stock covenants do not
prohibit a redemption and the Company has funds on hand to consummate such
redemption, then the Company or its assignee shall consummate such redemption at
such time. Notwithstanding the foregoing, in the event the Company assigns its
redemption obligation to a third party pursuant to Section 9.3, then the Default
Redemption Period shall terminate on the earlier of (i) 180 days from the date
of such demand to consummate the redemption and (ii) 30 days after such
assignment.
Section 9.3 Assignment of Redemption Obligation.
-----------------------------------
The Company may assign its redemption obligation under Section 9.2 to a
third party. The Company shall provide the Investor with notice at least 30 days
prior to any proposed assignment of its redemption obligation to a third party;
provided that if it is not possible to provide notice 30 days prior to such
assignment, the Company shall provide such notice as soon as possible.
Section 9.4 Failure to Redeem.
-----------------
In the event the Company or its assignee, as the case may be, does not
consummate a redemption pursuant to Section 9.2 during the Default Redemption
Period, then, for a period of 180 days after the expiration of the Default
Redemption Period (the "Investor Recourse Period"), the Investor may sell the
Shares and the Conversion Shares and transfer the related rights under this
Agreement, the Stockholder Agreement and the Registration Rights Agreement to
any party without regard to the restrictions on transferability set forth
therein, including any consent right; provided that the transfer of the Investor
Rights shall be subject to the transferee acquiring the Minimum Investment (an
"Unrestricted Transfer"). If, at the end of the Investor Recourse Period, the
Investor has not effected an Unrestricted Transfer, then the Company shall have
a 30-day period during which to effect a redemption at the Default Redemption
Price. If the Company does not effect redemption during such period, then the
Investor shall have the right to effect a Company Sale pursuant to Section 9.5.
Section 9.5 Company Sale.
------------
If the Company fails to effect a redemption as set forth in Section 9.4, the
Investor may require the Company to effect, at the Company's option, either a
public sale or a liquidation of the Company (a "Company Sale"), exercisable by
written notice to the Company. If the Investor exercises such right, any
Investor Nominees who have been elected to the Board shall immediately resign as
directors. The Investor will retain the rights to participate as a bidder in any
such sale; provided that if the highest bid in any such public sale is not in an
amount sufficient to pay the Investor the Default Redemption Price for all the
Shares and Conversion
23
Shares held by the Investor, the Investor will have a right of first refusal to
purchase the Company for such highest bid amount. The Company shall be required
to accept any offer it receives which provides for payment to the Investor of
the full Default Redemption Price for all Shares and Conversion Shares held by
the Investor; provided that if the Company receives more than one such offer,
the Company shall have the right to determine which offer to accept.
ARTICLE X
MISCELLANEOUS
Section 10.1 Survival of Representations and Warranties.
------------------------------------------
The Surviving Representations and Warranties which were made as of September
15, 1999, shall continue to survive indefinitely, and the representations and
warranties in Section 3.1(j) of the Original Investment Agreement, which were
also made as of September 15, 1999, the terms of which are incorporated herein
by reference (including any relevant disclosure schedules with respect thereto)
shall survive until 30 days after the expiration of the applicable statute of
limitations relating to the taxes or other matters covered. For the avoidance of
doubt, it is understood and agreed that except for the Surviving Representations
and Warranties and the representations and warranties set forth in Section
3.1(j) of the Original Investment Agreement, which shall survive in accordance
with the preceding sentence, none of the other representations and warranties
made in the Original Investment Agreement, whether made by either the Company or
the Investor, survive; provided, however, that except as set forth in the
Settlement Agreement, the parties hereto retain all rights, powers and remedies
available at law or in equity or otherwise in connection with any breach arising
out of the Original Investment Agreement prior to the date hereof, and the
execution of this Agreement by the parties shall not operate as a waiver of, nor
shall it prejudice, any such right, power or remedy now or hereafter existing at
law or in equity or otherwise except for any rights, powers or remedies arising
out of events that occurred prior to the date hereof to the extent the events
giving rise to such rights, powers or remedies were disclosed in the Company's
public filings with the FCC or SEC, disclosed in writings to the Investor or
actually known by those individuals listed on Schedule 10.1, which rights,
powers and remedies shall be null and void and of no further force or effect.
Section 10.2 Notices.
-------
All notices and other communications hereunder shall be in writing and shall
be deemed to have been duly given, if delivered personally, by telecopier or
sent by overnight courier as follows:
(a) If to the Investor, to:
NBC Universal, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Tel: 212-646-7024
Fax: 212-646-4733
24
with a copy to:
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Attention: John A. Marzulli, Jr.
Tel: 212-848-8590
Fax: 646-848-8590
(b) If to the Company, to:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: General Counsel
Tel: 561-659-4122
Fax: 561-655-9424
with copies to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W., Suite 800
Washington, DC 20036
Attention: John R. Feore, Jr.
Tel: 202-776-2000
Telecopy: 202-776-2222
and
Holland & Knight LLP
22 Lakeview Avenue, Suite 1000
West Palm Beach, Florida 33401
Attention: David L. Perry, Jr.
Tel: 561-650-8314
Fax: 561-650-8399
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
Section 10.3 Entire Agreement; Amendment.
---------------------------
The Transaction Agreements and the documents described therein or attached
or delivered pursuant thereto set forth the entire agreement between the parties
thereto with respect to the transactions contemplated by such agreements. This
Agreement amends and restates the Original Investment Agreement in its entirety
and such Original Investment Agreement shall be of no further force or effect,
other than as set forth in Section 10.1 of this Agreement. Any provision of this
Agreement may be amended or modified in whole or in part at any time only by an
agreement in writing signed by all of the parties. No failure on the part of any
party to
25
exercise, and no delay in exercising, any right shall operate as a waiver
thereof nor shall any single or partial exercise by any party of any right
preclude any other or future exercise thereof or the exercise of any other
right.
Section 10.4 Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to constitute an original, but all of which together shall
constitute one and the same document.
Section 10.5 Governing Law; Jurisdiction; Waiver of Jury Trial.
-------------------------------------------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to contracts executed and performed
within such state, and each party hereby submits to the jurisdiction of the
Delaware Chancery Court. In the event the Delaware Chancery Court does not have
jurisdiction over any dispute arising out of this Agreement, each party hereby
submits to the jurisdiction of the United States District Court for the Southern
District of New York, provided that in the event such court does not have
jurisdiction over any dispute arising out of this Agreement, each party hereby
submits to the jurisdiction of the Supreme Court of the State of New York, New
York County. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER
THIS AGREEMENT.
Section 10.6 Fees and Expenses.
-----------------
Each party shall bear its own costs and expenses incurred in connection with
this Agreement and the Ancillary Documents and the transactions contemplated
hereby, including the fees and expenses of their respective accountants and
counsel.
Section 10.7 Indemnification by the Company.
------------------------------
(a) Subject to the provisions of Section 10.7(b), the Company agrees to
indemnify and save harmless the Investor and each of the respective officers,
directors, employees, agents and Affiliates of the Investor in their respective
capacities as such (the "Investor Indemnitees"), from and against any and all
actions, suits, claims, proceedings, costs, damages, judgments, amounts paid in
settlement (subject to Section 10.7(b)) and expenses (including, without
limitation, reasonable attorneys' fees and disbursements) (collectively,
"Losses"), suffered or incurred by any of them relating to or arising out of any
inaccuracy in or breach of the representations, warranties, covenants or
agreements made by the Company herein. No payment for Investor's Losses shall be
required except to the extent that the cumulative aggregate amount of such
Losses equals or exceeds $1,000,000. The Company's liability to the Investor
under this Section 10.7 shall not exceed $417,500,000.
(b) An Investor Indemnitee shall give written notice to the Company of any
claim with respect to which it seeks indemnification promptly after the
discovery by such party of any matters giving rise to a claim for
indemnification; provided that the failure of any Investor Indemnitee to give
notice as provided herein shall not relieve the Company of its obligations
26
under this Section 10.7 unless and to the extent that the Company shall have
been materially prejudiced by the failure of such Investor Indemnitee to so
notify the Company. In case any such action, suit, claim or proceeding is
brought against an Investor Indemnitee, the Company shall be entitled to
participate in the defense thereof and, to the extent that it may wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
Investor, and after notice from the Company of its election so to assume the
defense thereof, the Company will not be liable to such Investor Indemnitee
under this Section 10.7 for any legal or other expense subsequently incurred by
such Investor Indemnitee in connection with the defense thereof; provided,
however, that (i) if the Company shall elect not to assume the defense of such
claim or action or (ii) if outside legal counsel to the Investor Indemnitee
reasonably determines that there may be a conflict between the positions of the
Company and of the Investor Indemnitee in defending such claim or action, then
separate counsel shall be entitled to participate in the conduct of the defense,
and the Company shall be liable for any legal or other expenses reasonably
incurred by the Investor Indemnitee in connection with the defense (but only
with respect to one such separate counsel). The Company shall not be liable for
any settlement of any action, suit, claim or proceeding effected without its
written consent; provided, however, that the Company shall not unreasonably
withhold, delay or condition its consent. The Company further agrees that it
will not, without the Investor Indemnitee's prior written consent (which consent
shall not be unreasonably withheld), settle or compromise any claim or consent
to entry of any judgment in respect thereof in any pending or threatened action,
suit, claim or proceeding in respect of which indemnification may be sought
hereunder unless such settlement or compromise includes an unconditional release
of the Investor and each other Investor Indemnitee from all liability arising
out of such action, suit, claim or proceeding.
Section 10.8 Successors and Assigns; Third Party Beneficiaries.
-------------------------------------------------
Subject to compliance with applicable law, the Investor may assign its
rights under this Agreement in whole or in part only to (i) any Affiliate of the
Investor, but no such assignment shall relieve the Investor of its obligations
hereunder; or (ii) to a party that is not an Affiliate of the Investor in
compliance with the provisions of the Stockholder Agreement. Upon a valid
assignment in accordance with the provisions of the preceding sentence, such
assignee shall become the Investor for purposes hereof. For purposes of this
Agreement, any direct or indirect transfer to a third party of a controlling
interest in the capital stock of the Investor (other than if the Investor at the
applicable time is NBCU) shall be deemed to be an assignment hereunder and shall
be subject to all of the terms and conditions set forth herein. The Company may
not assign any of its rights or delegate any of its duties under this Agreement
without the prior written consent of the Investor. Any purported assignment in
violation of this Section shall be void. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any Person other than the
parties hereto and their respective successors any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and their
respective successors and permitted assigns, and for the benefit of no other
Person.
Section 10.9 Remedies.
--------
27
No right, power or remedy conferred upon the Investor in this Agreement or
the other Transaction Agreements to which it is a party shall be exclusive, and
each such right, power or remedy shall be cumulative and in addition to every
other right, power or remedy whether conferred in this Agreement or the other
Transaction Agreements to which it is a party or now or hereafter available at
law or in equity or by statute or otherwise. No course of dealing between the
Investor and the Company and no delay in exercising any right, power or remedy
conferred in this Agreement or now or hereafter existing at law or in equity or
by statute or otherwise shall operate as a waiver or otherwise prejudice any
such right, power or remedy. The parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement or the other
Transaction Agreements to which they are parties was not performed in accordance
with the terms hereof and that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement or the other Transaction
Agreements to which they are parties and to enforce specifically the terms and
provisions of this Agreement in addition to any other remedy to which they are
entitled at law or in equity.
Section 10.10 Headings, Captions and Table of Contents.
----------------------------------------
The section headings, captions and table of contents contained in this
Agreement are for reference purposes only, are not part of this Agreement and
shall not affect the meaning or interpretation of this Agreement.
Section 10.11 Termination.
-----------
Sections 4.1, 5.5, 5.7 and 5.8 and Article VI (other than Section 6.12) of
this Agreement shall terminate if neither (i) the Investor (together with its
Affiliates) owns at least the Minimum Investment nor (ii) a transferee of the
Investor to whom the Investor Rights were transferred in accordance with the
Stockholder Agreement owns at least the Minimum Investment. This Agreement shall
terminate in its entirety upon the earlier of (i) the Investor or a permitted
transferee acquiring shares of capital stock that provide it with the unfettered
right to vote a sufficient number of voting shares to elect a majority of the
members of the Board of Directors or (ii) December 31, 2013.
Section 10.12 Severability.
------------
If one or more provisions of this Agreement or the application thereof to
any Person or circumstances is determined by a court or agency of competent
jurisdiction to violate any law or regulation, including, without limitation,
any rule or policy of the FCC, or to be invalid, void or unenforceable to any
extent (a "Conflicting Provision"), the Conflicting Provision shall have no
further force or effect, but the remainder of this Agreement and the application
of the Conflicting Provision to other Persons or circumstances or in
jurisdictions other than those as to which it has been held invalid or
unenforceable shall not be affected thereby and shall be enforced to the
greatest extent permitted by law, so long as any such violation, invalidity or
unenforceability does not change the basic economic or legal positions of the
parties. In such event, the parties shall negotiate in good faith such changes
in other terms as shall be practicable in order to effect the original intent of
the parties.
28
IN WITNESS WHEREOF, this Amended and Restated Investment Agreement has been
executed by the parties hereto or by their respective duly authorized
representatives, all as of the date first above written.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Dean M. Goodman
-------------------------
Name: Dean M. Goodman
Title: President and Chief Operating Officer
NBC UNIVERSAL, INC.
By: /s/ Robert C. Wright
-------------------------
Name: Robert C. Wright
Title: President and Chief Executive Officer
Schedule 4.1(g)
Certain subsidiaries of the Company have entered into agreements to purchase
substantially all the assets of full power television stations serving the
Memphis, TN and New Orleans, LA markets for an aggregate purchase price of $36
million. The Company's subsidiaries have the right to purchase and the current
owner of such stations has the right to require the Company's subsidiaries to
purchase such stations at any time after January 1, 2007 through December 31,
2008.
Schedule 4.1(h)
Plan Options: 1,711,298
Non-Plan Options: 500,000
Schedule 10.1
Each of the current persons with the respective following positions, and any
person holding such position at any time during the period commencing on
September 15, 1999 and concluding on the Effective Date who is still employed by
General Electric Company.
Executive
- ---------
Robert C. Wright, President and CEO
Brandon Burgess, EVP Business Development
Lynn A. Calpeter, EVP and CFO
Richard Cotton, EVP and General Counsel
John Eck, EVP and President, Information Technology and Operations
Randy Falco, EVP and President, NBC Television Network
Jay Ireland, EVP and President, NBC Television Stations Division
Business Development
- --------------------
Bruce Campbell, SVP Business Development
Jay Bockhaus, VP, Business Development
Annie Balagot, Director, Business Development
Accounting
- ----------
Lance Robinson, SVP and Chief Accounting Officer
Seth Zirkel, Director, Business Development
Finance
- -------
Patricia Hutton - EVP & CFO Universal Studios
Tracie Winbigler - EVP, CFO, TVSD
Bradley Smith - VP, Finance, TVSD
Michael D. Collins - SVP, Financial Planning and Analysis
Vladimir Djedovic - Manager, Finance (Affiliate Compensation)
Mark Johnson - VP, Finance & Administration
Human Resources
- ---------------
David Crossen - VP, Human Resources, NBC Network
Tom Quick - VP, Human Resources, TVSD
Tax
- ---
Don Calvert - Counsel, Mergers & Acquisitions
Todd Davis - SVP, Tax
Leela Mookerjee - Tax Counsel
Brian O'Leary - VP, Tax Counsel
Law Department
- --------------
Susan Weiner, EVP Litigation and Assistant General Counsel
Elizabeth Newell, SVP Corporate & Transactions Law
Andrew Fossett, VP, Corporate Law
Sari Greenberg, VP, Corporate & Transactions Law
Daniel Kummer, VP, Litigation
Bill LeBeau, Senior Counsel, Regulatory
Patricia Suh, Senior Counsel, Corporate & Transactions Law
Elisabeth Yap, Litigation Counsel
TV Stations (General Managers)
- ------------------------------
Philadelphia: WCAU - Dennis Bianchi
Providence: WJAR - Lisa Churchville
New York: WNBC - Frank Commerford
Miami: WTVJ - Ardyth Diercks
Hartford: WVIT - David Doebler
D.C.: WRC - Michael Jack
Raleigh: WNCN - Barry Leffler
Los Angeles: KNBC - Paula Madison
Dallas: WKXAS - Tom O'Brien
Birmingham: WVTM - Jim Powell
San Francisco: KNTV - Linda Sullivan
Chicago: WMAQ - Larry Wert
NBC Network Sales & Pricing / National Spot Sales
- -------------------------------------------------
Keith Turner, President
Ed Swindler, EVP Network & CFO Commercial
Shari Post, Sales Account Executive, Network
Robin Radow - Sales Account Executive, Network
Programming
- -----------
Sheraton Kalouria - SVP, Daytime Programs
Narendra Reddy - VP, Programming
TV Group
- --------
Michael Steib , General Manager, WeatherPlus
Jean Dietz - VP, Affiliate Relations
John Damiano - SVP, Affiliate Relations
Marketing
- ---------
Ed O'Donnell - SVP, Marketing & Media Development
John D. Miller - President & Chief Marketing Officer
Kristen Hackett - Group Director, Marketing, TV
Other - Non-GE Employees
- ------------------------
Paul Bird, Debevoise & Plimpton
James Stewart, UBS
Lawrence P. Tu, Dell Computer Corp., former EVP and General Counsel, NBC
Universal
EXHIBIT 13
EXECUTION COPY
AMENDED AND RESTATED STOCKHOLDER AGREEMENT
DATED AS OF NOVEMBER 7, 2005
AMONG
PAXSON COMMUNICATIONS CORPORATION,
NBC UNIVERSAL, INC.,
MR. LOWELL W. PAXSON,
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP
AND
PAXSON ENTERPRISES, INC.
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS..................................................2
Section 1.1 Definitions....................................................2
ARTICLE II BOARD OF DIRECTORS.................................................10
Section 2.1 Board of Directors............................................10
Section 2.2 Certain Matters Relating to Directors.........................11
ARTICLE III CERTAIN AGREEMENTS................................................11
Section 3.1 Financial Statements and Other Reports........................11
Section 3.2 Certain Other Matters.........................................14
Section 3.3 Agreement to Vote Stock; Irrevocable Proxy....................15
Section 3.4 Company Sale..................................................15
Section 3.5 Tender Offer..................................................16
Section 3.6 Investor Call Right Termination...............................19
Section 3.7 Transfer of or Issuance by Paxson Management Corporation......21
Section 3.8 Management Incentive Pool.....................................21
Section 3.9 Issuance of Securities........................................21
Section 3.10 Transfer Notice..............................................21
Section 3.11 Negotiation of New Debt Covenants............................22
Section 3.12 Conversion...................................................22
ARTICLE IV TRANSFER RESTRICTIONS..............................................23
Section 4.1 Transfer of Series B Preferred Stock by the Investor..........23
Section 4.2 Paxson Stockholder Restrictions...............................24
Section 4.3 [INTENTIONALLY OMITTED].......................................24
Section 4.4 Legends.......................................................24
Section 4.5 [INTENTIONALLY OMITTED].......................................25
ARTICLE V [INTENTIONALLY OMITTED].............................................25
ARTICLE VI MISCELLANEOUS......................................................25
Section 6.1 Notices.......................................................25
Section 6.2 Entire Agreement; Amendment...................................27
Section 6.3 Severability..................................................27
Section 6.4 Counterparts..................................................28
Section 6.5 Governing Law; Jurisdiction; Waiver of Jury Trial.............28
Section 6.6 Successors and Assigns; Third Party Beneficiaries.............28
Section 6.7 [INTENTIONALLY OMITTED].......................................29
Section 6.8 Remedies......................................................29
Section 6.9 Headings, Captions and Table of Contents......................29
Section 6.10 Termination..................................................29
Section 6.11 Additional Paxson Stockholders...............................29
- i -
Schedule 3.8 - Terms of Management Incentive Pool
Schedule 6.2 - List of Individuals
Exhibit A - Assumption Agreement
- ii -
AMENDED AND RESTATED STOCKHOLDER AGREEMENT
AMENDED AND RESTATED STOCKHOLDER AGREEMENT, dated as of November 7,
2005, among PAXSON COMMUNICATIONS CORPORATION, a Delaware corporation (together
with its successors, the "Company"), NBC UNIVERSAL, INC. (f/k/a NATIONAL
BROADCASTING COMPANY, INC.), a Delaware corporation (together with its
successors, the "Investor"), and Mr. LOWELL W. PAXSON, SECOND CRYSTAL DIAMOND
LIMITED PARTNERSHIP, a Nevada limited partnership, and PAXSON ENTERPRISES, INC.,
a Nevada corporation (collectively, the "Paxson Stockholders").
W I T N E S S E T H:
WHEREAS, on September 15, 1999, the Investor, and certain of its
Affiliates, invested $415,000,000 (the "Initial Investment") in the Company,
and, in connection with the Initial Investment,
1. the Company and the Investor entered into an Investment Agreement
(the "Original Investment Agreement"), pursuant to which the
Investor purchased certain securities from the Company;
2. the Company, the Investor and the Paxson Stockholders entered into
a Stockholder Agreement (the "Original Stockholder Agreement"), to
provide for certain matters with respect to the governance of the
Company;
3. the Paxson Stockholders and NBC Palm Beach Investment II, Inc.
("NBC Palm II") entered into a Call Agreement (the "Original Call
Agreement"), pursuant to which the Paxson Stockholders granted NBC
Palm II an option to purchase certain securities of the Company
held by them; and
4. the Company and the Investor entered into a Registration Rights
Agreement (the "Original Registration Rights Agreement" and,
together with the Original Investment Agreement, the Original
Stockholder Agreement and the Original Call Agreement, the
"Existing Agreements"), pursuant to which the Company granted the
Investor and certain of its Affiliates certain registration rights
with respect to certain shares of Class A Common Stock (as defined
below) held or acquired by the Investor and certain of its
Affiliates;
WHEREAS, since the date of the Initial Investment, certain disputes
have arisen among the parties as to their rights and obligations under the
Existing Agreements, and the parties have agreed to resolve those disputes and
restructure the Initial Investment, subject to the terms and conditions of the
Transaction Agreements;
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereto hereby agree to amend and
restate the Original Stockholder Agreement as follows:
ARTICLE I
CERTAIN DEFINITIONS
-------------------
Section 1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Affiliate" shall mean, with respect to any Person, any other Person
that controls, is controlled by, or is under common control with, such Person,
including the executive officers and directors of such Person. As used in this
definition, "control" (including its correlative meanings, "controlled by" and
"under common control with") shall mean the possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"Agreement" shall mean this Agreement, as from time to time amended,
modified or supplemented.
"Beneficially Own" shall have the meaning set forth in Rule 13d-3 under
the Exchange Act.
"Board of Directors" shall mean the Board of Directors of the Company
as from time to time constituted.
"Business Day" shall mean any day, other than a Saturday, Sunday or a
day on which commercial banks in New York, New York are authorized or obligated
by law or executive order to close.
"Call Agreement" shall mean the Call Agreement, dated as of the date
hereof, between NBC Palm II and the Paxson Stockholders, as from time to time
amended, modified or supplemented.
"Call Closing" shall have the meaning set forth in Section 2.3 of the
Call Agreement.
"Call Right" shall have the meaning set forth in Section 2.1 of the
Call Agreement.
"Call Period" shall have the meaning set forth in Section 1.1 of the
Call Agreement.
"Call Shares" shall have the meaning set forth in Section 1.1 of the
Call Agreement.
"Certificate of Designation" shall mean the Amended and Restated
Certificate of Designation of the Series B Preferred Stock, filed with the
Secretary of State of the State of Delaware on or prior to the date hereof, as
from time to time amended, modified or supplemented.
2
"Change of Control" shall mean, with respect to the Company, (i) any
Person (including a Person's Affiliate), other than a Permitted Holder,
Beneficially Owning 50% or more of the Total Voting Power, (ii) any Person
(including a Person's Affiliate), other than a Permitted Holder, Beneficially
Owning more than 33 1/3% of the Total Voting Power, and the Permitted Holders
Beneficially Owning, in the aggregate, a lesser percentage of the Total Voting
Power than such other Person and not having the right or ability by voting
power, contract or otherwise to elect or designate for election a majority of
the Board of Directors, (iii) the consummation of a consolidation or merger of
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which the Common Stock is converted into cash, securities or
other property, other than a consolidation or merger of the Company in which the
holders of Common Stock of the Company outstanding immediately prior to the
consolidation or merger hold, directly or indirectly, at least a majority of the
total voting power of the common stock of the surviving corporation immediately
after such consolidation or merger, (iv) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the Company
has been approved by a majority of the directors then still in office who either
were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the Board of Directors or (v) any "change of control" occurs (as
defined at such time) with respect to any outstanding preferred stock or
indebtedness of the Company.
"Class A Common Stock" shall mean the shares of Class A Common Stock,
par value $0.001 per share, of the Company.
"Class B Common Stock" shall mean the shares of Class B Common Stock,
par value $0.001 per share, of the Company.
"Class C Common Stock" shall mean the shares of Class C Non-Voting
Common Stock, par value $0.001 per share, of the Company.
"Common Stock" shall mean the Class A Common Stock, Class B Common
Stock and Class C Common Stock, par value $0.001 per share, and any other class
of common stock of the Company hereafter created and any securities of the
Company into which such Common Stock may be reclassified, exchanged or
converted.
"Communications Act" shall have the meaning set forth in Section 1.1 of
the Investment Agreement.
"Company" shall have the meaning set forth in the preamble hereto.
"Company CEO" shall mean the chief executive officer of the Company
appointed on the date hereof in connection with the execution of the Transaction
Agreements and any successor, unless the initial Company CEO was terminated by
the Company without Cause or the initial Company CEO resigned for Good Reason
(in each case, as such terms are defined in the Burgess Employment Agreement (as
defined in the Master Agreement)).
3
"Company Sale" shall have the meaning set forth in Section 9.5 of the
Investment Agreement.
"Company Stations" shall mean, collectively, each full service
television, low power television and television translator station owned and
operated by the Company or any Company Subsidiary.
"Conversion Shares" shall mean the shares of Common Stock into which
the shares of Series B Preferred Stock are convertible, as such shares may be
equitably adjusted to reflect any stock dividend or distribution on, stock split
or reverse stock split of, or similar event with respect to Common Stock (other
than the issuance of preferred stock of the Company to the Eligible Stockholders
pursuant to Section 3.6(b) hereof) and any merger, consolidation, combination,
reclassification, recapitalization or similar transaction involving Common
Stock.
"DMA" shall have the meaning set forth in Section 1.1 of the Investment
Agreement.
"Early Tender Offer" shall have the meaning set forth in Section
3.5(b).
"EDP Attribution" shall have the meaning set forth in Section 4.1(a).
"Effective Date" shall mean the date hereof.
"Eligible Stockholders" shall have the meaning set forth in Section
3.6(b).
"Escrow Agent" shall mean the escrow agent named in the Escrow
Agreement or any successor thereto.
"Escrow Agreement" shall mean the Escrow Agreement to be entered into
among the Investor, the Paxson Stockholders and the Escrow Agent within three
Business Days following the Effective Date, as from time to time amended,
modified or supplemented.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Existing Agreements" shall have the meaning set forth in the recitals
hereto.
"Existing Preferred Stock" shall mean the (i) 14 1/4% Cumulative Junior
Exchangeable Preferred Stock and (ii) 9 3/4% Series A Convertible Preferred
Stock, collectively.
"Expiration Date" shall have the meaning set forth in Section 3.5(c).
"FCC" shall mean the Federal Communications Commission and any
successor governmental entity performing functions similar to those performed by
the Federal Communications Commission on the date hereof.
"FCC Single Majority Stockholder" shall mean a Person who holds or has
the right to vote shares of voting stock having more than 50% of the Total
Voting Power of all of the
4
outstanding Voting Stock and voting stock equivalents of the Company, whether
such shares of voting stock are issued to such Person or such Person's
Affiliate.
"14 1/4% Cumulative Junior Exchangeable Preferred Stock" shall mean the
14 1/4% Cumulative Junior Exchangeable Preferred Stock, par value $0.001 per
share, issued pursuant to the Certificate of Designation of the Powers,
Preferences and Relative, Participating, Optional and Other Special Rights of 13
1/4% Cumulative Junior Exchangeable Preferred Stock and Qualifications,
Limitations and Restrictions Thereof, filed on August 7, 1998.
"Grantee" shall have the meaning set forth in Section 3.3(b).
"Independent" shall mean, with respect to a director or proposed
director, that such person is (i) "independent", as determined in accordance
with Section 121A of the Company Guide of the American Stock Exchange rules and
(ii) was not employed by, engaged by or affiliated with the Company, the
Investor or any Paxson Stockholder or any of their Affiliates within the past
three years.
"Initial Investment" shall have the meaning set forth in the recitals
hereto.
"Initial Expiration Date" shall have the meaning set forth in Section
3.5(c).
"Investment Agreement" shall mean the Amended and Restated Investment
Agreement, dated as of the date hereof, between the Company and the Investor, as
such agreement may from time to time be amended, modified or supplemented.
"Investor" shall have the meaning set forth in the preamble hereto.
"Investor Call Right Termination" shall have the meaning set forth in
Section 1.1 of the Call Agreement.
"Investor Call Right Termination Amount" shall mean the amount of
$105,000,000, increasing at a rate per annum equal to 10% from October 1, 2005
through the date of the Investor Call Right Termination.
"Investor Nominee" shall mean any individual proposed by a Permitted
Transferee for election to the Board of Directors, which individual (i) shall
not have an attributable interest in the Investor or any entity having an
attributable interest in a broadcast license for purposes of the FCC and (ii)
shall be Independent.
"Investor Rights" shall mean the rights of the Investor set forth in
Articles II, III and IV of this Agreement and in Articles IV and VI, other than
Section 6.12, of the Investment Agreement.
"Investor Transfer Restriction Period" shall mean the period commencing
on the Effective Date and ending on the earlier of the exercise of the Call
Right by the Investor or a Permitted Transferee, as applicable, or the date of
the Investor Call Right Termination.
5
"Issuance Restriction Period" shall mean the period commencing on the
Effective Date and ending on the earlier of (i) the consummation of the Early
Tender Offer or the Tender Offer, as the case may be, or (ii) the termination of
the Restricted Period.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or security agreement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement or any financing lease having substantially the same
effect as any of the foregoing).
"Master Agreement" shall mean the Master Transaction Agreement, dated
as of the date hereof, among the Company, the Investor, the Paxson Stockholders,
Paxson Management Corporation, NBC Palm I and NBC Palm II, as from time to time
amended, modified or supplemented.
"Material Adverse Effect" shall mean a material adverse effect on (i)
with respect to the Company, the business, assets, operations or financial or
other condition of the Company and the Company Subsidiaries taken as a whole or
(ii) with respect to any party to any Transaction Agreement, the ability of such
party to perform its obligations under such Transaction Agreement to which it is
a party.
"Minimum Investment" shall have the meaning set forth in Section 1.1 of
the Investment Agreement.
"9 3/4% Series A Convertible Preferred Stock" shall mean the 9 3/4%
Series A Convertible Preferred Stock, par value $0.001 per share, issued
pursuant to the Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights of 9 3/4% Series A
Convertible Preferred Stock and Qualifications, Limitations and Restrictions
Thereof, dated as of June 9, 1998.
"NBC Palm I" shall mean NBC Palm Beach Investment I, Inc., a California
corporation.
"NBC Palm II" shall have the meaning set forth in the recitals hereto.
"New Exchange Debentures" shall have the meaning set forth in paragraph
(n) of the Certificate of Designation.
"Observers" shall have the meaning set forth in Section 2.1(a).
"Offer Documents" shall have the meaning set forth in Section 3.5(c).
"Offer Price" shall mean $1.25 per share of Class A Common Stock to be
offered in a Tender Offer, increasing at a rate per annum equal to 10% from
October 1, 2005 through the date of the commencement of the Tender Offer, as
such price may be equitably adjusted to reflect (i) any stock dividend or
distribution on, stock split or reverse stock split of, or similar event with
respect to Common Stock, (ii) any merger, consolidation, combination,
reclassification, recapitalization or similar transaction involving Common Stock
and (iii) any issuance of Common Stock for consideration less than fair market
value on the date of issue
6
(other than shares issued pursuant to Stock-Based Compensation Awards or upon
conversion or exchange of convertible or exchangeable securities the conversion
or exchange price of which was not less than the fair market value on the date
of issue) or, except as set forth in the Transaction Agreements, any repurchase
or redemption of Common Stock by the Company at a price greater than fair market
value on the date of repurchase or redemption.
"Offeror" shall have the meaning set forth in Section 3.5(c).
"Operating Rights" shall mean the rights of the Investor set forth in
Section 7.2 of the Investment Agreement.
"Original Call Agreement" shall have the meaning set forth in the
recitals hereto.
"Original Investment Agreement" shall have the meaning set forth in the
recitals hereto.
"Original Registration Rights Agreement" shall have the meaning set
forth in the recitals hereto.
"Original Stockholder Agreement" shall have the meaning set forth in
the recitals hereto.
"Parent" shall mean General Electric Company, a New York corporation.
"Paxson" shall mean Mr. Lowell W. Paxson.
"Paxson Estate Planning Affiliates" shall mean collectively, (i) all
limited partners of Second Crystal Diamond Limited Partnership, other than
Paxson and Paxson Enterprises, Inc., and (ii) Marla J. Paxson, the children or
other lineal descendants (whether adoptive or biological) of Paxson and any
revocable or irrevocable inter vivos or testamentary trust (including any
trustee of such trust in his or her capacity as trustee) or the probate estate
(including any executor or executrix of such estate in his or her capacity as
such) of any such individual, so long as one or more of the foregoing
individuals is the principal beneficiary of such trust or probate estate, or any
corporation, partnership, limited liability company or other entity in which any
of the foregoing individuals has a controlling interest.
"Paxson Shares" shall mean, as of any date of determination, all shares
of Common Stock held at such time by any Paxson Stockholder.
"Paxson Stockholders" shall have the meaning set forth in the preamble
hereto and any other stockholders that become parties to this Agreement pursuant
to Section 6.11 after the date hereof, including, without limitation, any Paxson
Estate Planning Affiliates.
"Permitted Holders" shall mean, collectively, any Paxson Stockholder
and the spouse, children or other lineal descendants (whether adoptive or
biological) of Paxson and any revocable or irrevocable inter vivos or
testamentary trust or the probate estate of any such individual, so long as one
or more of the foregoing individuals is the principal beneficiary of such trust
or probate estate.
7
"Permitted Liens" shall mean (i) mechanics', carriers', repairmen's or
other like Liens arising or incurred in the ordinary course of business, (ii)
Liens arising under original purchase price conditioned sales contracts and
equipment leases with third parties entered into in the ordinary course of
business consistent with past practice, (iii) statutory Liens for taxes not yet
due and payable, (iv) Liens securing the indebtedness included as "long-term
debt" on the June 30, 2005 financial statements of the Company or securing any
indebtedness that replaces or refinances any of such indebtedness and (v) other
encumbrances or restrictions or imperfections of title which do not materially
impair the continued use and operation of the assets to which they relate.
"Permitted Transferee" shall have the meaning set forth in the Section
3.10.
"Person" shall mean an individual, corporation, unincorporated
association, partnership, group (as defined in subsection 13(d)(3) of the
Exchange Act), trust, joint stock company, joint venture, business trust or
unincorporated organization, limited liability company, any governmental entity
or any other entity of whatever nature.
"Refinance" shall mean, in respect of any capital stock, to refinance,
extend, renew, refund, repay, prepay, repurchase, redeem, or retire, or to issue
other capital stock in exchange or replacement for, such capital stock.
"Restricted Period" shall mean the period commencing on the Effective
Date and ending on the earlier of the Call Closing or the date of the Investor
Call Right Termination.
"Same Market Station" shall mean any Company Station (i) in which the
Investor would be permitted to have an attributable interest under the ownership
rules adopted by the FCC in MM Docket Nos. 94-150, 92-51 and 87-154, as such
rules may be amended from time to time, and (ii) which, even if the Investor
were deemed to have an attributable interest therein, would not increase the
Investor's national broadcast coverage as calculated under the FCC's national
ownership rules because the Investor has an owned or operated television station
in the same DMA. For the purpose of this definition, a television station shall
be deemed to be "operated" by the Investor if the Investor supplies more than
15% of the total weekly broadcast programming hours of such station.
"Schedule 14D-9" shall have the meaning set forth in Section 3.5(c).
"Schedule TO" shall have the meaning set forth in Section 3.5(c).
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Series B Preferred Stock" shall mean the 11% Series B Convertible
Exchangeable Preferred Stock, par value $0.001 per share, of the Company.
"Senior Secured Floating Rate Notes" shall mean the Company's Senior
Secured Floating Rate Notes due 2010 issued pursuant to the Indenture, dated as
of January 12, 2004,
8
among the Company, the subsidiary guarantors named therein
and The Bank of New York, as trustee.
"Settlement Agreement" shall mean the Settlement Agreement, dated as of
the date hereof, between the Investor and the Company, as from time to time
amended, modified or supplemented.
"Stock-Based Compensation Awards" shall mean options, restricted stock
and any other stock-based compensation awards issued or issuable under any of
the Company's Stock Incentive Plan, 1996 Stock Incentive Plan, 1998 Stock
Incentive Plan or any other stock-based compensation plan approved by the Board
of Directors or any employment, consulting or similar agreements in effect as of
the date hereof or entered into after the date hereof and approved by the Board
of Directors.
"Stockholder Meeting" shall mean the first annual meeting of the
stockholders of the Company occurring after the date hereof, which meeting the
Company shall hold and convene no later than June 30, 2006, in order to vote on
certain matters including, but not limited to, the Stockholder Proposals, and
any adjournment thereof or action or approval by stockholder consent with
respect to all or any part of the Stockholder Proposals; provided that if the
Investor or a Permitted Transferee, as applicable, exercises the Call Right
prior to such time, the Company shall seek stockholder approval of the
Stockholder Proposals as soon as practicable and all reasonable and customary
documented expenses incurred by the Company in connection with seeking
stockholder approval of the Stockholder Proposals prior to the first annual
meeting shall be borne by the Investor or a Permitted Transferee, as applicable.
"Stockholder Proposals" shall mean the proposals to be submitted to the
stockholders of the Company for approval of: (i) an amendment to the Company's
certificate of incorporation increasing the number of authorized shares of
Common Stock, Class A Common Stock and Class C Common Stock to not less than
857,000,000, 505,000,000 and 317,000,000, respectively; (ii) a stock-based
compensation plan to authorize the issuance of an additional 50 million shares
of Class A Common Stock pursuant to Stock-Based Compensation Awards which may be
granted to certain senior executives of the Company; (iii) the issuance of the
Conversion Shares if and to the extent required to satisfy conditions to the
listing thereof under applicable rules of the American Stock Exchange; and (iv)
any other matters necessary to consummate the transactions contemplated by the
Transaction Agreements.
"Subject Securities" shall mean the Series B Preferred Stock, the
Conversion Shares and the Call Shares.
"Subsequent Period" shall have the meaning set forth in Section 3.5(c).
"Subsidiary" shall mean, as to any Person, a corporation, partnership,
limited liability company, joint venture or other entity of which shares of
stock or other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
9
owned, directly or indirectly, through one or more intermediaries (including,
without limitation, other Subsidiaries), or both, by such Person.
"10 3/4% Senior Subordinated Notes" shall mean the Company's 10 3/4%
Senior Subordinated Notes due 2008 issued pursuant to the Indenture, dated as of
July 12, 2001, among the Company, the subsidiary guarantors named therein and
The Bank of New York, as trustee.
"Tender Offer" shall mean an offer to purchase for cash at the Offer
Price, by the Investor or a Permitted Transferee, as applicable, pursuant to
Regulation 14D under the Exchange Act, any and all of the issued and outstanding
shares of Class A Common Stock, conducted in accordance with the provisions of
Section 3.5 of this Agreement, other than (i) any shares of Class A Common Stock
held by any Paxson Stockholders or any Paxson Estate Planning Affiliates on the
date of the commencement of a Tender Offer and (ii) any shares of Class A Common
Stock issued after the Effective Date upon the exercise, grant or vesting of any
Stock-Based Compensation Awards or upon conversion or exchange of convertible or
exchangeable securities, unless such shares are issued pursuant to any
contractual obligations of the Company as existing immediately prior to the
Effective Date.
"Tender Offer Event" shall have the meaning set forth in Section
3.5(a).
"Total Voting Power" shall mean, with respect to any corporation, the
total number of votes which may be cast in the election of directors of such
corporation if all securities entitled to vote in the election of such directors
(excluding shares of preferred stock that are entitled to elect directors only
upon the occurrence of customary events of default) are present and voted.
"Transaction Agreements" shall have the meaning set forth in Section 1
of the Master Agreement.
"Transfer" shall mean, with respect to any shares of capital stock or
the Call Right, any direct or indirect sale, assignment, pledge, offer or other
transfer or disposal of any interest in such capital stock or right.
"12 1/4% Senior Subordinated Discount Notes" shall mean the Company's
12 1/4% Senior Subordinated Discount Notes due 2009 issued pursuant to the
Indenture, dated as of January 14, 2002, among the Company, the subsidiary
guarantors named therein and The Bank of New York, as trustee.
"Voting Stock" shall mean shares of the capital stock and any other
securities of the Company having the ordinary power to vote in the election of
directors of the Company.
ARTICLE II
BOARD OF DIRECTORS
------------------
Section 2.1 Board of Directors.
10
(a) The Investor may appoint two representatives ("Observers") to
receive notice of and have the right to attend all meetings of the Board of
Directors and any of its standing committees and receive copies of all materials
distributed to members of the Board of Directors at the same time such materials
are distributed to members of the Board of Directors, subject to (i) the letter
agreements between the Company and each of Paul Bird and James Stewart, dated
April 27, 2004, and between the Company and the Investor, dated April 29, 2004,
and (ii) any similar conflict-of-interest restrictions that the Company may
impose on any other Observers who may be appointed by the Investor. Such
Observers shall have no right to vote on any matters presented to the Board of
Directors.
(b) Unless the Communications Act and the rules and regulations
promulgated by the FCC prohibit a Permitted Transferee from having board
nomination or similar rights, at the request of the Permitted Transferee, the
Company shall have the right, but not the obligation, to nominate up to three
Investor Nominees for election or appointment to the Board of Directors as part
of the management slate that is included in the proxy statement (or consent
solicitation or similar document) of the Company relating to the election of
directors, and shall provide the same support for the election of each such
Investor Nominee as it provides to other persons standing for election as
directors of the Company as part of the Company's management slate, but in no
event shall the Permitted Transferee have the right to appoint any directors to
the Board of Directors.
(c) Notwithstanding the foregoing, Section 2.1(b) shall terminate on,
and have no further force and effect from and after, the termination of the
Restricted Period.
Section 2.2 Certain Matters Relating to Directors.
(a) The Company shall use reasonable best efforts to cause the Board of
Directors to consist of nine members, comprised of not more than two employee
directors, one of whom shall be the chief executive officer of the Company, and
the remainder of whom shall be Independent directors.
(b) The Company shall engage an executive search firm of recognized
national standing as soon as practicable, but in no event later than five
Business Days following the Effective Date, and shall use reasonable best
efforts to fill the four vacancies on the Board of Directors existing as of the
Effective Date as promptly as practicable following the Effective Date.
ARTICLE III
CERTAIN AGREEMENTS
------------------
Section 3.1 Financial Statements and Other Reports. The Company shall
deliver, or cause to be delivered to the Investor:
(a) Monthly Financials: as soon as practicable and in any event within
30 days after the end of each calendar month of the Company, copies of all
monthly financial reports prepared for the chief executive officer or the chief
operating officer of the Company with respect to the Company and its
consolidated Subsidiaries for and as of the end of such
11
month, including, without limitation, a monthly balance sheet and income
statement and a comparison of the income statement to the budget;
(b) Quarterly Financials: as soon as practicable and in any event
within five days after it files them with the SEC, a consolidated balance sheet
of the Company and its consolidated Subsidiaries as at the end of such period,
and the related unaudited consolidated statements of income and of cash flows,
as contained in the Form 10-Q for such fiscal quarter provided by the Company to
the SEC, and if such Form 10-Q is no longer required to be so provided by the
Company, then the Company shall provide the Investor, within 45 days after the
end of each fiscal quarter of the Company, with comparable financial statements,
certified by the chief financial officer of the Company that they fairly present
the financial position and results of operations of the Company and its
consolidated Subsidiaries, as appropriate, as at the end of such periods and for
such periods, subject to changes resulting from audit and normal year-end
adjustments;
(c) Year-End Financials: as soon as practicable and in any event within
five days after it files them with the SEC, or if the Company is no longer
required to file such statements with the SEC, within 90 days after the end of
each fiscal year of the Company, the audited consolidated balance sheet of the
Company and its consolidated Subsidiaries, as at the end of such year, and the
related consolidated statements of income, shareholders' equity and cash flows
of the Company and its consolidated Subsidiaries for such fiscal year, (1)
accompanied by a report thereon of independent certified public accountants
selected by the Company, which report shall state that the examination by such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards without any limitations
being imposed on the scope of such examination and (2) certified by the chief
financial officer of the Company that they fairly present the financial position
and results of operations of the Company and its consolidated Subsidiaries, as
at the dates and for the periods indicated, as appropriate;
(d) Accountants' Certification: so long as not contrary to the then
current recommendations of the American Institute of Certified Public
Accountants, the year-end financial statements delivered pursuant to this
Section 3.1 shall be accompanied by a written statement of the Company's
independent certified public accountants that in making the examination
necessary for certification of such financial statements nothing has come to
their attention which would lead them to believe that the Company is not in
compliance with the terms of the instruments governing its outstanding debt or,
if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly for any failure to obtain knowledge of any such
violation;
(e) Accountants' Reports: promptly upon receipt thereof (unless
restricted by applicable professional standards), copies of all significant
reports submitted to the Company by independent public accountants in connection
with each annual, interim or special audit of the financial statements of the
Company made by such accountants, including, without limitation, the comment
letter submitted by such accountants to management in connection with their
annual audit;
12
(f) Reports and Filings: within five days after the same are sent,
copies of all financial statements and reports which the Company sends to its
stockholders;
(g) Events of Default etc.: promptly upon, but in any event no later
than five Business Days after, any executive officer of the Company obtaining
knowledge (1) of any condition or event that constitutes a violation or default,
or becoming aware that any lender has given any notice or taken any other action
with respect to a claimed violation or default under the instruments governing
then outstanding debt and preferred stock, (2) that any Person has given any
notice to the Company or any of its Subsidiaries or taken any other action with
respect to a claimed default or event or condition that would be required to be
disclosed in a Current Report on Form 8-K filed by the Company with the SEC or
(3) of any condition or event which has had or could reasonably be expected to
have a Material Adverse Effect, an officer's certificate specifying the nature
and period of existence of such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of such claimed
violation, default, event or condition, and what action the Company has taken,
is taking and proposes to take with respect thereto;
(h) Litigation: promptly upon any executive officer of the Company
obtaining knowledge of (1) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Company or
any Company Subsidiary not previously disclosed by the Company to the Investor,
or (2) any material adverse development in any such action, suit, proceeding,
governmental investigation or arbitration that, in each case involves claims in
excess of $5,000,000 in the aggregate or would reasonably be expected to cause a
Material Adverse Effect, the Company shall promptly give notice thereof to the
Investor, provided that the Company shall not be required to provide any
information or documents to the extent they are protected by the attorney-client
privilege;
(i) ERISA Events: promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event (as defined in the Investment
Agreement), with a written notice specifying the nature thereof, what action the
Company or ERISA Affiliate (as defined in the Investment Agreement) has taken,
is taking or proposes to take with respect thereto and, when known, any action
taken or threatened by the IRS, the Department of Labor or the PBGC (as defined
in the Investment Agreement) with respect thereto;
(j) ERISA Notices: with reasonable promptness, copies of (1) all
notices received by the Company or any of its ERISA Affiliates from the PBGC
relating to an ERISA Event, (2) each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by the Company or any of its ERISA
Affiliates with the IRS with respect to each Title IV Plan (as defined in the
Investment Agreement), if any, and (3) all notices received by the Company or
any of its ERISA Affiliates from a Multiemployer Plan (as defined in the
Investment Agreement) sponsor concerning an ERISA Event;
(k) Financial Plans: as soon as practicable after delivered to the
Board of Directors, any budget and financial forecast for the Company and the
Company Subsidiaries, including (1) a forecasted operating cash flows statement
of the Company and the Company Subsidiaries for the next succeeding fiscal year
and (2) forecasted operating cash flows statement
13
of the Company and the Company Subsidiaries for each fiscal quarter of the next
succeeding fiscal year; and
(l) Other Information: with reasonable promptness, such other
information and data with respect to the Company or any of its Subsidiaries or
Affiliates as from time to time may be reasonably requested by the Investor.
Notwithstanding the foregoing, the Company shall not be required to provide any
information or document pursuant to paragraphs (g) through (j) of this Section
3.1 to the extent such information or document is included in a Current Report
on Form 8-K filed by the Company with the SEC and the Company delivers such 8-K
to the Investor, including by means of email transmission, within one Business
Day following such filing.
Section 3.2 Certain Other Matters. The Company agrees that except with
the prior written consent of the Investor, it and its Subsidiaries shall not,
directly or indirectly:
(i) adopt any shareholders rights plan, or amend any of its
organizational documents or issue any capital stock or other securities or enter
into any agreement that is material to the Company and the Company Subsidiaries
taken as a whole, the provisions of which, upon the acquisition of capital
securities of the Company by the Investor or its Affiliates: (A) would be
violated or breached, would require a consent or approval thereunder, or would
result in a default thereof (or an event which, with notice or lapse of time or
both, would constitute a default), (B) would result in the termination thereof
or accelerate the performance required thereby, or result in a right of
termination or acceleration thereunder, (C) would result in the creation of any
Lien (except Permitted Liens) upon any of the properties or assets of the
Company or any Company Subsidiary thereunder, (D) would disadvantage the
Investor or its Affiliates relative to other stockholders on the basis of the
size of their shareholdings, or (E) would otherwise restrict or impede the
ability of the Investor and its Affiliates to acquire additional shares of
capital stock, or dispose of such capital stock, in any manner permitted by
Section 4.1; provided that the Company may (x) enter into senior loan agreements
that contain customary provisions permitting acceleration of the related
indebtedness upon a change of control and (y) issue debt securities or preferred
stock that contain customary change of control provisions permitting the holders
of such debt securities or preferred stock to demand repurchase of their debt
securities or preferred stock upon a change of control of the Company to any
party other than to Parent or its wholly owned domestic Subsidiary; or
(ii) take any action that would cause any ownership interest in any of
the following to be attributable to the Investor or any of its Affiliates for
purposes of FCC regulations: (A) a U.S. broadcast radio or television station
(other than the Same Market Stations), (B) a U.S. cable television system, (C) a
U.S. "daily newspaper" (as such term is defined in Section 73.3555 of the rules
and regulations of the Federal Communications Commission, as the same may be
amended from time to time), (D) any U.S. communications facility operated
pursuant to a license granted by the FCC and subject to the provisions of
Section 310(b) of the Communications Act, or (E) any other business which is
subject to FCC regulations under which the ownership of a Person may be subject
to limitation or restriction as a result of the interest in such business being
attributed to such Person.
14
Section 3.3 Agreement to Vote Stock; Irrevocable Proxy(a) Each of the
Paxson Stockholders irrevocably agrees that it shall vote (or cause to be voted)
all of the Voting Stock that it has the power to vote on the record date of any
such vote or action (i) in favor of each of the Stockholder Proposals and the
approval of any strategic plan or financing plan approved by a majority of the
Independent members of the Board of Directors, (ii) against any proposal that
would upon consummation result in a Change of Control (other than as
contemplated by the Transaction Agreements) or that would directly or indirectly
impede or otherwise adversely affect any of the foregoing matters and
transactions and (iii) in the same proportion as the holders of the Class A
Common Stock (other than (A) the Paxson Stockholders and (B) the directors and
the officers of the Company) in any stockholder vote on the election of
directors to the Board of Directors, but in no circumstances shall any Paxson
Stockholder be required to vote in any manner that would violate any fiduciary
duty.
(b) Each of the Paxson Stockholders grants an irrevocable proxy to
Stephen R. Rusmisel (the "Grantee") with full power of substitution (and agrees
to execute such documents or certificates evidencing such proxy as the Investor
or the Company may reasonably request) to vote, at the Stockholder Meeting and
any adjournments or postponements thereof or at such other meeting of the
stockholders of the Company and any adjournments or postponements thereof at
which the stockholders vote on the Stockholder Proposals, and in any action by
written consent of the stockholders of the Company, all of the Voting Stock that
the Paxson Stockholders would be entitled to vote, in favor of clauses (i), (ii)
and (iii) of the Stockholder Proposals. This proxy is irrevocable and coupled
with an interest and shall revoke any previous proxies with respect to actions
described in this Section 3.3(b) and shall terminate upon the taking by the
Grantee of the actions described in this Section 3.3(b).
(c) The Paxson Stockholders shall not, directly, or indirectly through
any of their Affiliates, take or commit or agree to take, any action
inconsistent or that interferes with the items specified in Section 3.3(a) or
(b), including, without limitation, the implementation of any strategic plan or
financing plan that is approved by a majority of the Independent members of the
Board of Directors; provided that nothing herein shall prevent Paxson or any of
his Affiliates from enforcing any rights he or they may have under any of the
Transaction Agreements.
(d) This Section 3.3 shall terminate on, and have no further force or
effect from and after, the termination of the Restricted Period.
Section 3.4 Company Sale. If at any time the Investor exercises its
rights under Section 9.5 of the Investment Agreement to cause the Company to
consummate a Company Sale, the Paxson Stockholders agree to take all necessary
and reasonably desirable actions to enable the Company to effectuate such
Company Sale pursuant to Section 9.5 thereof. Without limiting the generality of
the foregoing, each Paxson Stockholder shall vote all of the Voting Stock that
it has the power to vote in favor of any Company Sale which is in the form of a
merger, consolidation or other reorganization, sale of substantially all assets
or complete liquidation, dissolution, winding up or other transaction that
requires the approval of the Company's stockholders and shall tender all shares
of Common Stock held by it in connection with a Company Sale in the form of a
transaction involving a tender or exchange offer, on the same terms and
conditions (other than a control premium for shares of Class B Common Stock)
offered to holders of Common Stock generally.
15
Section 3.5 Tender Offer. (a) The Investor or a Permitted Transferee,
as applicable, shall commence a Tender Offer in accordance with Section 3.5(c)
of this Agreement concurrently with the earliest of (i) the effectiveness of a
Transfer of the Call Right by NBC Palm II to a Permitted Transferee, (ii) the
exercise by NBC Palm II of the Call Right or (iii) the Transfer by NBC Palm I,
during the Investor Transfer Restriction Period pursuant to Section 4.1(a) of
this Agreement, of a number of shares of Series B Preferred Stock that, assuming
the conversion of the shares of Series B Preferred Stock so transferred
(excluding shares of Series B Preferred Stock retained by NBC Palm I), together
with the number of shares of Series B Preferred Stock previously Transferred by
NBC Palm I pursuant to Section 4.1(a) of this Agreement, represents in excess of
50% of the Total Voting Power of the Company as of the date hereof assuming the
conversion of the shares of Series B Preferred Stock so transferred (each, a
"Tender Offer Event"). In the event the Investor or a Permitted Transferee, as
applicable, commences a Tender Offer pursuant to this Section 3.5(a)(i) or
(iii), the Investor shall cause NBC Palm II to, or a Permitted Transferee, as
applicable, shall, also simultaneously exercise the Call Right.
(b) The Investor or any of its Affiliates may not conduct but may
facilitate the commencement by a third party of a Tender Offer at any time prior
to the occurrence of a Tender Offer Event (an "Early Tender Offer"), so long as
the consummation of such Early Tender Offer would not be reasonably expected to
materially delay the receipt of any FCC approval required to consummate the
purchase of the Call Shares upon exercise of the Call Right by NBC Palm II or a
Permitted Transferee, as applicable, pursuant to the Call Agreement, or the
purchase of the Call Shares by the Company pursuant to the Company Stock
Purchase Agreement, dated as of the date hereof, between the Company and the
Paxson Stockholders. An Early Tender Offer shall be conducted in accordance with
Section 3.5(c). In the event an Early Tender Offer occurs, the Investor or a
Permitted Transferee, as applicable, shall have no obligation to commence a
Tender Offer in connection with a Tender Offer Event, provided that the Investor
or a Permitted Transferee, as applicable, shall exercise the Call Right prior to
the expiration of the Call Period. In the event of an Early Tender Offer, if NBC
Palm II or a Permitted Transferee, as applicable, fails to exercise the Call
Right within the Call Period, the Investor shall pay to the Company, within five
Business Days following the termination of the Call Period, $2,410,375.30 as
liquidated damages and not as a penalty, which shall be the sole and exclusive
remedy of any party to this Agreement, or any of their respective heirs,
successors and assigns, at law or in equity for the failure by NBC Palm II or a
Permitted Transferee, as applicable, to exercise the Call Right during the Call
Period following the consummation of an Early Tender Offer. Such payment shall
be made by wire transfer in immediately available funds to an account or
accounts designated by the Company not later than three Business Days following
the termination of the Call Period.
(c) If the Investor, a Permitted Transferee or any other third party
(the "Offeror") commences a Tender Offer pursuant to Section 3.5(a) or (b) of
this Agreement, such Tender Offer shall be conducted in accordance with the
following provisions:
(i) The Tender Offer shall be conducted on customary terms, as
determined by the Offeror and the Company and in accordance with the
provisions of all applicable law. The Tender Offer shall expire at 12:00
midnight, New York City Time, twenty Business Days following the
commencement of the Tender Offer or such other date as
16
the Offeror and the Company may agree (the "Initial Expiration Date" and
together with any extension permitted hereunder, the "Expiration Date"). The
obligation of the Offeror to commence the Tender Offer and to accept for
payment and pay for any and all shares of Class A Common Stock tendered
pursuant to the Tender Offer shall be unconditional, except for, subject to
Section 3.5(d) of this Agreement, the receipt of any required regulatory
approvals, and the Tender Offer may be extended as may be necessary to
obtain such approvals. The Offeror expressly reserves the right to amend or
make changes to the terms of the Tender Offer; provided, however, that,
without the prior written consent of the Company, the Offeror shall not do
any of the following: (A) decrease the Offer Price or change the form of
consideration to be paid in the Tender Offer, (B) except as described above,
impose any conditions to the Tender Offer or (C) otherwise amend the Tender
Offer in a manner that would materially and adversely affect the holders of
shares of Class A Common Stock. Notwithstanding anything in this Agreement
to the contrary, the Offeror shall have the right to extend the Tender Offer
beyond the Initial Expiration Date for: (A) any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Tender Offer or (B) any period required by applicable law.
In addition, the Offeror may, without the consent of the Company, and, if
requested by the Company, the Offeror shall for one Subsequent Period (as
defined below), extend the Tender Offer beyond the date on which shares of
Class A Common Stock are first accepted for payment as a "subsequent
offering period" (as such term is defined in Rule 14d-1(g)(8) under the
Exchange Act in accordance with Rule 14d-11 of the Exchange Act (each, a
"Subsequent Period"). The Offeror may extend the Tender Offer for an
unlimited number of Subsequent Periods, provided, however, that no single
Subsequent Period may exceed twenty Business Days. To the extent the Offeror
amends or makes changes to the conditions of the Tender Offer pursuant to
the terms and conditions of this Section, the Company will cooperate with
the Offeror in making any filings or amendments required by the Delaware
General Corporation Law, the Exchange Act, the Securities Act or any other
federal securities law, regulation or rule, or as otherwise may be necessary
to effect such amendment or change.
(ii) As soon as reasonably practicable on the date the Tender Offer is
commenced, (A) the Offeror shall file with the SEC a Tender Offer Statement
on Schedule TO (together with all amendments thereto, the "Schedule TO") and
(B) the Company shall file a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") with respect to the Tender Offer, each
of which will comply in all material respects with the provisions of all
applicable federal and state securities laws, and will contain (including as
an exhibit) or incorporate by reference the Tender Offer and forms of the
related letter of transmittal (which documents, together with any
supplements or amendments thereto, are referred to collectively as the
"Offer Documents"). The Company agrees that (I) the Schedule 14D-9 shall not
be withdrawn or amended without the prior written consent of the Offeror;
provided, however, that the Company's recommendation or, in the alternative,
its statement expressing that the Company has no opinion and is remaining
neutral toward the Tender Offer, may be withdrawn or modified by the Board
of Directors without the prior written consent of the Offeror to the extent
that the Board of Directors determines in the good faith exercise of its
reasonable business judgment, after receiving the advice of outside counsel,
that such
17
recommendation or expression of neutrality would no longer be consistent
with its fiduciary duties to the Company's stockholders under applicable law
and (II) the Schedule 14D-9, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company
with respect to written information supplied by the Offeror specifically for
inclusion in the Schedule 14D-9. Each of the Offeror and the Company agrees
that the Schedule TO and the Offer Documents, on the date filed with the SEC
and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that no representation shall be
made by the Offeror with respect to written information supplied by the
Company specifically for inclusion in the Schedule TO or the Offer
Documents, and no representation shall be made by the Company with respect
to written information supplied by the Offeror specifically for inclusion in
the Schedule TO or the Offer Documents. Each of the Offeror and the Company
further agrees to take all steps necessary to cause the Offer Documents to
be filed with the SEC and to be disseminated to the Company's stockholders,
in each case as and to the extent required by applicable federal securities
laws. Each of the Offeror and the Company agrees promptly to correct or
supplement any information provided by it for use in the Offer Documents if
and to the extent that it shall have become false and misleading in any
material respect, and the Offeror and the Company further agree to take all
steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to the Company's stockholders, in each
case as and to the extent required by applicable federal securities laws.
The Company and its counsel shall be given a reasonable opportunity to
review the initial Offer Documents before they are filed with the SEC. The
Offeror and its counsel shall be given a reasonable opportunity to review
the initial Schedule 14D-9 before it is filed with the SEC. In addition, the
Offeror, on the one hand, and the Company, on the other hand, agree to
provide the other and their respective counsel with any comments or other
communications that either party or their counsel may receive from time to
time from the SEC or its staff with respect to the Schedule 14D-9 or the
Offer Documents promptly after the receipt of such comments or other
communications.
(iii) Subject to the terms of this Agreement, promptly after the
expiration of the "initial offering period" (as such term is defined in Rule
14d-1(g)(4) under the Exchange Act) and, if applicable, promptly in
accordance with Rule 14d-11 under the Exchange Act, during any Subsequent
Period, the Offeror shall accept for payment and pay for, in accordance with
the terms of the Tender Offer, all of the shares of Class A Common Stock
validly tendered pursuant to the Tender Offer and not validly withdrawn.
(iv) In connection with the Tender Offer, no later than three (3)
Business Days prior to the anticipated commencement of the Tender Offer, the
Company shall furnish the Offeror with (A) mailing labels, security position
listings of shares of Class A Common Stock held in stock depositories and
any available listing or computer file
18
containing the names and addresses of the record holders of shares of Class
A Common Stock, each as of the most recent practicable date, and (B) such
additional information, including updated lists of stockholders, mailing
labels and lists of securities positions and such other information and
assistance as the Offeror or its agents may reasonably request in connection
with communicating to the record and beneficial holders of shares of Class A
Common Stock with respect to the Tender Offer. Subject to the requirements
of applicable law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the
Tender Offer, the Offeror shall, and shall cause its agents to, hold in
confidence the information contained in any such labels, listings and files,
shall use such information only in connection with the Tender Offer and, if
the Tender Offer shall be terminated, shall, upon request, promptly deliver
to the Company all copies of such information then in its possession or
under its control.
(d) If the Person that intends to commence a Tender Offer pursuant to
Section 3.5(a) of this Agreement or an Early Tender Offer pursuant to Section
3.5(b) of this Agreement would not be permitted, absent receipt of prior FCC
approval and the grant of any necessary waivers of the FCC's media ownership
rules, to be the legal owner of 5% or more of the Voting Stock of the Company as
the result of such Person's existing or proposed media ownership interests, and
therefore would not reasonably be expected to be able to consummate such Tender
Offer or Early Tender Offer, as the case may be, without receipt of such FCC
approval and any necessary waivers, then such Person shall, prior to the
commencement of such Tender Offer or Early Tender Offer, as the case may be,
either: (i) make such arrangements as may be necessary to ensure that, following
the consummation of such Tender Offer or Early Tender Offer, as the case may be,
such Person does not have legal ownership of 5% or more of the Voting Stock of
the Company (by exchanging any shares of Class A Common Stock acquired by such
Person for Class C Common Stock or otherwise relinquishing any voting rights
with respect to any shares of Class A Common Stock in a manner reasonably
sufficient, as reasonably determined by the Company, to render the Class A
Common Stock non-attributable to such Person under the FCC rules); or (ii) enter
into a trust or similar arrangement that complies with the FCC's requirements
for an "insulating trust" pursuant to 47 C.F.R. ss.73.3555, Note 2(d) of the
FCC's Rules and the FCC Attribution Order, 55 RR.2d 1465 (1984) for such period
of time as may be necessary to ensure such Person's compliance with the media
ownership rules, and under which such trust will have legal ownership of all
shares of Class A Common Stock acquired by such Person in the Tender Offer or
the Early Tender Offer, as the case may be, and legal ownership will not be
attributed to such Person under the FCC's rules. The Company agrees to use
reasonable efforts to take any actions as may be reasonably requested by the
Offeror to effect the arrangements contemplated by the previous sentence.
Section 3.6 Investor Call Right Termination. Upon the Investor Call
Right Termination:
(a) the Paxson Stockholders shall deliver the Paxson Demand (as defined
in the Escrow Agreement) to the Escrow Agent pursuant to Section 4(b) of the
Escrow Agreement.
(b) unless a Tender Offer has previously been consummated in accordance
with Section 3.5, the Investor shall deliver to the Company for distribution
certificates
19
evidencing Series B Preferred Stock with an aggregate liquidation preference
plus accrued and unpaid dividends equal to the Investor Call Right Termination
Amount. If at the time shares of Series B Preferred Stock are delivered to the
Company pursuant to this Section 3.6(b) there are any holders of the Class A
Common Stock who would have been eligible to participate in a Tender Offer
commenced pursuant to Section 3.5(a) or (b) of this Agreement (the "Eligible
Stockholders"), the Company shall distribute to the Eligible Stockholders, on a
pro rata basis in accordance with the number of shares of Class A Common Stock
held by each of them, shares of Series B Preferred Stock (or, at the option of
the Company, another class or series of preferred stock of the Company with
substantially identical economic rights) with an aggregate liquidation
preference equal to the Investor Call Right Termination Amount. Each of the
Paxson Stockholders hereby unconditionally waives any right to receive such
shares of Series B Preferred Stock or other class or series of preferred stock
distributed pursuant to this Section 3.6(b). For avoidance of doubt, the shares
of the class or series of preferred stock distributed to Eligible Stockholders
pursuant to this Section 3.6(b) shall vote together with the holders of all
other outstanding shares of Series B Preferred Stock, as a single class, on all
matters on which they are entitled to vote.
(c) If the Investor is required to surrender shares of Series B
Preferred Stock upon the Investor Call Right Termination pursuant to Section
3.6(b) of this Agreement, and at such time the Existing Debt Indentures (as
defined in the Certificate of Designation) would prohibit the Company from
issuing or distributing to the Eligible Stockholders, pursuant to Section 3.6(b)
of this Agreement, the shares of Series B Preferred Stock surrendered by the
Investor, because such shares would be deemed to be Disqualified Capital Stock
or the issuance or distribution thereof would be deemed to be a Restricted
Payment (as each such term is defined in the Existing Debt Indentures), the
Investor agrees to either:
(i) vote in favor of, or consent in writing to, amending the
Certificate of Designation to provide that the Exchange Date (as defined in
the Certificate of Designation) may not be earlier than April 18, 2010, and
amending the New Exchange Indenture and the form of New Exchange Debentures
to provide that the maturity date of the New Exchange Debentures shall be a
date not prior to April 19, 2010 and not later than December 31, 2013, which
date shall be determined in the Investor's sole discretion; or
(ii) surrender to the transfer agent for the Common Stock certificates
representing shares of Series B Preferred Stock having a liquidation
preference plus accrued and unpaid dividends equal to the Investor Call
Right Termination Amount, duly endorsed in blank for transfer, with
instructions to distribute such shares to the Eligible Stockholders in the
manner provided in Section 3.6(b) of this Agreement.
Until such date as the distribution to the Eligible Stockholders of shares of
Series B Preferred Stock (or, at the option of the Company, shares of another
class or series of preferred stock of the Company with substantially identical
economic rights) contemplated by Section 3.6(b) of this Agreement has occurred,
the Investor will not Transfer any shares of Series B Preferred Stock pursuant
to Section 4.1 of this Agreement, unless the transferee agrees in writing to be
bound by this Section 3.6.
20
Section 3.7 Transfer of or Issuance by Paxson Management Corporation.
During the Restricted Period, Paxson shall not Transfer or issue any of the
capital stock or other equity interests of Paxson Management Corporation to any
Person (including any options, warrants or other rights to acquire the capital
stock or such other equity interests and any securities and instruments
exchangeable for or convertible into the capital stock or such other equity
interests), other than to a Paxson Estate Planning Affiliate.
Section 3.8 Management Incentive Pool.
(a) Not later than 18 months following the Effective Date, the Company
shall grant Stock-Based Compensation Awards for at least 24 million shares of
Class A Common Stock to selected senior executives of the Company recommended by
the Company CEO, which Stock-Based Compensation Awards shall incorporate the
terms set forth on Schedule 3.8. The Company CEO shall recommend the terms and
conditions of the Stock-Based Compensation Awards granted to such senior
executives and such grants shall be subject to approval by the Company's
Compensation Committee following consultation with the Company's compensation
advisor.
(b) Each award agreement relating to any grant of a Stock-Based
Compensation Award that is made on or after the Effective Date shall provide
that (i) such Stock-Based Compensation Awards and the shares of Class A Common
Stock issuable pursuant to such Stock-Based Compensation Awards shall not be
eligible to participate in the Tender Offer or an Early Tender Offer and shall
not be transferable until the earlier of (A) the consummation of the Tender
Offer or an Early Tender Offer, as the case may be, or (B) the date of the
Investor Call Right Termination, (ii) no Stock-Based Compensation Award shall
become exercisable or be settled prior to (A) in the event that NBC Palm II or
its Permitted Transferee, as applicable, commences a Tender Offer the earlier of
(x) the closing of the Tender Offer and (y) 60 days following the commencement
of the Tender Offer and (B) in the event that NBC Palm II or its Permitted
Transferee, as applicable, does not commence a Tender Offer, 20 business days
following the expiration of the Call Right and (iii) vesting of Stock-Based
Compensation Awards will not be accelerated based upon a change in control of
the Company pursuant to any transaction contemplated by the Transaction
Agreements.
Section 3.9 Issuance of Securities. Prior to the termination of the
Issuance Restriction Period, the Company shall not at any time issue any shares
of Class A Common Stock or other securities which are exchangeable or
exercisable for or convertible into shares of Class A Common Stock prior to the
termination of the Issuance Restriction Period, other than shares of capital
stock or other securities issued pursuant to any contractual obligations of the
Company as existing immediately prior to the Effective Date and shares permitted
to be issued without the Investor's consent pursuant to Sections 4.1(h)(i), (ii)
and (iii) of the Investment Agreement.
Section 3.10 Transfer Notice. The Investor shall give the Company
written notice of the identity of a proposed Permitted Transferee at least 30
days prior to the earlier date of (i) a proposed Transfer or exercise of the
Call Right by NBC Palm II or a Permitted Transferee, as applicable, or (ii) a
proposed Transfer of shares of Series B Preferred Stock by the Investor that
would constitute a Tender Offer Event. Such notice shall include such financial
21
information regarding the proposed Permitted Transferee as may be reasonably
necessary for the Board of Directors to determine whether such Person satisfies
clause (ii) of the penultimate sentence of this Section 3.10. The Board of
Directors shall approve or disapprove such Person as a Permitted Transferee
within 30 days of receipt of such notice. In making such determination, the
Board of Directors shall, in the reasonable exercise of its fiduciary duties,
principally take into account that such proposed transferee: (i) is, and,
subject to obtaining waivers of the FCC rules and regulations permitted by
Section 2.2(b) of the Call Agreement, upon consummation of the Call Closing
shall be, in compliance with applicable FCC rules relating to ownership and
operation of the Company Stations; and (ii) is able to fulfill the financial
obligations arising in connection with the exercise of the Call Right and the
consummation of a Tender Offer (and such proposed transferee shall have
delivered to the Board of Directors a proposal for satisfying any rights that
holders of any debt securities of the Company may have in connection with the
Tender Offer Event and the consummation of the Tender Offer); provided, however,
that in considering the request for approval, the Board of Directors shall not
consider the Offer Price; provided, further, however, that the foregoing shall
not limit the ability of the Board of Directors to consider the Offer Price when
making any recommendation required to be included in any Solicitation
Recommendation Statement on Schedule 14D-9 in connection with the Tender Offer;
and, provided, however, that the Board of Directors shall approve such Person as
a Permitted Transferee if the Board of Directors determines in the reasonable
exercise of its fiduciary duties that such person otherwise satisfies the
requirements set forth in this sentence and either provides reasonably
satisfactory evidence that it has sufficient liquid financial resources to
fulfill the financial obligations referred to in clause (ii) of this sentence
without the need for external financing or presents firm commitments in
customary form from nationally recognized sources for such financing. Any
proposed transferee that is approved by the Board of Directors shall be a
"Permitted Transferee." If the Board of Directors fails to approve or disapprove
such proposed Permitted Transferee within such 30-day period, such Person shall
be deemed to be a Permitted Transferee.
Section 3.11 Negotiation of New Debt Covenants. The Company shall use
commercially reasonable efforts in any Refinancing of the Existing Debt
Indentures to obtain terms under which the exchange of shares of Series B
Preferred Stock for New Exchange Debentures would not violate any of the terms
of the debt instruments issued in the Refinancing.
Section 3.12 Conversion. At any time after the Call Closing, shares of
the Series B Preferred Stock are convertible at the option of the holder thereof
in the manner set forth in the Certificate of Designation. In the event no Call
Closing occurs prior to the Investor Call Right Termination, from the date of
the Investor Call Right Termination until the earlier of the closing of the
purchase of the shares of Class B Common Stock by the Company or the second
anniversary of the Investor Call Right Termination, the shares of the Series B
Preferred Stock are convertible at the option of the holder in the manner set
forth in the Certificate of Designation; provided that such conversion would not
reasonably be expected to materially delay or hinder receipt of FCC approval of
the transfer of the Call Shares from the Paxson Stockholders to the Company or
result in any Person becoming the Beneficial Owner of more than 50% of the Total
Voting Power of the Common Stock.
22
ARTICLE IV
TRANSFER RESTRICTIONS
---------------------
Section 4.1 Transfer of Series B Preferred Stock by the Investor.
(a) During the Investor Transfer Restriction Period. During the
Investor Transfer Restriction Period, the Investor shall not Transfer shares of
Series B Preferred Stock, other than:
(i) not more than three Transfers to not more than three Persons of an
aggregate of up to 15,000 shares of Series B Preferred Stock;
(ii) a Transfer of shares of Series B Preferred Stock that would
represent, upon conversion, the Transfer of more than 50% of the Total
Voting Power of the Company as of the Effective Date determined in
accordance with Section 3.5(a)(ii); provided, that such Transfer shall be to
a Permitted Transferee and such Permitted Transferee shall commence a Tender
Offer in accordance with Section 3.5(c) of this Agreement; and
(iii) so long as the Investor holds an attributable interest in the
Company within the meaning of 47 C.F.R. ss.73.3555 of the rules of the FCC
(or any successor rule) as a result of the Equity-Debt-Plus component of
such rules (the "EDP Attribution"), Transfers of the amount of Series B
Preferred Stock at any time to any Person necessary for the Investor to be
in compliance with the FCC ownership rules, including with respect to EDP
Attribution; provided, that following such Transfer, such Person to whom
shares of Series B Preferred Stock are Transferred shall also be in
compliance with the FCC ownership rules, including with respect to EDP
attribution.
(b) Following the Investor Transfer Restriction Period. Following the
Investor Transfer Restriction Period, the Investor shall have the right to
Transfer shares of Series B Preferred Stock to any Person without any
restrictions or limitations on such Transfer; provided, that if such Transfer
occurs prior to the earliest of (i) the Call Closing, (ii) the closing of the
purchase by the Company, pursuant to the Company Stock Purchase Agreement, dated
as of the date hereof, between the Company and the Paxson Stockholders, of the
shares of Class B Common Stock owned by the Paxson Stockholders, or (iii) the
second anniversary of the date of the Investor Call Right Termination, following
such Transfer, the Person to whom shares of Series B Preferred Stock are
Transferred shall be in compliance with the FCC ownership rules, including with
respect to EDP Attribution.
(c) Investor Call Right Termination. Until the earlier of (A) the
consummation of a Tender Offer pursuant to Section 3.5 of this Agreement or (B)
the delivery of Series B Preferred Stock pursuant to Section 3.6(a) of this
Agreement, the Investor shall Beneficially Own shares of Series B Preferred
Stock sufficient to permit it to satisfy its obligations pursuant to Section
3.6(a).
23
(d) Transfer of Investor Rights. The Investor may not transfer the
Investor Rights except in conjunction with a Transfer of Subject Securities that
is in compliance with the terms of this Agreement and except as provided in this
Section 4.1(d).
(i) If, after giving effect to any Transfer of Subject Securities, the
Investor and its Affiliates own the Minimum Investment, the Investor Rights
shall continue unaffected by such Transfer.
(ii) If, after giving effect to any Transfer of Subject Securities,
neither the Investor and its Affiliates nor the transferee of such Subject
Securities would own the Minimum Investment, then the Investor Rights shall
terminate upon the effectiveness of such Transfer.
(iii) If, after giving effect to any Transfer of Subject Securities,
the Investor and its Affiliates would not hold the Minimum Investment and
the transferee of such Subject Securities would own the Minimum Investment,
then the Investor Rights shall be transferred to such transferee of the
Subject Securities.
(iv) If, after giving effect to any Transfer of Subject Securities,
both the Investor and its Affiliates, on one hand, and the transferee of
such Subject Securities, on the other hand, own the Minimum Investment, the
Investor shall determine whether the Investor Rights shall be transferred to
the transferee of such Subject Securities. The Investor shall notify the
Company of its determination upon such Transfer.
Section 4.2 Paxson Stockholder Restrictions. During the Restricted
Period, the Paxson Stockholders shall not Transfer any of the Call Shares;
provided, however, that the Paxson Stockholders may Transfer the Call Shares to
one or more Paxson Estate Planning Affiliates so long as following such
Transfer, the Paxson Stockholders remain, or a Paxson Estate Planning Affiliate
shall be, the FCC Single Majority Stockholder of the Company and each Paxson
Estate Planning Affiliate to whom any or all of the Call Shares are Transferred
by a Paxson Stockholder agrees in writing to be bound by the Transaction
Agreements to which a Paxson Stockholder is a party in its capacity as a Paxson
Stockholder. The Paxson Stockholders and any Paxson Estate Planning Affiliate to
whom any or all of the Call Shares are Transferred by a Paxson Stockholder
hereby acknowledge that the immediately preceding sentence of this Section 4.2
may restrict their ability to have the Call Shares accepted in a Tender Offer
commenced pursuant to Section 3.5 of this Agreement.
Section 4.3 [INTENTIONALLY OMITTED]
Section 4.4 Legends. (a) The Investor understands and agrees that any
disposition of shares of Series B Preferred Stock by it or any of its Affiliates
may only occur pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption from registration under the
Securities Act. The Investor agrees to the imprinting, so long as appropriate,
of substantially the following legends on certificates representing any of the
securities referenced in the preceding sentence:
NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
ISSUABLE UPON EXERCISE OF THE SECURITIES REPRESENTED
24
HEREBY HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND THE OTHER TERMS OF AN AMENDED AND RESTATED STOCKHOLDER
AGREEMENT, DATED AS OF NOVEMBER 7, 2005, AS THE SAME MAY BE AMENDED OR
AMENDED AND RESTATED FROM TIME TO TIME, AMONG PAXSON COMMUNICATIONS
CORPORATION, NBC UNIVERSAL, INC., SECOND CRYSTAL DIAMOND LIMITED
PARTNERSHIP, PAXSON ENTERPRISES, INC. AND LOWELL W. PAXSON.
The legend set forth above shall be removed if and when (i) the securities
represented by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or (ii) the Investor delivers to
the Company an opinion of counsel reasonably acceptable to the Company to the
effect that such legends are no longer necessary.
(b) The Paxson Stockholders agree that, during the Restricted Period,
substantially the following legend shall be imprinted on certificates
representing any of the Paxson Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON TRANSFER AND OTHER TERMS OF AN AMENDED AND RESTATED STOCKHOLDER
AGREEMENT, DATED AS OF NOVEMBER 7, 2005, AS THE SAME MAY BE AMENDED OR
AMENDED AND RESTATED FROM TIME TO TIME, AMONG PAXSON COMMUNICATIONS
CORPORATION, NBC UNIVERSAL, INC., SECOND CRYSTAL DIAMOND LIMITED
PARTNERSHIP, PAXSON ENTERPRISES, INC. AND LOWELL W. PAXSON.
Section 4.5 [INTENTIONALLY OMITTED]
ARTICLE V
[INTENTIONALLY OMITTED]
-----------------------
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given, if delivered
personally, by telecopier or sent by overnight courier as follows:
(b) If to the Investor, to:
25
NBC Universal, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Tel: 212-646-7024
Fax: 212-646-4733
with a copy to:
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Attention: John A. Marzulli, Jr.
Tel: 212-848-8590
Fax: 646-848-8590
(c) If to the Company, to:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: General Counsel
Tel: 561-659-4122
Fax: 561-655-9424
with copy to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W., Suite 800
Washington, DC 20036
Attention: John R. Feore, Jr.
Tel: 202-776-2000
Fax: 202-776-2222
and
Holland & Knight LLP
222 Lakeview Avenue, Suite 1000
West Palm Beach, Florida 33401
Attention: David L. Perry
Tel: 561-650-8314
Fax: 561-650-8399
(d) If to the Paxson Stockholders, to:
Lowell W. Paxson
529 South Flagler Drive, 26H
West Palm Beach, Florida 33401
26
Tel: 561-835-8080
Fax: 561-832-5656
and
Wiley, Rein & Fielding LLP
1776 K Street, NW
Washington, DC 20006
Attention: Fred Fielding
Tel: 202-719-7000
Fax: 202-719-7049
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
Section 6.2 Entire Agreement; Amendment. The Transaction Agreements and
the documents described therein or attached or delivered pursuant thereto set
forth the entire agreement between the parties thereto with respect to the
transactions contemplated by such agreements. This Agreement amends and restates
the Original Stockholder Agreement in its entirety; provided, however, that
except as set forth in the Settlement Agreement, the parties hereto retain all
rights, powers and remedies available at law or in equity or otherwise in
connection with any breach arising out of the Original Stockholder Agreement
prior to the date hereof, and entering into this Agreement by the parties shall
not operate as a waiver of, nor shall it prejudice, any such right, power or
remedy now or hereafter existing at law or in equity or otherwise, except for
any rights, powers or remedies arising out of events that occurred prior to the
date hereof to the extent the events giving rise to such rights, powers or
remedies were disclosed in the Company's public filings with the SEC or the FCC,
disclosed in writing to the Investor or actually known by the individuals listed
on Schedule 6.2, including the right to assert that any such event is a Voting
Rights Triggering Event under the Certificate of Designation and such rights,
powers and remedies shall be null and void and of no further force or effect.
Any provision of this Agreement may be amended or modified in whole or in part
at any time only by an agreement in writing signed by all of the parties hereto.
No failure on the part of any party to exercise, and no delay in exercising, any
right shall operate as a waiver thereof nor shall any single or partial exercise
by any party of any right preclude any other or future exercise thereof or the
exercise of any other right.
Section 6.3 Severability. If one or more provisions of this Agreement
or the application thereof to any Person or circumstances is determined by a
court or agency of competent jurisdiction to violate any law or regulation,
including, without limitation, any rule or policy of the FCC, or to be invalid,
void or unenforceable to any extent (a "Conflicting Provision"), the Conflicting
Provision shall have no further force or effect, but the remainder of this
Agreement and the application of the Conflicting Provision to other Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable shall not be affected thereby and shall be enforced to
the greatest extent permitted by law, so long as any such violation, invalidity
or unenforceability does not change the basic economic or legal positions of the
parties. In such event, the parties shall negotiate in good faith
27
such changes in other terms as shall be practicable in order to effect the
original intent of the parties.
Section 6.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same document.
Section 6.5 Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts executed and performed within such
state, and each party hereby submits to the jurisdiction of the Delaware
Chancery Court. In the event the Delaware Chancery Court does not have
jurisdiction over any dispute arising out of this Agreement, each party hereby
submits to the jurisdiction of the United States District Court for the Southern
District of New York, provided that in the event such court does not have
jurisdiction over any dispute arising out of this Agreement, each party hereby
submits to the jurisdiction of the Supreme Court of the State of New York, New
York County. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER
THIS AGREEMENT.
Section 6.6 Successors and Assigns; Third Party Beneficiaries. The
Company may not assign any of its rights or delegate any of its duties under
this Agreement without the prior written consent of the Investor and the Paxson
Stockholders. The Paxson Stockholders may not assign any of their rights or
delegate any of their duties under this Agreement without the prior written
consent of the Investor and the Company, provided that the Paxson Stockholders
may assign their rights and delegate their duties to an Affiliate in connection
with any Transfer in accordance with Section 4.2 of this Agreement (in which
event such applications as may be required shall be filed with the FCC for
consent to the transfer of control of the station licenses held by subsidiaries
of PCC) but no such assignment or delegation shall relieve such Paxson
Stockholder of any of its obligations hereunder. The Investor may not assign any
of its rights or delegate any of its duties under this Agreement without the
prior written consent of the Paxson Stockholders and the Company, provided that
the Investor may assign its rights and delegate its duties to (i) an Affiliate
but no such assignment or delegation shall relieve the Investor of any of its
obligations hereunder, (ii) any Permitted Transferee in accordance with Section
2.5 of the Call Agreement and (iii) any transferee in accordance with Section
4.1(d) of this Agreement that will own the Minimum Investment. Subject to
Section 6.10, so long as the Investor retains any Subject Securities, the
Investor, in respect of its ownership thereof, shall remain subject in all
respects to the terms and provisions of this Agreement. The Investor shall not
assign any rights under this Agreement unless such assignee expressly assumes
all of the obligations of the Investor associated with the rights proposed to be
assigned. Upon a valid assignment in accordance with this Section 6.6 and all
other applicable provisions in this Agreement respecting assignments and
transfers, such assignee shall become the Investor for purposes hereof. Any
purported assignment in violation of this Section 6.6 shall be null and void.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any Person, other than the parties hereto and their respective
successors and permitted assignees, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are
28
intended to be for the sole and exclusive benefit of the parties hereto and
their respective successors and permitted assignees, and for the benefit of no
other Person.
Section 6.7 [INTENTIONALLY OMITTED]
Section 6.8 Remedies. No right, power or remedy conferred upon any
party in this Agreement shall be exclusive, and each such right, power or remedy
shall be cumulative and in addition to every other right, power or remedy
whether conferred in this Agreement or now or hereafter available at law or in
equity or by statute or otherwise. No course of dealing between the Investor,
the Company and the Paxson Stockholders and no delay in exercising any right,
power or remedy conferred in this Agreement or now or hereafter existing at law
or in equity or by statute or otherwise shall operate as a waiver or otherwise
prejudice any such right, power or remedy. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in
addition to any other remedy to which they are entitled at law or in equity.
Section 6.9 Headings, Captions and Table of Contents. The section
headings, captions and table of contents contained in this Agreement are for
reference purposes only, are not part of this Agreement and shall not affect the
meaning or interpretation of this Agreement.
Section 6.10 Termination. Articles II, III and IV of this Agreement
shall terminate if neither (i) the Investor (together with its Affiliates) owns
at least the Minimum Investment nor (ii) a transferee to whom the Investor
Rights were transferred in accordance with this Agreement, owns at least the
Minimum Investment. This Agreement shall terminate in its entirety upon the
earlier of (a) the Investor or a transferee, as applicable, acquiring shares of
capital stock that provide it with the unfettered right to vote a sufficient
number of shares of the Voting Stock to elect a majority of the members of the
Board of Directors or (b) December 31, 2013. This Agreement shall terminate as
to the Paxson Stockholders at such time as they cease to own any Call Shares.
Section 6.11 Additional Paxson Stockholders. Each Affiliate (including
family members) of Paxson who acquires shares of Common Stock from a Paxson
Stockholder after the date hereof shall become a Paxson Stockholder for all
purposes of this Agreement and shall execute and deliver to the Company an
Assumption Agreement in the form of Exhibit A hereto.
29
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto or by their respective duly authorized representatives, all as of the
date first above written.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Dean M. Goodman
-----------------------------------
Name: Dean M. Goodman
Title: President and Chief
Operating Officer
/s/ Lowell W. Paxson
--------------------------------------
Lowell W. Paxson
SECOND CRYSTAL DIAMOND LIMITED
PARTNERSHIP
By: Paxson Enterprises, Inc., its
general partner
By: /s/ Lowell W. Paxson
-----------------------------------
Name: Lowell W. Paxson
Title: President
PAXSON ENTERPRISES, INC.
By: /s/ Lowell W. Paxson
-----------------------------------
Name: Lowell W. Paxson
Title: President
NBC UNIVERSAL, INC.
By: /s/ Robert C. Wright
-----------------------------------
Name: Robert C. Wright
Title: President and Chief Executive
Officer
Schedule 3.8 - Terms of Management Incentive Pool
The Stock-Based Compensation Awards to be granted pursuant to Section 3.8 shall
provide that one-third of the number of shares subject to such Stock-Based
Compensation Award may be acquired by the recipient at a price of $0.01 per
share (and if awarded in the form of stock options may be exercised immediately
for shares which remain subject to vesting), one-third of such shares may be
acquired by the recipient at a price per share equal to the fair market value of
the Class A Common Stock averaged over the ten trading days preceding the date
on which the award is granted, and one-third of such shares may be acquired by
the recipient at a price of $1.25 per share.
Schedule 6.2 - List of Individuals
Each of the current persons with the respective following positions, and any
person holding such position at any time during the period commencing on
September 15, 1999 and concluding on the Effective Date who is still employed by
the Parent.
Executive
- ---------
Robert C. Wright, President and CEO
Brandon Burgess, EVP Business Development
Lynn A. Calpeter, EVP and CFO
Richard Cotton, EVP and General Counsel
John Eck, EVP and President, Information Technology and Operations
Randy Falco, EVP and President, NBC Television Network
Jay Ireland, EVP and President, NBC Television Stations Division
Business Development
- --------------------
Bruce Campbell, SVP Business Development
Jay Bockhaus, VP, Business Development
Annie Balagot, Director, Business Development
Accounting
- ----------
Lance Robinson, SVP and Chief Accounting Officer
Seth Zirkel, Director, Business Development
Finance
- -------
Patricia Hutton - EVP & CFO Universal Studios
Tracie Winbigler - EVP, CFO, TVSD
Bradley Smith - VP, Finance, TVSD
Michael D. Collins - SVP, Financial Planning and Analysis
Vladimir Djedovic - Manager, Finance (Affiliate Compensation)
Mark Johnson - VP, Finance & Administration
Human Resources
- ---------------
David Crossen - VP, Human Resources, NBC Network
Tom Quick - VP, Human Resources, TVSD
Tax
- ---
Don Calvert - Counsel, Mergers & Acquisitions
Todd Davis - SVP, Tax
Leela Mookerjee - Tax Counsel
Brian O'Leary - VP, Tax Counsel
Law Department
- --------------
Susan Weiner, EVP Litigation and Assistant General Counsel
Elizabeth Newell, SVP Corporate & Transactions Law
Andrew Fossett, VP, Corporate Law
Sari Greenberg, VP, Corporate & Transactions Law
Daniel Kummer, VP, Litigatio
Bill LeBeau, Senior Counsel, Regulatory
Patricia Suh, Senior Counsel, Corporate & Transactions Law
Elisabeth Yap, Litigation Counsel
TV Stations (General Managers)
- ------------------------------
Philadelphia: WCAU - Dennis Bianchi
Providence: WJAR - Lisa Churchville
New York: WNBC - Frank Commerford
Miami: WTVJ - Ardyth Diercks
Hartford: WVIT - David Doebler
D.C.: WRC - Michael Jack
Raleigh: WNCN - Barry Leffler
Los Angeles: KNBC - Paula Madison
Dallas: WKXAS - Tom O'Brien
Birmingham: WVTM - Jim Powell
San Francisco: KNTV - Linda Sullivan
Chicago: WMAQ - Larry Wert
NBC Network Sales & Pricing / National Spot Sales
- -------------------------------------------------
Keith Turner, President
Ed Swindler, EVP Network & CFO Commercial
Shari Post, Sales Account Executive, Network
Robin Radow, Sales Account Executive, Network
Programming
- -----------
Sheraton Kalouria - SVP, Daytime Programs
Narendra Reddy - VP, Programming
TV Group
- --------
Michael Steib, General Manager, WeatherPlus
Jean Dietz - VP, Affiliate Relations
John Damiano - SVP, Affiliate Relations
Marketing
- ---------
Ed O'Donnell - SVP, Marketing & Media Development
John D. Miller - President & Chief Marketing Officer
Kristen Hackett - Group Director, Marketing, TV
Other - Non-GE Employees
- ------------------------
Paul Bird, Debevoise & Plimpton
James Stewart, UBS
Lawrence P. Tu, Dell Computer Corp., former EVP and General Counsel, NBC
Universal
Exhibit A
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated as of ______, ______, made by ______, (the
"Additional Stockholder"), in connection with the Amended and Restated
Stockholder Agreement (the "Stockholder Agreement") dated as of November 7,
2005, among Paxson Communications Corporation, NBC Universal, Inc., Lowell W.
Paxson, Second Crystal Diamond Limited Partnership and Paxson Enterprises, Inc.
All capitalized terms not defined herein shall have the meaning ascribed to them
in the Stockholder Agreement.
W I T N E S S E T H:
WHEREAS, the Paxson Stockholders have entered into the Stockholder
Agreement, which requires the Additional Stockholder to become a party to the
Stockholder Agreement in connection with the Transfer of the Paxson Shares to
the Additional Stockholder; and the Additional Stockholder has agreed to execute
and deliver this Assumption Agreement in order to become a party to the
Stockholder Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Assumption. By executing and delivering this Assumption Agreement,
the Additional Stockholder, as provided in Section 6.11 of the Stockholder
Agreement, hereby becomes a party to the Stockholder Agreement with the same
force and effect as if originally named therein as a Paxson Stockholder and,
without limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Paxson Stockholder thereunder.
2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL STOCKHOLDER]
By:____________________________________
Name:_______________________________
Title:______________________________
EXHIBIT 14
EXECUTION COPY
CALL AGREEMENT
CALL AGREEMENT, dated as of November 7, 2005 (this "Agreement"), by and
among MR. LOWELL W. PAXSON, SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP, a Nevada
limited partnership, PAXSON ENTERPRISES, INC., a Nevada corporation
(collectively, the "Call Stockholders"), and NBC PALM BEACH INVESTMENT II, INC.,
a California corporation ("Palm Beach II" or the "Investor").
W I T N E S S E T H:
WHEREAS, on September 15, 1999, NBC Universal, Inc. (f/k/a National
Broadcasting Company, Inc.), a Delaware corporation ("NBC Universal"), and
certain of its Affiliates, invested $415,000,000 (the "Initial Investment") in
Paxson Communications Corporation, a Delaware corporation (the "Company"), and,
in connection with the Initial Investment,
1. the Company and NBC Universal entered into an Investment Agreement
(the "Original Investment Agreement"), pursuant to which NBC
Universal purchased certain securities from the Company;
2. the Company, NBC Universal and the Call Stockholders entered into
a Stockholder Agreement (the "Original Stockholder Agreement"), to
provide for certain matters with respect to the governance of the
Company;
3. the Call Stockholders and Palm Beach II entered into a Call
Agreement (the "Original Call Agreement"), pursuant to which the
Call Stockholders granted Palm Beach II an option to purchase
certain securities of the Company held by them; and
4. the Company and NBC Universal entered into a Registration Rights
Agreement (the "Original Registration Rights Agreement" and,
together with the Original Investment Agreement, the Original
Stockholder Agreement and the Original Call Agreement, the
"Existing Agreements"), pursuant to which the Company granted NBC
Universal and certain of its Affiliates certain registration
rights with respect to certain shares of Class A Common Stock (as
defined below) held or acquired by NBC Universal and certain of
its Affiliates;
WHEREAS, NBC Universal, the Company and Lowell W. Paxson have
determined to restructure the Initial Investment and in connection with such
restructuring, NBC Universal, the Company and Lowell W. Paxson have agreed to
terminate or amend and restate the Existing Agreements, and enter into certain
other agreements;
WHEREAS, the Call Stockholders and Palm Beach II wish to terminate the
Original Call Agreement effective as of the date hereof;
WHEREAS, the Call Stockholders have agreed to grant the Investor the
right to purchase the Call Shares subject to the terms and conditions of this
Agreement; and
WHEREAS, the Call Stockholders are the record and beneficial owners of
8,311,639 shares of Class B Common Stock ("Class B Common Stock"), par value
$0.001 per share, of the Company and 15,455,062 shares of Class A Common Stock
("Class A Common Stock" and, together with Class B Common Stock, "Common
Stock"), par value $0.001 per share, of the Company, representing all of the
shares of Common Stock held and owned by the Call Stockholders.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other Person that
controls, is controlled by, or is under common control with, such Person,
including the executive officers and directors of such Person. As used in
this definition, "control" (including its correlative meanings, "controlled
by" and "under common control with") means the possession, directly or
indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise).
"Board of Directors" has the meaning assigned to it in Section 2.5.
"Business Day" means any day, other than a Saturday, Sunday or a day on
which commercial banks in New York, New York are authorized or obligated by
law or executive order to close.
"Call Closing" has the meaning assigned to it in Section 2.3.
"Call Deadline" has the meaning assigned to it in Section 2.3.
"Call Notice" has the meaning assigned to it in Section 2.2.
"Call Period" means the period commencing on the Effective Date and
ending on the earlier of (i) 11:59 P.M. Eastern Time on May 6, 2007 and (ii)
the 75th day following the Early Tender Offer Consummation Date, provided
that the Call Period shall end at 11:59 P.M. Eastern Time on May 6, 2007 if
the Board of Directors fails to approve, within 75 days after the
consummation of an Early Tender Offer, a Transfer of the Call
2
Right by the Investor to a Permitted Transferee pursuant to Section 2.5 of
this Agreement.
"Call Price" has the meaning assigned to it in Section 2.1.
"Call Right" has the meaning assigned to it in Section 2.1.
"Call Shares" means the 8,311,639 shares of Class B Common Stock and
15,455,062 shares of Class A Common Stock owned by the Call Stockholders,
and any shares of common stock of the Company or other securities that may
be received by the Call Stockholders with respect to such Call Shares (x) as
a result of a stock dividend or distribution on, stock split or reverse
stock split of, or similar event with respect to Call Shares or (y) on
account of Call Shares in a merger, consolidation, combination,
reclassification, recapitalization or similar transaction involving the
Company.
"Certificate of Designation" means the Amended and Restated Certificate
of Designation of the Powers, Preferences and Relative, Participating,
Optional and Other Special Rights of the 11% Series B Convertible
Exchangeable Preferred Stock and Qualifications, Limitations and
Restrictions Thereof, dated as of the date hereof, as from time to time
amended, modified or supplemented.
"Communications Act" means the Communications Act of 1934, as amended
(including, without limitation, the Cable Communications Policy Act of 1984
and the Cable Television Consumer Protection and Competition Act of 1992)
and all rules and regulations of the FCC, in each case as from time to time
in effect.
"Conflicting Provision" has the meaning assigned to it in Section 5.3.
"Early Tender Offer" has the meaning assigned to it in Section 3.5(b)
of the Stockholder Agreement.
"Early Tender Offer Consummation Date" means the first scheduled
expiration date following the date on which all of the conditions to the
consummation of the Early Tender Offer have been satisfied or waived by the
Offeror.
"Effective Date" means the date hereof.
"Escrow Agent" means the escrow agent named in the Escrow Agreement, or
any successor thereto.
"Escrow Agreement" means the Escrow Agreement to be entered into among
NBC Universal, the Call Stockholders and the Escrow Agent in accordance with
Section 2.10, as from time to time amended, modified or supplemented.
"Escrow Amount" has the meaning assigned to it in Section 2.10.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
3
"Existing Notes" means the (i) Senior Secured Floating Rate Notes; (ii)
12 1/4% Senior Subordinated Discount Notes; and (iii) 10 3/4% Senior
Subordinated Notes, collectively.
"Existing Preferred Stock" means the (i) 14 1/4% Cumulative Junior
Exchangeable Preferred Stock and (ii) 9 3/4% Series A Convertible Preferred
Stock, collectively.
"FCC" means the Federal Communications Commission and any successor
governmental entity performing functions similar to those performed by the
Federal Communications Commission on the date hereof.
"FCC Application" means the application to be filed pursuant to Section
2.2(b) in connection with the exercise of the Call Right by the Investor or
a Permitted Transferee, as applicable.
"Final Order" means an action or actions by the FCC that have not been
reversed, stayed, enjoined, set aside, annulled, or suspended, and with
respect to which no requests are pending for administrative or judicial
review, reconsideration, appeal, or stay, and the time for filing any such
requests and the time for the FCC to set aside the action on its own motion
have expired.
"14 1/4% Cumulative Junior Exchangeable Preferred Stock" means the 14
1/4% Cumulative Junior Exchangeable Preferred Stock, par value $0.001 per
share, issued pursuant to the Certificate of Designation of the Powers,
Preferences and Relative, Participating, Optional and Other Special Rights
of 13 1/4% Cumulative Junior Exchangeable Preferred Stock and
Qualifications, Limitations and Restrictions Thereof, filed on August 7,
1998.
"Governmental Authority" means any federal, national, supranational,
state, provincial, local, or similar government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Initial Call Deadline" has the meaning assigned to it in Section 2.3.
"Investor Call Right Termination" means the termination, pursuant to
Section 2.8 hereof, of the right of the Investor or a Permitted Transferee,
as applicable, to acquire the Call Shares pursuant to this Agreement.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or security agreement of any kind or
nature whatsoever (including, without limitation, any conditional sale or
other title retention agreement or any financing lease having substantially
the same effect as any of the foregoing).
4
"Master Agreement" means the Master Transaction Agreement, dated as of
the date hereof, among the Company, the Call Stockholders, Paxson Management
Corporation, the Investor, NBC Palm Beach Investment I, Inc. and NBC
Universal, as from time to time amended, modified or supplemented.
"9 3/4% Series A Convertible Preferred Stock" means the 9 3/4% Series A
Convertible Preferred Stock, par value $0.001 per share, issued pursuant to
the Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and Other Special Rights of 9 3/4% Series A
Convertible Preferred Stock and Qualifications, Limitations and Restrictions
Thereof, dated as of June 9, 1998.
"Offer Price" has the meaning assigned to it in the Stockholder
Agreement.
"Paxson Estate Planning Affiliates" means collectively (i) all limited
partners of Second Crystal Diamond Limited Partnership, other than Lowell W.
Paxson and Paxson Enterprises, Inc., and (ii) Marla J. Paxson, the children
or other lineal descendants (whether adoptive or biological) of Lowell W.
Paxson and any revocable or irrevocable inter vivos or testamentary trust
(including any trustee of such trust in his or her capacity as trustee) or
the probate estate (including any executor or executrix of such estate in
his or her capacity as such) of any such individual, so long as one or more
of the foregoing individuals is the principal beneficiary of such trust or
probate estate, or any corporation, partnership, limited liability company
or other entity in which any of the foregoing individuals has a controlling
interest.
"Permitted Transferee" has the meaning assigned to it in Section 2.5.
"Person" means an individual, corporation, unincorporated association,
partnership, group (as defined in subsection 13(d)(3) of the Exchange Act),
trust, joint stock company, joint venture, business trust or unincorporated
organization, limited liability company, any governmental entity or any
other entity of whatever nature.
"Restricted Period" has the meaning assigned to it in Section 2.4.
"Senior Secured Floating Rate Notes" means the Company's Senior Secured
Floating Rate Notes due 2010 issued pursuant to the Indenture, dated as of
January 12, 2004, among the Company, the subsidiary guarantors named therein
and The Bank of New York, as trustee.
"Series B Preferred Stock" means the 11% Series B Convertible
Exchangeable Preferred Stock of the Company issued pursuant to the
Certificate of Designation.
"Stockholder Agreement" means the Amended and Restated Stockholder
Agreement, dated as of the date hereof, among the Company, NBC Universal and
the Call Stockholders, as from time to time amended, modified or
supplemented.
"10 3/4% Senior Subordinated Notes" means the Company's 10 3/4% Senior
Subordinated Notes due 2008 issued pursuant to the Indenture, dated as of
July 12, 2001,
5
among the Company, the subsidiary guarantors named therein and The Bank of
New York, as trustee.
"Tender Offer" has the meaning assigned to it in the Stockholder
Agreement.
"Transaction Agreements" has the meaning assigned to it in the Master
Agreement.
"Transfer" means, with respect to the Call Shares or the Call Right,
any direct or indirect sale, assignment, pledge, offer or other transfer or
disposal of any interest in such shares or right.
"12 1/4% Senior Subordinated Discount Notes" means the Company's 12
1/4% Senior Subordinated Discount Notes due 2009 issued pursuant to the
Indenture, dated as of January 14, 2002, among the Company, the subsidiary
guarantors named therein and The Bank of New York, as trustee.
ARTICLE II
CALL RIGHT
Section 2.1 Call Right. (a) The Call Stockholders hereby grant to the
Investor an irrevocable right to purchase from the Call Stockholders all of the
Call Shares on the terms and conditions set forth herein (the "Call Right"). In
consideration for the grant of the Call Right, on the Effective Date, the
Investor shall pay to the Call Stockholders, in cash by wire transfer in
immediately available funds to an account or accounts designated by the Call
Stockholders, an amount equal to $25,013,446.85, being the sum of (i) $1.15
multiplied by the 8,311,639 shares of Class B Common Stock owned by the Call
Stockholders on the Effective Date and (ii) $1.00 multiplied by the 15,455,062
shares of Class A Common Stock owned by the Call Stockholders on the Effective
Date.
(b) At any time during the Call Period, the Investor or a Permitted
Transferee, as applicable, may exercise the Call Right, in whole but not in
part, and subject to the terms and conditions set forth herein, purchase from
the Call Stockholders the Call Shares for a purchase price (the "Call Price")
equal to the sum of (i) $0.29 multiplied by all of the shares of Class B Common
Stock owned by the Call Stockholders on the Effective Date and delivered at the
Call Closing and (ii) $0.25 multiplied by all of the shares of Class A Common
Stock owned by the Call Stockholders on the Effective Date and delivered at the
Call Closing. The price per share of Class B Common Stock and Class A Common
Stock specified in the previous sentence and the Call Price shall be equitably
adjusted to reflect any conversions, reclassifications, reorganizations, stock
dividends, stock splits, reverse splits and similar events which occur with
respect to the Common Stock after the date hereof and on or prior to the Call
Closing.
(c) In the event an Early Tender Offer is consummated pursuant to
Section 3.5 of the Stockholder Agreement, NBCU or its Permitted Transferee, as
applicable, shall, subject to Section 3.5(b) of the Stockholder Agreement,
exercise the Call Right prior to the end of the Call Period.
6
Section 2.2 Exercise of Call Right; Call Notice. (a) Exercise of the
Call Right shall be accomplished by the Investor or a Permitted Transferee, as
applicable, sending notice of such exercise (the "Call Notice") to the Call
Stockholders at the address provided for in Section 5.1 of this Agreement at any
time during the Call Period. The Call Notice shall state the Call Price and the
place at which the Call Closing will be conducted.
(b) As promptly as practicable, but in no event later than 10 Business
Days after the giving of the Call Notice, the parties shall cause to be filed
with the FCC an application requesting that the FCC consent to the Transfer of
the Call Shares pursuant to this Agreement. The FCC Application shall not
include a request for any waivers other than requests for not more than an
aggregate of six waivers of the FCC's then-effective media ownership rules of
not more than 12 months' duration (but in no event may the FCC Application
include a request for a television triopoly waiver or a waiver of the national
audience reach limitation), provided, that any request to continue any waivers
of the local television multiple ownership rule then held by the Company
pursuant to the FCC's "satellite" station policy shall not be counted toward
this limit. If the parties determine that any other application or approval is
required under applicable law with respect to the Transfer of the Call Shares
pursuant to this Agreement, the parties shall make such filing as promptly as
practicable following delivery of the Call Notice.
Section 2.3 Call Closing. (a) The closing (the "Call Closing") of the
exercise of the Call Right and the purchase and sale of the Call Shares shall
occur as promptly as practicable following the delivery of the Call Notice and
in any event within three Business Days following the receipt of any required
consent, approval, authorization or other order of, action by, or any required
filing with or notification to, any Governmental Authority or any required
material third party consent, including, without limitation, (i) the expiration
or termination of any waiting period (and any extension thereof) under the HSR
Act applicable to the purchase of the Call Shares and (ii) approval by the FCC
of the purchase of the Call Shares pursuant to Section 310(d) of the
Communications Act, which approval shall have become a Final Order, subject to
the penultimate sentence of this Section 2.3(a). The Call Closing shall occur at
the place designated in the Call Notice. In the event the Call Closing does not
occur within eighteen (18) months following the filing of the FCC Application
(the "Initial Call Deadline"), the right of the Investor or a Permitted
Transferee, as applicable, to purchase the Call Shares pursuant to the Call
Right shall terminate; provided, however, that the Investor or a Permitted
Transferee, as applicable, may, at its election, extend the Initial Call
Deadline for an additional six (6)-month period (the "Call Deadline") if, prior
to the Initial Call Deadline, the FCC has approved the purchase of the Call
Shares by the Investor or such Permitted Transferee, as applicable, but such
approval has not become a Final Order, by delivering a notice of extension to
the Call Stockholders not later than the date of the Initial Call Deadline. The
requirement for a Final Order may be waived by the Investor or a Permitted
Transferee, as applicable, in its sole discretion. If at the Call Deadline, a
Final Order has not been issued, and the Investor or a Permitted Transferee, as
applicable, has not waived the requirement for a Final Order and proceeded with
the Call Closing, the Call Right shall expire and Investor or the Permitted
Transferee, as applicable, shall have no further rights or obligations under
this Agreement.
(b) The obligation of the Call Stockholders to deliver the Call Shares
to the Investor or a Permitted Transferee, as applicable, at the Call Closing
shall be conditioned on the consummation of the Tender Offer.
7
(c) At the Call Closing, (i) the Call Stockholders shall deliver to the
Investor or a Permitted Transferee, as applicable, certificates representing all
of the Call Shares, duly endorsed in blank or accompanied by stock powers duly
executed in blank, with all necessary stock transfer stamps affixed thereto and
(ii) the Investor or a Permitted Transferee, as applicable, shall pay the Call
Price by wire transfer in immediately available funds to the account or accounts
specified by the Call Stockholders. The Call Stockholders shall furnish
necessary account information at least three Business Days prior to the Call
Closing. The obligation of the Investor or a Permitted Transferee, as
applicable, to pay the Call Price shall be subject to the receipt by the
Investor or a Permitted Transferee, as applicable, of all the Call Shares free
and clear of any Lien.
Section 2.4 Limitation on Transfer of the Call Shares by the Call
Stockholders. From the date hereof until the earlier of (i) the Call Closing or
(ii) the date of the Investor Call Right Termination (the "Restricted Period"),
the Call Stockholders shall not Transfer any of the Call Shares; provided,
however, that the Call Stockholders may Transfer, pursuant to prior FCC
consents, the Call Shares to one or more Paxson Estate Planning Affiliates so
long as following such Transfer, the Call Stockholders or a Paxson Estate
Planning Affiliate remains the single majority shareholder of the Company under
applicable FCC rules and each Paxson Estate Planning Affiliate to whom any of
the Call Shares are Transferred by a Call Stockholder agrees in writing to be
bound by the Transaction Agreements to which such Transferring Call Stockholder
is a party in its capacity as a Call Stockholder. The Call Stockholders and any
Paxson Estate Planning Affiliate to whom any or all of the Call Shares are
Transferred by a Call Stockholder hereby acknowledge that the immediately
preceding sentence of this Section 2.4 will restrict their ability to tender the
Call Shares in a Tender Offer commenced pursuant to Section 3.5 of the
Stockholder Agreement.
Section 2.5 Transfer of Call Right . (a) At any time prior to the
expiration of the Call Period, the Investor may Transfer the Call Right to a
third party which the board of directors of the Company (the "Board of
Directors") approves in the reasonable exercise of its business judgment. In
making such determination, the Board of Directors shall, in the reasonable
exercise of its fiduciary duties, principally take into account that such
proposed transferee: (i) is, and, subject to obtaining waivers of the FCC rules
and regulations permitted by Section 2.2(b) of this Agreement, upon consummation
of the Call Closing shall be, in compliance with applicable FCC rules relating
to ownership and operation of the full-service television stations owned and
operated by the Company; and (ii) is able to fulfill the financial obligations
arising in connection with the exercise of the Call Right and the consummation
of the Tender Offer (and such proposed transferee shall have delivered to the
Board of Directors a proposal for satisfying any rights that holders of any debt
securities of the Company may have in connection with such exercise and
consummation); provided, however, that in considering the request for approval,
the Board of Directors shall not consider the Offer Price; provided, further,
however, that the foregoing shall not limit the ability of the Board of
Directors to consider the Offer Price when making any recommendation required to
be included in any Solicitation/Recommendation Statement on Schedule 14D-9 in
connection with the Tender Offer; and, provided, however, that the Board of
Directors shall approve such Person as a Permitted Transferee if the Board of
Directors determines in the reasonable exercise of its fiduciary duties that
such Person otherwise satisfies the standard in this sentence and either
provides reasonably satisfactory evidence that it has sufficient liquid
financial resources to fulfill
8
the financial obligations referred to in clause (ii) of this sentence without
the need for external financing or presents firm commitments in customary form
from nationally recognized sources for such financing. Any proposed transferee
that is approved by the Board of Directors shall be a "Permitted Transferee."
Any Transfer of the capital stock of the Investor to a Person, other than an
Affiliate of NBC Universal, shall be deemed to be a Transfer of the Call Right;
provided, however, that any Transfer of the capital stock of NBCU Universal to a
Person, other than an Affiliate of General Electric Company, shall not be deemed
to be a Transfer of the Call Right.
(b) Concurrently with the effectiveness of the Transfer of the Call
Right to a Permitted Transferee, such Permitted Transferee shall deliver a Call
Notice to the Call Stockholders, and, unless an Early Tender Offer has been
consummated pursuant to Section 3.5(b) of the Stockholder Agreement, the Offeror
(as defined in Section 3.5(c) of the Stockholder Agreement) will commence a
Tender Offer pursuant to and subject to the terms and conditions of Section 3.5
of the Stockholder Agreement.
Section 2.6 Conversion of Call Shares. During the Restricted Period,
the Call Stockholders shall not convert any of the Call Shares into any other
security of the Company.
Section 2.7 Legends. The Call Stockholders agree to the imprinting, for
so long as appropriate, of substantially the following legends on certificates
representing any of the Call Shares:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF AN
AMENDED AND RESTATED STOCKHOLDER AGREEMENT, DATED AS OF NOVEMBER 7, 2005,
AMONG PAXSON COMMUNICATIONS CORPORATION, LOWELL W. PAXSON, SECOND CRYSTAL
DIAMOND LIMITED PARTNERSHIP, PAXSON ENTERPRISES, INC. AND NBC UNIVERSAL,
INC.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
CALL AGREEMENT DATED AS OF NOVEMBER 7, 2005, AMONG MR. LOWELL W. PAXSON,
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP, PAXSON ENTERPRISES, INC. AND NBC
PALM BEACH INVESTMENT II, INC.
Section 2.8 Termination of the Investor Call Right. The right of the
Investor or a Permitted Transferee, as applicable, to purchase the Call Shares
pursuant to this Agreement shall terminate upon the earliest to occur of the:
(i) expiration of the Call Period prior to the delivery of the Call Notice by
the Investor or a Permitted Transferee, as applicable, to the Call Stockholders;
(ii) expiration of the Initial Call Deadline or, if applicable, the Call
Deadline, prior to the occurrence of the Call Closing; and (iii) written consent
of the parties hereto.
Section 2.9 Termination of the Original Call Agreement. Effective as of
the Effective Date, the Original Call Agreement is hereby terminated and shall
have no further force or effect.
Section 2.10 Escrow. Within three Business Days following the Effective
Date, pursuant to and in accordance with Section 3(a) of the Master Agreement,
the Call Stockholders
9
shall deposit all of the shares of Class A Common Stock owned by the Call
Stockholders on the Effective Date into escrow, and NBCU shall deposit
$3,863,765.50 (the "Escrow Amount") with the Escrow Agent in respect of the
shares of Class A Common Stock owned by the Call Stockholders. Promptly
following the exercise of the Call Right, the parties hereto shall deliver a
joint notice to the Escrow Agent pursuant to the Escrow Agreement instructing
the Escrow Agent to release the Escrow Amount to the Call Stockholders. Promptly
following the occurrence of the Investor Call Right Termination, the Call
Stockholders shall deliver a notice to the Escrow Agent instructing the Escrow
Agent to release the Escrow Amount to the Call Stockholders.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Call Stockholders.
Each Call Stockholder represents and warrants to the Investor as follows:
(a) Existence; Compliance with Law. Each of the Call Stockholders that
is an individual has full legal right and capacity to execute and deliver this
Agreement and each of the Call Stockholders that is not an individual is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and each of the Call Stockholders has all
necessary power and authority to enter into this Agreement, to carry out its
obligations and to consummate the transactions contemplated hereby. Each of the
Call Stockholders that is not an individual is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business makes such licensing or
qualification necessary, except to the extent that the failure to be so licensed
or qualified and in good standing would not adversely affect the ability of such
Call Stockholder to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement. The execution and delivery by each
Call Stockholder of this Agreement, the performance by each Call Stockholder of
its obligations hereunder and the consummation by each Call Stockholder of the
transactions contemplated hereby have been duly authorized by all requisite
action on the part of each Call Stockholder and its stockholders or partners, as
the case may be. This Agreement has been duly executed and delivered by each
Call Stockholder, and (assuming due authorization, execution and delivery by the
other parties) this Agreement constitutes legal, valid and binding obligations
of each Call Stockholder, enforceable against each Call Stockholder in
accordance with its terms, subject to the effect of any applicable bankruptcy,
insolvency (including all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting creditors' rights generally
and subject to the effect of general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
(b) Authorization; Enforceable Obligations. Assuming that all consents,
approvals, authorizations and other actions described in Section 3.1(c) have
been obtained, all filings and notifications listed on Schedule 3.1(c) have been
made and any applicable waiting period has expired or been terminated, and
except as may result from any facts or circumstances relating solely to the
Investor, the execution, delivery and performance of this Agreement does
10
not and will not (i) violate, conflict with or result in the breach of the
certificate of incorporation or by laws (or similar organizational documents) of
such Call Stockholder (other than Mr. Lowell W. Paxson), (ii) conflict with or
violate any law or Governmental Order applicable to such Call Stockholder or
(iii) conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of
termination, acceleration or cancellation of, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which such Call Stockholder or any of its
subsidiaries is a party, except, in the case of clauses (ii) and (iii), as would
not materially and adversely affect the ability of such Call Stockholder to
carry out its obligations under, and to consummate the transactions contemplated
by, this Agreement.
(c) Governmental Consents. The execution, delivery and performance by
each Call Stockholder of this Agreement and the transactions contemplated hereby
do not and will not require any consent, approval, authorization or other order
of, action by, filing with or notification to, any Governmental Authority,
except (i) as described in Schedule 3.1(c), (ii) the pre-merger notification and
waiting period requirements of the HSR Act and the approval by the FCC pursuant
to Section 310(d) of the Communications Act in connection with the exercise of
the Call Right, (iii) where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would not
prevent or materially delay the consummation by such Call Stockholder of the
transactions contemplated by this Agreement or (iv) as may be necessary as a
result of any facts or circumstances relating solely to the other parties
hereto.
(d) Capitalization; Ownership. Such Call Stockholder owns the Call
Shares set forth opposite his name on Schedule 3.1(d) attached hereto, free and
clear of all Liens. Upon delivery of and payment for the Call Shares at the Call
Closing as provided herein, the Investor shall acquire good title to the Call
Shares delivered by such Call Stockholder, free and clear of all Liens. Such
Call Stockholder is not a party to, and has no knowledge of, any voting trust,
proxy or any other agreement or understanding with respect to the Call Shares
other than as created by the Transaction Agreements. Upon delivery of and
payment for the Call Shares at the Call Closing as provided herein, the Investor
or a Permitted Transferee, as applicable, shall own all of the outstanding
shares of Class B Common Stock held by the Call Stockholders.
Section 3.2 Survival of Representations and Warranties. All
representations and warranties made herein shall survive for a period of three
years after the termination of this Agreement.
ARTICLE IV
OTHER AGREEMENTS
Section 4.1 Governmental Filings. In addition to the FCC Application,
each of the Call Stockholders and the Investor or a Permitted Transferee, as
applicable, will make, as promptly as practicable following the request of any
other party, all other filings required to be made by the Call Stockholders and
the Investor or a Permitted Transferee, as applicable, under the applicable law,
including, without limitation, the Communications Act, the HSR Act and any
11
similar requirement of foreign law and the rules and regulations related
thereto, with regard to the transactions contemplated by this Agreement
(including, without limitation, the purchase and holding of the Call Shares
pursuant to this Agreement) and each of the parties hereto will take all
reasonable steps within its control (including providing information to the FCC)
to obtain any required consents or approvals as promptly as practicable. The
Call Stockholders and the Investor or a Permitted Transferee, as applicable,
will each provide information and cooperate in all respects to assist the other
parties in making its or their required filings under the Communications Act.
Section 4.2 Inconsistent Actions. Once the FCC Application has been
filed, neither the Investor or a Permitted Transferee, as applicable, nor any
Call Stockholder shall take any action that could reasonably be expected to
delay or hinder the grant of the FCC Application. NBC Universal hereby agrees
that it will not, and NBC Universal shall not permit any of the NBCU Entities
(as defined in the Master Agreement) to, file a petition to deny or otherwise
object to or oppose the grant of the FCC Application.
Section 4.3 Tax Treatment. The parties agree that the Call Stockholders
may treat the transactions contemplated hereby for federal, state and local tax
purposes as a sale of the Call Shares by the Call Stockholders as of the
Effective Date.
Section 4.4 NBC Guaranty. NBC Universal hereby unconditionally and
absolutely guarantees the timely payment and performance by Palm Beach II of all
of its obligations under this Agreement. Such guarantee shall automatically
expire and have no further force and effect upon a Transfer of the Call Right to
a Permitted Transferee in the manner provided by this Agreement, without any
further action being required by or on behalf of the parties hereto, in which
event NBC Universal shall be released from any further obligation hereunder.
ARTICLE V
MISCELLANEOUS
Section 5.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given, if delivered
personally, by telecopier or sent by overnight courier as follows:
(a) If to the Investor, to:
NBC PALM BEACH INVESTMENT II, INC.
c/o NBC Universal, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Tel: 212-646-7024
Fax: 212-646-4733
12
with a copy to:
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Attention: John A. Marzulli, Jr.
Tel: 212-848-8590
Fax: 646-848-8590
(b) If to the Call Stockholders, to:
Lowell W. Paxson
529 South Flagler Drive, 26H
West Palm Beach, Florida 33401
Tel: 561-835-8080
Fax: 561-832-5656
with a copy to:
Wiley, Rein & Fielding LLP
1776 K Street NW
Washington, DC 20006
Attention: Fred Fielding
Tel: 202-719-7000
Fax: 202-719-7049
and
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: General Counsel
Tel: 561-659-4122
Fax: 561-655-9424
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
Section 5.2 Entire Agreement; Amendment. The Transaction Agreements and
the documents described therein or attached or delivered pursuant thereto set
forth the entire agreement between the parties thereto with respect to the
transactions contemplated by such agreements. Any provision of this Agreement
may be amended or modified in whole or in part at any time only by an agreement
in writing signed by all of the parties. No failure on the part of any party to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof nor shall any single or partial exercise by any party of any right
preclude any other or future exercise thereof or the exercise of any other
right.
13
Section 5.3 Severability. If one or more provisions of this Agreement
or the application thereof to any Person or circumstances is determined by a
court or agency of competent jurisdiction to violate any law or regulation,
including, without limitation, any rule or policy of the FCC, or to be invalid,
void or unenforceable to any extent (a "Conflicting Provision"), the Conflicting
Provision shall have no further force or effect, but the remainder of this
Agreement and the application of the Conflicting Provision to other Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable shall not be affected thereby and shall be enforced to
the greatest extent permitted by law, so long as any such violation, invalidity
or unenforceability does not change the basic economic or legal positions of the
parties. In such event, the parties shall negotiate in good faith such changes
in other terms as shall be practicable in order to effect the original intent of
the parties.
Section 5.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same document.
Section 5.5 Governing Law; Jurisdiction; Waiver of Jury Trial. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts executed and performed within such
state, and each party hereby submits to the jurisdiction of the Delaware
Chancery Court. In the event the Delaware Chancery Court does not have
jurisdiction over any dispute arising out of this Agreement, each party hereby
submits to the jurisdiction of the United States District Court for the Southern
District of New York, provided that in the event such court does not have
jurisdiction over any dispute arising out of this Agreement, each party hereby
submits to the jurisdiction of the Supreme Court of the State of New York, New
York County. THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER
THIS AGREEMENT.
Section 5.6 Successors and Assigns; Third Party Beneficiaries. The Call
Stockholders may not assign any of their rights or delegate any of their duties
under this Agreement without the prior written consent of the Investor, provided
that the Call Stockholders may assign their rights and delegate their duties to
Paxson Estate Planning Affiliates in connection with any Transfer in accordance
with Section 2.4 of this Agreement (in which event such applications as may be
required shall be filed with the FCC for consent to the transfer of control of
the station licenses held by subsidiaries of the Company); but no such
assignment or delegation shall relieve such Call Stockholder of any of its
obligations hereunder. The Investor may not assign any of its rights or delegate
any of its duties under this Agreement without the prior written consent of the
Call Stockholders, provided that the Investor may assign its rights and delegate
its duties to (i) an Affiliate, but no such assignment or delegation shall
relieve the Investor of any of its obligations hereunder, and (ii) any Permitted
Transferee in accordance with Section 2.5. The Investor shall not assign any
rights under this Agreement unless such assignee expressly assumes all of the
obligations of the Investor associated with the rights proposed to be assigned.
Any purported assignment in violation of this Section 5.6 shall be null and
void. Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any Person, other than the parties hereto and their respective
successors and permitted assignees, any
14
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
parties hereto and their respective successors and permitted assignees, and for
the benefit of no other Person.
Section 5.7 Remedies. No right, power or remedy conferred upon any
party in this Agreement shall be exclusive, and each such right, power or remedy
shall be cumulative and in addition to every other right, power or remedy
whether conferred in this Agreement or now or hereafter available at law or in
equity or by statute or otherwise. No course of dealing among the Investor, the
Company and the Call Stockholders and no delay in exercising any right, power or
remedy conferred in this Agreement or now or hereafter existing at law or in
equity or by statute or otherwise shall operate as a waiver or otherwise
prejudice any such right, power or remedy. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in
addition to any other remedy to which they are entitled at law or in equity.
Section 5.8 Further Assurances. Each party shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be necessary or appropriate to effectuate, carry out and comply
with all of the terms of this Agreement and the transactions contemplated
hereby.
Section 5.9 Headings, Captions and Table of Contents. The section
headings, captions and table of contents contained in this Agreement are for
reference purposes only, are not part of this Agreement and shall not affect the
meaning or interpretation of this Agreement.
15
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto or by their respective duly authorized representative all as of the date
first above stated.
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP
By: Paxson Enterprises, Inc., its general partner
By: /s/ Lowell W. Paxson
----------------------------------
Name: Lowell W. Paxson
Title: President
PAXSON ENTERPRISES, INC.
By: /s/ Lowell W. Paxson
----------------------------------
Name: Lowell W. Paxson
Title: President
/s/ Lowell W. Paxson
----------------------------------
Lowell W. Paxson
The undersigned hereby executes this Agreement
solely for purposes of Sections 4.2 and 4.4 of
this Agreement
NBC UNIVERSAL, INC.
By: /s/ Robert C. Wright
----------------------------------
Name: Robert C. Wright
Title: President and Chief Executive Officer
NBC PALM BEACH INVESTMENT II, INC.
By: /s/ Robert C. Wright
----------------------------------
Name: Robert C. Wright
Title: Director and President
SCHEDULE 3.1(c)
GOVERNMENTAL CONSENTS
1. One or more notices of consummation required to be filed with the FCC
following the Call Closing.
2. A copy of this Agreement required to be filed with the FCC within 30 days
following the execution of this Agreement.
3. Filings with the Securities and Exchange Commission pursuant to Section 16
of the Exchange Act.
SCHEDULE 3.1(d)
CAPITALIZATION TABLE OF CALL SHARES
- ------------------------------------------------------ --------------------------------- --------------------------------
Call Stockholder Number of Shares of Class A Number of Shares of Class B
Common Stock Common Stock
- ------------------------------------------------------ --------------------------------- --------------------------------
Lowell W. Paxson 100 0
Second Crystal Diamond Limited Partnership 14,695,725 7,487,401
Paxson Enterprises, Inc. 759,237 824,238
--------------------------------- --------------------------------
Total 15,455,062 8,311,639
================================= ================================
EXHIBIT 15
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 11% SERIES B
CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Paxson Communications Corporation (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Corporation (the "Board of Directors") by its
Certificate of Incorporation, as amended (hereinafter referred to as the
"Certificate of Incorporation"), and pursuant to the provisions of Section 242
of the General Corporation Law of the State of Delaware, said Board of
Directors, on November 7, 2005, duly approved and adopted the following
resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board of Directors
by the Certificate of Incorporation, and having received the written consent
of the holder of all of the outstanding shares thereof, the Board of
Directors does hereby amend and restate the Certificate of Designation of
the Powers, Preferences and Relative, Participating, Optional and Other
Special Rights of 8% Series B Convertible Exchangeable Preferred Stock and
Qualifications, Limitations and Restrictions Thereof, which was originally
filed with the Secretary of State of the State of Delaware on September 15,
1999 and under which the Corporation issued, on September 15, 1999 (the
"Original Issue Date"), 41,500 shares of 8% Series B Convertible
Exchangeable Preferred Stock with a liquidation preference of $10,000 per
share (the "Original Series B Preferred Stock"), in respect of which an
aggregate of 18,857 additional shares of Original Series B Preferred Stock
have been issued as payment in full of all obligations for dividends accrued
through September 30, 2005, to read in its entirety as set forth herein, and
does hereby redesignate the 60,357 shares of Original Series B Preferred
Stock as 60,357 shares of 11% Series B Convertible Exchangeable Preferred
Stock, par value $.001 per share, with a liquidation preference of $10,000
per share, having the designations, preferences, relative, participating,
optional and other special rights and the qualifications, limitations and
restrictions thereof that are set forth in the Certificate of Incorporation
and in this Resolution as follows:
(a) Designation. The Original Series B Preferred Stock previously created
out of the authorized and unissued shares of Preferred Stock of the Corporation
is hereby redesignated as "11% Series B Convertible Exchangeable Preferred
Stock." The number of shares constituting such class as of the Issue Date shall
be 60,607 and are referred to as
1
the "Series B Preferred Stock." The "Liquidation Preference" of the Series B
Preferred Stock shall be $10,000 per share.
(b) Rank. The Series B Preferred Stock shall, with respect to dividends and
distributions upon liquidation, winding up or dissolution of the Corporation,
rank (i) senior to all classes of Common Stock of the Corporation and to each
other class of Capital Stock of the Corporation or series of Preferred Stock of
the Corporation hereafter created, the terms of which do not expressly provide
that it ranks senior to, or on a parity with, the Series B Preferred Stock as to
dividends and distributions upon liquidation, winding up or dissolution of the
Corporation (collectively referred to, together with all classes of Common Stock
of the Corporation, as "Junior Securities"); (ii) on a parity with any class of
Capital Stock of the Corporation or series of Preferred Stock of the Corporation
hereafter created the terms of which expressly provide that such class or series
will rank on a parity with the Series B Preferred Stock as to dividends and
distributions upon liquidation, winding up or dissolution (collectively referred
to as "Parity Securities"), provided that any such Parity Securities not issued
in accordance with the requirements of paragraph (f)(i) hereof shall be deemed
to be Junior Securities and not Parity Securities; and (iii) junior to the
Existing Preferred Stock and to each other class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation hereafter created
the terms of which expressly provide that such class or series will rank senior
to the Series B Preferred Stock as to dividends and distributions upon
liquidation, winding up or dissolution of the Corporation (collectively referred
to as "Senior Securities"), provided that any such Senior Securities not issued
in accordance with the requirements of paragraph (f)(i) hereof shall be deemed
to be Junior Securities and not Senior Securities.
(c) Dividends.
(i) Beginning on the Issue Date, the Holders of the outstanding shares of
Series B Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors, out of funds legally available therefor, dividends on
each share of Series B Preferred Stock at the higher of (determined on a
cumulative basis from the Issue Date to the date of such determination) (x) a
rate per annum equal to 11% of the Issue Price and (y) the aggregate cash
dividends per share paid on the Class A Common Stock from the Issue Date to the
date of such determination, multiplied by the number of shares of Class A Common
Stock into which each share of Series B Preferred Stock is convertible. All
dividends shall be cumulative, whether or not earned or declared, on a daily
basis from the Issue Date, but shall be payable only at such time or times as
may be fixed by the Board of Directors or as otherwise provided herein and shall
not compound. Dividends shall be payable to the Holders of record as they appear
on the stock books of the Corporation on such dates as the Board of Directors
may determine with respect to such dividends. Dividends shall cease to
accumulate in respect of shares of the Series B Preferred Stock on the date of
the redemption of such shares unless the Corporation shall have failed to pay
the relevant redemption price on the date fixed for redemption.
(ii) All dividends paid with respect to shares of the Series B Preferred
Stock pursuant to paragraph (c)(i) shall be paid pro rata to the Holders
entitled thereto.
2
(iii) Dividends payable on the Series B Preferred Stock for any period less
than a year shall be computed on the basis of a 360-day year of twelve 30-day
months and the actual number of days elapsed in the period for which payable.
(d) Liquidation.
(i) In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, the Holders of shares of Series B
Preferred Stock then outstanding shall be entitled to be paid, out of the assets
of the Corporation available for distribution to its stockholders and before any
distribution shall be made or any assets distributed to the holders of any of
the Junior Securities, including, without limitation, the Common Stock of the
Corporation, an amount in cash equal to the greater of (A) the Liquidation
Preference for each share outstanding, plus, without duplication, an amount in
cash equal to accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding up, and (B) the amount per share payable
upon liquidation, dissolution or winding up to the holders of shares of the
Corporation's Class A Common Stock (without deduction for the liquidation
preference otherwise payable pursuant to clause (A) hereof), multiplied by the
number of such shares into which the shares of Series B Preferred Stock are then
convertible. Except as provided in the preceding sentence, Holders of Series B
Preferred Stock shall not be entitled to any distribution in the event of any
liquidation, dissolution or winding up of the affairs of the Corporation. If the
assets of the Corporation are not sufficient to pay in full the liquidation
payments payable to the Holders of outstanding shares of the Series B Preferred
Stock and all Parity Securities, then, (x) should the holders of the Series B
Preferred Stock be entitled to receive the liquidation amount described in
clause (A) above, the holders of all such shares shall share equally and ratably
in such distribution of assets first in proportion to the Liquidation Preference
to which each is entitled until such preferences are paid in full, and then in
proportion to their respective amounts of accumulated but unpaid dividends; and
(y) should the holders of the Series B Preferred Stock be entitled to receive
the liquidation amount described in clause (B) above, the holders of all such
shares shall share equally and ratably in such distribution of assets in
proportion to the full liquidation payments to which each is entitled.
(ii) For the purposes of this paragraph (d), neither the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with or into one
or more entities shall be deemed to be a liquidation, dissolution or winding up
of the affairs of the Corporation.
3
(e) Redemption.
(i) Mandatory Redemption. The Corporation shall redeem, in the manner
provided for in paragraph (e)(iii) hereof, all of the outstanding shares of
Series B Preferred Stock for cash on December 31, 2013 (the "Maturity Date"), at
a price per share equal to the Redemption Price. In the event the Corporation
fails to redeem the Series B Preferred Stock for cash on the Maturity Date, the
Holder shall be entitled to all remedies available at law or equity, including
the right to bring an action to compel enforcement of this paragraph (e)(i) or
an action for damages arising out of the failure by the Corporation to redeem
the Series B Preferred Stock for cash on the Maturity Date.
(ii) Optional Redemption. At any time after the Restricted Period, the
Corporation may, at its option, redeem, in whole, in the manner provided for in
paragraph (e)(iii) hereof, all of the outstanding shares of Series B Preferred
Stock, at a price per share equal to the Redemption Price.
(iii) Procedures for Redemption. (A) At least 90 days prior to the date
fixed for any redemption of the Series B Preferred Stock pursuant to paragraph
(e)(i) or (e)(ii) (the "Redemption Date"), written notice (the "Redemption
Notice") shall be given by first class mail, postage prepaid, to each Holder of
record on the date such notice is given at such Holder's address as it appears
on the stock books of the Corporation, provided that no failure to give such
notice nor any deficiency therein shall affect the validity of the procedure for
the redemption of any shares of Series B Preferred Stock, except in the case of
an Optional Redemption, as to the Holder or Holders to whom the Corporation has
failed to give said notice or to whom such notice was defective. The Redemption
Notice shall state:
(1) the Redemption Price;
(2) Redemption Date;
(3) that the Holder is to surrender to the Corporation, in the manner,
at the place or places and at the price designated, his certificate or
certificates representing the shares of Series B Preferred Stock; and
(4) that dividends on the shares of the Series B Preferred Stock shall
cease to accumulate on such Redemption Date unless the Corporation defaults
in the payment of the Redemption Price.
(B) Each Holder of Series B Preferred Stock shall surrender the certificate
or certificates representing all shares of Series B Preferred Stock held by it
to the Corporation, duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), in the manner and at the place designated in the
Redemption Notice, and on the Redemption Date the full Redemption Price for such
shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired.
4
(C) On and after the Redemption Date, unless the Corporation defaults in the
payment in full of the Redemption Price, dividends on the Series B Preferred
Stock shall cease to accumulate on the Redemption Date, and all rights of the
Holders of redeemed shares shall terminate with respect thereto on the
Redemption Date, other than the right to receive the Redemption Price, without
interest; provided, however, that if a notice of redemption shall have been
given as provided in paragraph (e)(iii)(A) above and the funds necessary for
redemption (including an amount in respect of all dividends that will accrue to
the Redemption Date) shall have been segregated and irrevocably deposited in
trust for the equal and ratable benefit of the Holders of the shares to be
redeemed, then, at the close of business on the day on which such funds are
segregated and set aside, the Holders of the shares to be redeemed shall cease
to be stockholders of the Corporation and shall be entitled only to receive the
Redemption Price.
(iv) Redemption at the Option of the Holders. The Series B Preferred Stock
is subject to certain redemption rights of certain Holders in accordance with
the terms and conditions set forth in Article IX of the Investment Agreement.
(f) Voting Rights. Holders of Series B Preferred Stock shall have no voting
rights, except as required by the General Corporation Law of the State of
Delaware, and as expressly provided in this Certificate of Designation.
(i) (A) So long as any shares of the Series B Preferred Stock are
outstanding, the Corporation may not issue any additional shares of Series B
Preferred Stock or any new class of Parity Securities or Senior Securities (or
amend the provisions of any existing class of Capital Stock to make such class
of Capital Stock Parity Securities or Senior Securities) without the approval of
the Holders of at least a majority of the shares of Series B Preferred Stock
then outstanding, voting or consenting, as the case may be, together as one
class; provided, however, that the Corporation may, without the approval of the
Holders of at least a majority of the shares of Series B Preferred Stock then
outstanding, voting or consenting, as the case may be, together as one class:
(I) issue a new class of Senior Securities (or amend the provisions of any
existing class of Capital Stock to make such class of Capital Stock Senior
Securities) at any time after the Common Stock Trading Price first exceeds 120%
of the Conversion Price (as then in effect) for 20 consecutive trading days;
(II) issue additional shares of Existing Preferred Stock, Parity Securities or
Senior Securities (including shares issued in payment of dividends thereon in
accordance with their respective certificates of designation), which Senior
Securities are pari passu with the Existing Preferred Stock, and which Senior
Securities or Parity Securities do not require the Corporation to pay dividends
thereon on a current basis in cash, or require cash dividends to be paid at a
rate not in excess of one percentage point greater than the dividend rate borne
by any series of the Existing Preferred Stock (as existing on the Issue Date)
and which do not prohibit the payment of dividends other than in cash on the
Series B Preferred Stock or prohibit or otherwise interfere with the ability of
the Corporation to redeem the Series B Preferred Stock pursuant to paragraph
(e)(i) above, in an amount sufficient to Refinance any series of the Existing
Preferred Stock, in whole or in part, with such shares being issued no sooner
than the date the Corporation Refinances such series of the Existing Preferred
Stock; and (III) issue additional shares of Series B Preferred Stock or a new
class of preferred stock
5
in accordance with the terms and conditions set forth in Section 3.6 of the
Stockholder Agreement.
(B) So long as any shares of the Series B Preferred Stock are outstanding,
the Corporation shall not amend this Resolution so as to affect materially and
adversely the rights, preferences or privileges of Holders of shares of Series B
Preferred Stock without the affirmative vote or consent of Holders of at least a
majority of the issued and outstanding shares of Series B Preferred Stock,
voting or consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting.
(C) So long as any shares of the Series B Preferred Stock are outstanding,
the Corporation shall not amend or modify the Indenture for the New Exchange
Debentures (the "New Exchange Indenture") in the form to be executed by the
parties thereto (except as expressly provided therein in respect of amendments
without the consent of Holders of New Exchange Debentures) as permitted by
Section 8.02 of the New Exchange Indenture to be amended or modified by (I) a
majority vote (x) without the affirmative vote or consent of Holders of at least
a majority of the shares of Series B Preferred Stock then outstanding or, (y) if
any New Exchange Debentures are then outstanding, without the affirmative vote
or consent of, in the aggregate, Holders of at least a majority in Liquidation
Preference of the Series B Preferred Stock and holders of at least a majority in
principal amount of the New Exchange Debentures, or (II) unanimous consent,
without the consent of each Holder of Series B Preferred Stock and each holder
of New Exchange Debentures, in the case of each of clauses (I)(x) and (y) and
(II), voting or consenting, as the case may be, as one class, and given in
person or by proxy, either in writing or by resolution adopted at an annual or
special meeting (in the case of Holders of Series B Preferred Stock and, in
accordance with the terms of the New Exchange Indenture, in the case of holders
of New Exchange Debentures).
(D) Except as set forth in paragraph (f)(i)(A) above, the creation,
authorization or issuance of any shares of any Junior Securities, Parity
Securities or Senior Securities or the increase or decrease in the amount of
authorized Capital Stock of any class, including Preferred Stock, shall not
require the consent of Holders of Series B Preferred Stock and shall not be
deemed to affect adversely the rights, preferences or privileges of Holders of
Series B Preferred Stock.
(ii) Without the affirmative vote or consent of Holders of a majority of the
issued and outstanding shares of Series B Preferred Stock, voting or consenting,
as the case may be, as a separate class, given in person or by proxy, either in
writing or by resolution adopted at an annual or special meeting, the
Corporation shall not, in a single transaction or series of related
transactions, consolidate or merge with or into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of the
Corporation's assets (as an entirety or substantially as an entirety in one
transaction or series of related transactions) to, another Person (other than a
Wholly-Owned Subsidiary with, into or to another Wholly-Owned Subsidiary) or
adopt a plan of liquidation unless (A) either (I) the Corporation is the
surviving or continuing Person or (II) the Person (if other than the
Corporation) formed by such consolidation or into which the Corporation
6
is merged or the Person that acquires by conveyance, transfer or lease the
properties and assets of the Corporation substantially as an entirety or, in the
case of a plan of liquidation, the Person to which assets of the Corporation
have been transferred shall be a corporation, partnership or trust organized and
existing under the laws of the United States or any State thereof or the
District of Columbia; (B) the Series B Preferred Stock shall be converted into
or exchanged for and shall become shares of such successor, transferee or
resulting Person with the same powers, preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions thereon, that the Series B Preferred Stock had immediately prior to
such transaction; (C) immediately after giving effect to such transaction and
the use of the proceeds therefrom, on a pro forma basis, including giving effect
to any Indebtedness incurred or anticipated to be incurred, or Parity Securities
or Senior Securities issued or anticipated to be issued, in connection with such
transaction, (1) the Leverage Ratio of the Corporation (in the case of clause
(I) of the foregoing clause (A)) or such Person (in the case of clause (II) of
the foregoing clause (A)) would not be higher than the Leverage Ratio of the
Corporation immediately preceding the date of such transaction, and (2) either
(x) the stockholder's equity attributable to the Series B Preferred Stock,
determined in accordance with GAAP, of the Corporation (in the case of clause
(I) of the foregoing clause (A)) or such Person (in the case of clause (II) of
the foregoing clause (A)), is positive based on the balance sheet included in
the Corporation's or such Person's, as the case may be, most recent quarterly or
annual financial statements, or (y) the Board of Directors determines in good
faith that the fair market value of the assets the Corporation (in the case of
clause (I) of the foregoing clause (A)) or such Person (in the case of clause
(II) of the foregoing clause (A)) available to the holders of the Series B
Preferred Stock assuming a liquidation of the Corporation or such Person, as the
case may be, would not be less than the fair market value of the assets of the
Corporation available to the holders of the Series B Preferred Stock assuming
liquidation of the Corporation immediately preceding such transaction; (D)
immediately after giving effect to such transactions, no Voting Rights
Triggering Event shall have occurred or shall have occurred after the Issue Date
and be continuing; and (E) the Corporation has delivered to the transfer agent
for the Series B Preferred Stock prior to the consummation of the proposed
transaction an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or transfer complies with the terms hereof and
that all conditions precedent herein relating to such transaction have been
satisfied. For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of related transactions) of
all or substantially all of the properties and assets of one or more
Subsidiaries of the Corporation, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Corporation shall be
deemed to be the transfer of all or substantially all of the properties and
assets of the Corporation.
(iii) (A) If (I) the Corporation fails to discharge any redemption or
conversion obligation with respect to the Series B Preferred Stock; (II) the
Corporation fails to make a Change of Control Offer (whether pursuant to the
terms of paragraph (h)(v) or otherwise) following a Change of Control if such
Change of Control Offer is required by paragraph (h) hereof or fails to purchase
shares of Series B Preferred Stock from Holders who elect to have such shares
purchased pursuant to the Change of Control
7
Offer; (III) the Corporation breaches or violates one of the provisions set
forth in any of paragraphs (l)(i), (l)(ii), (l)(iii) or (l)(iv) hereof and the
breach or violation continues for a period of 60 days or more after the
Corporation receives notice thereof specifying the default from the holders of
at least 25% of the shares of Series B Preferred Stock then outstanding; or (IV)
the Corporation fails to pay at the final stated maturity (giving effect to any
extensions thereof) the principal amount of any Indebtedness of the Corporation
or any Restricted Subsidiary of the Corporation, or the final stated maturity of
any such Indebtedness is accelerated, if the aggregate principal amount of such
Indebtedness, together with the aggregate principal amount of any other such
Indebtedness in default for failure to pay principal at the final stated
maturity (giving effect to any extensions thereof) or which has been
accelerated, aggregates $10,000,000 or more at any time, in each case, after a
20-day period during which such default shall not have been cured or such
acceleration rescinded, then in the case of any of clauses (I) through (IV) the
number of directors constituting the Board of Directors shall be adjusted by the
number, if any, necessary to permit the Holders of the then outstanding shares
of Series B Preferred Stock, voting separately and as one class, to elect the
lesser of two directors and that number of directors constituting 25% of the
members of the Board of Directors. Each such event described in clauses (I),
(II), (III) and (IV) is a "Voting Rights Triggering Event." Subject to
subparagraph (f)(iii)(E) below, Holders of a majority of the issued and
outstanding shares of Series B Preferred Stock, voting separately and as one
class, shall have the exclusive right to elect the lesser of two directors and
that number of directors constituting 25% of the members of the Board of
Directors at a meeting therefor called upon occurrence of such Voting Rights
Triggering Event, and at every subsequent meeting at which the terms of office
of the directors so elected by the Holders of the Series B Preferred Stock
expire (other than as described in (f)(iii)(B) below). The voting rights
provided herein shall be the exclusive remedy at law or in equity of the holders
of the Series B Preferred Stock for any Voting Rights Triggering Event, other
than a Voting Rights Triggering Event arising out of a violation of subparagraph
(e)(i).
(B) The right of the Holders of Series B Preferred Stock voting together as
a separate class to elect members of the Board of Directors as set forth in
subparagraph (f)(iii)(A) above shall continue until such time as in all other
cases, the failure, breach or default giving rise to such Voting Rights
Triggering Event is remedied, cured (including, but not limited to, in the case
of clause (IV) of subparagraph (f)(iii)(A) above through the issuance of
Refinancing Indebtedness or the waiver of any breach or default by the holder of
such Indebtedness) or waived by the holders of at least a majority of the shares
of Series B Preferred Stock then outstanding and entitled to vote thereon, at
which time (I) the special right of the Holders of Series B Preferred Stock so
to vote as a class for the election of directors and (II) the term of office of
the directors elected by the Holders of the Series B Preferred Stock shall each
terminate and the directors elected by the holders of Common Stock or Capital
Stock (other than the Series B Preferred Stock), if applicable, shall constitute
the entire Board of Directors. At any time after voting power to elect directors
shall have become vested and be continuing in the Holders of Series B Preferred
Stock pursuant to paragraph (f)(iii) hereof, or if vacancies shall exist in the
offices of directors elected by the Holders of Series B Preferred Stock, a
proper officer of the Corporation may, and upon the written request of the
Holders of record of
8
at least 25% of the shares of Series B Preferred Stock then outstanding
addressed to the secretary of the Corporation shall, call a special meeting of
the Holders of Series B Preferred Stock, for the purpose of electing the
directors which such Holders are entitled to elect. If such meeting shall not be
called by a proper officer of the Corporation within 20 days after personal
service of said written request upon the secretary of the Corporation, or within
20 days after mailing the same within the United States by certified mail,
addressed to the secretary of the Corporation at its principal executive
offices, then the Holders of record of at least 25% of the outstanding shares of
Series B Preferred Stock may designate in writing one of their number to call
such meeting at the reasonable expense of the Corporation, and such meeting may
be called by the Person so designated upon the notice required for the annual
meetings of stockholders of the Corporation and shall be held at the place for
holding the annual meetings of stockholders. Any Holder of Series B Preferred
Stock so designated shall have, and the Corporation shall provide, access to the
lists of stockholders to be called pursuant to the provisions hereof.
(C) At any meeting held for the purpose of electing directors at which the
Holders of Series B Preferred Stock shall have the right, voting together as a
separate class, to elect directors as aforesaid, the presence in person or by
proxy of the Holders of at least a majority of the outstanding shares of Series
B Preferred Stock shall be required to constitute a quorum of such Series B
Preferred Stock.
(D) Any vacancy occurring in the office of a director elected by the Holders
of Series B Preferred Stock may be filled by the remaining directors elected by
the Holders of Series B Preferred Stock unless and until such vacancy shall be
filled by the Holders of Series B Preferred Stock.
(E) The provisions of this paragraph (f)(iii) shall apply only to those
Holders, if any, that would be permitted to vote in the election of directors of
the Corporation pursuant to applicable laws and regulations of the FCC, with
such Holders together being treated as the class of Holders entitled to exercise
such rights; provided, however, that under no circumstances shall the Initial
Holder have a right to vote in the election of any director pursuant to the
provisions of this paragraph (f)(iii). The determination as to whether any
Holder would not be permitted to exercise such voting rights shall be made
jointly by any such Holder(s) and the Corporation.
(iv) In any case in which the Holders of Series B Preferred Stock shall be
entitled to vote pursuant to this paragraph (f) or pursuant to Delaware law,
each Holder of Series B Preferred Stock entitled to vote with respect to such
matter shall be entitled to one vote for each share of Series B Preferred Stock
held.
(g) Conversion.
(i) Shares of the Series B Preferred Stock are convertible at the option of
the Holder thereof, at any time and from time to time after the Call Closing (as
defined in the Call Agreement), into (A) (I) a number of shares of Class A
Common Stock or (II) in the case of the Initial Holder only, if the Initial
Holder determines in its sole discretion that it
9
is prevented under applicable laws and regulations of the FCC from holding
shares of Class A Common Stock issuable upon conversion of its shares of Series
B Preferred Stock, a number of shares of non-voting Common Stock of the
Corporation (which upon disposition by the Initial Holder to any Person other
than an Affiliate of the Initial Holder shall automatically be converted into
shares of Class A Common Stock), equal to the Issue Price of the shares of
Series B Preferred Stock surrendered for conversion plus without duplication, an
amount in cash equal to accumulated and unpaid dividends thereon, divided by the
(B) Conversion Price then in effect, except that (x) if shares of Series B
Preferred Stock are called for redemption, the conversion right will terminate
at the close of business on the Redemption Date and (y) neither the Initial
Holder nor its Affiliates shall be permitted to convert fewer than 2,000 shares
of Series B Preferred Stock. In the event no Call Closing (as defined in the
Call Agreement) occurs prior to Investor Call Right Termination, from the date
of the Investor Call Right Termination until the earlier of the Class B Closing
(as defined in the Company Stock Purchase Agreement) or the second anniversary
of the Investor Call Right Termination, the shares of the Series B Preferred
Stock are convertible at the option of the Holder thereof as described above,
provided that such conversion would not reasonably be expected to materially
delay or hinder receipt of FCC approval of the transfer of the Call Shares (as
defined in the Company Stock Purchase Agreement) from the Paxson Stockholders
(as defined in the Company Stock Purchase Agreement) to the Corporation or
result in any Person becoming the beneficial owner of more than 50% of the total
voting power of the Common Stock. No fractional shares or securities
representing fractional shares will be issued upon conversion; in lieu of
fractional shares the Corporation will, at its option, either round up the
number of shares to be issued to the nearest whole share or pay a cash
adjustment based upon the current market price of the Class A Common Stock at
the close of business on the first Business Day preceding the date of
conversion. The Series B Preferred Stock shall be converted by the holder
thereof by surrendering the certificate or certificates representing the shares
of Series B Preferred Stock to be converted, appropriately completed, to the
transfer agent for the Common Stock. The transfer agent shall issue one or more
certificates representing the Conversion Shares in the name or names requested
by the Holder. The transfer agent will deliver to the Holder a new certificate
representing the shares of Series B Preferred Stock in excess of those being
surrendered for conversion. The conversion rights stated herein are subject to
compliance by the holder with all applicable laws and regulations, including,
without limitation, the Communications Act, and as a condition precedent to the
Corporation's obligation to issue Conversion Shares to the Initial Holder or its
Affiliates upon conversion of shares of Series B Preferred Stock, the
Corporation may require that such persons deliver to the Corporation an opinion
of legal counsel reasonably acceptable to the Corporation to the effect that the
issuance of Conversion Shares to such persons or their designees upon conversion
will not violate or conflict with the Communications Act.
(ii) (A) In case the Corporation shall (I) pay a dividend or distribution in
shares of its Class A Common Stock on its shares of Class A Common Stock, (II)
subdivide its outstanding shares of Class A Common Stock into a greater number
of shares, (III) combine its outstanding shares of Class A Common Stock into a
smaller number of shares, or (IV) issue, by reclassification of its shares of
Class A Common
10
Stock, any shares of its Capital Stock (each such transaction being called a
"Stock Transaction"), then and in each such case, the Conversion Price in effect
immediately prior thereto shall be adjusted so that the Holder of a share of
Series B Preferred Stock surrendered for conversion after the record date fixing
stockholders to be affected by such Stock Transaction shall be entitled to
receive upon conversion the number of Conversion Shares which such Holder would
have been entitled to receive after the happening of such event had such share
of Series B Preferred Stock been converted immediately prior to such record
date. Such adjustment shall be made whenever any of such events shall happen,
but shall also be effective retroactively as to shares of Series B Preferred
Stock converted between such record date and the date of the happening of any
such event.
(B) If the Corporation shall, at any time or from time to time while any
shares of Series B Preferred Stock are outstanding, issue, sell or distribute
any right or warrant to purchase, acquire or subscribe for shares of Class A
Common Stock (including a right or warrant with respect to any security
convertible into or exchangeable for shares of Class A Common Stock) generally
to holders of Common Stock (including by way of a reclassification of shares or
a recapitalization of the Corporation), for a consideration on the date of such
issuance, sale or distribution less than the Common Stock Trading Price of the
shares of Class A Common Stock underlying such rights or warrants on the date of
such issuance, sale or distribution, then and in each such case, the Conversion
Price shall be adjusted by multiplying such Conversion Price by a fraction, the
numerator of which shall be the sum of (I) the Common Stock Trading Price per
share of Common Stock on the first trading day after the date of the public
announcement of the actual terms (including the price terms) of such issuance,
sale or distribution multiplied by the number of shares of Class A Common Stock
outstanding immediately prior to such issuance, sale or distribution plus (II)
the aggregate Fair Market Value of the consideration to be received by the
Corporation in respect of the purchase of the shares of Class A Common Stock
underlying such right or warrant, and the denominator of which shall be the
Common Stock Trading Price per share of Class A Common Stock on the trading day
immediately preceding the public announcement of the actual terms (including the
price terms) of such issuance, sale or distribution multiplied by the aggregate
number of shares of Class A Common Stock (I) outstanding immediately prior to
such issuance, sale or distribution plus (II) underlying such rights or warrants
at the time of such issuance. For the purposes of the preceding sentence, the
aggregate consideration receivable by the Corporation in connection with the
issuance, sale or distribution of any such right or warrant shall be deemed to
be equal to the sum of the aggregate offering price (before deduction of
reasonable underwriting discounts or commissions and expenses) of all such
rights or warrants.
(C) In the event the Corporation shall at any time or from time to time
while any shares of Series B Preferred Stock are outstanding declare, order, pay
or make a dividend or other distribution generally to holders of Common Stock in
stock or other securities or rights or warrants to subscribe for securities of
the Corporation or any of its subsidiaries or evidences of indebtedness of the
Corporation or any other person or pay any Extraordinary Cash Dividend (other
than any dividend or distribution on the Class A Common Stock (I) referred to in
paragraphs (A) or (B) above or (II) if in conjunction
11
therewith the Corporation declares and pays or makes a dividend or distribution
on each share of Series B Preferred Stock which is the same as the dividend or
distribution that would have been made or paid with respect to such share of
Series B Preferred Stock had such share been converted into shares of Class A
Common Stock immediately prior to the record date for any such dividend or
distribution on the Class A Common Stock), then, and in each such case, an
appropriate adjustment to the Conversion Price shall be made so that the Holder
of each share of Series B Preferred Stock shall be entitled to receive, upon the
conversion thereof, the number of shares of Class A Common Stock determined by
multiplying (x) the number of shares of Class A Common Stock into which such
share was convertible on the day immediately prior to the record date fixed for
the determination of stockholders entitled to receive such dividend or
distribution by (y) a fraction, the numerator of which shall be the Common Stock
Trading Price per share of Class A Common Stock as of such record date, and the
denominator of which shall be such Common Stock Trading Price per share of Class
A Common Stock less the Fair Market Value per share of Class A Common Stock of
such dividend or distribution (as determined in good faith by the Board of
Directors, as evidenced by a Board Resolution mailed to each holder of Series B
Preferred Stock). An adjustment made pursuant to this paragraph (C) shall be
made upon the opening of business on the next business day following the date on
which any such dividend or distribution is made and shall be effective
retroactively to the close of business on the record date fixed for the
determination of stockholders entitled to receive such dividend or distribution.
(iii) No adjustment in the Conversion Price will be required to be made in
any case until cumulative adjustments amount to 1% or more of the Conversion
Price, but any such adjustment that would otherwise be required to be made shall
be carried forward and taken into account in any subsequent adjustment. The
Corporation may, to the extent permitted by law, make such reductions in the
Conversion Price in addition to those described in paragraph (ii) above as it,
in its sole discretion, shall determine to be advisable in order that certain
stock related distributions hereafter made by the Corporation to its
stockholders shall not be taxable to such stockholders.
(iv) In the event of any capital reorganization (other than a capital
reorganization covered by paragraph (ii)(C) above) or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
paragraph (ii)(A) above), or in case of any merger, consolidation or other
corporate combination of the Corporation with or into another corporation, or in
case of any sale or conveyance to another corporation of the property of the
Corporation as an entirety or substantially as an entirety (each of the
foregoing being referred to as a "Transaction"), each share of Series B
Preferred Stock shall continue to remain outstanding if the Corporation is the
Surviving Person (as defined below) of such Transaction, and shall be subject to
all the provisions hereof, as in effect prior to such Transaction, or if the
Corporation is not the Surviving Person, each share of Series B Preferred Stock
shall be exchanged for a new series of convertible preferred stock of the
Surviving Person, or in the case of a Surviving Person other than a corporation,
comparable securities of such Surviving Person, in either case having economic
terms as nearly equivalent as possible to, and with the same voting and other
rights as, the Series B Preferred Stock, including entitling the holder thereof
to receive, upon presentation of the certificate therefor to the Surviving
Person subsequent
12
to the consummation of such Transaction, the kind and amount of shares of stock
and other securities and property receivable (including cash) upon the
consummation of such Transaction by a holder of that number of shares of Class A
Common Stock into which one share of Series B Preferred Stock was convertible
immediately prior to such Transaction. In case securities or property other than
common stock shall be issuable or deliverable upon conversion as aforesaid, then
all references in this paragraph (iv) shall be deemed to apply, so far as
appropriate and as nearly as may be, to such other securities or property.
Notwithstanding anything contained herein to the contrary, the Corporation
will not effect any Transaction unless, prior to the consummation thereof,
proper provision is made to ensure that the holders of shares of Series B
Preferred Stock will be entitled to receive the benefits afforded by this
paragraph (iv).
For purposes of this paragraph (iv), "Surviving Person" shall mean the
continuing or surviving Person of a merger, consolidation or other corporate
combination, the Person receiving a transfer of all or a substantial part of the
properties and assets of the Corporation, or the Person consolidating with or
merging into the Corporation in a merger, consolidation or other corporate
combination in which the Corporation is the continuing or surviving Person, but
in connection with which the Series B Preferred Stock or Common Stock of the
Corporation is exchanged, converted or reclassified into the securities of any
other Person or cash or any other property.
(v) The conversion price shall initially equal $2.00 per share, and shall
increase from and after the Issue Date at a rate equal to the dividend rate on
the Series B Preferred Stock as set forth in paragraph (c)(i) (the "Conversion
Price"). The Conversion Price shall be subject to adjustment as provided in this
paragraph (g).
(vi) The Corporation shall cause the shares of Class A Common Stock issuable
upon conversion of the Series B Preferred Stock (or in the case of the Initial
Holder's election to convert into non-voting Common Stock, upon conversion of
such non-voting Common Stock) to be approved for listing on the American Stock
Exchange (or such other principal securities exchange on which the Class A
Common Stock may at the time be listed for trading), subject to official
notification of issuance, prior to the date of issuance thereof. Notwithstanding
anything in this Resolution to the contrary, no Holders shall be entitled to
exercise the conversion rights set forth in this paragraph (g) until such time
as the conditions for listing of the Class A Common Stock issuable upon
conversion of the Series B Preferred Stock on the American Stock Exchange (or
such other principal securities exchange on which the Class A Common Stock may
be listed for trading), if applicable, which are set forth, as of the Issue
Date, in Section 713 of the American Stock Exchange Company Guide (or
substantially similar provisions of such other exchange, in each case as such
exchange rules may be hereafter in effect from time to time) have been
satisfied, whether through stockholder approval of the issuance of the Series B
Preferred Stock or otherwise.
(vii) Notwithstanding anything to the contrary contained in this paragraph
(g), there shall be no adjustment to the Conversion Price in connection with any
issuance of
13
additional shares of Series B Preferred Stock or other securities pursuant to
Section 3.6 of the Stockholder Agreement.
(h) Change of Control.
(i) In the event of a Change of Control (the date of such occurrence being
the "Change of Control Date"), the Corporation shall notify the Holders of the
Series B Preferred Stock in writing of such occurrence and shall make an offer
to purchase (the "Change of Control Offer") all then outstanding shares of
Series B Preferred Stock at a purchase price of 101% of the Liquidation
Preference thereof plus, as applicable and without duplication, an amount in
cash equal to all accumulated and unpaid dividends thereon (such applicable
purchase price being hereinafter referred to as the "Change of Control Purchase
Price").
(ii) Within 30 days following the Change of Control Date, the Corporation
shall (x) cause a notice of the Change of Control to be sent at least once to
the Dow Jones News Service or similar business news service in the United States
and (y) send by first class mail, postage prepaid, a notice to each Holder of
Series B Preferred Stock at such Holder's address as it appears in the register
maintained by the Transfer Agent, which notice shall govern the terms of the
Change of Control Offer. The notice to the Holders shall contain all
instructions and materials necessary to enable such Holders to tender Series B
Preferred Stock pursuant to the Change of Control Offer. Such notice shall
state:
(A) that a Change of Control has occurred, that the Change of Control
Offer is being made pursuant to this paragraph (h) and that all Series B
Preferred Stock validly tendered and not withdrawn will be accepted for
payment;
(B) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 30 Business Days nor later than 60
Business Days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date");
(C) that any shares of Series B Preferred Stock not tendered will
continue to accumulate dividends;
(D) that, unless the Corporation defaults in making payment of the
Change of Control Purchase Price, any share of Series B Preferred Stock
accepted for payment pursuant to the Change of Control Offer shall cease to
accumulate dividends after the Change of Control Payment Date;
(E) that Holders accepting the offer to have any shares of Series B
Preferred Stock purchased pursuant to a Change of Control Offer will be
required to surrender their certificate or certificates representing such
shares, properly endorsed for transfer together with such customary
documents as the Corporation and the transfer agent may reasonably require,
in the manner and at the place specified in the notice prior to the close of
business on the Business Day preceding to the Change of Control Payment
Date;
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(F) that Holders will be entitled to withdraw their acceptance if the
Corporation receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the number of shares of Series B Preferred Stock the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have such shares of Series B Preferred Stock purchased;
(G) that Holders whose shares of Series B Preferred Stock are purchased
only in part will be issued a new certificate representing the number of
shares of Series B Preferred Stock equal to the unpurchased portion of the
certificate surrendered; and
(H) the circumstances and relevant facts regarding such Change of
Control.
(iii) The Corporation will comply with any securities laws and regulations,
to the extent such laws and regulations are applicable to the purchase of the
Series B Preferred Stock in connection with a Change of Control Offer.
(iv) On the Change of Control Payment Date, the Corporation shall (A) accept
for payment the shares of Series B Preferred Stock tendered pursuant to the
Change of Control Offer, (B) promptly mail to each Holder of shares so accepted
payment in an amount in cash equal to the Change of Control Purchase Price for
such Series B Preferred Stock, (C) execute and issue a new Series B Preferred
Stock certificate equal to any unpurchased shares of Series B Preferred Stock
represented by certificates surrendered and (D) cancel and retire each
surrendered certificate. Unless the Corporation defaults in the payment for the
shares of Series B Preferred Stock tendered pursuant to the Change of Control
Offer, dividends will cease to accumulate with respect to the shares of Series B
Preferred Stock tendered and all rights of Holders of such tendered shares will
terminate, except for the right to receive payment therefor, on the Change of
Control Payment Date.
(v) If the purchase of the Series B Preferred Stock would violate or
constitute a default or be prohibited under any of the Existing Debt Indentures
or the Existing Preferred Stock, then, notwithstanding anything to the contrary
contained above, prior to complying with the foregoing provisions, but in any
event within 30 days following the Change of Control Date, the Corporation
shall, to the extent required to permit such purchase of the Series B Preferred
Stock, either (A) repay in full all Indebtedness under the Existing Debt
Indentures and effect the termination of any such prohibition under the Existing
Preferred Stock, or (B) obtain the requisite consents, if any, under the
Existing Debt Indentures and the certificates of designation governing the
Existing Preferred Stock required to permit the purchase of the Series B
Preferred Stock required by this paragraph (h). Until the requirements of the
immediately preceding sentence are satisfied, the Corporation shall not make,
and shall not be obligated to make, any Change of Control Offer; provided that
the Corporation's failure to comply with this paragraph (h)(v) shall constitute
a Voting Rights Triggering Event.
15
(i) Conversion or Exchange. Other than as set forth in paragraph (g) above,
the Holders of shares of Series B Preferred Stock shall not have any rights
hereunder to convert such shares into or exchange such shares for shares of any
other class or classes or of any other series of any class or classes of Capital
Stock of the Corporation.
(j) Reissuance of Series B Preferred Stock. Shares of Series B Preferred
Stock that have been issued and reacquired in any manner, including shares
purchased or redeemed or exchanged, shall (upon compliance with any applicable
provisions of the laws of Delaware) have the status of authorized and unissued
shares of Preferred Stock undesignated as to series and may be redesignated and
reissued as part of any series of Preferred Stock; provided that any issuance of
such shares as Series B Preferred Stock must be in compliance with the terms
hereof.
(k) Business Day. If any payment or redemption shall be required by the
terms hereof to be made on a day that is not a Business Day, such payment or
redemption shall be made on the immediately succeeding Business Day.
(l) Certain Additional Provisions.
(i) Limitation on Incurrence of Additional Indebtedness. The Corporation
shall not, and shall not permit any Restricted Subsidiary to, directly or
indirectly, incur any Indebtedness (including Acquired Indebtedness) other than
Permitted Indebtedness. Notwithstanding the foregoing limitation, the
Corporation and its Restricted Subsidiaries may incur Indebtedness if on the
date of the incurrence of such Indebtedness (i) no Voting Rights Triggering
Event shall have occurred and be continuing or shall occur as a consequence
thereof and (ii) after giving effect to the incurrence of such Indebtedness and
the receipt and application of the proceeds thereof, the ratio of the
Corporation's total Indebtedness to the Corporation's Consolidated EBITDA
(determined on a pro forma basis for the last four full fiscal quarters of the
Corporation for which financial statements are available at the date of
determination) is less than 7.0 to 1; provided, however, that if the
Indebtedness which is the subject of a determination under this provision is
Acquired Indebtedness, or Indebtedness incurred in connection with the
simultaneous acquisition of any Person, business, property or assets, then such
ratio shall be determined by giving effect (on a pro forma basis, as if the
transaction had occurred at the beginning of the four quarter period) to both
the incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by the Corporation and the inclusion in the Corporation's
Consolidated EBITDA of the Consolidated EBITDA of the acquired Person, business,
property or assets; and provided further that in the event that the Consolidated
EBITDA of the acquired Person, business, property or assets reflects an
operating loss, no amounts shall be deducted from the Corporation's Consolidated
EBITDA in making the determination described above. Accrual of interest,
accretion or amortization of original issue discount and the payment of interest
or dividends in the form of additional Indebtedness will be deemed not to be an
incurrence of Indebtedness for purposes of this paragraph (l)(i).
(ii) Limitation on Restricted Payments. (A) The Corporation shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or indirectly,
make any
16
Restricted Payment if at the time of such Restricted Payment and immediately
after giving effect thereto (I) any Voting Rights Triggering Event shall have
occurred and be continuing; or (II) the Corporation could not incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
paragraph (l)(i) above; or (III) the aggregate amount of Restricted Payments
declared or made after the Issue Date (the amount expended for such purposes, if
other than in cash, being the fair market value of such property as determined
by the Board of Directors in good faith) exceeds the sum of (x) 100% of the
Corporation's Cumulative Consolidated EBITDA minus 1.4 times the Corporation's
Cumulative Consolidated Interest Expense, and (y) 100% of the aggregate Net
Proceeds and the fair market value of securities or other property received by
the Corporation from the issue or sale, after the Issue Date, of Capital Stock
(other than Disqualified Capital Stock of the Corporation or Capital Stock of
the Corporation issued to any Restricted Subsidiary) of the Corporation or any
Indebtedness or other securities of the Corporation convertible into or
exercisable or exchangeable for Capital Stock (other than Disqualified Capital
Stock) of the Corporation which have been so converted or exercised or
exchanged, as the case may be.
(B) Notwithstanding the foregoing, these provisions will not prohibit: (I)
the payment of any dividend or the making of any distribution within 60 days
after the date of its declaration if such dividend or distribution would have
been permitted on the date of declaration; (II) the purchase, redemption or
other acquisition or retirement of any Capital Stock of the Corporation or any
warrants, options or other rights to acquire shares of any class of such Capital
Stock (x) solely in exchange for shares of Qualified Capital Stock or other
rights to acquire Qualified Capital Stock, (y) through the application of the
Net Proceeds of a substantially concurrent sale for cash (other than to a
Restricted Subsidiary) of shares of Qualified Capital Stock or warrants, options
or other rights to acquire Qualified Capital Stock or (z) in the case of
Disqualified Capital Stock, solely in exchange for, or through the application
of the Net Proceeds of a substantially concurrent sale for cash (other than to a
Restricted Subsidiary) of, Disqualified Capital Stock that has a redemption date
no earlier than, is issued by the Corporation or the same Person as and requires
the payment of current dividends or distributions in cash no earlier than, in
each case, the Disqualified Capital Stock being purchased, redeemed or otherwise
acquired or retired and which Disqualified Capital Stock does not prohibit the
payment of dividends other than in cash on the Series B Preferred Stock or the
exchange thereof for Exchange Debentures; or (III) any transactions contemplated
by the Call Agreement or the Master Agreement.
(iii) Limitations on Transactions with Affiliates. (A) The Corporation shall
not, and shall not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into or suffer to exist any transaction or series
of related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or services) with any Affiliate or holder
of 10% or more of the Corporation's Common Stock (an "Affiliate Transaction") or
extend, renew, waive or otherwise modify the terms of any Affiliate Transaction
entered into prior to the Original Issue Date unless (I) such Affiliate
Transaction is between or among the Corporation and its Wholly-Owned
Subsidiaries; (II) such Affiliate Transaction is between or among the
Corporation and any of its Subsidiaries, on the one hand, and the Initial Holder
or any of its Affiliates, on the
17
other hand; or (III) the terms of such Affiliate Transaction are fair and
reasonable to the Corporation or such Restricted Subsidiary, as the case may be,
and the terms of such Affiliate Transaction are at least as favorable as the
terms which could be obtained by the Corporation or such Restricted Subsidiary,
as the case may be, in a comparable transaction made on an arm's-length basis
between unaffiliated parties. In any Affiliate Transaction involving an amount
or having a value in excess of $1,000,000 which is not permitted under clause
(I) above the Corporation must obtain a Board Resolution certifying that such
Affiliate Transaction complies with clause (III) above. In any Affiliate
Transaction involving an amount or having a value in excess of $5,000,000 which
is not permitted under clause (I) above, unless such transaction is with a
Subsidiary in which no Affiliate has a minority interest, the Corporation must
obtain a valuation of the assets subject to such transaction by an Independent
Appraiser or a written opinion as to the fairness of such a transaction from an
independent investment banking firm or an Independent Appraiser.
(B) The foregoing provisions shall not apply to (I) any Restricted Payment
that is not prohibited by the provisions described in paragraph (l)(ii) above,
(II) any transaction approved by the Board of Directors with an officer or
director of the Corporation or of any Subsidiary in his or her capacity as
officer or director entered into in the ordinary course of business, including
compensation and employee benefit arrangements with any officer or director of
the Corporation or of any Subsidiary that are customary for public companies in
the broadcasting industry, (III) modifications of the Existing Preferred Stock,
or (IV) any transactions contemplated by the Master Agreement.
(iv) Limitation on Preferred Stock of Restricted Subsidiaries. The
Corporation shall not permit any Restricted Subsidiary to issue any Preferred
Stock (except to the Corporation or to a Restricted Subsidiary) or permit any
Person (other than the Corporation or a Restricted Subsidiary) to hold any such
Preferred Stock unless the Corporation or such Restricted Subsidiary would be
entitled to incur or assume Indebtedness in compliance with paragraph (l)(i)
above in an aggregate principal amount equal to the aggregate liquidation value
of the Preferred Stock to be issued.
(v) Reports. If the Corporation is no longer required to file annual or
quarterly reports with the Commission pursuant to the Exchange Act, the
Corporation will provide to the Holders copies of all annual and quarterly
reports and other information which the Corporation would have been required to
file with the Commission pursuant to Sections 13 and 15(d) of the Exchange Act
had it been so subject without cost to the Holders.
(m) Exchange.
(i) Requirements. The outstanding shares of Series B Preferred Stock are
exchangeable, in whole or in part, on a pro rata basis, at the option of the
Holder, for the New Exchange Debentures to be substantially in the form of
Exhibit A to the New Exchange Indenture, a copy of which is on file with the
secretary of the Corporation; provided, however, that each partial exchange
shall be with respect to shares of Series B
18
Preferred Stock outstanding with an aggregate Liquidation Preference of not less
than $50,000,000 in the case of Initial Holder and $5,000,000 for all other
Holders or all such shares remaining outstanding, if less; and provided further
that any such exchange prior to January 1, 2007, may only be made if (A) there
shall be no contractual impediment to such exchange; (B) such exchange would be
permitted under the terms of the Existing Preferred Stock (or any other
Preferred Stock of the Company issued to fund the redemption of any Existing
Preferred Stock with substantially similar terms as the Existing Preferred Stock
so redeemed), to the extent then outstanding, and immediately after giving
effect to such exchange, no Default or Event of Default (as defined in the New
Exchange Indenture) would exist under the New Exchange Indenture, no default or
event of default would exist under the Existing Debt Indentures and no default
or event of default under any other material instrument governing Indebtedness
outstanding at the time (including Indebtedness incurred to refinance any of the
Existing Debt Indentures on substantially comparable terms) would be caused
thereby; and (C) the New Exchange Indenture has been qualified under the Trust
Indenture Act of 1939, as amended, if such qualification is required at the time
of such exchange; and provided further that, anything to the contrary
notwithstanding, no such exchange that would cause or result in a violation,
default or event of default under the Existing Debt Indentures may be made prior
to the earliest of (x) the Expiration Date (as defined in the Stockholder
Agreement) or the earliest date upon which shares of Class A Common Stock are
accepted and paid for in an Early Tender Offer (as defined in the Stockholder
Agreement) and (y) 20 Business Days after the date upon which the Investor (as
defined in the Stockholder Agreement) shall have performed its obligation to
deliver shares of Series B Preferred Stock (A) to the Corporation in accordance
with Section 3.6(b) of the Stockholder Agreement or (B) to the transfer agent
for the Class A Common Stock pursuant to Section 3.6(c) of the Stockholder
Agreement. The exchange rate shall be $1.00 principal amount of New Exchange
Debentures for each $1.00 of Liquidation Preference and accumulated and unpaid
dividends of Series B Preferred Stock, including, to the extent necessary, New
Exchange Debentures in principal amounts less than $1,000, provided that the
Corporation shall have the right, at its option, to pay cash in an amount equal
to the principal amount of that portion of any New Exchange Debenture that is
not an integral multiple of $1,000 instead of delivering a New Exchange
Debenture in a denomination of less than $1,000.
(ii) Exchange Procedures. (A) At least 30 days prior to the Exchange Date,
the Holder shall give the Corporation written notice by first-class mail,
postage prepaid, to the Corporation's principal office, which notice shall
state: (I) the Exchange Date, and (II) the number of shares and aggregate
Liquidation Preference of the Series B Preferred Stock to be exchanged. On or
before the Exchange Date, each Holder of Series B Preferred Stock shall
surrender to the Corporation the certificate or certificates representing such
shares of Series B Preferred Stock. The Corporation shall cause the New Exchange
Debentures to be executed on the Exchange Date and, upon surrender of the
certificates for any shares of Series B Preferred Stock so exchanged, duly
endorsed (or otherwise in proper form for transfer, as determined by the
Corporation), such shares shall be exchanged by the Corporation for New Exchange
Debentures. In the event that any certificate surrendered pursuant to this
paragraph (m) represents shares in excess of those being surrendered for
exchange, the Corporation shall issue a new certificate
19
representing the unexchanged portion of shares of Series B Preferred Stock.
Dividends on the shares of Series B Preferred Stock to be exchanged shall cease
to accrue on the Exchange Date whether or not certificates for shares of Series
B Preferred Stock are surrendered for exchange on such Exchange Date unless the
Corporation shall default in the delivery of New Exchange Debentures. The
Corporation shall pay interest on the New Exchange Debentures from the Exchange
Date whether or not certificates for shares of Series B Preferred Stock are
surrendered for exchange on such Exchange Date.
(B) If notice has been given as aforesaid, and if before the Exchange Date
(I) the New Exchange Indenture shall have been duly executed and delivered by
the Corporation and the trustee thereunder and (II) all New Exchange Debentures
necessary for such exchange shall have been duly executed by the Corporation and
delivered to the trustee under the New Exchange Indenture with irrevocable
instructions to authenticate the New Exchange Debentures necessary for such
exchange, then the rights of the Holders of Series B Preferred Stock so
exchanged as stockholders of the Corporation shall cease (except the right to
receive New Exchange Debentures and, if the Corporation so elects, cash in lieu
of any New Exchange Debenture not an integral multiple of $1,000), and the
Person or Persons entitled to receive the New Exchange Debentures issuable upon
exchange shall be treated for all purposes as the registered Holder or Holders
of such New Exchange Debentures as of the Exchange Date.
(iii) No Exchange in Certain Cases. Notwithstanding the foregoing provisions
of this paragraph (m), the Corporation shall not be obligated to exchange the
Series B Preferred Stock for New Exchange Debentures if such exchange, or any
term or provision of the New Exchange Indenture or the New Exchange Debentures,
or the performance of the Corporation's obligations under the New Exchange
Indenture or the New Exchange Debentures, shall violate any applicable law or
if, at the time of such exchange, the Corporation is insolvent or if it would be
rendered insolvent by such exchange.
(n) Definitions. As used in this Certificate of Designation, the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a
Restricted Subsidiary or assumed in connection with the acquisition of
assets from such Person.
"Affiliate" means, for any Person, a Person who, directly or
indirectly, through one or more intermediaries controls, or is controlled
by, or is under common control with, such other Person. The term "control"
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. With
respect to the Corporation, Affiliate will also include any Permitted
Holders or Persons controlled by the Permitted Holders.
20
"Affiliate Transaction" shall have the meaning ascribed to it in
paragraph (l)(iii) hereof.
"Asset Sale" means the sale, transfer or other disposition (other than
to the Corporation or any of its Restricted Subsidiaries) in any single
transaction or series of related transactions involving assets with a fair
market value in excess of $2,000,000 of (a) any Capital Stock of or other
equity interest in any Restricted Subsidiary other than in a transaction
where the Corporation or a Restricted Subsidiary receives therefor one or
more media properties with a fair market value equal to the fair market
value of the Capital Stock issued, transferred or disposed of by the
Corporation or the Restricted Subsidiary (with such fair market values being
determined by the Board of Directors), (b) all or substantially all of the
assets of the Corporation or of any Restricted Subsidiary, (c) real property
or (d) all or substantially all of the assets of any media property, or part
thereof, owned by the Corporation or any Restricted Subsidiary, or a
division, line of business or comparable business segment of the Corporation
or any Restricted Subsidiary; provided that Asset Sales shall not include
sales, leases, conveyances, transfers or other dispositions to the
Corporation or to a Restricted Subsidiary or to any other Person if after
giving effect to such sale, lease, conveyance, transfer or other disposition
such other Person becomes a Restricted Subsidiary, or the sale of all or
substantially all of the assets of the Corporation or a Restricted
Subsidiary in a transaction complying with (f)(ii), in which case only the
assets not so sold shall be deemed an Asset Sale.
"Board of Directors" shall have the meaning ascribed to it in the first
paragraph of this Resolution.
"Board Resolution" means a copy of a resolution certified pursuant to
an Officers' Certificate to have been duly adopted by the Board of Directors
of the Corporation and to be in full force and effect.
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized
by law or other governmental action to be closed.
"Call Agreement" means the Call Agreement, dated as of November 7,
2005, as from time to time amended, modified or supplemented.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other
equivalents (however designated) of capital stock, including each class of
common stock and preferred stock of such Person and (ii) with respect to any
Person that is not a corporation, any and all partnership or other equity
interests of such Person
"Capitalized Lease Obligation" means, as to any Person, the obligation
of such Person to pay rent or other amounts under a lease to which such
Person is a party that is required to be classified and accounted for as
capital lease obligations
21
under GAAP and, for purposes of this definition, the amount of such
obligations at any date shall be the capitalized amount of such obligations
at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation ("S&P")
or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper
maturing no more than one year from the date of creation thereof and, at the
time of acquisition, having a rating of at least A-1 from S&P or at least
P-1 from Moody's; (iv) certificates of deposit or bankers' acceptances
maturing within one year from the date of acquisition thereof issued by any
commercial bank organized under the laws of the United States of America or
any state thereof or the District of Columbia or any U.S. branch of a
foreign bank having at the date of acquisition thereof combined capital and
surplus of not less than $250,000,000; (v) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds which invest substantially all their assets in securities of
the types described in clauses (i) through (v) above.
"Certificate of Incorporation" shall have the meaning ascribed to it in
the first paragraph of this Resolution.
A "Change of Control" of the Corporation will be deemed to have
occurred at such time as (i) any Person (including a Person's Affiliates),
other than a Permitted Holder, becomes the beneficial owner (as defined
under Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of 50% or more of the total voting power of the Corporation's
Common Stock, (ii) any Person (including a Person's Affiliates), other than
a Permitted Holder, becomes the beneficial owner of more than 33 1/3% of the
total voting power of the Corporation's Common Stock, and the Permitted
Holders beneficially own, in the aggregate, a lesser percentage of the total
voting power of the Common Stock of the Corporation than such other Person
and do not have the right or ability by voting power, contract or otherwise
to elect or designate for election a majority of the Board of Directors of
the Corporation, (iii) there shall be consummated any consolidation or
merger of the Corporation in which the Corporation is not the continuing or
surviving corporation or pursuant to which the Common Stock of the
Corporation would be converted into cash, securities or other property,
other than a merger or consolidation of the Corporation in which the holders
of the Common Stock of the Corporation outstanding immediately prior to the
consolidation or merger hold, directly or indirectly, at least a majority of
the
22
voting power of the Common Stock of the surviving corporation immediately
after such consolidation or merger, (iv) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Corporation (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Corporation has been approved by a
majority of the directors then still in office who either were directors at
the beginning of such period or whose election or recommendation for
election was previously so approved) cease to constitute a majority of the
Board of Directors or (v) any "change in control" occurs (as defined at such
time) with respect to the Existing Preferred Stock or any issue of
Disqualified Capital Stock other than one to a Permitted Holder.
"Change of Control Date" shall have the meaning ascribed to it in
paragraph (h)(i) hereof.
"Change of Control Offer" shall have the meaning ascribed to it in
paragraph (h)(i) hereof.
"Change of Control Payment Date" shall have the meaning ascribed to it
in paragraph (h)(ii)(B) hereof.
"Change of Control Purchase Price" shall have the meaning ascribed to
it in paragraph (h)(i) hereof.
"Class A Common Stock" means the Class A Common Stock, par value $.001
per share, of the Corporation.
"Commission" means the Securities and Exchange Commission.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and
whether voting or non-voting) of, such Person's common stock, whether
outstanding on the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"Common Stock Trading Price" on any date means, with respect to the
Class A Common Stock, the Closing Price for the Class A Common Stock on such
date. The "Closing Price" on any date shall mean the last sale price for the
Class A Common Stock, regular way, or, in case no such sale takes place on
such date, the average of the closing bid and asked prices, regular way, for
the Class A Common Stock in either case as reported in the principal
consolidated transaction reporting system with respect to the principal
national securities exchange on which the Class A Common Stock is listed or
admitted to trading or, if the Class A Common Stock is not listed or
admitted to trading on any national securities exchange, the last quoted
price, or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the principal
automated quotation system that may then be in use or, if the Class A Common
Stock is not quoted by any such organization, the average of the closing bid
and
23
asked prices as furnished by a professional market maker making a market in
the Class A Common Stock selected by the Board of Directors or, in the event
that no trading price is available for the Class A Common Stock, the fair
market value of the Class A Common Stock, as determined in good faith by the
Board of Directors.
"Communications Act" means the Communications Act of 1934, as amended
(including, without limitation, the Cable Communications Policy Act of 1984
and the Cable Television Consumer Protection and Competition Act of 1992)
and all rules and regulations of the FCC, in each case as from time to time
in effect.
"Company Stock Purchase Agreement" means the Company Stock Purchase
Agreement, dated as of November 7, 2005, as from time to time amended,
modified or supplemented.
"Consolidated EBITDA" means, for any Person, for any period, an amount
equal to (a) the sum of Consolidated Net Income for such period, plus, to
the extent deducted from the revenues of such Person in determining
Consolidated Net Income, (i) the provision for taxes for such period based
on income or profits and any provision for taxes utilized in computing a
loss in Consolidated Net Income above, plus (ii) Consolidated Interest
Expense, net of interest income earned on cash or cash equivalents for such
period (including, for this purpose, dividends on the Existing Preferred
Stock and any Redeemable Dividends in each case only to the extent that such
dividends were deducted in determining Consolidated Net Income), plus (iii)
depreciation for such period on a consolidated basis, plus (iv) amortization
of intangibles and broadcast program licenses for such period on a
consolidated basis, minus (b) scheduled payments relating to broadcast
program license liabilities, except that with respect to the Corporation
each of the foregoing items shall be determined on a consolidated basis with
respect to the Corporation and its Restricted Subsidiaries only; provided,
however, that, for purposes of calculating Consolidated EBITDA during any
fiscal quarter, cash income from a particular Investment of such Person
shall be included only if cash income has been received by such Person as a
result of the operation of the business in which such Investment has been
made in the ordinary course without giving effect to any extraordinary,
unusual and non-recurring gains.
"Consolidated Interest Expense" means, with respect to any Person, for
any period, the aggregate amount of interest which, in conformity with GAAP,
would be set forth opposite the caption "interest expense" or any like
caption on an income statement for such Person and its Subsidiaries on a
consolidated basis, including, but not limited to, Redeemable Dividends,
whether paid or accrued, on Subsidiary Preferred Stock, imputed interest
included in Capitalized Lease Obligations, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, the net costs associated with hedging obligations,
amortization of other financing fees and
24
expenses, the interest portion of any deferred payment obligation,
amortization of discount or premium, if any, and all other non-cash interest
expense (other than interest amortized to cost of sales) plus, without
duplication, all net capitalized interest for such period and all interest
incurred or paid under any guarantee of Indebtedness (including a guarantee
of principal, interest or any combination thereof) of any Person, all time
brokerage fees relating to financing of radio or television stations which
the Corporation has an agreement or option to acquire, plus the amount of
all dividends or distributions paid on Disqualified Capital Stock (other
than dividends paid or payable in shares of Capital Stock of the
Corporation).
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the net income (or loss) of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided, however, that (a) the net income of any
Person (the "other Person") in which the Person in question or any of its
Subsidiaries has less than a 100% interest (which interest does not cause
the net income of such other Person to be consolidated into the net income
of the Person in question in accordance with GAAP) shall be included only to
the extent of the amount of dividends or distributions paid to the Person in
question or to the Subsidiary, (b) the net income of any Subsidiary of the
Person in question that is subject to any restriction or limitation on the
payment of dividends or the making of other distributions (other than
pursuant to the Existing Notes) shall be excluded to the extent of such
restriction or limitation, (c) (i) the net income of any Person acquired in
a pooling of interests transaction for any period prior to the date of such
acquisition and (ii) any net gain (but not loss) resulting from an Asset
Sale by the Person in question or any of its Subsidiaries other than in the
ordinary course of business shall be excluded, (d) extraordinary, unusual
and non-recurring gains and losses shall be excluded, (e) losses associated
with discontinued and terminated operations in an amount not to exceed
$1,000,000 per annum shall be excluded and (f) all non-cash items
(including, without limitation, cumulative effects of changes in GAAP and
equity entitlements granted to employees of the Corporation and its
Restricted Subsidiaries) increasing and decreasing Consolidated Net Income
and not otherwise included in the definition of Consolidated EBITDA shall be
excluded.
"Conversion Price" has the meaning ascribed to it in paragraph (g)(v)
hereof.
"Conversion Shares" means (i) the number of shares of Class A Common
Stock or (ii) in the case of the Initial Holder only, if the Initial Holder
determines in its sole discretion that it is prevented under the
Communications Act from holding shares of Class A Common Stock issuable upon
conversion of its shares of Series B Preferred Stock, the number of shares
of non-voting Common Stock of the Corporation (which upon disposition by the
Initial Holder shall automatically be converted into shares of Class A
Common Stock) into which the Series B Preferred Stock is from time to time
convertible.
25
"Corporation" shall have the meaning ascribed to it in the first
paragraph of this Resolution.
"Credit Facility" means, with respect to the Corporation or any
Restricted Subsidiary, one or more debt or commercial paper facilities with
banks or other lenders providing for revolving credit loans, term loans,
receivables or inventory financing (including through the sale of
receivables or inventory to such lenders or to a special purpose, bankruptcy
remote entity formed to borrow from such lender against such receivables or
inventory) or trade letters of credit, in each case together with any
amendments, amendments and restatements or modifications thereof or
extensions, revisions, refinancings or replacements thereof by one or more
lenders or a syndicate of lenders.
"Cumulative Consolidated EBITDA" means, with respect to any Person, as
of any date of determination, Consolidated EBITDA from the Issue Date to the
end of such Person's most recently ended full fiscal quarter prior to such
date, taken as a single accounting period.
"Cumulative Consolidated Interest Expense" means, with respect to any
Person, as of any date of determination, Consolidated Interest Expense plus
any cash dividends paid on Senior Securities or Parity Securities not
already reflected in Consolidated Interest Expense, in each case from the
Issue Date to the end of such Person's most recently ended full fiscal
quarter prior to such date, taken as a single accounting period.
"Disqualified Capital Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures
(excluding any maturity as the result of an optional redemption by the
issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof, in whole or in part, on or prior to December 31, 2013. Without
limitation of the foregoing, Disqualified Capital Stock shall be deemed to
include (i) any Preferred Stock of a Restricted Subsidiary, (ii) any
Preferred Stock of the Corporation, with respect to either of which, under
the terms of such Preferred Stock, by agreement or otherwise, such
Restricted Subsidiary or the Corporation is obligated to pay current
dividends or distributions in cash during the period prior to December 31,
2013; and (iii) as long as the Series B Preferred Stock remains outstanding,
Senior Securities and Parity Securities; provided, however, that (i)
Preferred Stock of the Corporation or any Restricted Subsidiary that is
issued with the benefit of provisions requiring the Corporation to make an
offer to purchase such Preferred Stock in the event of a change of control
of the Corporation or Restricted Subsidiary shall not be deemed to be
Disqualified Capital Stock solely by virtue of such provisions, and (ii) the
Existing Preferred Stock and the Series B Preferred Stock, as in effect on
the Issue Date, shall not be considered Disqualified Capital Stock.
26
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Date" means the date of the original issuance of the New
Exchange Debentures.
"Existing Debt Indentures" means the indentures dated as of July 12,
2001, January 14, 2002, and January 12, 2004, among the Corporation, the
subsidiary guarantors party thereto and The Bank of New York, as trustee,
which govern the Existing Notes, and the Existing Exchange Indenture and any
one or more indentures, credit agreements or similar instruments under which
Indebtedness in compliance with Section 3.9 of the Stockholder Agreement is
issued to Refinance any of the foregoing.
"Existing Exchange Debentures" means the 13 1/4% Exchange Debentures
due 2006 (if issued) issued under the Existing Exchange Indenture.
"Existing Exchange Indenture" means the indenture, dated June 10, 1998,
between the Corporation, the guarantors thereto, and The Bank of New York,
as trustee, which governs the Existing Exchange Debentures.
"Existing Notes" means the 10 3/4% Senior Subordinated Notes due 2008,
12 1/4% Senior Subordinated Discount Notes due 2009 and Senior Secured
Floating Rate Notes due 2010 issued under the Existing Debt Indentures.
"Existing Preferred Stock" means the 14 1/4% Cumulative Junior
Exchangeable Preferred Stock, par value $.001 per share, with a liquidation
preference of $10,000 per share, of which 49,610 shares are outstanding as
of the Issue Date, and any additional shares issued as payment of dividends
thereon; and the 9 3/4% Series A Convertible Preferred Stock, $.001 par
value, with a liquidation preference of $10,000 per share, of which 15,162
shares are outstanding as of the Issue Date, and any additional shares
issued as payment of dividends thereon.
"Extraordinary Cash Dividend" means cash dividends with respect to the
Class A Common Stock the aggregate amount of which in any fiscal year
exceeds 10% of Consolidated EBITDA of the Corporation and its subsidiaries
for the fiscal year immediately preceding the payment of such dividend.
"Fair Market Value" of any consideration other than cash or of any
securities shall mean the amount which a willing buyer would pay to a
willing seller in an arm's-length transaction as determined by an
independent investment banking or appraisal firm experienced in the
valuation of such securities or property selected in good faith by the Board
of Directors or a committee thereof.
"FCC" means the Federal Communications Commission and any successor
governmental entity performing functions similar to those performed by the
Federal Communications Commission on the Issue Date.
27
"GAAP" means generally accepted accounting principles consistently
applied as in effect in the United States from time to time.
"Holder" means a holder of shares of Series B Preferred Stock as
reflected in the stock books of the Corporation.
"incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness
or other obligation or the recording, as required pursuant to GAAP or
otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred," "incurrable" and "incurring"
shall have meanings correlative to the foregoing); provided that a change in
GAAP that results in an obligation of such Person that exists at such time
becoming Indebtedness shall not be deemed an incurrence of such
Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person,
any indebtedness at any time outstanding, secured or unsecured, contingent
or otherwise, which is for borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute
accounts payable or trade payables and other accrued liabilities arising in
the ordinary course of business, including, without limitation, any and all
programming broadcast obligations) if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, and shall also include, to the extent not
otherwise included, (i) any Capitalized Lease Obligations, (ii) obligations
secured by a Lien to which the property or assets owned or held by such
Person are subject, whether or not the obligation or obligations secured
thereby shall have been assumed (provided, however, that if such obligation
or obligations shall not have been assumed, the amount of such Indebtedness
shall be deemed to be the lesser of the principal amount of the obligation
or the fair market value of the pledged property or assets), (iii)
guarantees of items of other Persons which would be included within this
definition for such other Persons (whether or not such items would appear
upon the balance sheet of the guarantor), (iv) all obligations for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, (v) in the case of the Corporation, Disqualified
Capital Stock of the Corporation or any Restricted Subsidiary and (vi)
obligations of any such Person under any Interest Rate Agreement applicable
to any of the foregoing (if and to the extent such Interest Rate Agreement
obligations would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP). The amount of Indebtedness of any Person
at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency
giving rise to the obligation, provided that (i) the amount outstanding
28
at any time of any Indebtedness issued with original issue discount is the
principal amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP and (ii) Indebtedness shall not include
any liability for federal, state, local or other taxes. Notwithstanding any
other provision of the foregoing definition, any trade payable arising from
the purchase of goods or materials or for services obtained in the ordinary
course of business or contingent obligations arising out of customary
indemnification agreements with respect to the sale of assets or securities
shall not be deemed to be "Indebtedness" of the Corporation or any
Restricted Subsidiaries for purposes of this definition. Furthermore,
guarantees of (or obligations with respect to letters of credit supporting)
Indebtedness otherwise included in the determination of such amount shall
not also be included.
"Independent Appraiser" means an appraiser of national reputation in
the United States (i) which does not, and whose directors, executive
officers and Affiliates do not, have a direct or indirect financial interest
in excess of 5% of fully diluted outstanding voting securities of the
Corporation at the time of determination and (ii) which, in the judgment of
the Corporation, is independent from the Corporation as evidenced by an
Officer's Certificate.
"Initial Holder" means NBC Palm Beach Investment I, Inc.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement designed to protect the party indicated therein
against fluctuations in interest rates.
"Investment" means, directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course
of business), loan or capital contribution to (by means of transfers of
property to others, payments for property or services for the account or use
of others or otherwise), the purchase of any stock, bonds, notes,
debentures, partnership or joint venture interests or other securities of,
the acquisition, by purchase or otherwise, of all or substantially all of
the business or assets or stock or other evidence of beneficial ownership
of, any Person or the making of any investment in any Person. Investments
shall exclude extensions of trade credit on commercially reasonable terms in
accordance with normal trade practices and repurchases or redemptions of the
Existing Notes, the Existing Exchange Debentures, the Existing Preferred
Stock or the Series B Preferred Stock by the Corporation.
"Investment Agreement" means the Amended and Restated Investment
Agreement, dated November 7, 2005, entered into by the Corporation and the
Initial Holder, as such agreement may be amended, modified or supplemented
from time to time.
29
"Investor Call Right Termination" has the meaning set forth in the Call
Agreement.
"Issue Date" means October 1, 2005.
"Issue Price" means $10,000 per share for the shares of Series B
Preferred Stock.
"Junior Securities" shall have the meaning ascribed to it in paragraph
(b) hereof.
"Leverage Ratio" means, for any Person, the ratio of (i) the sum of the
principal amount, or aggregate liquidation preference, of Indebtedness,
Senior Securities and Parity Securities of such Person plus, without
duplication, an amount equal to accumulated and unpaid interest or dividends
thereon, as the case may be, as of the date of determination, to its (ii)
Consolidated EBITDA (determined on a pro forma basis for the last four full
fiscal quarters of such Person for which financial statements are available
at the date of determination).
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale
or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Liquidation Preference" shall have the meaning ascribed to it in
paragraph (a) hereof.
"Master Agreement" means the Master Transaction Agreement, dated as of
November 7, 2005, by and among the Corporation, the Initial Holder, Lowell
W. Paxson and certain of their respective Affiliates, as such agreement may
be amended, modified or supplemented from time to time.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by
the Corporation or an Asset Sale, the aggregate net proceeds received by the
Corporation, after payment of expenses, commissions and the like incurred in
connection therewith, whether such proceeds are in cash or in property
(valued at the fair market value thereof, as determined in good faith by the
Board of Directors, at the time of receipt) and (b) in the case of any
exchange, exercise, conversion or surrender of outstanding securities of any
kind for or into shares of Capital Stock of the Corporation which is not
Disqualified Capital Stock, the net book value of such outstanding
securities on the date of such exchange, exercise, conversion or surrender
(plus any additional amount required to be paid by the holder to the
Corporation upon such exchange, exercise, conversion or surrender, less any
and all payments made to the holders, e.g., on account of fractional shares
and less all expenses incurred by the Corporation in connection therewith).
"New Exchange Debentures" shall mean the Convertible Exchange
Debentures due 2009 (if issued) issuable under the New Exchange Indenture.
30
"New Exchange Indenture" shall have the meaning ascribed to it in
paragraph (f)(i)(C) hereof.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing, or otherwise relating
to, any Indebtedness.
"Officers' Certificate" means a certificate signed by two officers or
by an officer and either an Assistant Treasurer or an Assistant Secretary of
the Corporation which certificate shall include a statement that, in the
opinion of such signers all conditions precedent to be performed by the
Corporation prior to the taking of any proposed action have been taken. In
addition, such certificate shall include (i) a statement that the
signatories have read the relevant covenant or condition, (ii) a brief
statement of the nature and scope of such examination or investigation upon
which the statements are based, (iii) a statement that, in the opinion of
such signatories, they have made such examination or investigation as is
reasonably necessary to express an informed opinion and (iv) a statement as
to whether or not, in the opinion of the signatories, such relevant
conditions or covenants have been complied with.
"Opinion of Counsel" means an opinion of counsel that, in such
counsel's opinion, all conditions precedent to be performed by the
Corporation prior to the taking of any proposed action have been taken. Such
opinion shall also include the statements called for in the second sentence
under "Officers' Certificate".
"Original Issue Date" means September 15, 1999.
"Parity Securities" shall have the meaning ascribed to it in paragraph
(b) hereof.
"Permitted Holders" means (a) collectively Lowell W. Paxson or any
Paxson Estate Planning Affiliates, as that term is defined in the
Stockholder Agreement, and (b) the Initial Holder or any of its Affiliates.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness under the New Exchange Debentures and the
guarantees related thereto, including any New Exchange Debentures
issued in accordance with the New Exchange Indenture as payment of
interest on the New Exchange Debentures;
(ii) Indebtedness under the Existing Exchange Debentures and the
guarantees related thereto, including any Existing Exchange Debentures
issued in accordance with the Existing Exchange Indenture as payment of
interest on the Existing Exchange Debentures;
31
(iii) Indebtedness incurred pursuant to any Credit Facility in an
aggregate principal amount at any time outstanding not to exceed
$25,000,000;
(iv) all other Indebtedness of the Corporation and its Restricted
Subsidiaries outstanding on the Issue Date, including, without
limitation, the Existing Notes, reduced by the amount of any scheduled
amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon;
(v) Obligations under Interest Rate Agreements of the Corporation
covering Indebtedness of the Corporation or any of its Restricted
Subsidiaries; provided, however, that such Interest Rate Agreements are
entered into to protect the Corporation and its Restricted Subsidiaries
from fluctuations in interest rates on Indebtedness incurred in
accordance with paragraph (l)(i) hereof to the extent the notional
principal amount of such Interest Rate Agreement does not exceed the
principal amount of the Indebtedness to which such Interest Rate
Agreement relates;
(vi) Indebtedness of a Restricted Subsidiary to the Corporation or
to a Restricted Subsidiary for so long as such Indebtedness is held by
the Corporation or a Restricted Subsidiary, in each case subject to no
Lien held by a Person other than the Corporation or a Restricted
Subsidiary; provided that if as of any date any Person other than the
Corporation or a Restricted Subsidiary owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of the Corporation to a Restricted Subsidiary
for so long as such Indebtedness is held by a Restricted Subsidiary, in
each case subject to no Lien; provided that (a) any Indebtedness of the
Corporation to any Restricted Subsidiary is unsecured and subordinated,
pursuant to a written agreement, to the Corporation's Obligations under
the New Exchange Indenture and the New Exchange Debentures and (b) if
as of any date any Person other than a Restricted Subsidiary owns or
holds any such Indebtedness or any Person holds a Lien in respect of
such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the
Corporation;
(viii) Purchase Money Indebtedness and Capitalized Lease
Obligations incurred to acquire property in the ordinary course of
business which Indebtedness and Capitalized Lease Obligations do not in
the aggregate exceed 5% of the Corporation's consolidated total assets
at any one time;
(ix) Refinancing Indebtedness; and
32
(x) Additional Indebtedness of the Corporation in an aggregate
principal amount not to exceed $10,000,000 at any one time outstanding.
"Permitted Investments" means, for any Person, Investments made on or
after the Issue Date consisting of:
(i) Investments by the Corporation, or by a Restricted Subsidiary,
in the Corporation or a Restricted Subsidiary;
(ii) Cash Equivalents;
(iii) Investments by the Corporation, or by a Restricted
Subsidiary, in a Person (or in all or substantially all of the business
or assets of a Person) if as a result of such Investment (a) such
Person becomes a Restricted Subsidiary, (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the
Corporation or a Restricted Subsidiary or (c) such business or assets
are owned by the Corporation or a Restricted Subsidiary;
(iv) loans and advances to employees (other than executive
officers) made in the ordinary course of business consistent with past
practices of the Corporation or such Restricted Subsidiary, as the case
may be, provided that such loans and advances do not exceed $1.0
million to any one employee and $5.0 million in the aggregate at any
one time outstanding;
(v) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary
course of business;
(vi) stock, obligations or other securities received in settlement
of debts created in the ordinary course of business and owing to the
Corporation or a Restricted Subsidiary or in satisfaction of judgments;
(vii) an Investment in any Person to the extent such Investment
represents the non-cash portion of the consideration received in
connection with an Asset Sale;
(viii) Investments in connection with time brokerage and other
similar agreements with independently owned broadcast properties,
including options to purchase such broadcast properties;
(ix) Investments primarily for the purpose of acquiring
programming, not to exceed an aggregate of $25.0 million outstanding at
any one time;
33
(x) accounts receivable of the Corporation and its Restricted
Subsidiaries generated in the ordinary course of business;
(xi) any transaction where the consideration provided by the
Corporation or any Restricted Subsidiary in connection with such
Investment consists solely or principally of broadcast air time, not to
exceed an aggregate of $5.0 million in any one year; and
(xii) other Investments of the Corporation and its Restricted
Subsidiaries that do not exceed $75.0 million outstanding at any one
time in the aggregate, provided that such Investments are related to
the business in which the Corporation or any Restricted Subsidiary was
engaged on the Issue Date or any related or ancillary business.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemption or upon liquidation.
"Purchase Money Indebtedness" means any Indebtedness incurred in the
ordinary course of business by a Person to finance the cost (including the
cost of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection
therewith.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Redeemable Dividend" means, for any dividend or distribution with
regard to Disqualified Capital Stock, the quotient of the dividend or
distribution divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the issuer of such Disqualified Capital Stock.
"Redemption Date" shall have the meaning ascribed to it in subparagraph
(e)(iii) hereof.
"Redemption Notice" shall have the meaning ascribed to it in
subparagraph (e)(iii) hereof.
"Redemption Price" means the Issue Price plus (as applicable) all
accrued and unpaid dividends through and including the date of redemption.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire,
or to
34
issue a security or Indebtedness in exchange or replacement for, or to
amend the terms of, such security or Indebtedness, in whole or in part, for
any amount up to and including the greater of the redemption price of such
security or Indebtedness pursuant to the terms of such security or
Indebtedness or the face value of such security or Indebtedness on the date
of any such refinancing, plus (without duplication) the amount of any
accrued dividends on such security or interest on such Indebtedness, the
amount of any premium required to be paid under the terms of such security
or Indebtedness and the amount of reasonable expenses incurred by the
Corporation in connection with such transaction; provided, however, that if
any security or Indebtedness which is Refinanced or issued in connection
with a Refinancing is exchangeable or exercisable for or convertible into
shares of Class A Common Stock, such security or Indebtedness shall not be
so exchangeable, exercisable or convertible until the earlier of the closing
of the Tender Offer (as such term is defined in the Stockholder Agreement)
or the end of the Restricted Period. "Refinanced" and "Refinancing" shall
have correlative meanings.
"Refinancing Indebtedness" means any refinancing by the Corporation or
any Restricted Subsidiary of Indebtedness that does not (i) result in an
increase in the aggregate principal amount of Indebtedness of such Person as
of the date of such proposed refinancing (plus the amount of any premium
required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by the
Corporation in connection with such refinancing) or (ii) create Indebtedness
with (a) a Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Indebtedness being Refinanced or (b) a final
maturity earlier than the final maturity of the Indebtedness being
Refinanced; provided that if such Indebtedness being Refinanced is
subordinate or junior to the New Exchange Debentures, then such Refinancing
Indebtedness shall be subordinate to the New Exchange Debentures at least to
the same extent and in the same manner as the Indebtedness being Refinanced.
"Restricted Payment" means (i) the declaration or payment of any
dividend or the making of any other distribution (other than dividends or
distributions payable in Qualified Capital Stock) on shares of Parity
Securities or Junior Securities, (ii) any purchase, redemption, retirement
or other acquisition for value of any Junior Securities, or any warrants,
rights or options to acquire shares of Junior Securities, other than through
the exchange of such Junior Securities or any warrants, rights or options to
acquire shares of any class of such Junior Securities for Qualified Capital
Stock or warrants, rights or options to acquire Qualified Capital Stock,
(iii) the making of any Investment (other than a Permitted Investment), (iv)
any designation of a Restricted Subsidiary as an Unrestricted Subsidiary on
the basis of the fair market value of such Subsidiary utilizing standard
valuation methodologies and approved by the Board of Directors, excluding
any such Subsidiary with a fair market value equal to or less than $500, or
(v) forgiveness of any Indebtedness of an Affiliate of the Corporation to
the Corporation or a Restricted Subsidiary.
35
"Restricted Period" means the period commencing on November 7, 2005 and
ending on the earlier of the Call Closing (as such term is defined in the
Call Agreement) or the date of the Investor Call Right Termination.
"Restricted Subsidiary" means a Subsidiary of the Corporation other
than an Unrestricted Subsidiary and includes all of the Subsidiaries of the
Corporation existing as of the Issue Date. The Board of Directors of the
Corporation may designate any Unrestricted Subsidiary or any Person that is
to become a Subsidiary as a Restricted Subsidiary if immediately after
giving effect to such action (and treating any Acquired Indebtedness as
having been incurred at the time of such action), the Corporation could have
incurred at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to paragraph (l)(i) above.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Securities" shall have the meaning ascribed to it in paragraph
(b) hereof.
"Series B Preferred Stock" shall have the meaning ascribed to it in
paragraph (a) hereof.
"Stockholder Agreement" means the Amended and Restated Stockholder
Agreement, dated as of November 7, 2005, by and among the Corporation, the
Initial Holder and certain Affiliates of the Corporation, as such agreement
may be amended, modified or supplemented from time to time.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such
Person or (ii) any other Person of which at least a majority of the voting
interest under ordinary circumstances is at the time, directly or
indirectly, owned by such Person.
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of the Corporation which is classified
after the Issue Date as an Unrestricted Subsidiary by a resolution adopted
by the Board of Directors; provided that a Subsidiary organized or acquired
after the Issue Date may be so classified as an Unrestricted Subsidiary only
if such classification is not in violation of the covenant set forth under
paragraph (l)(i) above. The transfer agent for the Series B Preferred Stock
shall be given prompt notice by the Corporation of each resolution adopted
by the Board of Directors under this provision, together with a copy of each
such resolution adopted.
"Voting Rights Triggering Event" shall have the meaning ascribed to it
in paragraph (f)(iii)(A) hereof.
36
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the
then outstanding aggregate principal amount of such Indebtedness into (b)
the total of the product obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payment of principal, including payment at final maturity, in respect
thereof, by (ii) the number of years (calculated to the nearest one-twelfth)
which will elapse between such date and the making of such payment.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary all of the
outstanding voting securities (other than directors' qualifying shares) of
which are owned, directly or indirectly, by the Corporation.
IN WITNESS WHEREOF, said Paxson Communications Corporation has caused this
Certificate to be signed this 7th day of November, 2005.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Dean M. Goodman
------------------------
Name: Dean M. Goodman
Title: President and Chief Operating Officer
EXHIBIT 16
EXECUTION COPY
NBC UNIVERSAL, INC.
REGISTRATION RIGHTS AGREEMENT
LETTER AMENDMENT
November 7, 2005
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Ladies and Gentlemen:
Reference is made to the Registration Rights Agreement (the
"Agreement"), dated as of September 15, 1999, by and between Paxson
Communications Corporation (together with its successors and assigns, the
"Company") and NBC Universal, Inc. (f/k/a National Broadcasting Company, Inc.)
(together with its successors and assigns, the "Investor"). Capitalized terms
used but not otherwise defined herein shall have the respective meanings given
such terms in the Agreement.
The Company and the Investor hereby agree to amend the Agreement in
accordance with Section 9(b) of the Agreement as follows:
1. All references in the Agreement to "Warrants" shall be disregarded,
it being understood that the Warrants have been cancelled effective as of the
date hereof.
2. All references in the Agreement to "Investment Agreement" shall mean
the Amended and Restated Investment Agreement, dated as of the date hereof, by
and between the Company and the Investor, as such agreement may be amended,
modified or supplemented from time to time.
3. All references in the Agreement to "Preferred Stock" shall mean the
11% Series B Convertible Exchangeable Preferred Stock of the Company.
4. The definition of "Registrable Securities" shall be amended to
include any shares of Preferred Stock deliverable by the Investor to the
transfer agent pursuant to Section 3.6(c)(ii) of the Stockholder Agreement.
5. All references in the Agreement to "Stockholder Agreement" shall
mean the Amended and Restated Stockholder Agreement, dated as of the date
hereof, by and among the Company, certain Company affiliates and the Investor,
as such agreement may be amended, modified or supplemented from time to time.
6. All references in the Agreement to "Call Agreement" shall mean the
Call Agreement, dated as of the date hereof, among NBC Palm Beach Investment II,
Inc. and the Paxson Stockholders, as such agreement may be amended, modified or
supplemented from time to time.
7. All references in the Agreement to "Call Shares" shall mean the Call
Shares as that term is defined in the Call Agreement.
8. All references in Section 2(a) of the Agreement to "$100,000,000"
shall be deleted and replaced with "$25,000,000."
9. All references in Section 2(a) of the Agreement to "$20,000,000"
shall be deleted and replaced with "$5,000,000."
10. Section 9(c) of the Agreement shall be deleted in its entirety and
replaced with the following:
"(c) Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the Company at the following
address and to a Holder at the following address (or at such other address for
any party as shall be specified by like notice, provided that notices of a
change of address shall be effective only upon receipt thereof):
If to the Company: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Chief Executive Officer
Fax: 561-655-9424
With a copy to: Holland & Knight LLP
222 Lakeview Avenue, Suite 1000
West Palm Beach, Florida 33401
Attention: David L. Perry
Tel: 561-650-8314
Fax: 561-850-8399
2
If to the Investor: NBC Universal, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Tel: 212-646-7024
Fax: 212-646-4733
With a copy to: Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Attention: John A. Marzulli, Jr.
Tel: 212-848-8590
Fax: 646-848-8590"
11. Section 9(i) of the Agreement shall be deleted in its entirety and
replaced with the following:
"If one or more provisions of this Agreement or the application thereof
to any person or circumstances is determined by a court or agency of competent
jurisdiction to violate any law or regulation, including, without limitation,
any rule or policy of the Federal Communications Commission, or to be invalid,
void or unenforceable to any extent (a "Conflicting Provision"), the Conflicting
Provision shall have no further force or effect, but the remainder of this
Agreement and the application of the Conflicting Provision to other persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable shall not be affected thereby and shall be enforced to
the greatest extent permitted by law, so long as any such violation, invalidity
or unenforceability does not change the basic economic or legal positions of the
parties. In such event, the parties shall negotiate in good faith such changes
in other terms as shall be practicable in order to effect the original intent of
the parties."
Except as otherwise set forth herein, the parties hereto agree that the
remaining provisions of the Agreement shall remain in full force and effect.
3
This Letter Amendment shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in and
to be performed in that State.
NBC UNIVERSAL, INC.
By: /s/ Robert C. Wright
------------------------------------
Name: Robert C. Wright
Title: President and Chief Executive
Officer
Consented to and acknowledged
as of the above date:
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Dean M. Goodman
-------------------------------
Name: Dean M. Goodman
Title: President and Chief Operating Officer
EXHIBIT 17
EXECUTION COPY
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement") is entered into as of November
7, 2005, by and among Mr. Lowell W. Paxson, Second Crystal Diamond Limited
Partnership, a Nevada limited partnership, Paxson Enterprises, Inc., a Nevada
corporation (collectively, the "Paxson Stockholders"), NBC Universal, Inc.
("NBCU" and, together with the Paxson Stockholders, the "Escrow Parties") and
The Bank of New York, as the Escrow Agent hereunder (together with any successor
in such capacity, the "Escrow Agent").
WHEREAS, the Paxson Stockholders and NBC Palm Beach Investment II,
Inc., a California corporation ("Palm Beach II"), have executed, among other
things, a Call Agreement, dated as of November 7, 2005 (as in effect from time
to time, the "Call Agreement"), pursuant to which Palm Beach II, or its
Permitted Transferee (as defined in the Call Agreement), has an irrevocable
right to purchase from the Paxson Stockholders all of the Call Shares (as
defined in the Call Agreement), including the Class A Shares (the "Call Right"),
subject to the conditions set forth in the Call Agreement;
WHEREAS, Paxson Communications Corporation, a Delaware corporation
("PCC"), NBCU and the Paxson Stockholders have executed, among other things, an
Amended and Restated Stockholder Agreement, dated as of November 7, 2005 (as in
effect from time to time, the "Stockholder Agreement"), pursuant to which NBCU
has agreed, among other things, in the event of an Investor Call Right
Termination, to pay to the Paxson Stockholders on behalf of PCC the Escrow
Deposit (as defined below), subject to the conditions set forth in the
Stockholder Agreement; and
WHEREAS, as security for the Escrow Parties' respective obligations
pursuant to Section 2.1(b) of the Call Agreement and Section 3.6 of the
Stockholder Agreement, (i) NBCU has deposited cash in the amount of
$3,863,765.50 (the "Escrow Deposit") with the Escrow Agent on the date hereof,
to be held, disbursed and otherwise acted upon as set forth in this Agreement,
(ii) the Paxson Stockholders have deposited the Class A Shares (the "Escrow
Shares") with the Escrow Agent on the date hereof, to be held, released and
otherwise acted upon as set forth in this Agreement and (iii) the Escrow Agent
has acknowledged receipt of the Escrow Deposit and Escrow Shares;
NOW, THEREFORE, in consideration of the above premises and of the
mutual covenants and agreements contained herein, the parties hereby agree as
follows:
1. Definitions. Each capitalized term used but not otherwise defined in
this Agreement has the meaning assigned to it in the Stockholder Agreement. As
used in this Agreement:
"Business Day" means any day, other than a Saturday or a Sunday,
upon which the Escrow Agent conducts business.
"Escrow Fund" at any time means the Escrow Deposit described in
the recitals hereto and all Escrow Income, in each case to the extent held by
the Escrow Agent at such time.
"Escrow Income" at any time means all interest or other income
directly or indirectly earned and paid to the Escrow Agent on the Escrow Fund
and held by the Escrow Agent, together with all interest and other income
accrued but unpaid on such funds as of such time and payable at a later time.
"Escrow Shares" means the 15,455,062 shares of Class A Common
Stock of the Company owned by the Paxson Stockholders, and any shares of common
stock of the Company or other securities that may be issued with respect to the
Escrow Shares (x) as a result of a stock dividend or distribution on, stock
split or reverse stock split of, or similar event with respect to the Escrow
Shares or (y) on account of the Escrow Shares in a merger, consolidation,
combination, reclassification, recapitalization or similar transaction involving
the Company.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or any Governmental Entity.
2. Appointment of the Escrow Agent. The Escrow Parties hereby designate
and appoint the Escrow Agent as joint escrow agent for the Escrow Parties
pursuant to the terms of this Agreement. The Escrow Agent agrees to (i) act as
the Escrow Agent, (ii) deposit and hold the Escrow Fund in an account maintained
by the Escrow Agent, and (iii) disburse the Escrow Fund, in each case in
accordance with the terms and conditions of this Agreement. Any fees and
expenses payable to the Escrow Agent in connection with the performance of its
obligations hereunder shall be paid by NBCU.
3. Investment of the Escrow Fund. The Escrow Agent will invest or
reinvest the Escrow Fund without distinction between principal and income in the
Fidelity U.S. Treasury III Money Market Fund or, as instructed in writing by
NBCU from time to time, in U.S. government obligations maturing not more than
ninety (90) days from the date of purchase or in a money market account invested
solely in U.S. government obligations (each, a "Permitted Investment"). All
Escrow Income received from the investment of the Escrow Fund will be paid by
the Escrow Agent to NBCU on a quarterly basis, by wire transfer of immediately
available funds, to NBCU's account listed immediately below, on the Business Day
following March 31, June 30, September 30 and December 31 of each year, provided
that no distribution shall be made that would reduce the Escrow Fund below the
amount of the Escrow Deposit.
Bank: JP Morgan Chase
ABA: 021000021
SWIFT: CHASUS33
Account: 0381063114
Account Name: NBC Universal
Reference: Globe Quarterly Escrow Interest
The Escrow Agent will have no liability for any investment losses,
including any losses on any investment required to be liquidated prior to
maturity in order to make a payment required hereunder. Any loss incurred from
an investment made pursuant to this Section 3 or additional fees payable to the
Escrow Agent will be borne by NBCU and will be replenished by NBCU to keep the
Escrow Fund equal to the Escrow Deposit. For tax reporting purposes, all
2
interest or other income earned from the investment of the Escrow Fund in any
tax year will be allocated to NBCU.
4. Release of the Escrow Deposit and Escrow Shares. The Escrow Agent
will disburse and pay over the Escrow Deposit and release the Escrow Shares, as
the case may be, as follows:
(a) Upon Exercise of Call Right. Upon the exercise of the Call
Right, the Paxson Stockholders and NBCU or its Permitted Transferee, as
applicable, shall deliver to the Escrow Agent a joint written notice in
accordance with Section 10(a) (a "Joint Demand") that states that the Paxson
Stockholders are entitled to the Escrow Deposit and requests that the Escrow
Agent disburse such amount to the Paxson Stockholders or their designees in the
manner indicated in such Joint Demand. Upon receipt of such Joint Demand, the
Escrow Agent will, within three Business Days, disburse to the Paxson
Stockholders or their designees the Escrow Deposit in the manner indicated in
such Joint Demand.
(b) Upon Investor Call Right Termination. Upon the occurrence of
an Investor Call Right Termination, the Paxson Stockholders may deliver to the
Escrow Agent and NBCU a written notice in accordance with Section 10(a) (a
"Paxson Demand") that states that the Paxson Stockholders are entitled to the
Escrow Deposit and request that the Escrow Agent disburse such amount to the
Paxson Stockholders in the manner indicated in such Paxson Demand. The Paxson
Demand will be accompanied by a written certification that a copy of such Paxson
Demand has been given to NBCU. Upon such delivery to the Escrow Agent, such
Paxson Demand will remain pending until either payment of the amount claimed in
such Paxson Demand is made in accordance with Section 4(e) or a final award
pursuant to Section 7 has been delivered with respect to such Paxson Demand and
any disbursement from the Escrow Fund required by such final award has been
made. Upon the occurrence of an Investor Call Right Termination and the
disbursement of the Escrow Deposit to the Paxson Stockholders pursuant to this
Section 4(b), the Escrow Agent will release the Escrow Shares to PCC.
(c) Upon a Call Closing. Upon the occurrence of a Call Closing (as
defined in the Call Agreement), NBCU or its Permitted Transferee, as applicable,
may deliver to the Escrow Agent and the Paxson Stockholders a written notice in
accordance with Section 10(a) (a "Call Closing Notice") that states that NBCU or
its Permitted Transferee, as applicable, is entitled to the Escrow Shares and
request that the Escrow Agent release such shares to NBCU or its Permitted
Transferee, as applicable, in the manner indicated in such Call Closing Notice.
The Call Closing Notice will be accompanied by a written certification that a
copy of such Call Closing Notice has been given to the Paxson Stockholders. Upon
such delivery to the Escrow Agent, such Call Closing Notice will remain pending
until either the Escrow Shares are released in accordance with Section 4(e) or a
final award pursuant to Section 7 has been delivered with respect to such Call
Closing Notice and any release of Escrow Shares required by such final award has
been made.
(d) Dispute Notice. After receiving a copy of a Paxson Demand or a
Call Closing Notice, any of NBCU or its Permitted Transferee or the Paxson
Stockholders, as the case may be, may, subject to Section 4(e), challenge the
propriety of the requested disbursement or release by giving the Escrow Agent
and the other parties hereto written notice in accordance with
3
Section 10(a) setting forth the grounds for such challenge (a "Dispute Notice");
provided, however, that if there is no dispute between the Escrow Parties as to
whether the Investor Call Right Termination has occurred, the occurrence or
nonoccurrence of the Investor Call Right Termination cannot be the basis for
delivery of a Dispute Notice with respect to Section 4(b). Subject to Section
4(e), if the Escrow Agent receives a Dispute Notice, then the Escrow Agent will
not make the requested disbursement or permit the requested release unless and
until the Escrow Agent has received written instructions in accordance with
Section 10(a) in respect of such disbursement from the Escrow Parties, acting
jointly, or from an arbitrator or court of competent jurisdiction pursuant to
Section 7.
(e) Disbursement without Dispute. On the tenth Business Day after
it receives a Paxson Demand or a Call Closing Notice, as the case may be, the
Escrow Agent will (i) make the requested disbursement of the Escrow Deposit to
the Paxson Stockholders or (ii) release the Escrow Shares to NBCU or its
Permitted Transferee, as applicable, or PCC, as the case may be, in each case in
accordance with such Paxson Demand or a Call Closing Notice unless, prior to
such tenth Business Day, the Escrow Agent has received a Dispute Notice (in
which event, Section 7 will govern the resolution of any dispute and the related
disposition of the Escrow Fund or release of the Escrow Shares).
5. Treatment of Escrow Shares.
(a) Title of Escrow Account. All certificates representing the
Escrow Shares delivered to the Escrow Agent pursuant to this Agreement shall be
deposited by the Escrow Agent in an account designated substantially as follows:
"Paxson Communications Corporation Stock Certificate Escrow Account" (the
"Escrow Account") duly endorsed in blank or accompanied by stock powers duly
executed in blank, with all necessary stock transfer stamps affixed thereto.
(b) Receipt of Distributions and Dividends. So long as the Escrow
Shares remain in the Escrow Account, if PCC issues any distributions, dividends,
rights or other property in respect of the Class A Shares, or in the event of a
share split, recapitalization, merger, acquisition, spinoff or other transaction
affecting the capitalization of PCC then, in such event, the Paxson Stockholders
shall send evidence of such distributions, dividends, rights, share certificates
or other property directly to the Escrow Agent, which is hereby authorized to
hold and retain possession of all such evidences of distributions, dividends,
rights or other property until release of the Escrow Shares in accordance with
Section 4. In the event the Escrow Shares are distributed to NBCU or its
Permitted Transferee pursuant to Section 4, then the Escrow Agent will
distribute evidences of such distributions, dividends, rights or other property
in the form the Escrow Agent received from the Paxson Stockholders. In the event
the Escrow Shares are not distributed to NBCU or its Permitted Transferee, the
Escrow Agent is hereby authorized, empowered and instructed to deliver all such
evidences of distributions, dividends, rights, Common Stock or other property to
PCC.
(c) Voting Rights. So long as the Escrow Shares are deposited in
the Escrow Account, the Paxson Stockholders shall have the right to vote the
Escrow Shares at any and all meetings of the stockholders of the Company without
restriction, subject to Section 3.3 of the Stockholder Agreement.
4
6. Other Instructed Disbursements. In addition to the foregoing
disbursement and release methods, the Escrow Agent will make disbursements of or
from the Escrow Fund or release the Escrow Shares in accordance with any written
instructions received by the Escrow Agent that are jointly executed by the
Paxson Stockholders and NBCU or its Permitted Transferee, as applicable, or that
are provided by the arbitrator or court pursuant to Section 7, upon receipt of
such instructions or at any later time specified in such instructions.
7. Dispute Resolution Procedures. It is understood and agreed that
should any dispute arise with respect to the delivery, ownership, right of
possession, and/or disposition of the Escrow Fund or the Escrow Shares, or
should any claim be made upon the Escrow Agent, the Escrow Fund or the Escrow
Shares by a third party, the Escrow Agent upon receipt of notice of such dispute
or claim is authorized and will be entitled (at its sole option and election) to
retain in its possession, without liability to anyone, all or any of the Escrow
Fund or the Escrow Shares until such dispute has been settled either by the
mutual written agreement of the Escrow Parties or by an arbitration award or by
a final order, decree or judgment of a court of competent jurisdiction in the
United States of America, the time for perfection of an appeal of such order,
decree or judgment having expired. The Escrow Agent may, but will be under no
duty whatsoever to, institute or defend any legal proceedings that relate to the
Escrow Fund or the Escrow Shares.
8. Termination. This Agreement will terminate upon the disbursement in
full of the Escrow Fund and the Escrow Shares, or on any earlier date agreed to
in a writing executed by NBCU and the Paxson Stockholders and delivered to the
Escrow Agent; provided that the provisions of Section 9 shall survive any such
termination.
9. Escrow Agent Terms and Conditions.
(a) The duties, responsibilities and obligations of the Escrow
Agent shall be limited to those expressly set forth herein and no duties,
responsibilities or obligations shall be inferred or implied. The Escrow Agent
shall not be subject to, nor required to comply with, any other agreement
between or among any or all of the Escrow Parties or to which any Escrow Party
is a party, even though reference thereto may be made herein, or to comply with
any direction or instruction (other than those contained herein or delivered in
accordance with this Agreement) from any Escrow Party or any entity acting on
its behalf. The Escrow Agent shall not be required to, and shall not, expend or
risk any of its own funds or, subject to Section 9(d), otherwise incur any
financial liability in the performance of any of its duties hereunder.
(b) This Agreement is for the exclusive benefit of the parties
hereto and their respective successors hereunder, and shall not be deemed to
give, either express or implied, any legal or equitable right, remedy, or claim
to any other entity or person whatsoever.
(c) If at any time the Escrow Agent is served with any judicial or
administrative order, judgment, decree, writ or other form of judicial or
administrative process which in any way affects the Escrow Fund (including but
not limited to orders of attachment or garnishment or other forms of levies or
injunctions or stays relating to the transfer of the Escrow Fund), the Escrow
Agent is authorized to comply therewith in any manner as it or its legal counsel
of its own choosing deems appropriate; and if the Escrow Agent complies with any
such
5
judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, the Escrow Agent shall not be liable to any
of the parties hereto or to any other person or entity even though such order,
judgment, decree, writ or process may be subsequently modified or vacated or
otherwise determined to have been without legal force or effect.
(d) The Escrow Agent shall not be liable for any action taken or
omitted or for any loss or injury resulting from its actions or its performance
or lack of performance of its duties hereunder in the absence of gross
negligence or willful misconduct on its part. In no event shall the Escrow Agent
be liable (i) for acting as contemplated by this Agreement in accordance with or
relying upon any instruction, notice, demand, certificate or document from any
Escrow Party or any entity acting on behalf of any Escrow Party, (ii) for any
consequential, punitive or special damages, (iii) for the acts or omissions of
its nominees, correspondents, designees, subagents or subcustodians, or (iv) for
an amount in excess of the value of the Escrow Fund and the Escrow Shares,
valued as of the date of deposit.
(1) If any fees, expenses or costs incurred by, or any
obligations owed to, the Escrow Agent hereunder are not promptly paid when
due, the Escrow Agent may reimburse itself therefor from the Escrow Fund and
may sell, convey or otherwise dispose of any portion of the Escrow Fund for
such purpose.
(2) As security for the due and punctual performance of any
and all of the Escrow Parties' obligations to the Escrow Agent hereunder,
now or hereafter arising, the Escrow Parties, individually and collectively,
hereby pledge, assign and grant to the Escrow Agent a continuing security
interest in, and a lien on, the Escrow Fund and the Escrow Shares and all
additions thereto. The security interest of the Escrow Agent shall at all
times be valid, perfected and enforceable by the Escrow Agent against the
Escrow Parties and all third parties in accordance with the terms of this
Agreement.
(3) The Escrow Agent may consult with legal counsel at the
expense of the Escrow Parties as to any matter relating to this Agreement,
and the Escrow Agent shall not incur any liability in acting in good faith
in accordance with any advice from such counsel.
(4) The Escrow Agent shall not incur any liability for not
performing any act or fulfilling any duty, obligation or responsibility
hereunder by reason of any occurrence beyond the control of the Escrow Agent
(including but not limited to any act or provision of any present or future
law or regulation or governmental authority, any act of God or war, or the
unavailability of the Federal Reserve Bank wire or telex or other wire or
communication facility).
(e) Unless otherwise specifically set forth herein, the Escrow
Agent shall proceed as soon as practicable to collect any checks or other
collection items at any time deposited hereunder. All such collections shall be
subject to the Escrow Agent's usual collection practices or terms regarding
items received by the Escrow Agent for deposit or collection. The Escrow Agent
shall not be required, or have any duty, to notify anyone of any payment or
maturity under the terms of any instrument deposited hereunder, nor to take any
legal action to
6
enforce payment of any check, note or security deposited hereunder or to
exercise any right or privilege which may be afforded to the holder of any such
security.
(f) The Escrow Agent shall provide the Escrow Parties monthly
statements identifying transactions, transfers or holdings of the Escrow Fund
and each such statement shall be deemed to be correct and final upon receipt
thereof by the Escrow Parties unless the Escrow Agent is notified in writing to
the contrary within thirty (30) business days of the date of such statement.
(g) The Escrow Agent shall not be responsible in any respect for
the form, execution, validity, value or genuineness of documents or securities
deposited hereunder, or for any description therein, or for the identity,
authority or rights of persons executing or delivering or purporting to execute
or deliver any such document, security or endorsement.
(h) The Escrow Parties, jointly and severally, shall be liable for
and shall reimburse and indemnify the Escrow Agent and hold the Escrow Agent
harmless from and against any and all claims, losses, liabilities, costs,
damages or expenses (including reasonable attorneys' fees and expenses)
(collectively, "Losses") arising from or in connection with or related to this
Agreement or being the Escrow Agent hereunder (including but not limited to
Losses incurred by the Escrow Agent in connection with its successful defense,
in whole or in part, of any claim of gross negligence or willful misconduct on
its part), provided, however, that nothing contained herein shall require the
Escrow Agent to be indemnified for Losses caused by its gross negligence or
willful misconduct.
(1) The Escrow Parties may remove the Escrow Agent at any
time by giving to the Escrow Agent thirty (30) calendar days' prior notice
in writing signed by all the Escrow Parties. The Escrow Agent may resign at
any time by giving to the Escrow Parties fifteen (15) calendar days' prior
written notice thereof.
(2) Within ten (10) calendar days after giving the foregoing
notice of removal to the Escrow Agent or receiving the foregoing notice of
resignation from the Escrow Agent, all the Escrow Parties shall jointly
agree on and appoint a successor Escrow Agent. If a successor Escrow Agent
has not accepted such appointment by the end of such 10-day period, the
Escrow Agent may, in its sole discretion, apply to a court of competent
jurisdiction for the appointment of a successor Escrow Agent or for other
appropriate relief. The costs and expenses (including reasonable attorneys'
fees and expenses) incurred by the Escrow Agent in connection with such
proceeding shall be paid by, and be deemed a joint and several obligation
of, the Escrow Parties.
(3) Upon receipt of the identity of the successor Escrow
Agent, the Escrow Agent shall either deliver the Escrow Fund and the Escrow
Shares then held hereunder to the successor Escrow Agent, less the Escrow
Agent's fees, costs and expenses or other obligations owed to the Escrow
Agent, or hold such Escrow Fund or Escrow Shares, pending distribution,
until all such fees, costs and expenses or other obligations are paid.
7
(4) Upon delivery of the Escrow Fund and the Escrow Shares to
the successor Escrow Agent, the Escrow Agent shall have no further duties,
responsibilities or obligations hereunder.
(i) In the event of any ambiguity or uncertainty hereunder or in
any notice, instruction or other communication received by the Escrow Agent
hereunder, the Escrow Agent may, in its sole discretion, refrain from taking any
action other than retain possession of the Escrow Fund and the Escrow Shares,
unless the Escrow Agent receives written instructions, signed by all the Escrow
Parties, which eliminates such ambiguity or uncertainty.
(j) In the event of any dispute between or conflicting claims by
or among the Escrow Parties and/or any other person or entity with respect to
the Escrow Fund and the Escrow Shares, the Escrow Agent shall be entitled, in
its sole discretion, to refuse to comply with any and all claims, demands or
instructions with respect to the Escrow Fund and the Escrow Shares so long as
such dispute or conflict shall continue, and the Escrow Agent shall not be or
become liable in any way to the Escrow Parties for failure or refusal to comply
with such conflicting claims, demands or instructions. The Escrow Agent shall be
entitled to refuse to act until, in its sole discretion, either (i) such
conflicting or adverse claims or demands shall have been determined by
arbitration or by a final order, judgment or decree of a court of competent
jurisdiction, which order, judgment or decree is not subject to appeal, or
settled by agreement between the conflicting parties as evidenced in a writing
satisfactory to Escrow Agent or (ii) the Escrow Agent shall have received
security or an indemnity satisfactory to it sufficient to hold it harmless from
and against any and all losses which it may incur by reason of so acting. The
Escrow Agent may, in addition, elect, in its sole discretion, to commence an
interpleader action or seek other judicial relief or orders as it may deem, in
its sole discretion, necessary. The costs and expenses (including reasonable
attorneys' fees and expenses) incurred in connection with such proceeding shall
be paid by, and shall be deemed a joint and several obligation of, the Escrow
Parties.
(k) Each Escrow Party hereby represents and warrants (a) that this
Agreement has been duly authorized, executed and delivered on its behalf and
constitutes its legal, valid and binding obligation and (b) that the execution,
delivery and performance of this Agreement by the Escrow Party do not and will
not violate any applicable law or regulation.
(l) No printed or other material in any language, including
prospectuses, notices, reports, and promotional material which mentions "The
Bank of New York" by name or the rights, powers, or duties of the Escrow Agent
under this Agreement shall be issued by any other parties hereto, or on such
party's behalf, without the prior written consent of the Escrow Agent.
(m) The Escrow Agent does not have any interest in the Escrow Fund
or the Escrow Shares deposited hereunder but is serving as escrow holder only
and having only possession thereof. NBCU shall pay or reimburse the Escrow Agent
upon request for any transfer taxes or other taxes relating to the Escrow Fund
incurred in connection herewith and shall indemnify and hold harmless the Escrow
Agent any amounts that it is obligated to pay in the way of such taxes. Any
payments of income hereunder shall be subject to withholding regulations then in
force with respect to United States taxes. The parties hereto will provide the
8
Escrow Agent with appropriate W-9 forms for tax I.D., number certifications, or
W-8 forms for non-resident alien certifications. It is understood that the
Escrow Agent shall be responsible for income reporting only with respect to
income earned on investment of funds which are a part of the Escrow Fund and is
not responsible for any other reporting.
10. Notices and Wiring Instructions.
(a) Any notice required or permitted to be given hereunder shall
be sufficient if in writing and (a) delivered in person or by express delivery
or courier service, (b) sent by facsimile, or (c) deposited in the mail
registered or certified first class, postage prepaid and return receipt
requested (provided that any notice given pursuant to clause (b) is also
confirmed by the means described in clause (a) or (c)) to such address or
facsimile of the party set forth below or to such other place or places as such
party from time to time may designate in writing in compliance with the terms
hereof. Each notice shall be deemed given when so delivered personally, or sent
by facsimile transmission, or, if sent by express delivery or courier service
one (1) Business Day after being sent, or if mailed, five (5) Business Days
after the date of deposit in the mail; provided that with respect to the Escrow
Agent, notices and other communications will be deemed to have been duly given
only upon the Escrow Agent's actual receipt thereof:
If to NBCU: NBC Universal, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Tel: 212-646-7024
Fax: 212-646-4733
With a copy, which shall not
constitute notice, to: Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Attention: John A. Marzulli, Jr.
Tel: 212-848-8590
Fax: 646-848-8590
If to the Paxson Stockholders: Lowell W. Paxson
529 South Flagler Drive, 26H
West Palm Beach, Florida 33401
Tel: 561-835-8080
Fax: 561-832-5656
with a copy to: Wiley, Rein & Fielding LLP
1776 K Street NW
Washington, DC 20006
Attention: Fred Fielding
Tel: 202-719-7000
Fax: 202-719-7049
9
If to Escrow Agent, to: The Bank of New York
Corporate Trust Administration
Division
101 Barclay Street,
8th Floor West
New York, NY 10286
Attention: Matthew G. Louis
Assistant Vice President
Tel: 212-815-3219
Fax: 212-815-5877
If to Paxson Communications
Corporation: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Chief Executive
Officer
Tel: 561-659-4122
Fax: 561-655-9424
with copy to: Holland & Knight LLP
222 Lakeview Avenue, Suite 1000
West Palm Beach, Florida 33401
Attention: David L. Perry
Tel: 561-650-8314
Fax: 561-650-8399
and Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, DC 20036
Attention: John R. Feore, Jr.
Tel: 202-776-2000
Fax: 202-776-2222
(b) Any funds to be deposited with the Escrow Agent hereunder will
be sent by wire transfer pursuant to the following instructions (or by such
method of payment and pursuant to such instruction as may have been given in
advance and in writing by the Escrow Agent, as the case may be, in accordance
with Section 10(a)):
Bank: The Bank of New York
ABA #: 021000018
GLA/111565
For credit to Account No. 284185
11. Assignment. No party may assign any of its rights or delegate any
of its duties under this Agreement without the consent of the other parties;
provided that NBCU may assign its rights and delegate its duties to its
Permitted Transferee so long as such Permitted Transferee agrees in writing to
assume all of NBCU's obligations hereunder and the Paxson Stockholders may
assign their rights and delegate their duties to Paxson Estate Planning
Affiliates (as defined
10
in the Call Agreement) so long as such Paxson Estate Planning Affiliates agree
in writing to assume all of the Paxson Stockholders' obligations hereunder.
12. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
13. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent.
If an ambiguity or question of intent or interpretation arises, this Agreement
will be construed as if drafted jointly by the parties, and no presumption or
burden of proof will arise favoring or disfavoring any person or entity by
virtue of the authorship of any of the provisions of this Agreement.
14. Captions. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and will not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced and construed
as if no caption had been used in this Agreement.
15. Entire Agreement. This Agreement contains the entire agreement
among NBCU, the Paxson Stockholders and the Escrow Agent and supersedes any
prior understandings, agreements or representations by or between the parties,
written or oral, that may have related to the subject matter hereof in any way.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which taken
together will constitute one and the same instrument.
17. Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to any choice of law or conflict of law provision (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York. In furtherance of the
foregoing, the internal law of the State of New York will control the
interpretation and construction of this Agreement, even if under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
18. Parties in Interest. Nothing in this Agreement, express or implied,
is intended to confer on any Person other than the parties to this Agreement and
their respective successors and permitted assigns any rights or remedies under
or by virtue of this Agreement.
19. Waiver of Jury Trial. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR
EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (EACH PARTY HAVING HAD
OPPORTUNITY TO CONSULT COUNSEL), EACH PARTY EXPRESSLY WAIVES THE RIGHT TO TRIAL
BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN.
11
20. Other Definitional Provisions. The terms "hereof," "herein" and
"hereunder" and terms of similar import will refer to this Agreement as a whole
and not to any particular provision of this Agreement. Section and clause
references contained in this Agreement are references to Sections and clauses in
this Agreement, unless otherwise specified. Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular form.
Each gender-specific term used in this Agreement has a comparable meaning
whether used in a masculine, feminine or gender-neutral form. Whenever the term
"including" is used in this Agreement (whether or not that term is followed by
the phrase "but not limited to" or "without limitation" or words of similar
effect) in connection with a listing of items within a particular
classification, that listing will be interpreted to be illustrative only and
will not be interpreted as a limitation on, or an exclusive listing of, the
items within that classification.
21. Modifications. This Agreement may not be altered or modified
without the express written consent of the parties hereto. No course of conduct
will constitute a waiver of any of the terms and conditions of this Agreement,
unless such waiver is specified in writing, and then only to the extent so
specified. A waiver of any of the terms and conditions of this Agreement on one
occasion will not constitute a waiver of the other terms of this Agreement, or
of such terms and conditions on any other occasion.
22. Binding Effect. This Agreement will be binding upon the respective
parties hereto and their heirs, executors, successors and assigns.
23. Miscertification. NBCU and the Paxson Stockholders will be liable
to one another for the consequences of any action taken by the Escrow Agent in
reliance upon any certification made by it pursuant to this Agreement that is
inaccurate in any respect.
12
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the day and year first above written.
NBC UNIVERSAL, INC.
By: /s/ Robert C. Wright
---------------------------------------------
Name: Robert C. Wright
Title: President and Chief Executive Officer
/s/ Lowell W. Paxson
---------------------------------------------
Lowell W. Paxson
PAXSON ENTERPRISES, INC.
By: /s/ Lowell W. Paxson
---------------------------------------------
Name: Lowell W. Paxson
Title: President
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP
By: Paxson Enterprises, Inc., its general partner
By: /s/ Lowell W. Paxson
---------------------------------------------
Name: Lowell W. Paxson
Title: President
ESCROW AGENT: THE BANK OF NEW YORK
By: /s/ Matthew G. Louis
---------------------------------------------
Name: Matthew G. Louis
Title: Assistant Vice President
EXHIBIT 18
EXECUTION COPY
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") dated November 7,
2005, together with the releases herein, is made and entered into by and between
NBC Universal, Inc. ("NBCU") and Paxson Communications Corporation ("Paxson").
The term "Parties" shall refer collectively to all of the parties to this
Agreement.
WHEREAS NBCU filed an action against Paxson in the Delaware Court
of Chancery (the "Chancery Court") on August 19, 2004 (the "Chancery Court
Action") seeking declaratory relief and asserting breach of contract with
respect to the Cost of Capital Dividend Rate provision of the September 15, 1999
Certificate of Designation governing Paxson's 8% Series B Convertible
Exchangeable Preferred Stock (the "COD");
WHEREAS NBCU filed a First Amended Complaint in the Chancery Court
Action on September 28, 2004, and Paxson filed an Answer and Counterclaim on
October 14, 2004, seeking declaratory relief with respect to certain of NBCU's
redemption rights under the COD and the Investment Agreement between National
Broadcasting Company, Inc. ("NBC") and Paxson, dated September 15, 1999 (the
"Investment Agreement");
WHEREAS the Parties filed motions for judgment on the pleadings
with respect to the claims in the Chancery Court Action, which were denied in
one respect and granted in all other respects by the Chancery Court, including
that the Chancery Court granted judgment on the pleadings in NBCU's favor with
respect to the proper Cost of Capital Dividend Rate under the COD, and whereas
Paxson has sought to appeal that ruling to the Supreme Court of Delaware;
WHEREAS the Chancery Court Action is currently stayed but remains
pending;
WHEREAS NBCU commenced an arbitration proceeding against Paxson
with the American Arbitration Association on May 12, 2005 (the "Arbitration
Proceeding") seeking damages for alleged breaches of Section 6.7 of the
Investment Agreement and Section 10(d) of
the Network Sales Agreement between NBC and Paxson, dated November 19, 1999 (the
"Network Sales Agreement"), as well as seeking damages and declaratory relief
pursuant to allegations that Paxson wrongfully attempted to terminate the
Network Sales Agreement, the National Agreement between NBC and Paxson, dated
July 16, 2001 (the "National Sales Agreement"), and the Joint Sales Agreements,
which were entered into by NBC and Paxson for various local television markets
(the "JSAs") pursuant to three letter agreements, dated September 15, 1999,
between NBC and Paxson in respect of joint sales of advertising and other joint
services by NBC, Paxson and their respective affiliates (the "Letter
Agreements") (collectively, the Network Sales Agreement, National Sales
Agreement, the JSAs and the Letter Agreements are referred to herein as the
"Sales Agreements");
WHEREAS Paxson filed an Answer in the Arbitration Proceeding
denying NBCU's allegations and asserting that NBCU is entitled to no relief in
the Arbitration Proceeding; and
WHEREAS the Arbitration Proceeding is stayed but remains pending:
NOW, THEREFORE, in consideration of the mutual obligations and
promises contained herein, as well as in consideration of the execution and
delivery of the Master Transaction Agreement, by and among NBCU, Paxson, and
other parties, dated November 7, 2005 (the "Master Transaction Agreement") and
the other agreements to be executed and delivered by the Parties pursuant to the
Master Transaction Agreement, the Parties agree as follows:
1. The Parties agree to voluntarily dismiss, with prejudice, all
claims, counterclaims, and demands asserted in the Chancery Court Action.
Simultaneously with the execution of this Agreement, the Parties shall exchange
a signed stipulation of dismissal with
2
prejudice of the Chancery Court Action in the form attached hereto as Exhibit A.
NBCU shall file the stipulation with Chancery Court on the business day
following the execution of this Agreement.
2. The Parties agree to voluntarily dismiss, with prejudice, all
claims, counterclaims, and demands asserted in the Arbitration Proceeding.
Simultaneously with the execution of this Agreement, the Parties shall exchange
a signed stipulation of dismissal of the Arbitration Proceeding in the form
attached hereto as Exhibit B. NBCU shall submit the stipulation to the American
Arbitration Association on the business day following the execution of this
Agreement.
3. NBCU, for itself as well as for its present and former agents,
parents, affiliates, subsidiaries, divisions, units, partners, shareholders,
officers, directors, employees, contractors, predecessors, successors, assigns,
assignors, and attorneys, whether or not acting in such capacity, (collectively,
the "NBCU Releasors") hereby releases and forever discharges Paxson and its
respective present and former agents, parents, affiliates, subsidiaries,
divisions, units, partners, shareholders, officers, directors, employees,
contractors, predecessors, successors, assigns, assignors, and attorneys,
whether or not acting in such capacity, (collectively, the "Paxson Releasees")
from any and all claims, counterclaims, demands, controversies, actions, causes
of action, obligations, liabilities, costs (including any court or statutory
costs), attorneys' fees, and damages, in law or equity, that have been or could
have been brought related to the facts alleged in the Chancery Court Action
and/or the Arbitration Proceeding, whether known or unknown; provided, however,
(a) that nothing in this Agreement shall be construed to release, bar, alter, or
affect the rights or obligations of the Parties, or any party, under any
agreement, and shall not release, bar, alter, or affect any litigation or
arbitration
3
claim, based on conduct, facts, or injuries occurring after the date of the
execution of this Agreement; and (b) that the Sales Agreements shall remain in
full force and effect, provided that the obligations of the Parties thereunder
have been and shall continue to be suspended unless the Parties thereto mutually
agree in writing to revoke such suspension.
4. Paxson, for itself and for its present or former agents,
parents, affiliates, subsidiaries, divisions, units, partners, shareholders,
officers, directors, employees, contractors, predecessors, successors, assigns,
assignors, and attorneys, whether or not acting in such capacity, (collectively,
the "Paxson Releasors") hereby releases and forever discharges NBCU and its
present and former agents, parents, affiliates, subsidiaries, divisions, units,
partners, shareholders, officers, directors, employees, contractors,
predecessors, successors, assigns, assignors, and attorneys, whether or not
acting in such capacity, (collectively, the "NBCU Releasees") from any and all
claims, counterclaims, demands, controversies, actions, causes of action,
obligations, liabilities, costs (including any court or statutory costs),
attorneys' fees, and damages, in law or equity, that have been or could have
been brought related to the facts alleged in the Chancery Court Action and/or
the Arbitration Proceeding, whether known or unknown; provided, however, (a)
that nothing in this Agreement shall be construed to release, bar, alter, or
affect the rights or obligations of the Parties, or any party, under any
agreement, and shall not release, bar, alter, or affect any litigation or
arbitration claim, in each case, based on conduct, facts, or injuries occurring
after the date of the execution of this Agreement; and (b) that the Sales
Agreements shall remain in full force and effect, provided that the obligations
of the Parties thereunder have been and shall continue to be suspended unless
the Parties thereto mutually agree in writing to revoke such suspension. On the
business day following the execution of this Agreement, Paxson and NBCU shall
send a letter to the Federal
4
Communication Commission ("FCC") in the form attached hereto as Exhibit C,
advising the FCC that the Arbitration Proceeding has been voluntarily dismissed
by the Parties, withdrawing its prior filings with the FCC concerning the Sales
Agreements, stating that the Sales Agreements remain in full force and effect,
although the obligations of the Parties thereunder have been suspended, and
advising the FCC that the Parties have resolved any dispute regarding the Sales
Agreements. The Parties agree that (x) the execution and delivery of the Sales
Agreements and the performance by the parties of their obligations thereunder
were intended not to create an attributable interest for NBCU in any station
affiliated with or owned, operated or controlled by Paxson, (y) NBCU's efforts
to enforce its rights under the Sales Agreements did not create any such
attributable interest and (z) neither NBCU nor Paxson shall make any statements
in the future to the FCC or any third party, in writing or otherwise,
inconsistent with or contrary to the foregoing.
5. The Parties each agree to bear their own costs, including, but
not limited to, attorney's fees, arbitrator fees, administrative fees, and
filing fees associated with the Chancery Court Action, the Arbitration
Proceeding, and the execution and delivery of this Agreement.
6. The execution of this Agreement and the stipulations
contemplated herein shall not be used as, construed as, or deemed to be evidence
of any admission or concession of liability, wrongdoing, damages, facts or law
on the part of any of the Parties.
7. If one or more provisions of this Agreement or the application
thereof to any person or circumstances is determined by a court or agency of
competent jurisdiction to violate any law or regulation, including, without
limitation, any rule or policy of the FCC, or to be invalid, void or
unenforceable to any extent (a "Conflicting Provision"), the Conflicting
5
Provision shall have no further force or effect, but the remainder of this
Agreement and the application of the Conflicting Provision to other persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable shall not be affected thereby and shall be enforced to
the greatest extent permitted by law, so long as any such violation, invalidity
or unenforceability does not change the basic economic or legal positions of the
Parties. In such event, the Parties shall negotiate in good faith such changes
in other terms as shall be practicable in order to effect the original intent of
the Parties.
8. This Agreement may not be amended or modified except by a
written instrument signed by or on behalf of all the Parties hereto.
9. The Parties acknowledge that they have been advised by counsel
concerning the contents and effect of this Agreement, that they understand all
of its provisions, and that they are entering into this Agreement knowingly and
voluntarily.
10. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
11. The undersigned persons represent and warrant that they are
duly authorized to sign this Agreement on behalf of the person or entity on
whose behalf they are listed as signing and that they have full and proper
authority to bind such person or entity to all of the terms herein.
12. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
executed and performed within such state, and each party hereby submits to the
jurisdiction of the Chancery Court. In the event the
6
Chancery Court does not have jurisdiction over any dispute arising out of this
Agreement, each party hereby submits to the jurisdiction of the United States
District Court for the Southern District of New York, provided that in the event
such court does not have jurisdiction over any dispute arising out of this
Agreement, each party hereby submits to the jurisdiction of the Supreme Court of
the State of New York, New York County. THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
7
IN WITNESS WHEREOF, the Parties hereto and their counsel have
caused this Agreement to be duly executed as of the date first above written.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Dean M. Goodman
----------------------------------------
Name: Dean M. Goodman
Title: President and Chief Operating
Officer
NBC UNIVERSAL, INC.
By: /s/ Robert C. Wright
----------------------------------------
Name: Robert C. Wright
Title: President and Chief Executive
Officer
Exhibit A
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
NBC UNIVERSAL, INC., )
)
Plaintiff, )
)
v. ) C.A. No. 650-N
)
PAXSON COMMUNICATIONS )
CORPORATION, )
)
Defendant. )
STIPULATION OF DISMISSAL WITH PREJUDICE
Pursuant to Chancery Court Rule 41(a)(1), plaintiff NBC Universal, Inc.
and defendant Paxson Communications Corporation hereby dismiss this action, and
all claims and counterclaims asserted therein, with prejudice. Each party shall
bear its own costs and attorneys' fees.
CONNOLLY BOVE LODGE & HUTZ LLP MORRIS NICHOLS ARSHT & TUNNELL
- ------------------------------------ ------------------------------------
Collins J. Seitz, Jr. (Bar No. 2237) Kenneth J. Nachbar (Bar No. 2067)
1007 North Orange Street David J. Teklits (Bar No. 3221)
P.O. Box 2207 Morris Nichols Arsht & Tunnell
Wilmington, DE 19899 1201 North Market Street
(302) 658-9141 P.O. Box 1347
Wilmington, DE 19899
Stephen Fishbein (302) 658-9200
Adam S. Hakki
SHEARMAN & STERLING LLP William Pratt, Esq.
599 Lexington Avenue KIRKLAND & ELLIS LLP
New York, NY 10022 153 East 53rd Street
(212) 848-4000 New York, NY 10022
(212) 446-4862
Attorneys for Paxson Communications
Corporation
Susan E. Weiner
Executive Vice President and
Deputy General Counsel
NBC Universal, Inc.
30 Rockefeller Plaza
New York, New York 10112
(212) 664-2806
Attorneys for NBC Universal, Inc.
IT IS SO ORDERED, this ___________ day of ____________________, 2005.
-----------------------------------
Vice Chancellor
(422951; DE)
Exhibit B
[S&S Letterhead]
sfishbein@shearman.com November ____, 2005
(212) 848-4424
By Fax
Jennifer Eltahan
Case Manager
American Arbitration Association
950 Warren Avenue
East Providence, Rhode Island 02914
Re: 13 140 Y 01097 05 - NBC Universal, Inc. V. Paxson Communications
Corporation
----------------------------------------------------------------
Dear Ms. Eltahan:
Please be advised that Claimant NBC Universal, Inc. and Respondent Paxson
Communications Corporation hereby withdraw and dismiss all claims in the
above-referenced arbitration.
Very truly yours,
- ----------------------------------- ----------------------------------
Stephen Fishbein, Esq. William Pratt, Esq.
SHEARMAN & STERLING LLP KIRKLAND & ELLIS LLP
599 Lexington Avenue 153 East 53rd Street
New York, New York 10022 New York, New York 10022
Attorney for NBC Universal, Inc. Attorney for Paxson Communications
Corporation
cc: Susan Weiner, Esq.
EXHIBIT C
November ____, 2005
The Honorable Kevin J. Martin
Chairman
Federal Communications Commission
The Portals -- 8th Floor
445 12th Street, SW
Washington, DC 20554
Re: Paxson Communications Corporation and NBCU
------------------------------------------
Dear Chairman Martin:
Paxson Communications Corporation ("PCC") hereby withdraws that series
of letters that PCC filed with the Office of the Chairman on the following
dates: April 28, 2005, May 4, 2005, May 23, 2005, June 22, 2005, and July 21,
2005 (the "PCC Correspondence"). Paxson Management Corporation ("PMC") joins in
this request.(1) In response to the PCC Correspondence, NBC Universal, Inc.
(f/k/a National Broadcasting Company, Inc.) ("NBCU") submitted letters to the
Office of the Chairman on the following dates: May 25, 2005 and June 7, 2005
(the "NBCU Correspondence"). NBCU hereby withdraws the NBCU Correspondence. The
PCC Correspondence and the NBCU Correspondence addressed certain matters arising
under the contractual agreements between PCC and NBCU, which were previously
considered by the Commission in Telemundo Group, Inc., 17 FCC Rcd 6958 (2002).
By letter dated May 23, 2005, PCC advised your office that NBCU had filed with
the American Arbitration Association a request for arbitration regarding the
Parties' rights and responsibilities under the agreements.
Since the filing of the PCC Correspondence and the NBCU Correspondence,
NBCU and PCC have voluntarily dismissed the arbitration proceeding and have
settled their contractual dispute. In addition, the Network Sales Agreement, the
National Sales Agreement and the Joint Sales Agreements between PCC and NBCU
remain in full force and effect, although, at this time, the obligations of the
parties thereunder have been suspended unless the parties thereto mutually agree
in writing to revoke such suspension. Accordingly, there is no reason for any
Commission action regarding those matters, and PCC hereby withdraws the PCC
Correspondence and NBCU hereby withdraws the NBCU Correspondence and PCC and
NBCU hereby request the dismissal of this matter with prejudice.
Please inform the undersigned if any question should arise concerning
this request.
- ---------------------------
1 PMC is a party to this letter because pursuant to prior Commission consent
(see FCC File Nos. BTTCT-20050817ADH, et seq.), PMC has voting control over the
licensees of the PCC television stations.
PAXSON COMMUNICATIONS CORPORATION
By:
-------------------------------------
John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Ave., NW
Suite 800
Washington, DC 20036
Its Counsel
NBC UNIVERSAL, INC.
By:
-------------------------------------
Margaret Tobey, Esq.
Morrison & Foerster
2000 Pennsylvania Ave., NW
Suite 5500
Washington, DC 20006
Its Counsel
cc: Commissioner Kathleen Q. Abernathy
Commissioner Michael J. Copps
Commissioner Jonathan S. Adelstein
Donna Gregg, Chief, Media Bureau
Robert Ratcliffe, Deputy Bureau Chief, Media Bureau
EXHIBIT 19
----------
JOINT FILING AGREEMENT
We, the signatories of the statement on Schedule 13D to which this
Agreement is attached, hereby agree that such statement is, and any amendments
thereto filed by any of us will be, filed on behalf of each of us.
Dated: November 8, 2005
GENERAL ELECTRIC COMPANY
By: /s/ Richard Cotton
---------------------------------------------
Name: Richard Cotton
Title: Corporate Officer
NATIONAL BROADCASTING COMPANY HOLDING, INC.
By: /s/ Elizabeth A. Newell
---------------------------------------------
Name: Elizabeth A. Newell
Title: Assistant Secretary
NBC UNIVERSAL, INC.
By: /s/ Elizabeth A. Newell
---------------------------------------------
Name: Elizabeth A. Newell
Title: Assistant Secretary
NBC PALM BEACH Investment I, INC.
By: /s/ Elizabeth A. Newell
---------------------------------------------
Name: Elizabeth A. Newell
Title: Assistant Secretary
NBC PALM BEACH Investment II, INC.
By: /s/ Elizabeth A. Newell
---------------------------------------------
Name: Elizabeth A. Newell
Title: Assistant Secretary
