UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
ION MEDIA NETWORKS, INC.
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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)
704231109
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(CUSIP Number)
Elizabeth A. Newell, Assistant Secretary
NBC Universal, Inc.
30 Rockefeller Plaza, New York, NY 10112
(212) 664-3307
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 17, 2007
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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 of 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. 70423109 Page 2 of 25 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
- --------------- ----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See
Instructions)
(a) /_/
(b) /x/
- --------------- ----------------------------------------------------------------
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
- --------------------------------- ---------- -----------------------------------
7 SOLE VOTING POWER
NUMBER OF 303,035,000*
SHARES ---------- -----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ---------- -----------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 303,035,000*
WITH ---------- -----------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------- ---------- -----------------------------------
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)
82.3%**
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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 information provided to the Reporting Persons,
Citadel Limited Partnership (together with its affiliates, "CLP")
beneficially owns 262.33603 shares of 9 3/4% Series A Convertible
Preferred Stock convertible into 163,960 shares of Class A Common
Stock, which represents 1.6% of the issued and outstanding 9 3/4%
Series A Convertible Preferred Stock, and 2,724,207 shares of Class A
Common Stock, which represents 4.18% of the issued and outstanding
shares of Class A Common Stock. The Reporting Persons expressly
disclaim beneficial ownership of the shares of 9 3/4% Series A
Convertible Preferred Stock and Class A Common Stock owned by CLP.
** Based on 65,041,313 shares of Class A Common Stock outstanding as
reported by the Company in its most recent 10-Q Report filed with the
Securities and Exchange Commission on November 13, 2006, 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. 70423109 Page 4 of 25 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
- --------------------------------- ---------- -----------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ---------- -----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ---------- -----------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ---------- -----------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------- ---------- -----------------------------------
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)
23.8%**
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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
information provided to the Reporting Persons, CLP beneficially owns
262.33603 shares of 9 3/4% Series A Convertible Preferred Stock
convertible into 163,960 shares of Class A Common Stock, which
represents 1.6% of the issued and outstanding 9 3/4% Series A
Convertible Preferred Stock, and 2,724,207 shares of Class A Common
Stock, which represents 4.18% of the issued and outstanding shares of
Class A Common Stock. The Reporting Persons expressly disclaim
beneficial ownership of the shares of 9 3/4% Series A Convertible
Preferred Stock and Class A Common Stock owned by CLP.
** Based on 65,041,313 shares of Class A Common Stock outstanding as
reported by the Company in its most recent 10-Q Report filed with the
Securities and Exchange Commission on November 13, 2006.
SCHEDULE 13D
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CUSIP No. 70423109 Page 6 of 25 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
- --------------------------------- ---------- -----------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ---------- -----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ---------- -----------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ---------- -----------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------- ---------- -----------------------------------
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)
86.5%**
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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 information provided to the
Reporting Persons, CLP beneficially owns 262.33603 shares of 9 3/4%
Series A Convertible Preferred Stock convertible into 163,960 shares of
Class A Common Stock, which represents 1.6% of the issued and
outstanding 9 3/4% Series A Convertible Preferred Stock, and 2,724,207
shares of Class A Common Stock, which represents 4.18% of the issued
and outstanding shares of Class A Common Stock. The Reporting Persons
expressly disclaim beneficial ownership of the shares of 9 3/4% Series
A Convertible Preferred Stock and Class A Common Stock owned by CLP.
** Based on 65,041,313 shares of Class A Common Stock outstanding as
reported by the Company in its most recent 10-Q Report filed with the
Securities and Exchange Commission on November 13, 2006, 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. 70423109 Page 8 of 25 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
- --------------- ----------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See
Instructions)
(a) /_/
(b) /x/
- -------------- -----------------------------------------------------------------
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
- --------------------------------- ---------- -----------------------------------
7 SOLE VOTING POWER
NUMBER OF Disclaimed (See 11 below)
SHARES ---------- -----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ---------- -----------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON Disclaimed (See 11 below)
WITH ---------- -----------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------- ---------- -----------------------------------
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. 70423109 Page 9 of 25 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/
- --------------- ----------------------------------------------------------------
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
- --------------------------------- ---------- -----------------------------------
7 SOLE VOTING POWER
NUMBER OF Disclaimed (See 11 below)
SHARES ---------- -----------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ---------- -----------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON Disclaimed (See 11 below)
WITH ---------- -----------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------- ---------- -----------------------------------
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. 3 to Schedule 13D ("Amendment No. 3") amends the
Schedule 13D filed on September 27, 1999 (the "Initial Schedule 13D"), as
amended by Amendment No. 1 filed on February 14, 2003 and Amendment No. 2 filed
on November 9, 2005 (together with the Initial Schedule 13D, the "Schedule
13D"), which relates to shares of Class A Common Stock ("Class A Common Stock"),
par value $0.001 per share, of ION Media Networks, Inc., f/k/a/ Paxson
Communications Corp. (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 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 4. Purpose of Transaction.
Item 4 is hereby amended and supplemented to read as follows:
"On January 17, 2007, NBCU and Citadel Limited Partnership (together
with its affiliates, "CLP") entered into a Letter of Intent (the "Letter of
Intent"), pursuant to which NBCU agreed to work together and negotiate
exclusively with CLP between January 17, 2007 and May 7, 2007 (the "Exclusivity
Period") with respect to a potential transaction involving the Company (the
"Proposed Transaction"). If the board of directors of the Company (the "Board")
does not approve the Proposed Transaction by March 31, 2007, NBCU will have a
right to terminate the Exclusivity Period with respect to NBCU and its
representatives. In the event NBCU exercises its termination right, the
Exclusivity Period will no longer be applicable to CLP and CLP will have a right
of first refusal, until May 7, 2007, regarding any transaction NBCU or its
affiliates intend to enter into with respect to the securities of the Company
that NBCU and its affiliates currently own. The Letter of Intent also includes
certain proposed non-binding terms (the "Term Sheet") of the Potential
Transaction. This description of the Letter of Intent is not complete and is
subject to the terms of the Letter of Intent, attached hereto as Exhibit 20.
On January 17, 2007, NBCU and CLP submitted a letter (the "Letter") to
the Board: (i) proposing the Proposed Transaction set forth in the Term Sheet
and (ii) informing the Board that NBCU will propose CIG Media LLC, a newly
formed Delaware limited liability company owned by affiliates of CLP, as the
permitted transferee pursuant to the Call Agreement. This description of the
Letter is not complete and is subject to the terms in the Letter attached hereto
as Exhibit 21."
Item 5. Interest in Securities of the Issuer.
Item 5 is amended and supplemented to read as follows:
"(a) As a result of the Letter of Intent and the Letter described in Item 4,
NBCU, the NBCU entities and CLP may be deemed to be a group for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended; however,
neither the filing of this Schedule 13D nor any of its contents will be deemed
to constitute an admission that any of the Reporting Persons are the beneficial
owners of any shares of equity securities owned by CLP and/or its affiliates for
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.
(b) As a result of the Letter of Intent and the Letter described in Item 4,
NBCU, the NBCU entities and CLP may be deemed to be a group for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended; however,
neither the filing of this Schedule 13D nor any of its contents will be deemed
to constitute an admission that any of the Reporting Persons have the sole or
shared power to vote or direct the vote or dispose or direct the disposition of
any shares of equity securities owned by CLP and/or its affiliates for purposes
of Section 13(d) of the Securities
Exchange Act of 1934, as amended, or for any other purpose, and such sole or
shared power to vote or direct the vote or dispose or direct the disposition of
such shares of equity securities is expressly disclaimed."
Item 7. Materials to be Filed as Exhibits.
Exhibit No. Description
Exhibit 20 Letter of Intent, dated January 17, 2007, between NBC
Universal, Inc. and Citadel Limited Partnership.
Exhibit 21 Letter, dated January 17, 2007, from NBC Universal, Inc.
and Citadel Limited Partnership to the Company.
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: Authorized Signatory
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: January 17, 2007
SCHEDULE A
Directors and Executive Officers of
NBC Palm Beach Investment I, Inc.
DIRECTORS
Name Present Principal Occupation Present Business Address Citizenship
Lynn Calpeter Chief Financial Officer, NBC 30 Rockefeller Plaza United States
Universal, Inc. New York, NY 10112
Richard Cotton Executive Vice President and 30 Rockefeller Plaza United States
General Counsel 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
John Apadula Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
J.W. Ireland III Vice President 30 Rockefeller Plaza United States
New York, NY 10112
Lynn Calpeter Vice President and Treasurer 30 Rockefeller Plaza United States
New York, NY 10112
Richard Cotton Vice President and Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Todd Davis Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
Charles Fournier Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Stephen H. Gordon Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
Bill LeBeau Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Jennifer D. Mayhew Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
Maricela S. Mozqueda Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
i
Elizabeth A. Newell Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Brian O'Leary Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
Marc Palotay Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
Scott Seeley Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Susan Weiner Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
ii
SCHEDULE B
Directors and Executive Officers of
NBC Palm Beach Investment II, Inc.
DIRECTORS
Name Present Principal Occupation Present Business Address Citizenship
Lynn Calpeter Chief Financial Officer, NBC 30 Rockefeller Plaza United States
Universal, Inc. New York, NY 10112
Richard Cotton Executive Vice President and 30 Rockefeller Plaza United States
General Counsel 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
John Apadula Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
J.W. Ireland III Vice President 30 Rockefeller Plaza United States
New York, NY 10112
Lynn Calpeter Vice President and Treasurer 30 Rockefeller Plaza United States
New York, NY 10112
Richard Cotton Vice President and Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Todd Davis Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
Charles Fournier Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Stephen H. Gordon Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
Bill LeBeau Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Jennifer D. Mayhew Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
Maricela S. Mozqueda Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
iii
Elizabeth A. Newell Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Brian O'Leary Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
Marc Palotay Vice President and Assistant 30 Rockefeller Plaza United States
Treasurer New York, NY 10112
Scott Seeley Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
Susan Weiner Assistant Secretary 30 Rockefeller Plaza United States
New York, NY 10112
iv
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 06828
R. C. Wright NBC Universal, Inc. Vice Chairman of the Board and Executive Officer,
30 Rockefeller Plaza General Electric Company; Chairman, President 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
E. Comstock NBC Universal, Inc. President, NBCU Digital Media & Market
30 Rockefeller Plaza Development, 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 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, NBC and Telemundo TV Stations, NBC
30 Rockefeller Plaza Universal, Inc.
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, Chief Operating Officer, and Director,
100 Universal City Plaza Universal Studios, Inc. and Vivendi Universal
Universal City, CA 91608 Entertainment LLLP
v
K. S. Sherin General Electric Company Senior Vice President and Chief Financial
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06828
M. Shmuger 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, Universal
1000 Universal Studios Plaza Parks & Resorts Group
Orlando, FL 32819
J. Zucker NBC Universal, Inc. Chief Executive Officer - NBCU TV Group, NBC Universal,
30 Rockefeller Plaza Inc.
New York, NY 10112
Citizenship:
- ------------
All: United States, except as noted (*). Asterisk denotes three individuals as French citizens.
EXECUTIVE OFFICERS
Name Present Business Address Present Principal Occupation
R. C. Wright NBC Universal, Inc. Vice Chairman of the Board and Executive Officer,
30 Rockefeller Plaza General Electric Company; Chairman, President and
New York, NY 10112 Chief Executive Officer, NBC Universal, Inc.
L. Calpeter NBC Universal, Inc. Executive Vice President,
30 Rockefeller Plaza Chief Financial Officer, and
New York, NY 10112 Treasurer
B. Campbell NBC Universal, Inc. Executive Vice President,
30 Rockefeller Plaza
New York, NY 10112
E. Comstock NBC Universal, Inc. President
30 Rockefeller Plaza
New York, NY 10112
R. Cotton NBC Universal, Inc. Executive Vice President and General Counsel
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
vi
J. W. Ireland III NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
D. Linde NBC Universal, Inc. Executive Vice President
NBC Universal Studios
100 Universal City Plaza
Universal City, CA 91608
R. Meyer NBC Universal, Inc. Executive Vice President
NBC Universal Studios
100 Universal City Plaza
Universal City, CA 91608
M. Saperstein NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
C. Shields NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
M. Shmuger NBC Universal, Inc. Executive Vice President
NBC Universal Studios
100 Universal City Plaza
Universal City, CA 91608
P. Smith NBC Universal, Inc. Executive Vice President
NBC Universal Studios
80 - 110 New Oxford Street
London, WC/A 1HB
England
T. Williams NBC Universal, Inc. Executive Vice President
Universal Studios
1000 Universal Studios Plaza
Orlando, FL 32819
J. Zucker NBC Universal, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
Citizenship:
- ------------
P. Smith UK
All Others U.S.
vii
SCHEDULE D
Directors and Executive Officers of
National Broadcasting Company Holdings, Inc.
DIRECTORS
Name Present Business Address President 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 215 Evston Road Chairman, The Welcome Trust
London NWI 2BE
England (U.K.)
A.M. Fudge Young & Rubicam Brands Former Chairman and Chief Executive
285 Madison Avenue Officer,
New York, NY 10017 Young & Rubicam Brands
C.X. Gonzalez Kimberly-Clark de Mexico, S.A. de C.V. Chairman of the Board and Chief Executive
Jose Luis Lagrange 103, Officer, Kimberly-Clark de Mexico, S.A. de C.V.
Tercero Piso Colonia Los Morales
Mexico, D.F. 11510, Mexico
S. Hockfield Massachusetts Institute of Technology President, Massachusetts Institute of
77 Massachusetts Avenue Technology
Building 3-208
Cambridge, MA 02139
Jeffrey R. Immelt General Electric Company Chairman of the Board and Chief
3135 Easton Turnpike Executive Officer, General Electric
Fairfield, CT 06828 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 Chief Executive Officer, The
Cincinnati, OH 45202-3315 Proctor & Gamble Company
R.W. Lane Deere & Company Chairman and Chief Executive Officer,
One John Deere Place Deere & Company
Moline, Illinois 61265
R.S. Larsen Johnson & Johnson Former Chairman and Chief Executive
100 Albany Street Officer, Johnson & Johnson
Suite 200
New Brunswick, NJ 08901
R.B. Lazarus Ogilvy & Mather Worldwide Chairman and Chief
309 West 49th Street Executive Officer, Ogilvy & Mather
New York, NY 10019-7316 Worldwide
S. Nunn Sam Nunn School of Retired Partner, King & Spalding
International Affairs
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,
Bloomfield Hills, MI Penske Corporation
48302-0954
R.J. Swieringa S.C. Johnson Graduate School Anne and Elmer Lindseth Dean and
Cornell University Professor of Accounting, S.C.
207 Sage Hall Johnson Graduate School
Ithaca, NY 14853-6201 Cornell University
viii
D.A. Warner III J.P. Morgan Chase & Co., Retired Chairman of the
The Chase Manhattan Bank and Board, J.P. Morgan Chase & Co.,
Morgan Guaranty Trust Co. of New York The Chase Manhattan Bank and
345 Park Avenue Morgan Guaranty Trust Co. of New
New York, NY 10154 York
Robert C. Wright NBC Universal, Inc. Vice Chairman of the Board and Executive Officer,
30 Rockefeller Plaza General Electric Company;
New York, NY 10112 Chairman & Chief Executive
Officer, NBC Universal, Inc.
Citizenship:
- ------------
W. Castell U.K.
A. Jung Canada
C.X. Gonzalez Mexico
All Others U.S.A.
EXECUTIVE OFFICERS
Name Present Business Address Present Principal Occupation
Robert C. Wright NBC Universal, Inc. Chairman, Chief
30 Rockefeller Plaza Executive Officer
New York, NY 10112
Todd Davis NBC Universal, Inc. Assistant Treasurer
30 Rockefeller Plaza
New York, NY 10112
Brian O'Leary NBC Universal, Inc. Assistant Treasurer
30 Rockefeller Plaza
New York, NY 10112
Eliza Fraser General Electric Company Assistant Secretary
3135 Easton Turnpike
Fairfield, CT 06828
Elizabeth Newell NBC Universal, Inc. Assistant Secretary
30 Rockefeller Plaza
New York, NY 10112
Citizenship:
- ------------
All: U.S.
ix
SCHEDULE E
Directors and Executive Officers of
General Electric Company
DIRECTORS
Name Present Principal Occupation Present Business Address Citizenship
J.I. Cash, Jr Former Professor of Business General Electric Company US
Administration-Graduate 3135 Easton Turnpike
School of Business Fairfield, CT 06828
Administration, Harvard University
Sir William Castell Chairman, The Welcome Trust 215 Evston Road United Kingdom
London NWI 2BE
England (U.K.)
A.M. Fudge Chairman and Chief Executive Officer, Young & Rubicam Brands US
Young & Rubicam Brands 285 Madison Avenue
New York, NY 10017
C.X. Gonzalez Chairman of the Board and Chief Executive Kimberly-Clark de Mexico, S.A. de C.V. Mexico
Officer, Kimberly-Clark de Mexico, S.A. Jose Luis Lagrange 103,
de C.V. Tercero Piso Colonia Los Morales
Mexico, D.F. 11510, Mexico
S. Hockfield President, Massachusetts Institute of Massachusetts Institute of Technology US
Technology 77 Massachusetts Avenue
Building 3-208
Cambridge, MA 02139
J.R. Immelt Chairman of the Board and Chief Executive General Electric Company US
Officer, General Electric Company 3135 Easton Turnpike
Fairfield, CT 06828
A. Jung Chairman and Chief Executive Officer, Avon Products, Inc. Canada
Avon Products, Inc. 1345 Avenue of the Americas
New York, NY 10105
A.G. Lafley Chairman of the Board, President and The Procter & Gamble Company US
Chief Executive, The Procter & Gamble 1 Procter & Gamble Plaza
Company Cincinnati, Oh 45202-3315
R.W. Lane Chairman and Chief Executive Officer, Deere & Company US
Deere & Company One John Deere Place
Moline, Illinois 61265
R.S. Larsen Former Chairman and Chief Executive Johnson & Johnson US
Officer 100 Albany Street
Suite 200
New Brunswick, NJ 08901
x
R.B. Lazarus Chairman and Chief Executive Officer Ogilvy & Mather Worldwide US
309 West 49th Street
New York, NY 10019-7316
S. Nunn Retired Partner, King & Spalding Sam Nunn School of US
International Affairs
Georgia Institute of Technology
781 Marietta Street, NW
Atlanta, Georgia 30318
R.S. Penske Chairman of the Board and President, Penske Corporation US
Penske Corporation 2555 Telegraph Road
Bloomfield Hills, MI 48302-0954
R.J. Swieringa Anne and Elmer Lindseth Dean and S.C. Johnson Graduate School US
Professor of Accounting Cornell University
207 Sage Hall
Ithaca, NY 14853-6201
D.A. Warner III Former Chairman of the Board J. P. Morgan Chase & Co., US
The Chase Manhattan Bank and
Morgan Guaranty Trust Co. of New York
270 Park Avenue
New York, NY 10154
R.C. Wright Vice Chairman of the Board and Executive NBC Universal, Inc, US
Officer, General Electric Company; 30 Rockefeller Plaza
Chairman, President and CEO, NBC New York, NY 10112
Universal, Inc.
EXECUTIVE OFFICERS
Name Present Principal Occupation Present Business Address Citizenship
J.R. Immelt Chairman of the Board and Chief Executive General Electric Company US
Officer, General Electric Company 3135 Easton Turnpike
Fairfield, CT 06828
P.D. Ameen Vice President and Comptroller General Electric Company US
3135 Easton Turnpike
Fairfield, CT 06828
K.A. Cassidy Vice President and GE Treasurer General Electric Company US
201 High Ridge Road
Stamford, CT 06905-3417
W.J. Conaty Senior Vice President - Human Resources General Electric Company US
3135 Easton Turnpike
Fairfield, CT 06828
P. Daley Vice President - Corporate Business General Electric Company US
Development 3135 Easton Turnpike
Fairfield, CT 06828
B.B. Denniston III Senior Vice President and General Counsel General Electric Company US
3135 Easton Turnpike
Fairfield, CT 06828
J.M. Hogan Senior Vice President - GE Healthcare General Electric Company US
xi
Pollards Wood, Nightingales Lane
Chalfont St. Giles
HP8 4SP Great Britain
M.A. Neal Vice Chairman of General Electric General Electric Company US
Company; President & CEO, GE Capital 260 Long Ridge Road
Services Stamford, CT 06927
D.R. Nissen Senior Vice President - GE Consumer General Electric Company US
Finance 201 High Ridge Road
Stamford, CT 06905-3417
J.G. Rice Vice Chairman of General Electric General Electric Company US
Company; President & CEO, GE 4200 Wildwood Parkway
Infrastructure Atlanta, GA 30339
K.S. Sherin Senior Vice President - Finance and Chief General Electric Company US
Financial Officer 3135 Easton Turnpike
Fairfield, CT 06828
L.G. Trotter Vice Chairman of General Electric General Electric Company US
Company; President & CEO, GE Industrial 3135 Easton Turnpike
Fairfield, CT 06828
R.C. Wright Vice Chairman of the Board and Executive NBC Universal, Inc US
Officer, General Electric Company; 30 Rockefeller Plaza
Chairman and CEO, New York, NY 10112
NBC Universal, Inc.
xii
EXHIBIT INDEX
Exhibit No. Description
Exhibit 20 Letter of Intent, dated January 17, 2007, between NBC
Universal, Inc. and Citadel Limited Partnership.
Exhibit 21 Letter, dated January 17, 2007, from NBC Universal, Inc.
and Citadel Limited Partnership to the Company.
xiii
January 17, 2007
Citadel Limited Partnership
625 Madison Avenue - 15th Floor
New York, NY 10022
Gentlemen:
This letter of intent (this "Letter of Intent") sets forth certain
binding and nonbinding agreements between NBC Universal, Inc., a Delaware
corporation (together with its Affiliates, "NBCU") and Citadel Limited
Partnership (together with its Affiliates, "CLP"), concerning a proposed
transaction (the "Transaction") involving ION Media Networks, Inc., a Delaware
corporation (the "Company").
1. The parties anticipate that the Transaction would be consummated pursuant
to a Master Transaction Agreement by and among the Company, NBCU and CLP
(the "Transaction Agreement") and various other agreements entered into
pursuant to the Transaction Agreement (collectively, the "Other Agreements"
and, together with the Transaction Agreement, the "Agreements") and intend
to negotiate and enter into Agreements mutually acceptable to the parties
as soon as reasonably practicable. It is expected that the Agreements will
reflect terms and conditions set forth in Annex I (the "Term Sheet"),
together with such customary terms and conditions as the Company, NBCU and
CLP may mutually agree.
2. Exclusivity.
a. From the date of this Letter of Intent, subject to the following
paragraph, through May 7, 2007 (such period being the "Exclusivity
Period"), neither party nor any of its Representatives (as defined
below) shall, without the prior written consent of the other party,
(a) solicit, initiate, consider, encourage or accept any other
proposals or offers from any Person (as defined below), (i) relating
to any acquisition or purchase of all or any material portion of the
assets of the Company or any of its Affiliates (as defined below),
(ii) to enter into any business combination with the Company or any
Affiliate of the Company, (iii) to enter into any other extraordinary
business transaction involving or otherwise relating to the Company or
any Affiliate of the Company, or (iv) relating to any acquisition,
purchase, exchange, recapitalization or reorganization of all or any
portion of any class of debt or equity securities of the Company or
any Affiliate of the Company, or (b) participate in any discussions,
conversations, negotiations or other communications regarding, furnish
to any other Person, any information with respect to, or otherwise
cooperate in any way, assist or participate in, facilitate or
encourage any effort or attempt by any other Person to seek to do, any
of the foregoing. Each party shall immediately cease or cause to be
terminated, and shall cause its respective Representatives to
immediately cease and cause to be terminated, all existing
discussions, conversations, negotiations and other communications with
any other Person conducted heretofore with respect to any
of the foregoing. Each party hereby agrees not to, without the prior
written consent of the other party, release any Person from, or waive
any provision of, any confidentiality agreement to which it is a party
concerning the Company or the Transaction. As used in this Letter of
Intent, the term "Representative" means, as to any person, such
person's Affiliates and its and their directors, officers, employees,
agents, advisors (including, without limitation, financial advisors,
counsel and accountants) and such person's financing sources. The term
"Person" means, any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as
well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended. The term "Affiliate" means, with respect to any specified
Person, any other Person that directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under common
control with, such specified Person.
b. Notwithstanding the foregoing, in the event the board of directors of
the Company does not approve the Transaction on or prior to March 31,
2007, NBCU shall have the right to terminate the Exclusivity Period
with respect to NBCU and its Representatives and if NBCU exercises its
right to terminate the Exclusivity Period, the Exclusivity Period
shall no longer be applicable to CLP. In the event that NBCU
terminates the Exclusivity Period and, on or before May 7, 2007, NBCU
or one of its Affiliates intends to enter into a transaction of the
type described in clause (a) of paragraph 2 above, NBCU shall provide
CLP written notice (the "Offer Notice") at least 10 business days
prior to the date of such transaction. The Offer Notice shall (i)
include the material terms of the proposed transaction, any draft
transaction documents with respect to such proposed transaction, and
the identity of the parties to the proposed transaction and (ii) offer
to CLP, the right to undertake with NBCU the proposed transaction on
substantially the same terms and conditions as set forth in the Offer
Notice (the "Offer"). CLP will have 10 business days to accept the
Offer (the "Acceptance Period") by delivering to NBCU written notice
of its acceptance of the Offer. If CLP fails to accept, or rejects in
writing, the Offer prior to the expiration of such 10 business day
period, NBCU may then effectuate the transaction set forth in the
offer with another party on terms no more favorable to the other party
than those set forth in the Offer Notice.
3. Definitive Documentation. The parties shall use their respective
commercially reasonable efforts to enter into the Agreements no later than
January 31, 2007. Effective as of the execution date of the Agreements,
this Letter of Intent shall terminate and have no further force or effect.
4. Termination. Either party may terminate this Letter of Intent at any time
upon delivery of a written notice to the other party; provided, however,
that Paragraph 2 of this Letter of Intent shall survive the termination of
this Letter of Intent and shall continue to remain in effect in accordance
with its terms until the expiration of the Exclusivity Period.
2
5. Intentions of the Parties. Paragraph 1 of this Letter of Intent and the
Term Sheet (collectively, the "Nonbinding Provisions") constitute the only
non-binding statements of the intentions of the parties, except as provided
below, and each party hereto acknowledges that neither the Nonbinding
Provisions nor any prior or subsequent course of conduct or dealing between
the parties are intended to create or constitute any binding agreement
between the parties and neither party shall have any liability to the other
party with respect to the Nonbinding Provisions. A binding commitment with
respect to the Transaction will result only from the execution of the
Agreements. It is understood that (a) this Letter of Intent and the Term
Sheet do not constitute an obligation or commitment of any party to enter
into the Agreements or any other transaction, (b) any obligations or
commitments to proceed with the Transaction shall be contained only in the
Agreements and (c) the execution, delivery and performance of the
Transaction Agreement will require the approval of the CEO or the
Management Committee of Citadel Investment Group, L.L.C.
6. Publicity. Neither party to this Letter of Intent shall make any public
announcement concerning the existence or subject of this Letter of Intent
without the prior written approval of the other party to this letter
agreement, except, and only to the extent, as may be required to comply
with the requirements of applicable law or the applicable rules and
regulations of any recognized stock exchange, the NASD, or other
self-regulatory organization.
7. Miscellaneous. This Letter of Intent shall be binding upon and inure solely
to the benefit of the parties hereto and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Letter of Intent. This Letter of
Intent and the Confidentiality Agreement, dated as of April 7, 2006,
between NBCU and CLP constitute the entire agreement of CLP and NBCU hereto
with respect to the subject matter hereof and supersedes all other prior
agreements and undertakings, both written and oral, between CLP and NBCU
with respect to the subject matter hereof. This Letter of Intent may not be
amended or modified except by an instrument in writing signed by, or on
behalf of, CLP and NBCU. This Letter of Intent may be executed and
delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original, but all of
which taken together shall constitute one and the same agreement.
8. Governing Law. This Letter of Intent 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 New York. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United
States, in each case located in the County of New York, for any litigation
arising out of or relating to this Letter of Intent (and agrees not to
commence any litigation relating thereto except in such courts), and
further agrees that service of any process, summons, notice or document by
U.S. registered mail to its respective address set forth in this Letter of
Intent shall be effective service of process for any litigation brought
against it in any such court. Each of the parties hereto hereby
3
irrevocably and unconditionally waives any objection to the laying of venue
of any litigation arising out of this Letter of Intent in the courts of the
State of New York or the United States, in each case located in the County
of New York, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim in any such court that any such litigation
brought in any such court has been brought in an inconvenient forum.
9. Waiver of Jury Trial. Each of the parties hereto hereby waives to the
fullest extent permitted by applicable law any right it may have to a trial
by jury with respect to any litigation directly or indirectly arising out
of, under or in connection with this Letter of Intent or the transactions
contemplated by this Letter of Intent. Each of the parties hereto (a)
certifies that no Representative of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce that foregoing waiver and (b) acknowledges that
it and the other party hereto have been induced to enter into this Letter
of Intent and the transactions contemplated by this Letter of Intent, as
applicable, by, among other things, the mutual waivers and certifications
in this Paragraph 9.
4
Please acknowledge your agreement to the foregoing by signing in the space
provided below.
Very truly yours,
NBC UNIVERSAL, INC.
By: /s/ Bruce Campbell
-----------------------
Name: Bruce Campbell
Title: Executive Vice President,
Business Development
Accepted as of the date first written above by:
CITADEL LIMITED PARTNERSHIP
By: Citadel Investment Group, L.L.C., its General Partner
/s/ Matthew Hinerfeld
----------------------------------
Name: Matthew Hinerfeld
Title: Managing Director and
Deputy General Counsel
TERM SHEET OF PRINCIPAL TRANSACTIONS(1)
Set forth below are the principal terms of the proposed transaction
(the "Transaction") with respect to (i) the shares of Class A and Class B Common
Stock of ION Media Network, Inc. (the "Company") (respectively, the "Class A
Common Stock" and the "Class B Common Stock") and (ii) the Company's 14-1/4%
Preferred Stock (the "14-1/4% Preferred"), the Company's 9-3/4% Series A
Preferred Stock (the "9-3/4% Preferred") and the Company's 11% Series B
Preferred Stock (the "Series B Preferred") owned by NBCU.
A. Overview.
---------
As further described below, as part of the Transaction, among other
things, (i) NBCU shall assign that certain Call Agreement, dated
November 7, 2005 (the "Call Agreement") to a newly formed entity
("Newco") owned by affiliates of Citadel Limited Partnership (together
with its affiliates, "CLP"), (ii) Newco will commence a tender offer in
accordance with the Call Agreement and that certain Stockholder
Agreement, dated November 7, 2005 (the "Stockholder Agreement"), (iii)
the Company will also commence a tender offer for the Class A Common
Stock, other than shares of the Class A Common Stock owned by the Call
Stockholders (as defined in the Call Agreement) and certain shares of
Class A Common Stock issued after November 7, 2005 upon the exercise,
grant or vesting of any Stock-Based Compensation Awards (as defined in
the Stockholder Agreement) or upon conversion or exchange of
convertible or exchangeable securities of the Company (the "Ineligible
Shares") and shares held by CLP, (iv) the Company will issue
Subordinated Notes and potentially Series A-1 Convertible Preferred to
CLP and/or Newco to fund the Company tender offer, (v) the Company will
make an exchange offer for the 14-1/4% Preferred and the 9-3/4%
Preferred owned by parties other than CLP (the "Exchange Offer"), (vi)
the Series D Non-Convertible Preferred (as defined below), the
9,386.46875 shares of 14-1/4% Preferred Stock owned by CLP (the "CLP
14-1/4% Preferred"), and the 262.33603 shares of 9-3/4% Preferred Stock
owned by CLP (the "CLP 9-3/4% Preferred") will be exchanged for new
securities of the Company, and (vii) Newco will exercise the Call Right
(as defined in the Call Agreement) and acquire the Call Shares (as
defined in the Call Agreement) from the Call Stockholders, in each
case, as more fully described below.
The consummation of the Exchange Offer, the Preliminary Transactions,
the transfer of the Call Agreement, and the exercise of the Call Right
will be conditioned upon satisfaction of customary terms and
- -----------------------
(1) The proposed terms and conditions set forth in this term sheet are
intended merely as an outline of certain material terms of a potential
transaction and are provided for discussion purposes only and do not
constitute an offer, agreement or binding commitment by or on behalf of
any party. This term sheet does not include descriptions of all of the
terms, conditions and other provisions that would be contained in
definitive documentation relating to the proposed Transaction and is
not intended to limit the scope of discussion and negotiation of any
matters not consistent with the specific matters set forth herein. This
term sheet assumes the accuracy of all information regarding the debt
and equity capitalization of the Company that has been publicly
disclosed. In addition, this term sheet is subject to tax, accounting
and Delaware counsel review by both NBCU and CLP. This term sheet is
not a binding obligation to consummate the proposed Transaction. Any
such obligation will be created only be definitive agreements, the
provisions of which will supersede this term sheet.
conditions, including the execution of definitive transaction
documents mutually acceptable to the parties (the "Definitive
Transaction Documents"), absence of a MAC, absence of any material
litigation seeking to restrain or materially alter the Transaction
(which condition shall only be for the benefit of CLP and NBCU),
receipt of FCC approval (except as otherwise provided below with
respect to the transfer of the Call Agreement), entry into
satisfactory arrangements with management, approval, to the reasonable
satisfaction of CLP, by the Company's Compensation Committee of any
agreements, benefits or payments to be made to management in
connection with the Transactions, including the Newco Tender Offer,
sufficient to satisfy the safe harbor contained in Rule 14d-10 of the
Exchange Act, approval of the Transaction by the board of directors of
the Company (the "Board"), including approval of CLP and/or Newco as a
permitted transferee, and satisfaction of each of the conditions to,
and simultaneous consummation of, all the other transactions
contemplated hereby (other than the Company Tender Offer and the Newco
Tender Offer). The Company Tender Offer and the Newco Tender Offer
will be subject to the satisfaction of the more limited number of
conditions described below.
B. Transaction Steps
-----------------
1. As promptly as practicable following agreement on this Term
Sheet, NBCU and CLP will propose the Transaction to the Company
and seek approval of the Transaction by the Board. As part of
approving the Transaction, the Board will also approve CLP as a
permitted transferee of the Call Right.
2. CLP and NBCU will work in good faith with the Company to prepare
and execute the Definitive Transaction Documents as promptly as
practicable.
3. As promptly as practicable upon proposing the Transaction to the
Board, Newco and the Call Stockholders will apply for long-form
FCC approval.
4. As promptly as practicable following CLP becoming a permitted
transferee pursuant to the Call Agreement, CLP and/or Newco will
make any necessary HSR filings.
5. Upon Board approval of the Transaction, the Company will seek
from its senior lenders (i) an amendment to increase the
Restricted Payment basket to $70,000,000 and (ii) confirmation
that the Transaction does not trigger the Change of Control put.
If the amendment of the Restricted Payment basket is not
obtained, the funding of the Company Tender Offer will be
structured as set forth below in section C(3)(d). This term sheet
assumes that the Change of Control put does not apply. If
confirmation is not obtained, the Transaction may be restructured
such that NBCU retains $250,000,000 of Series B Preferred at all
times and NBCU and CLP will enter into an agreement designed to
achieve the relative economics between CLP and NBCU with respect
to their investment in the Company that would have resulted if
NBCU's investment in the Series B Preferred has been restructured
in the manner contemplated herein.
6. Upon the earlier of (x) receipt of FCC approval and (y) May 6,
2007 (such date, the "Commencement Date"), the Call Agreement
will be transferred to Newco. Simultaneously with such transfer,
Newco will exercise the Call Right, the
2
Company will commence the Company Tender Offer and the Exchange
Offer, and Newco will commence the Newco Tender Offer.
7. Upon satisfaction of all conditions, including, if not satisfied
prior to the Commencement Date, receipt of FCC approval, the
Newco Tender Offer, the Call Right, the Company Tender Offer, the
Exchange Offer and the Preliminary Transactions will all close
simultaneously (provided the requisite periods for the various
offers have been satisfied); provided, however, if FCC approval
has not been received by June 15, 2007, the Company Tender Offer
and the Newco Tender Offer will close, notwithstanding that FCC
approval has not been received, but subject to the satisfaction
of the other conditions to the Company Tender Offer and the Newco
Tender Offer.
C. The Transactions.
----------------
1. Formation of Newco
------------------
a. Newco will be a newly formed entity owned by affiliates of
CLP and will be structured to comply with FCC rules. Newco's
owners shall provide binding commitments to capitalize Newco
with sufficient financing to consummate the purchase of
Subordinated Debt (and, to the extent necessary, Series A-1
Convertible Preferred), the Newco Tender Offer, the exercise
of the Call Right and the payment of any amounts required to
be paid pursuant to the Non-Compete Agreements (as defined
below), after application of the Escrow Amount (as described
below).
2. The Call Right.
--------------
a. On the Commencement Date, (i) NBCU will exchange with the
Company $200,000,000 in face amount of Series B Preferred
for $200,000,000 in face amount of a new series of Company
preferred stock with terms identical to the Series B
Preferred but which shall not be convertible (the "Series D
Non-Convertible Preferred"), as described on Schedule F, and
(ii) NBCU will assign the Call Agreement and transfer
$200,000,000 in face amount of Series D Non-Convertible
Preferred to Newco. Newco will agree to issue to NBCU the
NBCU Option I (as described in section C(7)(a) below) upon
the Call Closing (as defined in the Call Agreement).
b. On the Commencement Date, NBCU will also irrevocably assign
and transfer to Newco, subject to receipt of FCC approval by
Newco, the rights to the proceeds of the escrow account (the
"Escrow Amount") established pursuant to the Escrow
Agreement among the Call Stockholders, NBCU and the Bank of
New York, dated November 7, 2005 and, subject to receipt of
FCC approval by Newco, Newco will assume the payment
obligations of NBCU to the Company, Mr. Paxson and Mr.
Goodman under the Paxson Consulting and Noncompetition
Agreement between the Company, Mr. Paxson and NBCU, dated as
of November 7,
3
2005 (the "Paxson Non-Compete Agreement"), and the Goodman
Noncompetition Agreement between NBCU and Mr. Goodman, dated
as of November 7, 2005 (the "Goodman Non-Compete Agreement,"
and, together with the Paxson Non-Compete Agreement, the
"Non-Compete Agreements").
c. Newco will simultaneously exercise the Call Right.
d. The Call Right will close upon receipt of FCC and other
regulatory approvals (provided the requisite periods for the
various offers have expired).
i. At the closing of the exercise of the Call Right, Newco
will pay $6,274,141 to the Call Stockholders pursuant
to the terms of the Call Agreement, $2,000,000 to the
Company and $3,000,000 to Mr. Paxson pursuant to the
Paxson Non-Compete Agreement, and $2,250,000 to Mr.
Goodman pursuant to the Goodman Non-Compete Agreement.
Newco will use the Escrow Amount (including accrued
interest) to partially satisfy these amounts.
ii. At the closing of the exercise of the Call Right, the
Call Stockholders shall immediately transfer all of
their Class A Common Stock and Class B Common Stock to
Newco.
iii. Simultaneously with the closing of the exercise of the
Call Right, that certain PMC Management and Proxy
Agreement, dated November 7, 2005, shall terminate.
3. Company Tender Offer
--------------------
a. On the Commencement Date, the Company will commence a tender
offer (the "Company Tender Offer") for all of the Class A
Common Stock. Holders of Ineligible Shares will not tender
their Class A Common Stock. CLP will agree not to tender the
2,728,531 shares of Class A Common Stock it currently holds
in physical form.
b. The Company Tender Offer and the financing thereof will be
made in compliance with all applicable laws and will be
subject only to those conditions contained in the Newco
Tender Offer. The Company Tender Offer will be made on
economic terms identical to the Newco Tender Offer described
in section C(4) below, provided, however, the offer price in
the Company Tender Offer will be $0.01 higher than the offer
price in the Newco Tender Offer.
c. The Company Tender Offer shall expire simultaneously with
the Newco Tender Offer (as defined below) (the "Initial
Offer Period"), provided, that, the Company Tender Offer may
be extended as necessary to obtain any required regulatory
approvals. The Company Tender Offer may also be extended
with the consent of CLP and NBCU for an unlimited number
4
of subsequent periods ("Subsequent Periods"). Promptly after
the expiration of the Initial Offer Period and during any
Subsequent Period, the Company shall unconditionally accept
for payment and pay for, in accordance with the terms of the
Company Tender Offer, all of the shares of Class A Common
Stock validly tendered pursuant to the Company Tender Offer
and not validly withdrawn.
d. On each closing of the Company Tender Offer (whether after
the Initial Offer Period or a Subsequent Period), CLP will
purchase subordinated debt (the "Subordinated Debt"), as
described on Schedule A, in an aggregate principal amount
equal to the amount necessary to fund the purchase of shares
under the Company Tender Offer; provided, that, (i) if the
amendment to increase the senior debt Restricted Payment
basket is not obtained, CLP will purchase Series A-1
Convertible Preferred (as defined below) for any amount
required to be funded in excess of the amount available in
the senior debt Restricted Payment basket, but excluding any
amounts required to be purchased pursuant to clause (ii),
and (ii) CLP will purchase Series A-1 Convertible Preferred
in an amount equal to $0.01 multiplied by the number of
shares accepted for payment in the Company Tender Offer.
4. Newco Tender Offer.
------------------
a. Simultaneous with the Company Tender Offer, Newco will
commence a tender offer (the "Newco Tender Offer") for the
Class A Common Stock. Holders of Ineligible Shares and CLP
will not tender their Class A Common Stock into the Newco
Tender Offer.
b. The Newco Tender Offer and the financing thereof will be
made in compliance with all applicable laws and will be
conditioned only on those conditions permitted under the
Call Agreement and the Stockholder Agreement, including that
the consummation of the Newco Tender Offer is not prohibited
by applicable law. The Newco Tender Offer will be made on
economic terms set forth in section 3.5(c) of the
Stockholder Agreement.
c. The Newco Tender Offer shall expire 20 business days
following the commencement of the Newco Tender Offer or such
other date as the Company and Newco shall agree and Newco
shall, promptly after the expiration of the Newco Tender
Offer, unconditionally pay for all of the shares of Class A
Common Stock validly tendered pursuant to the Newco Tender
Offer and not validly withdrawn. The consummation of the
Newco Tender Offer shall satisfy the obligations of NBCU
under the Stockholder Agreement and NBCU shall not
thereafter be obligated to surrender to the Company any
Series B Preferred pursuant to section 3.6 of the
Stockholder Agreement.
d. Upon conclusion of the Newco Tender Offer, the Company will
grant Newco a right to put all of the shares of Class A
common stock it acquired in the Newco Tender Offer to the
Company at a price equal to the Newco Tender Offer price,
such price to be paid in cash, funded through the sale
5
of Subordinated Debt to CLP to the extent permitted under
the senior debt Restricted Payment basket, or if not so
permitted, through the issuance of Series A-1 Convertible
Preferred. Such put shall be exercisable in the event that
the EBITDA of the Company for the last twelve months ending
December 31, 2007, or each of the 12 quarters thereafter,
does not meet or exceed specified EBITDA targets.
e. If for any reason the Company Tender Offer, the Exchange
Offer and the Preliminary Transactions do not close, then
NBCU shall grant Newco an option to purchase Series B
Preferred with a face amount equal to the product of (1) a
fraction, the numerator of which is the aggregate purchase
price paid by Newco in the Newco Tender Offer and the
denominator of which is the aggregate of the number of
shares outstanding prior to the closing of the Newco Tender
Offer and Company Tender Offer less the sum of the
Ineligible Shares plus 6,126,868 shares multiplied by the
Newco Tender Offer price multiplied by (2) $150,000,000. The
exercise price of their option will be equal to (i) the
aggregate number of shares of Class A common stock acquired
in by Newco in the Newco Tender offer multiplied by (ii) the
Newco Tender Offer price. Newco shall be permitted to pay
such exercise price in either cash or shares of Class A
common stock, at Newco's discretion.
5. The Exchange Offer.
------------------
a. On the Commencement Date, subject to section C(5)(b) and
section C(5)(c) below, (i) CLP will exchange $104,948,971 in
the aggregate of CLP 14-1/4% Preferred and CLP 9-3/4%
Preferred (face plus all accrued amounts, including amounts
accrued thereon through December 31, 2006) for an equal
aggregate principal amount of convertible subordinated debt
(the "Convertible Subordinated Debt"),(2) as described on
Schedule B, and (ii) NBCU will exchange (together with the
CLP exchange, the "Contingent Exchange") its $375,000,000 in
face amount of Series B Preferred for an equal principal
amount of Convertible Subordinated Debt. In the Contingent
Exchange, all of the CLP 14-1/4% Preferred will be exchanged
before any of the CLP 9-3/4% Preferred are exchanged and to
the extent that the amount of the Contingent Exchange is
reduced pursuant to C(5)(c) below, the CLP 9-3/4% Preferred
will be excluded from the Contingent Exchange before any CLP
14-1/4% Preferred is excluded from the Contingent Exchange.
b. Subject to section C(5)(c) below, the Exchange Offer will
provide the holders of (i) $475,252,056 in face amount(3) of
14-1/4% Preferred with the opportunity to exchange such
14-1/4% Preferred for Subordinated Debt in
- ------------------------
(2) Total Convertible Subordinated Debt would be approximately
$480,000,000.
(3) As of December 31, 2006, based on May 15, 2006 amounts, the last date
dividends were declared by the Board. This amount excludes the CLP
14-1/4% Preferred.
6
the principal amount of $332,676,439 and (ii) $164,292,539
in face amount(4) of 9-3/4% Preferred with the opportunity
to exchange such 9-3/4% Preferred for Subordinated Debt in
the principal amount of $65,717,016; provided that, to the
extent the holders of the 14-1/4% Preferred do not exchange
into Subordinated Debt, the amount of Subordinated Debt
offered to holders of the 9-3/4% Preferred will increase, on
a sliding scale basis, up to $73,931,643. The holders who
validly exchange will consent to, among other things, the
amendment of the existing certificates of designation
governing the 14-1/4% Preferred and the 9-3/4% Preferred to
eliminate all restrictive covenants, change of control
rights, and voting rights (with respect to the 9-3/4%
Preferred) contained therein.
c. Should at least 90% of the 14-1/4% Preferred Stock and at
least 90% of the 9-3/4% Preferred Stock validly exchange in
the Exchange Offer, CLP and NBCU will remain in their
existing positions and will not effectuate the Contingent
Exchange described in section C(5)(a) above and such
existing positions will be restructured as set forth in
section C(6) below. If less than 90% of each of the
14-1/4% Preferred and the 9-3/4% Preferred validly exchange
in the Exchange Offer, the amount of the Contingent Exchange
described in section C(5)(a) above will be reduced pro-rata,
on a sliding scale basis, in accordance with the methodology
detailed on Schedule G(1).
6. The Preliminary Transactions
----------------------------
a. Immediately following the consummation of the Exchange
Offer, to the extent the Contingent Exchange is not
effectuated or has been reduced pursuant to section C(5)(c)
above, CLP will exchange its remaining (i) CLP 14-1/4%
Preferred (face plus all accrued amounts thereon through
December 31, 2006) for an equal face amount of 8% Series A-1
Mandatorily Convertible Preferred Stock due 2013 (the
"Series A-1 Convertible Preferred") and (ii) CLP 9-3/4%
Preferred (face plus all accrued amounts, including amounts
accrued thereon through December 31, 2006) for an equal face
amount of 8% Series A-2 Mandatorily Convertible Preferred
Stock due 2013 (the "Series A-2 Convertible Preferred," and
together with the Series A-1 Convertible Preferred, the
"Series A Convertible Preferred"), as described on Schedule
C.
b. Immediately following the consummation of the Exchange
Offer, regardless of whether the Contingent Exchange occurs,
(i) CLP will exchange its $200,000,000 of Series D
Non-Convertible Preferred it received from NBCU as described
in section C(2)(a) for $200,000,000 in face amount of 8%
Series C Mandatorily Convertible Preferred Stock due
- -----------------------
(4) As of December 31, 2006, based on September 30, 2006 amounts, the last
date dividends were declared by the Board. This amount excludes the CLP
9-3/4% Preferred.
7
2013 (the "Series C Convertible Preferred"), as described on
Schedule E, and (ii) NBCU will exchange $31,070,000 of
Series B Preferred for an equal face amount of Series C
Convertible Preferred.
c. Immediately following the consummation of the Exchange
Offer, to the extent that the Contingent Exchange is not
effectuated or has been reduced pursuant to section C(5)(c)
above, NBCU will exchange its remaining Series B Preferred
for an equal face amount of Series B Mandatorily Convertible
Preferred Stock due 2013 (the "Series B Convertible
Preferred"), as described on Schedule D. Upon consummation
of this step of the Transaction, no Series B Preferred will
remain outstanding.
d. Immediately following the consummation of the Exchange
Offer, NBCU will transfer Convertible Subordinated Debt to
CLP in accordance with the methodology detailed on Schedule
G(2).
e. NBCU and Newco will enter into an agreement under which the
relative seniority of Series A Convertible Preferred over
Series B Convertible Preferred will be effectively
eliminated and the seniority of Series A-1 Convertible
Preferred received by CLP for funding the Company Tender
Offer or received upon exercise of the put right described
in section C(4)(d) will be addressed. Under the agreement,
NBCU will transfer to CLP (i) the economic benefit it
realizes and (ii) an amount equal to one half of the amount
of economic shortfall CLP experiences (after giving effect
to clause (i)), in each case as a result of CLP receiving
any Series A-1 Convertible Preferred instead of subordinated
debt for funding the Company Tender Offer (excluding the
$0.01 premium) or upon exercise of the put right described
in section C(4)(d).
7. NBCU Options.
------------
a. NBCU Option I: As set forth in section C(2)(a) above, Newco
will grant NBCU an option (the "NBCU Option I") to purchase
the shares of Class A Common Stock and Class B Common Stock
owned by Newco (and formerly owned by the Call
Shareholders), as described on Schedule H. The Definitive
Transaction Documentation shall contain provisions that
prohibit (i) the transfer by CLP of the shares of Class A
Common Stock and Class B Common Stock underlying the NBCU
Option I, (ii) the issuance by the Company of any share of
Class B Common Stock other than pursuant to the exercise of
the NBCU Option II (as defined below) or (iii) the entry
into any agreement or arrangement by CLP or the Company with
respect to a change of control or other extraordinary
corporate transaction of the Company, in each case, prior to
the earlier of the business day following (A) the six (6)
month anniversary of the Call Closing or (B) the Delisting
Date.
b. NBCU Option II: NBCU will irrevocably waive its right to any
accrued dividends on its Series B Preferred in exchange for
an option to acquire shares of Class B Common Stock (the
"NBCU Option II") from the Company, as described on Schedule
I.
8
c. CLP Put Right and NBCU Call Right: If at any time, either
(i) NBCU, (ii) a group (as such term defined in Rule 13d-3
under the Exchange Act) comprised of NBCU and a holder of
the NBCU Option I, the NBCU Option II, or other Company
securities transferred by NBCU or (iii) any third party
(other than CLP) that received the Company securities from
NBCU acquires securities representing more than 50% of the
voting power of the Company outstanding at such time (the
"Trigger Event"), Newco will have the right, subject to the
receipt of any required FCC approval, to put all its Subject
Securities (as defined in Schedule J) to NBCU as described
on Schedule J. If CLP does not exercise the put right, NBCU
will have a right to call such securities as described on
Schedule J.
8. CLP Warrants.
------------
a. The securities held by NBCU will permit and expressly
contemplate that the Company will issue to CLP warrants
representing 100,000,000 shares of Class A Common Stock, as
described on Schedule K.
9. NBCU Right of First Offer and Last Offer
----------------------------------------
a. CLP may seek to transfer any of its Subject Securities, at
any time subject to the following conditions: CLP shall
deliver to NBCU a written notice (the "First Offer Notice"),
which shall (i) state CLP's intention to seek to transfer
Subject Securities, the amount to be transferred, and the
proposed sale price thereof and (ii) offer to NBCU the right
to acquire all of such Subject Securities at the proposed
purchase price and upon the terms and subject to the
conditions of the proposed transfer as set forth in the
First Offer Notice (the "First Offer"), provided, that, the
First Offer must be accepted on an all or nothing basis.
NBCU, or a third party designated by NBCU, shall have a
right, for a period of twenty (20) days after delivery of
the First Offer Notice (the "Acceptance Period") to accept
the First Offer at the purchase price and upon the terms and
subject to the conditions as set forth in the First Offer.
Upon acceptance of the First Offer during the Acceptance
Period, subject to the receipt of any necessary FCC or other
regulatory approvals, NBCU or its designee shall have thirty
(30) days from the acceptance of the First Offer to
consummate the transaction to purchase the Subject
Securities. If NBCU or its designee shall fail to accept, or
shall reject in writing, the First Offer, then CLP may
transfer the Subject Securities at a price and on terms not
more favorable to the purchaser thereof than the price and
terms stated in the First Offer Notice, at any time within
one hundred eighty (180) days from the expiration of the
Acceptance Period; provided, that, CLP shall, upon receipt
of a bona fide offer (the "Last Offer") from a third party
with respect to the Subject Securities, promptly deliver to
NBCU a written notice (the "Last Look Notice"), which shall
identify such third party making the Last Offer and state
the proposed offer price thereof, the form of consideration
proposed to be paid and all other material terms and
9
conditions of the Last Offer, and NBCU or its designee shall
have a right, for a period of 10 business days upon receipt
of the Last Look Notice (the "Last Acceptance Period"), to
offer to purchase the Subject Securities at the proposed
offer price and upon the terms and subject to the conditions
of the proposed offer as set forth in the Last Offer. Upon
acceptance of the Last Offer during the Last Acceptance
Period, NBCU or its designee shall have thirty (30) days
from the acceptance of the Last Offer to consummate the
transaction to purchase the Subject Securities. The Right of
First Offer and Last Offer will terminate upon the earlier
of (i) the termination or expiration of the NBCU Option I or
NBCU Option II, (ii) the transfer of the NBCU Option I or
NBCU Option II to a third party, other than any party or
parties acting as a part of a group with NBCU, or (iii) the
transfer by NBCU to one or more third parties, other than
any party or parties acting as a part of a group with NBCU,
of securities representing, in the aggregate, more than 10%
of the total voting power of the Company on a fully diluted
basis immediately following the consummation of the
Transaction; provided, that, if NBCU transfers to one or
more third parties, other than any party or parties acting
as a part of a group with NBCU, securities representing, in
the aggregate, in excess of 5%, but not more than 10%, of
the total voting power of the Company on a fully diluted
basis immediately following the consummation of the
Transaction, NBCU shall have the Right of First Offer only.
The Right of First Offer and Last Offer shall not bind any
transferee of the Subject Security who acquires such
securities from CLP after compliance with this paragraph.
For the avoidance of doubt, CLP may pledge the Subject
Securities without being subject to the Right of First Offer
and Last Offer so long as the Right of First Offer and Last
Offer shall apply to any transfer of such pledged Subject
Securities by the pledgee thereof.
b. Notwithstanding the foregoing, for any transaction with an
aggregate total of $5,000,000 or less, but in no event
exceeding an aggregate total of $75,000,000 in any calendar
year (as measured by face amount of Subject Securities and
assuming a value of $0.75 per share for Class A Common
Stock), CLP may seek to transfer any of its Subject
Securities at any time subject to the following conditions:
CLP shall deliver to NBCU a written notice (the "De Minimis
First Offer Notice"), which shall (i) state CLP's intention
to seek to transfer Subject Securities, the amount to be
transferred, and the proposed sale price thereof and (ii)
offer to NBCU the right to acquire all of such Subject
Securities at the proposed purchase price and upon the terms
and subject to the conditions of the proposed transfer as
set forth in the De Minimis First Offer Notice (the "De
Minimis First Offer"), provided, that, the De Minimis First
Offer must be accepted on an all or nothing basis. NBCU, or
a third party designated by NBCU, shall have a right, for a
period of five (5) business days after delivery of the De
Minimis First Offer Notice (the "De Minimis Acceptance
Period") to accept the De Minimis First Offer at the
purchase price and upon the
10
terms and subject to the conditions as set forth in the De
Minimis First Offer. Upon acceptance of the De Minimis First
Offer during the De Minimis Acceptance Period, NBCU or its
designee shall have thirty (30) days from the acceptance of
the De Minimis First Offer to consummate the transaction to
purchase the Subject Securities. If NBCU or its designee
shall fail to accept, or shall reject in writing, the De
Minimis First Offer, then CLP may transfer the Subject
Securities at a price and on terms not more favorable to the
purchaser thereof than the price and terms stated in the De
Minimis First Offer Notice, at any time within ninety (90)
days from the expiration of the De Minimis Acceptance
Period. For the avoidance of doubt, CLP will not be
obligated to provide NBCU with a Last Look Notice for
Subject Securities that were subject to a De Minimis First
Offer Notice.
D. Subsequent Transactions.
-----------------------
1. Delisting
---------
a. If possible, based on the number of shares outstanding and
the number of record holders of Class A Common Stock, the
Company shall delist and deregister the Class A Common Stock
following the consummation of the Company Tender Offer and
the Newco Tender Offer.
2. Merger
------
a. If not all outstanding shares of Class A Common Stock are
tendered in the Company Tender Offer and the Newco Tender
Offer, the remaining shares of Class A Common Stock (other
than the shares owned by CLP) will be acquired through a
long-form merger under Delaware law. In the merger,
outstanding employee options and restricted stock units will
be rolled over into new securities of the surviving entity.
The Transaction will be conditioned upon the approval by the
current Board of the terms of such merger.
3. New Board
---------
a. As promptly as practicable following the closing of the Call
Right, the members of the Board will resign and Newco will
elect new members to the Board.
4. Increase of Authorized Shares
-----------------------------
a. In connection with the Transaction, the Company's
certificate of incorporation will be amended to increase the
number of authorized shares of Class A, Class B and Class C
Common Stock to allow for the issuance of such stock upon
the conversion of Series A Convertible Preferred, Series B
Convertible Preferred and Series C Convertible Preferred.
11
E. Fees and Expenses
-----------------
1. If the Board does not approve the Transaction or the Transaction
does not close, each of the parties will be responsible for its
own expenses.
2. If the Transaction closes, the Company will pay the reasonable
fees and expenses incurred by all of the parties to the
Transaction.
F. Due Diligence
-------------
1. The Company will provide CLP and its representatives with an
opportunity to (i) meet with the Chief Executive Officer and the
Chief Financial Officer of the Company to further understand the
Company's current business plan and forecast for 2007, including
access to internal financial models and (ii) conduct tax,
accounting and legal due diligence of the Company, which CLP
expects would be completed not more than two weeks after being
provided access by the Company.
12
Schedule A
Term Sheet for the Subordinated Debt
------------------------------------
Issuer ION.
Initial Holders CLP and the former holders of 14-1/4% Junior Exchangeable
Preferred Stock and 9-3/4% Convertible Preferred Stock.
Ranking Junior to the First Priority Term Loans due 2012, the First
Priority Senior Secured Floating Rate Notes due 2012 and the
Second Priority Senior Secured Floating Rate Notes due 2013
(the "Senior Debt Securities") and pari passu with the
Convertible Subordinated Debt.
Maturity July 2013.
Interest 12% annual simple interest coupon, payable quarterly in
arrears, in cash or additional Subordinated Debt, at ION's
option.
Call Protection Subordinated Debt shall not be callable prior to maturity.
Conversion Subordinated Debt shall not be convertible.
Transferability Subordinated Debt shall be freely transferable, subject to
applicable securities laws.
Other Terms The indenture shall contain customary covenants and events of
default provisions to be negotiated by the parties and shall
be consistent with the indentures for the Senior Debt
Securities.
13
Schedule B
Term Sheet for the Convertible Subordinated Debt
------------------------------------------------
Issuer ION.
Initial Holder CLP and NBCU.
Ranking Junior to the Senior Debt Securities and pari passu
with the Subordinated Debt.
Maturity July 2013.
Interest 8% annual simple interest coupon, payable quarterly in
arrears, in cash or additional Convertible Subordinated
Debt, at ION's option.
Call Protection Convertible Subordinated Debt shall not be callable
prior to maturity.
Optional Convertible Subordinated Debt shall be convertible at
Conversion any time, at the holder's option, into shares of Class
A Common Stock at a conversion price of $0.75 per share
of Class A Common Stock.
Mandatory Convertible Subordinated Debt shall be converted into
Conversion shares into shares of Class A Common Stock, or, in the
case of Convertible Subordinated Debt issued to NBCU,
at NBCU's option, an equal number of Class C Common
Stock, upon the earliest of: (i) in the event shares of
Class A Common Stock are traded on a national stock
exchange, the trading price for fifteen (15)
consecutive trading days of Class A Common Stock on
such exchange is equal to or greater than $0.75 per
share, increasing at a rate per annum of 8% from the
issuance of Convertible Subordinated Debt through the
date of conversion (the "Mandatory Conversion Price"),
(ii) the issuance by ION of Class A Common Stock at an
issue price per share equal to or greater than the
Mandatory Conversion Price with an aggregate
consideration of no less than $100,000,000 in such
issuance, or (iii) a nationally recognized investment
bank chosen by the Company pursuant to Board action
values a share of Class A Common Stock at an amount
equal to or greater than the Mandatory Conversion
Price.
Adjustments The conversion prices shall be subject to customary
to Conversion adjustments for stock splits, dividends,
Price recapitalizations, below market issues and similar
events.
Registration Rights The holders of Convertible Subordinated Debt shall
enter into a registration rights agreement with ION,
pursuant to which the holders shall have demand rights,
and piggyback rights and other customary terms to be
negotiated by the parties in the event of a conversion
of Convertible Subordinated Debt into Class A Common
Stock.
Transferability Convertible Subordinated Debt shall be freely
transferable, subject to applicable securities laws and
in the case of Convertible Subordinated Debt issued to
CLP, the NBCU Right of First Offer and Last Offer.
14
Schedule B
Other Terms The indenture shall contain customary covenants and
events of default provisions to be negotiated by the
parties and shall be consistent with the indentures of
the Senior Debt Securities. The Convertible
Subordinated Debt shall include customary minority
protections for the benefit of NBCU and CLP.
15
Schedule C
Term Sheet for the Series A Convertible Preferred Stock
-------------------------------------------------------
Issuer ION.
Initial Holder CLP.
Ranking The Series A-1 Convertible Preferred Stock and the A-2
Convertible Preferred Stock (collectively, the "Series
A Convertible Preferred") will be junior to the Senior
Debt Securities, the Subordinated Debt and the
Convertible Subordinated Debt, senior to the Series B
Convertible Preferred, the Series C Convertible
Preferred and the 9-3/4% Preferred, and pari passu with
the 14-1/4% Preferred.
Maturity August 2013.
Liquidation The liquidation preference for each share of Series A
Preference Convertible Preferred shall be the greater of (i)
$10,000 per share plus any accumulated and unpaid
dividends from the issue date through and including the
date of liquidation and (ii) the aggregate amount per
share payable upon liquidation to the holders of shares
of Class A Common Stock multiplied by the number of
shares of Class A Common Stock into which each share of
Series A Convertible Preferred would be convertible.
Dividend As and if declared by the Board, the greater of
(determined on a cumulative basis from the issuance
date of the Series A Convertible Preferred to the date
of such determination), (x) 8% annual simple dividend,
payable quarterly in arrears, in cash, which amounts
shall accrue to the extent not paid in cash, and (y)
the aggregate dividends per share paid on Class A
Common Stock, multiplied by the number of shares of
Class A Common Stock into which each share of Series A
Convertible Preferred would be convertible.
Call Protection Series A Convertible Preferred shall not be callable
prior to maturity.
Optional Conversion Series A Convertible Preferred shall be convertible at
any time, at the holder's option, into Class A Common
Stock at a conversion price of $0.75 per share of Class
A Common Stock.
16
Schedule C
Mandatory Conversion The outstanding shares of Series A Convertible
Preferred shall be converted into shares of Class A
Common Stock upon the earliest of: (i) in the event
shares of Class A Common Stock are traded on a national
stock exchange, the trading price for fifteen (15)
consecutive trading days of Class A Common Stock on
such exchange is equal to or greater than $0.75 per
share, increasing at a rate per annum of 8% from the
date of the closing of the exchange offer through the
date of conversion (the "Mandatory Conversion Price"),
(ii) the issuance by ION of Class A Common Stock at an
issue price per share equal to or greater than the
Mandatory Conversion Price with an aggregate
consideration of no less than $100,000,000 in such
issuance, or (iii) a nationally recognized investment
bank chosen by the Company pursuant to Board action
values a share of Class A Common Stock at an amount
equal to or greater than the Mandatory Conversion
Price.
Adjustments to The conversion prices shall be subject to customary
Conversion Price adjustments for stock splits, dividends,
recapitalizations, below market issues and similar
events.
Voting Holders of shares of Series A Convertible Preferred
shall not be entitled to voting rights.
Registration Rights The holders of Series A Convertible Preferred shall
enter into a registration rights agreement with ION,
pursuant to which the holders shall have demand rights,
and piggyback rights and other customary terms to be
negotiated by the parties in the event of a conversion
of Series A Convertible Preferred into Class A Common
Stock.
Transferability Series A Convertible Preferred shall be freely
transferable, subject to applicable securities laws and
the NBCU Right of First Offer and Last Offer.
Other Terms Except as outlined in this term sheet, the other rights
and provisions of Series A Convertible Preferred shall
be substantially similar to the Series B Convertible
Preferred and the Series A Convertible Preferred shall
include customary minority protections for the benefit
of CLP.
17
Schedule D
Term Sheet for the Series B Convertible Preferred Stock
-------------------------------------------------------
Issuer ION.
Initial Holder NBCU.
Ranking Junior to the Senior Debt Securities, the Subordinated
Debt, the Convertible Subordinated Debt, the Series A
Convertible Preferred, the 14-1/4% Preferred and the
9-3/4% Preferred, but senior to the Series C
Convertible Preferred.
Maturity August 2013.
Liquidation The liquidation preference for each share of Series B
Preference Convertible Preferred shall be the greater of (i)
$10,000 per share plus any accumulated and unpaid
dividends from the issue date through and including the
date of liquidation and (ii) the aggregate amount per
share payable upon liquidation to the holders of shares
of Class A Common Stock multiplied by the number of
shares of Class A Common Stock into which each share of
Series B Convertible Preferred would be convertible.
Dividend As and if declared by the Board, the greater of
(determined on a cumulative basis from the issuance
date of the Series B Convertible Preferred to the date
of such determination), (x) 8% annual simple dividend,
payable quarterly in arrears, in cash, which amounts
shall accrue to the extent not paid in cash, and (y)
the aggregate dividends per share paid on Class A
Common Stock, multiplied by the number of shares of
Class A Common Stock into which each share of Series B
Convertible Preferred would be convertible.
Call Protection Series B Convertible Preferred shall not be callable
prior to maturity.
Optional Series B Convertible Preferred shall be convertible at
Conversion any time, at the holder's option, into Class A Common
Stock at a conversion price of $0.75 per share of Class
A Common Stock.
18
Schedule D
Mandatory The outstanding shares of Series B Convertible
Conversion Preferred shall be converted into shares of Class A
Common Stock, or, at NBCU's option, an equal number of
shares of Class C Common Stock, upon the earliest of:
(i) in the event shares of Class A Common Stock are
traded on a national stock exchange, the trading price
for fifteen (15) consecutive trading days of Class A
Common Stock on such exchange is equal to or greater
than $0.75 per share, increasing at a rate per annum of
8% from the date of the closing of the exchange offer
through the date of conversion (the "Mandatory
Conversion Price"), (ii) the issuance by ION of Class A
Common Stock at an issue price per share equal to or
greater than the Mandatory Conversion Price with an
aggregate consideration of no less than $100,000,000 in
such issuance, or (iii) a nationally recognized
investment bank chosen by the Company pursuant to Board
action values a share of Class A Common Stock at an
amount equal to or greater than the Mandatory
Conversion Price.
Adjustments to The conversion prices shall be subject to customary
Conversion Price adjustments for stock splits, dividends,
recapitalizations, below market issues and similar
events.
Voting Holders of shares of Series B Convertible Preferred
shall not be entitled to voting rights.
Registration Rights The holders of Series B Convertible Preferred shall
enter into a registration rights agreement with ION,
pursuant to which the holders shall have demand rights,
and piggyback rights and other customary terms to be
negotiated by the parties in the event of a conversion
of Series B Convertible Preferred into Class A Common
Stock.
Transferability Series B Convertible Preferred shall be freely
transferable, subject to applicable securities laws.
Other Terms Except as outlined in this term sheet, the other rights
and provisions of the Series B Convertible Preferred
shall be substantially similar to the Series A
Convertible Preferred and the Series B Convertible
Preferred shall include customary minority protections
for the benefit of NBCU.
19
Schedule E
Term Sheet for the Series C Convertible Preferred Stock
-------------------------------------------------------
Issuer ION.
Holder CLP and NBCU.
Ranking Junior to the Senior Debt Securities, the Subordinated
Debt, the Convertible Subordinated Debt, the Series A
Convertible Preferred, the 14-1/4% Preferred, the
9-3/4% Preferred and the Series B Convertible
Preferred.
Maturity September 2013.
Liquidation The liquidation preference for each share of Series C
Preference Convertible Preferred shall be the greater of (i)
$10,000 per share plus any accumulated and unpaid
dividends from the issue date through and including the
date of liquidation and (ii) the aggregate amount per
share payable upon liquidation to the holders of shares
of Class A Common Stock multiplied by the number of
shares of Class A Common Stock into which each share of
Series C Convertible Preferred would be convertible.
Dividend As and if declared by the Board, the greater of
(determined on a cumulative basis from the issuance
date of the Series C Convertible Preferred to the date
of such determination), (x) 8% annual simple dividend,
payable quarterly in arrears, in cash, which amounts
shall accrue to the extent not paid in cash, and (y)
the aggregate dividends per share paid on Class A
Common Stock, multiplied by the number of shares of
Class A Common Stock into which each share of Series C
Convertible Preferred would be convertible.
Call Protection Series C Convertible Preferred shall not be callable
prior to maturity.
Optional Series C Convertible Preferred shall be convertible at
Conversion any time, at the holder's option, into Class A Common
Stock at a conversion price of $0.75 per share of Class
A Common Stock.
20
Schedule E
Mandatory The outstanding shares of Series C Convertible
Conversion Preferred shall be converted into shares of Class A
Common Stock or, in the case of Series C Convertible
Preferred issued to NBCU, at NBCU's option, an equal
number of shares of Class C Common Stock, upon the
earliest of: (i) in the event shares of Class A Common
Stock are traded on a national stock exchange, the
trading price for fifteen (15) consecutive trading days
of Class A Common Stock on such exchange is equal to or
greater than $0.75 per share, increasing at a rate per
annum of 8% from the date of the closing of the
exchange offer through the date of conversion (the
"Mandatory Conversion Price"), (ii) the issuance by ION
of Class A Common Stock at an issue price per share
equal to or greater than the Mandatory Conversion Price
with an aggregate consideration of no less than
$100,000,000 in such issuance, or (iii) a nationally
recognized investment bank chosen by the Company
pursuant to Board action values a share of Class A
Common Stock at an amount equal to or greater than the
Mandatory Conversion Price.
Adjustments to The conversion prices shall be subject to customary
Conversion Price adjustments for stock splits, dividends,
recapitalizations, below market issues and similar
events.
Voting Holders of shares of Series C Convertible Preferred
shall not be entitled to voting rights.
Registration Rights The holders of Series C Convertible Preferred shall
enter into a registration rights agreement with ION,
pursuant to which the holders shall have demand rights,
and piggyback rights and other customary terms to be
negotiated by the parties in the event of a conversion
of Series C Convertible Preferred into Class A Common
Stock.
Transferability Series C Convertible Preferred shall be freely
transferable, subject to compliance with securities
laws and in the case of Series C Convertible Preferred
issued to CLP, the NBCU Right of First Offer and Last
Offer.
Other Terms The Series C Convertible Preferred shall include
customary minority protections for the benefit of NBCU
and CLP.
21
Schedule F
Term Sheet for the Series D Non-Convertible Preferred Stock
-----------------------------------------------------------
Issuer ION.
Holder NBCU.
Ranking Junior to the Senior Debt Securities, the Subordinated
Debt, the Convertible Subordinated Debt, the Series A
Convertible Preferred, the 14-1/4% Preferred, the
9-3/4% Preferred, the Series B Convertible Preferred
but senior to the Series C Convertible Preferred.
Maturity August 2013.
Liquidation The liquidation preference for each share of Series D
Preference Non-Convertible Preferred shall be the greater of
$10,000 per share plus any accumulated and unpaid
dividends from the issue date through and including the
date of liquidation.
Dividend As and if declared by the Board, 8% annual simple
dividend payable quarterly in arrears in cash.
Call Protection Series D Non-Convertible Preferred shall not be
callable prior to maturity.
Conversion Series D Non-Convertible Preferred shall not be
convertible at any time.
Voting Holders of shares of Series D Non-Convertible Preferred
shall not be entitled to voting rights.
Registration Rights The holders of Series D Non-Convertible Preferred shall
enter into a registration rights agreement with ION,
pursuant to which the holders shall have demand rights,
piggyback rights and other customary terms to be
negotiated by the parties.
Transferability Series D Non-Convertible Preferred shall be freely
transferable, subject to applicable securities laws.
Other Terms Except as outlined in this term sheet, the other rights
and provisions of the Series D Non-Convertible
Preferred shall be substantially similar to the Series
B Convertible Preferred and the Series D
Non-Convertible Preferred shall include customary
minority protections for the benefit of CLP.
22
Schedule G
Exhibit 1. Composition of Subordinated Debt, Convertible Subordinated Debt,
14-1/4% Preferred, 9-3/4% Preferred, Series A Convertible Preferred, and
Series B Convertible Preferred, Subject to the Exchange Offer and the
Preliminary Transactions
[See attached spreadsheet]
Exhibit 2. Transfer of Convertible Subordinated Debt from NBCU to CLP,
Subject to the Exchange Offer and the Preliminary Transactions
[See attached spreadsheet]
23
Schedule G(1)
- --------------------------- -------------------------------------------------------------------------------------------------------
% Exchanged Subordinated Debt
- --------------------------- -------------------------------------------------------------------------------------------------------
14.25% 9.75% CIG CIG 14.25% 9.75%
Preferred Preferred Tender Exchange NBCU Preferred Preferred Subtotal
- -------------- ------------ ----------------- ---------------- ----------------- ----------------- ---------------- ---------------
0% 0% $61,114,757 $114,948,971 $365,000,000 $0 $0 $541,063,728
10% 10% $61,114,757 $106,581,289 $340,182,185 $33,267,644 $7,311,018 $548,456,892
20% 20% $61,114,757 $96,453,265 $309,074,377 $66,535,288 $14,457,744 $547,635,430
30% 30% $61,114,757 $86,361,166 $278,094,936 $99,802,932 $21,440,176 $546,813,967
40% 40% $61,114,757 $76,304,992 $247,243,862 $133,070,576 $28,258,317 $545,992,504
50% 50% $61,114,757 $66,284,744 $216,521,156 $166,338,220 $34,912,165 $545,171,042
60% 60% $61,114,757 $56,300,421 $185,926,817 $199,605,863 $41,401,720 $544,349,579
70% 70% $61,114,757 $46,352,024 $155,460,845 $232,873,507 $47,726,983 $543,528,116
80% 80% $61,114,757 $36,439,552 $125,123,240 $266,141,151 $53,887,953 $542,706,653
90% 90% $61,114,757 $0 $0 $299,408,795 $59,884,631 $420,408,183
100% 100% $61,114,757 $0 $0 $332,676,439 $65,717,016 $459,508,212
- -------------- ------------ ----------------- ---------------- ----------------- ----------------- ---------------- ---------------
- --------------------------- ---------------------------------------------------------------------------------------
% Exchanged Preferred Stock
- --------------------------- ---------------------------------------------------------------------------------------
14.25% 9.75% 14.25% 9.75% CIG NBCU
Preferred Preferred Preferred Preferred Series A Series B Subtotal
- -------------- ------------ ----------------- ---------------- ----------------- ----------------- ----------------
0% 0% $475,252,056 $164,292,539 $0 $0 $639,544,595
10% 10% $427,726,850 $147,863,285 $7,256,571 $25,928,927 $608,775,633
20% 20% $380,201,645 $131,434,031 $16,273,484 $58,147,846 $586,057,006
30% 30% $332,676,439 $115,004,777 $25,254,472 $90,238,397 $563,174,086
40% 40% $285,151,234 $98,575,523 $34,199,534 $122,200,582 $540,126,873
50% 50% $237,626,028 $82,146,270 $43,108,671 $154,034,399 $516,915,368
60% 60% $190,100,822 $65,717,016 $51,981,883 $185,739,850 $493,539,571
70% 70% $142,575,617 $49,287,762 $60,819,169 $217,316,933 $469,999,481
80% 80% $95,050,411 $32,858,508 $69,620,530 $248,765,649 $446,295,098
90% 90% $47,525,206 $16,429,254 $104,948,971 $375,000,000 $543,903,431
100% 100% $0 $0 $104,948,971 $375,000,000 $479,948,971
- -------------- ------------ ----------------- ---------------- ----------------- ----------------- ----------------
Schedule G(2)
- ---------------------------- ----------------------------------------- ----------------------------------------- ------------------
% Exchanged Mechanical Economic Consideration
- ---------------------------- -------------------------------------- --------------------------------------------
14.25% 9.75% CIG Convertible NBCU Convertible CIG Convertible NBCU Convertible Transferred From
Preferred Preferred Subordinated Debt Subordinated Debt Subordinated Debt Subordinated Debt NBCU to CIG
- --------------- ------------ ------------------- ------------------ ----------------------- -------------------- ------------------
0% 0% $104,948,971 $375,000,000 $114,948,971 $365,000,000 $10,000,000
10% 10% $97,692,400 $349,071,073 $106,581,289 $340,182,185 $8,888,889
20% 20% $88,675,487 $316,852,154 $96,453,265 $309,074,377 $7,777,778
30% 30% $79,694,499 $284,761,603 $86,361,166 $278,094,936 $6,666,667
40% 40% $70,749,437 $252,799,418 $76,304,992 $247,243,862 $5,555,556
50% 50% $61,840,300 $220,965,601 $66,284,744 $216,521,156 $4,444,444
60% 60% $52,967,088 $189,260,150 $56,300,421 $185,926,817 $3,333,333
70% 70% $44,129,802 $157,683,067 $46,352,024 $155,460,845 $2,222,222
80% 80% $35,328,441 $126,234,351 $36,439,552 $125,123,240 $1,111,111
90% 90% $0 $0 $0 $0 $0
100% 100% $0 $0 $0 $0 $0
- --------------- ------------ ------------------- ------------------ ----------------------- -------------------- ------------------
N.B. - To the extent the amount of subordinated debt received by CLP
under the CIG Tender section of this Schedule G(1) is less than
$61,114,757, CLP will be entitled to modify the exchange ratio of its
preferred instruments into convertible subordinated debt such that the
incremental capacity in the basket represented by the difference
between the $61,114,757 and the amount of subordinated debt received
by CLP is filled by the Citadel convertible preferred. Any amount of
incremental convertible subordinated debt received by CLP under this
provision would reduce the amount of Series A-1 preferred stock
otherwise deliverable to CLP in the Transaction.
Schedule H
Term Sheet for the NBCU Option I
--------------------------------
Issuer Newco.
Holder NBCU.
NBCU Option I NBCU and Newco shall enter into a call agreement
providing for the grant by Newco to NBCU of an option
(the "NBCU Option I") to acquire 15,455,062 shares of
Class A Common Stock and 8,311,639 shares of Class B
Common Stock.
Exercise Price The exercise price of the NBCU Option I shall be $0.40
per share of Class A Common Stock and $0.40 per share
of Class B Common Stock, payable in cash.
Option Period The NBCU Option I shall be exercisable at any time
during the five-year period beginning on the earlier of
the business day following (i) the six (6) month
anniversary of the Call Closing and (ii) the Delisting
Date (as such date may be extended, the "NBCU Option I
Period").
The NBCU Option I shall be renewable by NBCU in
five-year increments, provided, that, the CLP Put Right
and NBCU Call Right shall automatically be extended to
be co-terminus with the NBCU Option I.
Option Exercise The holder may not exercise the NBCU Option I prior to
the later of the business day following (i) the six (6)
month anniversary of the date of the grant of the NBCU
Option I and (ii) the receipt of FCC approval and any
other required Governmental approvals (the "Restricted
Period"). After the expiration of the Restricted
Period, the holder may exercise the NBCU Option I at
any time during the NBCU Option I Period by delivering
a notice of exercise to Newco (the "NBCU Option I
Exercise Notice").
Option Closing The closing of the purchase and sale of the shares
after the delivery of an NBCU Option I Exercise Notice
shall occur as promptly as practicable after the
delivery of the NBCU Option I Exercise Notice, subject
to the receipt of all requisite third party consents
and governmental approvals, including approval of the
FCC, provided, that, no option exercise will be valid
if the closing has not occurred within eighteen (18)
months following the delivery of the NBCU Option I
Exercise Notice.
Transferability After expiration of the Restricted Period, the NBCU
Option I shall be freely transferable, subject to
applicable FCC and securities laws and the CLP Put
Right. The NBCU Option I shall not be transferable
during the Restricted Period.
24
Schedule H
Transferability of CLP may only transfer the shares of Class A Common
Underlying Shares Stock and Class B Common Stock underlying the NBCU
Option I in their entirety in connection with a
transfer of all of the Subject Securities owned by CLP
or its affiliates at the time of such transfer;
provided, however, if shares of Class A Common Stock or
Class B Common Stock underlying the NBCU Option I are
transferred, such shares shall remain subject to NBCU
Option I.
Adjustments to The exercise price of the NBCU Option I shall be
Exercise Price subject to customary adjustments for stock splits,
dividends, recapitalizations and similar events.
Representations, The NBCU Option I Call Agreement shall contain
Warranties and customary representations, warranties and covenants to
Covenants be negotiated by the parties.
25
Schedule I
Term Sheet for the NBCU Option II
---------------------------------
Issuer ION.
Holder NBCU.
NBCU Option II NBCU and ION shall enter into a call agreement
providing for the grant by ION to NBCU of an option to
acquire 26,688,361 shares of Class B Common Stock (the
"NBCU Option II").
Exercise Price The exercise price of the NBCU Option II shall be $0.50
per share of Class B Common Stock, payable in cash.
Option Period The NBCU Option II shall be exercisable at any time
during the five-year period beginning on the date of
the Call Closing (as such date may be extended, the
"NBCU Option II Period").
The NBCU Option II shall be renewable in five-year
increments, provided, that, (i) the NBCU Option I is
also being renewed and (ii) the CLP Put Right and NBCU
Call Right shall automatically be extended to be
co-terminus with the NBCU Option II.
Option Exercise The holder may exercise, subject to FCC regulations and
any other required Governmental approvals, the NBCU
Option II at any time during the NBCU Option II Option
Period by delivering a notice of exercise to ION (the
"NBCU Option II Exercise Notice").
Option Closing The closing of the purchase and sale of the shares
underlying the NBCU Option II after the delivery of an
NBCU Option II Exercise Notice shall occur as promptly
as practicable after the delivery of the NBCU Option II
Exercise Notice, subject to the receipt of all
requisite third party consents and governmental
approvals, including approval of the FCC, provided,
that, no option exercise will be valid if the closing
has not occurred within eighteen (18) months following
the delivery of the NBCU Option II Exercise Notice.
Transferability The NBCU Option II shall be freely transferable,
subject to applicable FCC and securities laws and the
CLP Put Right.
Adjustments to The exercise price of the NBCU Option II shall be
Exercise Price subject to customary adjustments for stock splits,
dividends, recapitalizations and similar events.
Reservation for At all times during the NBCU Option II Period, ION
Issuance shall maintain a sufficient number of authorized but
unissued shares of Class B Common Stock so that ION
shareholder approval is not required in connection with
the exercise of the NBCU Option II.
26
Schedule I
Representations, The NBCU Option II Call Agreement shall contain
Warranties customary representations, warranties and covenants to
and Covenants be negotiated by the parties.
27
Schedule J
Term Sheet for the CLP Put Right and the NBCU Call Right
--------------------------------------------------------
Term The CLP Put Right and the NBCU Call Right will be
effective as long as NBCU Option I or NBCU Option II
continues to be outstanding.
CLP Put Right Upon the occurrence of the Trigger Event, subject to
receipt of any required FCC approval, Newco will have
the right for 30 days thereafter to put (the "Put
Exercise Period") to NBCU all of its (i) Convertible
Subordinated Debt, (ii) Series A Convertible Preferred,
(iii) Series C Convertible Preferred, (iv) Warrants and
(v) Class A Common Stock issued upon conversion or
exercise of any of the foregoing securities or
currently held by CLP or its affiliates, (excluding,
for the avoidance of doubt, shares of Class A Common
Stock included in the Call Shares) (collectively, the
"Subject Securities") in an amount not to exceed the
amount of the Subject Securities owned by CLP
immediately following consummation of the Transaction
(the "Maximum Amount").
NBCU Call Right After the Trigger Event, if CLP has not exercised the
CLP Put Right during the Put Exercise Period, NBCU will
have the right for 30 days after the conclusion of the
Put Exercise Period (the "Call Right Period") to call
all of the Subject Securities.
Renewable If CLP does not exercise the CLP Put Right during the
Put Exercise Period and NBCU does not exercise the NBCU
Call Right during the Call Right Period, the Put
Exercise Period and Call Exercise Period will renew on
each of the first five (5) anniversaries of the Trigger
Event.
Purchase Price Upon consummation of the CLP Put Right, following
receipt of all necessary FCC or other regulatory
approvals, NBCU will pay CLP (or its transferee) cash
equal to the fair market value of the Subject
Securities. Upon exercise of the NBCU Call Right,
following receipt of all necessary FCC or other
regulatory approvals, NBCU will pay CLP (or its
transferee), cash equal to the greater of (x) the
accreted amount of the Subject Securities (with no
value attributed to the common stock currently held by
CLP) plus the conversion price attributed to any common
stock obtained by CLP upon conversion or exercise of
Subject Securities) and (y) the fair market value of
the Subject Securities. The parties will in good faith
seek to agree at the time of the put/call on the fair
market value of the Subject Securities and if an
agreement cannot be reached, the fair market value will
be determined by an independent investment banker
acceptable to the parties. Fair market value will be
determined as of the date of the exercise of the CLP
Put Right or the NBCU Call Right, as applicable, and
shall accrue interest at LIBOR plus one-hundred (100)
basis points as of the date of the exercise of the CLP
Put Right or the NBCU Call Right, as applicable,
through the closing of the CLP Put Right or NBCU Call
Right.
28
Schedule J
Transferability If CLP transfers any of its Subject Securities to a
non-affiliated party (after compliance with NBCU's
Right of First Offer and Last Offer), such securities
shall no longer be subject to the CLP Put Right or the
NBCU Call Right. In the event CLP transfers all or
substantially all of its Subject Securities, CLP may
transfer the CLP Put Right to the transferee, subject
to the transferee being subject to the NBCU Call Right.
Any transferee will be prohibited from putting more
than the Maximum Amount of securities to NBCU. For the
avoidance of doubt, CLP may only transfer the Call
Shares in their entirety in connection with a transfer
of all of the Subject Securities owned by CLP or its
affiliates at the time of such transfer and the Call
Shares shall always be subject to NBCU Control Option
I.
Other Terms The CLP Put Right and the NBCU Call Right shall contain
customary terms to be negotiated by the parties.
29
Schedule K
Term Sheet for the Warrants
---------------------------
Issuer ION.
Holder Newco.
Term Seven years beginning on the issuance date (the
"Warrant Period").
Underlying 100,000,000 shares of Class A Common Stock.
Securities
Warrant Exercise The holder(s) of the Warrants may exercise the Warrants
in whole or in part at any time prior to the expiration
of the Warrant Period.
Exercise Price $0.75 per share, which must be paid by the holder in
cash and not on a net basis.
Adjustments to The exercise price of the Warrants and number of shares
Exercise Price underlying the Warrants shall be subject to customary
adjustments for stock splits, dividends,
recapitalizations and similar events.
Transferability The Warrants shall be freely transferable, subject to
applicable securities laws and the NBCU Right of First
Offer and Last Offer.
Other Terms The Warrants shall contain customary terms to be
negotiated by the parties and shall include customary
minority protections for the benefit of CLP.
30
January 17, 2007
The Board of Directors
ION Media Networks, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Ladies and Gentlemen:
Citadel Limited Partnership ("CLP") and NBC Universal, Inc. ("NBCU")
are pleased to present their proposal regarding a transaction (the "Proposed
Transaction") designed to provide substantial benefits to ION Media Networks,
Inc. ("ION" or the "Company") and its various stakeholders. The Proposed
Transaction is the result of extensive negotiations between CLP and NBCU and is
designed to balance the objectives of CLP, NBCU and the ION stakeholders by (i)
delivering the per share cash consideration to the holders of the Company's
Class A common stock contemplated in the November 7, 2005 agreements, (ii)
offering new subordinated debt to the holders of 14-1/4% and 9-3/4% preferred
stock pursuant to an exchange offer, (iii) significantly reducing fixed claims
in the capital structure, and (iv) simplifying the Company's ownership
structure.
As you are aware, pursuant to the Call Agreement, dated as of November
7, 2005 (the "Call Agreement"), NBCU holds the right (the "Call Right") to
purchase the shares (the "Call Shares") of Class A common stock and Class B
common stock of the Company that are beneficially owned by Lowell W. Paxson and
certain affiliates.
The Proposed Transaction contemplates, among other things, that NBCU
will transfer the Call Right to CIG Media LLC, a newly formed Delaware limited
liability company ("Newco") controlled by CLP. In connection with such transfer,
NBCU will propose that the Company's Board of Directors (the "Board") approve
Newco as a "permitted transferee" of the Call Right in accordance with, and
pursuant to, the Call Agreement.
Since its founding in 1990, Citadel Investment Group, L.L.C. ("CIG")
and its affiliates have grown into one of the world's most sophisticated
alternative investment institutions. Today, affiliates of CIG deploy
approximately $13 billion of investment capital across a highly diversified set
of proprietary investment strategies in nearly all major asset classes in all of
the world's principal markets. CIG and its affiliates maintain offices in Hong
Kong, Chicago, New York, San Francisco, Tokyo and London. Newco is one of the
entities for which CLP serves as portfolio manager and CIG provides
administrative and investment-related services.
We believe that CLP is particularly well suited to consummate the
Proposed Transaction expeditiously and to play an important role in the
Company's future. CLP currently manages corporate investments in the media
sector aggregating in excess of $4 billion. Based on the advice of its FCC
counsel, CLP does not currently manage any investment that
1
causes CLP to have incurred any FCC broadcast license attribution. As a result,
we believe that CLP is an ideal long-term sponsor for the Company, given its
ability to take control of the Company and desire to work with existing
management to reposition and grow the business.
The terms and conditions of the Proposed Transaction are set forth in
the term sheet (the "Term Sheet") enclosed with this letter. We wish to
highlight for the Board what we believe are the key objectives and benefits of
the Proposed Transaction:
o Holders of Class A common stock who tender would receive $1.41 per
share in cash, as of January 17, 2007, with the exact amount
determined by the formula in the Call Agreement. The Proposed
Transaction would significantly increase the number of common shares
outstanding on a fully diluted basis. However, Class A common
holders who tender will not be impacted by this dilution, as they
will receive cash consideration representing a 147% premium compared
to the closing price of the Class A Common Stock on January 16,
2007.
o Holders of 14-1/4% and 9-3/4% preferred stock would have the
opportunity to exchange their securities at their option for newly
issued ION subordinated debt. The new subordinated debt would have a
cash maturity in 2013 and would enhance preferred stockholders'
current rights through the introduction of debt covenants and
non-call features. Holders of 14-1/4% preferred stock would be
offered an exchange ratio of 70% of the current face amount of their
securities (the accreted value as of May 15, 2006). Holders of
9-3/4% preferred stock would be offered an exchange ratio of 40% of
the current face amount of their securities (the accreted value as
of September 30, 2006).
o Assuming a successful exchange of the 14-1/4% and 9-3/4% preferred
stock, CLP and NBCU will own convertible preferred stock at the
bottom of the pro-forma capital structure, and NBCU would
significantly reduce the face plus accrued value of its claims. In
this scenario, NBCU would hold securities that are junior to the
subordinated debt received by the holders of 14-1/4% and 9-3/4%
preferred stock and that have a face value of $406 million,
representing a 41% discount to the par plus accrued value of NBCU's
current preferred stock. Including the $100 million of preferred
stock NBCU forfeited as part of the November 2005 transactions, the
implied discount would be 49%. The convertible preferred stock owned
by CLP and NBCU would be mandatorily convertible into common stock
at an initial conversion price of $0.75 per Class A common share.
o Prior to the mandatory conversion of the CLP and NBCU convertible
securities, consummation of the Proposed Transaction with a
successful exchange would reduce fixed claims in the capital
structure by approximately $300 million; in addition, recurring
fixed charges would be reduced by approximately $50 million per
annum.
o Following the mandatory conversion of the CLP and NBCU convertible
securities, fixed charges would be reduced by an aggregate of $1
billion, and total
2
recurring fixed charges would be reduced by approximately $110
million per annum.
o The Company would retain approximately $190 million of subordinated
debt capacity following consummation of the Proposed Transaction,
leaving the Company with flexibility to attract new debt capital.
o Given an improved capital structure, the stability of a long-term
sponsor in CLP and a streamlined governance structure, the Company
would be positioned to attract new equity capital.
As further described in the Term Sheet, both entry into, and
consummation of, the Proposed Transaction are subject to a number of conditions,
including, without limitation, approval of the Board and absence of a material
adverse change affecting the Company. We wish to emphasize that CLP and NBCU
would proceed with the Proposed Transaction only on a consensual basis, with the
approval of the Board.
We and our advisors are ready to meet with you and your advisors at any
time. We look forward to scheduling a time to discuss the Proposed Transaction
and to answer any questions you or they may have about the Proposed Transaction.
Neither this letter nor the enclosed Term Sheet is intended to be, nor
shall either be, a binding contract between us, but is intended only as a formal
indication of our proposal as of this date, and the parties will be jointly
bound only in accordance with the terms and conditions to be negotiated and
contained in mutually executed definitive documentation. The description of the
Proposed Transaction above is intended to be a summary of the transactions
described in the Term Sheet and is qualified in its entirety by the attached
Term Sheet.
We look forward to working with you and the Company's management to
consummate the Proposed Transaction in a timely manner.
Very truly yours,
CITADEL LIMITED PARTNERSHIP NBC UNIVERSAL, INC.
By: Citadel Investment Group, LLC,
its General Partner
By: /s/ Matthew Hinerfeld By: /s/ Bruce Campbell
---------------------------- --------------------------
Name: Matthew Hinerfeld Name: Bruce Campbell
Title: Managing Director and Title: Executive Vice President,
Deputy General Counsel Business Development
3
TERM SHEET OF PRINCIPAL TRANSACTIONS(1)
Set forth below are the principal terms of the proposed transaction
(the "Transaction") with respect to (i) the shares of Class A and Class B Common
Stock of ION Media Network, Inc. (the "Company") (respectively, the "Class A
Common Stock" and the "Class B Common Stock") and (ii) the Company's 14-1/4%
Preferred Stock (the "14-1/4% Preferred"), the Company's 9-3/4% Series A
Preferred Stock (the "9-3/4% Preferred") and the Company's 11% Series B
Preferred Stock (the "Series B Preferred") owned by NBCU.
A. Overview.
---------
As further described below, as part of the Transaction, among other
things, (i) NBCU shall assign that certain Call Agreement, dated
November 7, 2005 (the "Call Agreement") to a newly formed entity
("Newco") owned by affiliates of Citadel Limited Partnership (together
with its affiliates, "CLP"), (ii) Newco will commence a tender offer in
accordance with the Call Agreement and that certain Stockholder
Agreement, dated November 7, 2005 (the "Stockholder Agreement"), (iii)
the Company will also commence a tender offer for the Class A Common
Stock, other than shares of the Class A Common Stock owned by the Call
Stockholders (as defined in the Call Agreement) and certain shares of
Class A Common Stock issued after November 7, 2005 upon the exercise,
grant or vesting of any Stock-Based Compensation Awards (as defined in
the Stockholder Agreement) or upon conversion or exchange of
convertible or exchangeable securities of the Company (the "Ineligible
Shares") and shares held by CLP, (iv) the Company will issue
Subordinated Notes and potentially Series A-1 Convertible Preferred to
CLP and/or Newco to fund the Company tender offer, (v) the Company will
make an exchange offer for the 14-1/4% Preferred and the 9-3/4%
Preferred owned by parties other than CLP (the "Exchange Offer"), (vi)
the Series D Non-Convertible Preferred (as defined below), the
9,386.46875 shares of 14-1/4% Preferred Stock owned by CLP (the "CLP
14-1/4% Preferred"), and the 262.33603 shares of 9-3/4% Preferred Stock
owned by CLP (the "CLP 9-3/4% Preferred") will be exchanged for new
securities of the Company, and (vii) Newco will exercise the Call Right
(as defined in the Call Agreement) and acquire the Call Shares (as
defined in the Call Agreement) from the Call Stockholders, in each
case, as more fully described below.
The consummation of the Exchange Offer, the Preliminary Transactions,
the transfer of the Call Agreement, and the exercise of the Call Right
will be conditioned upon satisfaction of customary terms and
- -----------------------
(1) The proposed terms and conditions set forth in this term sheet are
intended merely as an outline of certain material terms of a potential
transaction and are provided for discussion purposes only and do not
constitute an offer, agreement or binding commitment by or on behalf of
any party. This term sheet does not include descriptions of all of the
terms, conditions and other provisions that would be contained in
definitive documentation relating to the proposed Transaction and is
not intended to limit the scope of discussion and negotiation of any
matters not consistent with the specific matters set forth herein. This
term sheet assumes the accuracy of all information regarding the debt
and equity capitalization of the Company that has been publicly
disclosed. In addition, this term sheet is subject to tax, accounting
and Delaware counsel review by both NBCU and CLP. This term sheet is
not a binding obligation to consummate the proposed Transaction. Any
such obligation will be created only be definitive agreements, the
provisions of which will supersede this term sheet.
conditions, including the execution of definitive transaction
documents mutually acceptable to the parties (the "Definitive
Transaction Documents"), absence of a MAC, absence of any material
litigation seeking to restrain or materially alter the Transaction
(which condition shall only be for the benefit of CLP and NBCU),
receipt of FCC approval (except as otherwise provided below with
respect to the transfer of the Call Agreement), entry into
satisfactory arrangements with management, approval, to the reasonable
satisfaction of CLP, by the Company's Compensation Committee of any
agreements, benefits or payments to be made to management in
connection with the Transactions, including the Newco Tender Offer,
sufficient to satisfy the safe harbor contained in Rule 14d-10 of the
Exchange Act, approval of the Transaction by the board of directors of
the Company (the "Board"), including approval of CLP and/or Newco as a
permitted transferee, and satisfaction of each of the conditions to,
and simultaneous consummation of, all the other transactions
contemplated hereby (other than the Company Tender Offer and the Newco
Tender Offer). The Company Tender Offer and the Newco Tender Offer
will be subject to the satisfaction of the more limited number of
conditions described below.
B. Transaction Steps
-----------------
1. As promptly as practicable following agreement on this Term
Sheet, NBCU and CLP will propose the Transaction to the Company
and seek approval of the Transaction by the Board. As part of
approving the Transaction, the Board will also approve CLP as a
permitted transferee of the Call Right.
2. CLP and NBCU will work in good faith with the Company to prepare
and execute the Definitive Transaction Documents as promptly as
practicable.
3. As promptly as practicable upon proposing the Transaction to the
Board, Newco and the Call Stockholders will apply for long-form
FCC approval.
4. As promptly as practicable following CLP becoming a permitted
transferee pursuant to the Call Agreement, CLP and/or Newco will
make any necessary HSR filings.
5. Upon Board approval of the Transaction, the Company will seek
from its senior lenders (i) an amendment to increase the
Restricted Payment basket to $70,000,000 and (ii) confirmation
that the Transaction does not trigger the Change of Control put.
If the amendment of the Restricted Payment basket is not
obtained, the funding of the Company Tender Offer will be
structured as set forth below in section C(3)(d). This term sheet
assumes that the Change of Control put does not apply. If
confirmation is not obtained, the Transaction may be restructured
such that NBCU retains $250,000,000 of Series B Preferred at all
times and NBCU and CLP will enter into an agreement designed to
achieve the relative economics between CLP and NBCU with respect
to their investment in the Company that would have resulted if
NBCU's investment in the Series B Preferred has been restructured
in the manner contemplated herein.
6. Upon the earlier of (x) receipt of FCC approval and (y) May 6,
2007 (such date, the "Commencement Date"), the Call Agreement
will be transferred to Newco. Simultaneously with such transfer,
Newco will exercise the Call Right, the
2
Company will commence the Company Tender Offer and the Exchange
Offer, and Newco will commence the Newco Tender Offer.
7. Upon satisfaction of all conditions, including, if not satisfied
prior to the Commencement Date, receipt of FCC approval, the
Newco Tender Offer, the Call Right, the Company Tender Offer, the
Exchange Offer and the Preliminary Transactions will all close
simultaneously (provided the requisite periods for the various
offers have been satisfied); provided, however, if FCC approval
has not been received by June 15, 2007, the Company Tender Offer
and the Newco Tender Offer will close, notwithstanding that FCC
approval has not been received, but subject to the satisfaction
of the other conditions to the Company Tender Offer and the Newco
Tender Offer.
C. The Transactions.
----------------
1. Formation of Newco
------------------
a. Newco will be a newly formed entity owned by affiliates of
CLP and will be structured to comply with FCC rules. Newco's
owners shall provide binding commitments to capitalize Newco
with sufficient financing to consummate the purchase of
Subordinated Debt (and, to the extent necessary, Series A-1
Convertible Preferred), the Newco Tender Offer, the exercise
of the Call Right and the payment of any amounts required to
be paid pursuant to the Non-Compete Agreements (as defined
below), after application of the Escrow Amount (as described
below).
2. The Call Right.
--------------
a. On the Commencement Date, (i) NBCU will exchange with the
Company $200,000,000 in face amount of Series B Preferred
for $200,000,000 in face amount of a new series of Company
preferred stock with terms identical to the Series B
Preferred but which shall not be convertible (the "Series D
Non-Convertible Preferred"), as described on Schedule F, and
(ii) NBCU will assign the Call Agreement and transfer
$200,000,000 in face amount of Series D Non-Convertible
Preferred to Newco. Newco will agree to issue to NBCU the
NBCU Option I (as described in section C(7)(a) below) upon
the Call Closing (as defined in the Call Agreement).
b. On the Commencement Date, NBCU will also irrevocably assign
and transfer to Newco, subject to receipt of FCC approval by
Newco, the rights to the proceeds of the escrow account (the
"Escrow Amount") established pursuant to the Escrow
Agreement among the Call Stockholders, NBCU and the Bank of
New York, dated November 7, 2005 and, subject to receipt of
FCC approval by Newco, Newco will assume the payment
obligations of NBCU to the Company, Mr. Paxson and Mr.
Goodman under the Paxson Consulting and Noncompetition
Agreement between the Company, Mr. Paxson and NBCU, dated as
of November 7,
3
2005 (the "Paxson Non-Compete Agreement"), and the Goodman
Noncompetition Agreement between NBCU and Mr. Goodman, dated
as of November 7, 2005 (the "Goodman Non-Compete Agreement,"
and, together with the Paxson Non-Compete Agreement, the
"Non-Compete Agreements").
c. Newco will simultaneously exercise the Call Right.
d. The Call Right will close upon receipt of FCC and other
regulatory approvals (provided the requisite periods for the
various offers have expired).
i. At the closing of the exercise of the Call Right, Newco
will pay $6,274,141 to the Call Stockholders pursuant
to the terms of the Call Agreement, $2,000,000 to the
Company and $3,000,000 to Mr. Paxson pursuant to the
Paxson Non-Compete Agreement, and $2,250,000 to Mr.
Goodman pursuant to the Goodman Non-Compete Agreement.
Newco will use the Escrow Amount (including accrued
interest) to partially satisfy these amounts.
ii. At the closing of the exercise of the Call Right, the
Call Stockholders shall immediately transfer all of
their Class A Common Stock and Class B Common Stock to
Newco.
iii. Simultaneously with the closing of the exercise of the
Call Right, that certain PMC Management and Proxy
Agreement, dated November 7, 2005, shall terminate.
3. Company Tender Offer
--------------------
a. On the Commencement Date, the Company will commence a tender
offer (the "Company Tender Offer") for all of the Class A
Common Stock. Holders of Ineligible Shares will not tender
their Class A Common Stock. CLP will agree not to tender the
2,728,531 shares of Class A Common Stock it currently holds
in physical form.
b. The Company Tender Offer and the financing thereof will be
made in compliance with all applicable laws and will be
subject only to those conditions contained in the Newco
Tender Offer. The Company Tender Offer will be made on
economic terms identical to the Newco Tender Offer described
in section C(4) below, provided, however, the offer price in
the Company Tender Offer will be $0.01 higher than the offer
price in the Newco Tender Offer.
c. The Company Tender Offer shall expire simultaneously with
the Newco Tender Offer (as defined below) (the "Initial
Offer Period"), provided, that, the Company Tender Offer may
be extended as necessary to obtain any required regulatory
approvals. The Company Tender Offer may also be extended
with the consent of CLP and NBCU for an unlimited number
4
of subsequent periods ("Subsequent Periods"). Promptly after
the expiration of the Initial Offer Period and during any
Subsequent Period, the Company shall unconditionally accept
for payment and pay for, in accordance with the terms of the
Company Tender Offer, all of the shares of Class A Common
Stock validly tendered pursuant to the Company Tender Offer
and not validly withdrawn.
d. On each closing of the Company Tender Offer (whether after
the Initial Offer Period or a Subsequent Period), CLP will
purchase subordinated debt (the "Subordinated Debt"), as
described on Schedule A, in an aggregate principal amount
equal to the amount necessary to fund the purchase of shares
under the Company Tender Offer; provided, that, (i) if the
amendment to increase the senior debt Restricted Payment
basket is not obtained, CLP will purchase Series A-1
Convertible Preferred (as defined below) for any amount
required to be funded in excess of the amount available in
the senior debt Restricted Payment basket, but excluding any
amounts required to be purchased pursuant to clause (ii),
and (ii) CLP will purchase Series A-1 Convertible Preferred
in an amount equal to $0.01 multiplied by the number of
shares accepted for payment in the Company Tender Offer.
4. Newco Tender Offer.
------------------
a. Simultaneous with the Company Tender Offer, Newco will
commence a tender offer (the "Newco Tender Offer") for the
Class A Common Stock. Holders of Ineligible Shares and CLP
will not tender their Class A Common Stock into the Newco
Tender Offer.
b. The Newco Tender Offer and the financing thereof will be
made in compliance with all applicable laws and will be
conditioned only on those conditions permitted under the
Call Agreement and the Stockholder Agreement, including that
the consummation of the Newco Tender Offer is not prohibited
by applicable law. The Newco Tender Offer will be made on
economic terms set forth in section 3.5(c) of the
Stockholder Agreement.
c. The Newco Tender Offer shall expire 20 business days
following the commencement of the Newco Tender Offer or such
other date as the Company and Newco shall agree and Newco
shall, promptly after the expiration of the Newco Tender
Offer, unconditionally pay for all of the shares of Class A
Common Stock validly tendered pursuant to the Newco Tender
Offer and not validly withdrawn. The consummation of the
Newco Tender Offer shall satisfy the obligations of NBCU
under the Stockholder Agreement and NBCU shall not
thereafter be obligated to surrender to the Company any
Series B Preferred pursuant to section 3.6 of the
Stockholder Agreement.
d. Upon conclusion of the Newco Tender Offer, the Company will
grant Newco a right to put all of the shares of Class A
common stock it acquired in the Newco Tender Offer to the
Company at a price equal to the Newco Tender Offer price,
such price to be paid in cash, funded through the sale
5
of Subordinated Debt to CLP to the extent permitted under
the senior debt Restricted Payment basket, or if not so
permitted, through the issuance of Series A-1 Convertible
Preferred. Such put shall be exercisable in the event that
the EBITDA of the Company for the last twelve months ending
December 31, 2007, or each of the 12 quarters thereafter,
does not meet or exceed specified EBITDA targets.
e. If for any reason the Company Tender Offer, the Exchange
Offer and the Preliminary Transactions do not close, then
NBCU shall grant Newco an option to purchase Series B
Preferred with a face amount equal to the product of (1) a
fraction, the numerator of which is the aggregate purchase
price paid by Newco in the Newco Tender Offer and the
denominator of which is the aggregate of the number of
shares outstanding prior to the closing of the Newco Tender
Offer and Company Tender Offer less the sum of the
Ineligible Shares plus 6,126,868 shares multiplied by the
Newco Tender Offer price multiplied by (2) $150,000,000. The
exercise price of their option will be equal to (i) the
aggregate number of shares of Class A common stock acquired
in by Newco in the Newco Tender offer multiplied by (ii) the
Newco Tender Offer price. Newco shall be permitted to pay
such exercise price in either cash or shares of Class A
common stock, at Newco's discretion.
5. The Exchange Offer.
------------------
a. On the Commencement Date, subject to section C(5)(b) and
section C(5)(c) below, (i) CLP will exchange $104,948,971 in
the aggregate of CLP 14-1/4% Preferred and CLP 9-3/4%
Preferred (face plus all accrued amounts, including amounts
accrued thereon through December 31, 2006) for an equal
aggregate principal amount of convertible subordinated debt
(the "Convertible Subordinated Debt"),(2) as described on
Schedule B, and (ii) NBCU will exchange (together with the
CLP exchange, the "Contingent Exchange") its $375,000,000 in
face amount of Series B Preferred for an equal principal
amount of Convertible Subordinated Debt. In the Contingent
Exchange, all of the CLP 14-1/4% Preferred will be exchanged
before any of the CLP 9-3/4% Preferred are exchanged and to
the extent that the amount of the Contingent Exchange is
reduced pursuant to C(5)(c) below, the CLP 9-3/4% Preferred
will be excluded from the Contingent Exchange before any CLP
14-1/4% Preferred is excluded from the Contingent Exchange.
b. Subject to section C(5)(c) below, the Exchange Offer will
provide the holders of (i) $475,252,056 in face amount(3) of
14-1/4% Preferred with the opportunity to exchange such
14-1/4% Preferred for Subordinated Debt in
- ------------------------
(2) Total Convertible Subordinated Debt would be approximately
$480,000,000.
(3) As of December 31, 2006, based on May 15, 2006 amounts, the last date
dividends were declared by the Board. This amount excludes the CLP
14-1/4% Preferred.
6
the principal amount of $332,676,439 and (ii) $164,292,539
in face amount(4) of 9-3/4% Preferred with the opportunity
to exchange such 9-3/4% Preferred for Subordinated Debt in
the principal amount of $65,717,016; provided that, to the
extent the holders of the 14-1/4% Preferred do not exchange
into Subordinated Debt, the amount of Subordinated Debt
offered to holders of the 9-3/4% Preferred will increase, on
a sliding scale basis, up to $73,931,643. The holders who
validly exchange will consent to, among other things, the
amendment of the existing certificates of designation
governing the 14-1/4% Preferred and the 9-3/4% Preferred to
eliminate all restrictive covenants, change of control
rights, and voting rights (with respect to the 9-3/4%
Preferred) contained therein.
c. Should at least 90% of the 14-1/4% Preferred Stock and at
least 90% of the 9-3/4% Preferred Stock validly exchange in
the Exchange Offer, CLP and NBCU will remain in their
existing positions and will not effectuate the Contingent
Exchange described in section C(5)(a) above and such
existing positions will be restructured as set forth in
section C(6) below. If less than 90% of each of the
14-1/4% Preferred and the 9-3/4% Preferred validly exchange
in the Exchange Offer, the amount of the Contingent Exchange
described in section C(5)(a) above will be reduced pro-rata,
on a sliding scale basis, in accordance with the methodology
detailed on Schedule G(1).
6. The Preliminary Transactions
----------------------------
a. Immediately following the consummation of the Exchange
Offer, to the extent the Contingent Exchange is not
effectuated or has been reduced pursuant to section C(5)(c)
above, CLP will exchange its remaining (i) CLP 14-1/4%
Preferred (face plus all accrued amounts thereon through
December 31, 2006) for an equal face amount of 8% Series A-1
Mandatorily Convertible Preferred Stock due 2013 (the
"Series A-1 Convertible Preferred") and (ii) CLP 9-3/4%
Preferred (face plus all accrued amounts, including amounts
accrued thereon through December 31, 2006) for an equal face
amount of 8% Series A-2 Mandatorily Convertible Preferred
Stock due 2013 (the "Series A-2 Convertible Preferred," and
together with the Series A-1 Convertible Preferred, the
"Series A Convertible Preferred"), as described on Schedule
C.
b. Immediately following the consummation of the Exchange
Offer, regardless of whether the Contingent Exchange occurs,
(i) CLP will exchange its $200,000,000 of Series D
Non-Convertible Preferred it received from NBCU as described
in section C(2)(a) for $200,000,000 in face amount of 8%
Series C Mandatorily Convertible Preferred Stock due
- -----------------------
(4) As of December 31, 2006, based on September 30, 2006 amounts, the last
date dividends were declared by the Board. This amount excludes the CLP
9-3/4% Preferred.
7
2013 (the "Series C Convertible Preferred"), as described on
Schedule E, and (ii) NBCU will exchange $31,070,000 of
Series B Preferred for an equal face amount of Series C
Convertible Preferred.
c. Immediately following the consummation of the Exchange
Offer, to the extent that the Contingent Exchange is not
effectuated or has been reduced pursuant to section C(5)(c)
above, NBCU will exchange its remaining Series B Preferred
for an equal face amount of Series B Mandatorily Convertible
Preferred Stock due 2013 (the "Series B Convertible
Preferred"), as described on Schedule D. Upon consummation
of this step of the Transaction, no Series B Preferred will
remain outstanding.
d. Immediately following the consummation of the Exchange
Offer, NBCU will transfer Convertible Subordinated Debt to
CLP in accordance with the methodology detailed on Schedule
G(2).
e. NBCU and Newco will enter into an agreement under which the
relative seniority of Series A Convertible Preferred over
Series B Convertible Preferred will be effectively
eliminated and the seniority of Series A-1 Convertible
Preferred received by CLP for funding the Company Tender
Offer or received upon exercise of the put right described
in section C(4)(d) will be addressed. Under the agreement,
NBCU will transfer to CLP (i) the economic benefit it
realizes and (ii) an amount equal to one half of the amount
of economic shortfall CLP experiences (after giving effect
to clause (i)), in each case as a result of CLP receiving
any Series A-1 Convertible Preferred instead of subordinated
debt for funding the Company Tender Offer (excluding the
$0.01 premium) or upon exercise of the put right described
in section C(4)(d).
7. NBCU Options.
------------
a. NBCU Option I: As set forth in section C(2)(a) above, Newco
will grant NBCU an option (the "NBCU Option I") to purchase
the shares of Class A Common Stock and Class B Common Stock
owned by Newco (and formerly owned by the Call
Shareholders), as described on Schedule H. The Definitive
Transaction Documentation shall contain provisions that
prohibit (i) the transfer by CLP of the shares of Class A
Common Stock and Class B Common Stock underlying the NBCU
Option I, (ii) the issuance by the Company of any share of
Class B Common Stock other than pursuant to the exercise of
the NBCU Option II (as defined below) or (iii) the entry
into any agreement or arrangement by CLP or the Company with
respect to a change of control or other extraordinary
corporate transaction of the Company, in each case, prior to
the earlier of the business day following (A) the six (6)
month anniversary of the Call Closing or (B) the Delisting
Date.
b. NBCU Option II: NBCU will irrevocably waive its right to any
accrued dividends on its Series B Preferred in exchange for
an option to acquire shares of Class B Common Stock (the
"NBCU Option II") from the Company, as described on Schedule
I.
8
c. CLP Put Right and NBCU Call Right: If at any time, either
(i) NBCU, (ii) a group (as such term defined in Rule 13d-3
under the Exchange Act) comprised of NBCU and a holder of
the NBCU Option I, the NBCU Option II, or other Company
securities transferred by NBCU or (iii) any third party
(other than CLP) that received the Company securities from
NBCU acquires securities representing more than 50% of the
voting power of the Company outstanding at such time (the
"Trigger Event"), Newco will have the right, subject to the
receipt of any required FCC approval, to put all its Subject
Securities (as defined in Schedule J) to NBCU as described
on Schedule J. If CLP does not exercise the put right, NBCU
will have a right to call such securities as described on
Schedule J.
8. CLP Warrants.
------------
a. The securities held by NBCU will permit and expressly
contemplate that the Company will issue to CLP warrants
representing 100,000,000 shares of Class A Common Stock, as
described on Schedule K.
9. NBCU Right of First Offer and Last Offer
----------------------------------------
a. CLP may seek to transfer any of its Subject Securities, at
any time subject to the following conditions: CLP shall
deliver to NBCU a written notice (the "First Offer Notice"),
which shall (i) state CLP's intention to seek to transfer
Subject Securities, the amount to be transferred, and the
proposed sale price thereof and (ii) offer to NBCU the right
to acquire all of such Subject Securities at the proposed
purchase price and upon the terms and subject to the
conditions of the proposed transfer as set forth in the
First Offer Notice (the "First Offer"), provided, that, the
First Offer must be accepted on an all or nothing basis.
NBCU, or a third party designated by NBCU, shall have a
right, for a period of twenty (20) days after delivery of
the First Offer Notice (the "Acceptance Period") to accept
the First Offer at the purchase price and upon the terms and
subject to the conditions as set forth in the First Offer.
Upon acceptance of the First Offer during the Acceptance
Period, subject to the receipt of any necessary FCC or other
regulatory approvals, NBCU or its designee shall have thirty
(30) days from the acceptance of the First Offer to
consummate the transaction to purchase the Subject
Securities. If NBCU or its designee shall fail to accept, or
shall reject in writing, the First Offer, then CLP may
transfer the Subject Securities at a price and on terms not
more favorable to the purchaser thereof than the price and
terms stated in the First Offer Notice, at any time within
one hundred eighty (180) days from the expiration of the
Acceptance Period; provided, that, CLP shall, upon receipt
of a bona fide offer (the "Last Offer") from a third party
with respect to the Subject Securities, promptly deliver to
NBCU a written notice (the "Last Look Notice"), which shall
identify such third party making the Last Offer and state
the proposed offer price thereof, the form of consideration
proposed to be paid and all other material terms and
9
conditions of the Last Offer, and NBCU or its designee shall
have a right, for a period of 10 business days upon receipt
of the Last Look Notice (the "Last Acceptance Period"), to
offer to purchase the Subject Securities at the proposed
offer price and upon the terms and subject to the conditions
of the proposed offer as set forth in the Last Offer. Upon
acceptance of the Last Offer during the Last Acceptance
Period, NBCU or its designee shall have thirty (30) days
from the acceptance of the Last Offer to consummate the
transaction to purchase the Subject Securities. The Right of
First Offer and Last Offer will terminate upon the earlier
of (i) the termination or expiration of the NBCU Option I or
NBCU Option II, (ii) the transfer of the NBCU Option I or
NBCU Option II to a third party, other than any party or
parties acting as a part of a group with NBCU, or (iii) the
transfer by NBCU to one or more third parties, other than
any party or parties acting as a part of a group with NBCU,
of securities representing, in the aggregate, more than 10%
of the total voting power of the Company on a fully diluted
basis immediately following the consummation of the
Transaction; provided, that, if NBCU transfers to one or
more third parties, other than any party or parties acting
as a part of a group with NBCU, securities representing, in
the aggregate, in excess of 5%, but not more than 10%, of
the total voting power of the Company on a fully diluted
basis immediately following the consummation of the
Transaction, NBCU shall have the Right of First Offer only.
The Right of First Offer and Last Offer shall not bind any
transferee of the Subject Security who acquires such
securities from CLP after compliance with this paragraph.
For the avoidance of doubt, CLP may pledge the Subject
Securities without being subject to the Right of First Offer
and Last Offer so long as the Right of First Offer and Last
Offer shall apply to any transfer of such pledged Subject
Securities by the pledgee thereof.
b. Notwithstanding the foregoing, for any transaction with an
aggregate total of $5,000,000 or less, but in no event
exceeding an aggregate total of $75,000,000 in any calendar
year (as measured by face amount of Subject Securities and
assuming a value of $0.75 per share for Class A Common
Stock), CLP may seek to transfer any of its Subject
Securities at any time subject to the following conditions:
CLP shall deliver to NBCU a written notice (the "De Minimis
First Offer Notice"), which shall (i) state CLP's intention
to seek to transfer Subject Securities, the amount to be
transferred, and the proposed sale price thereof and (ii)
offer to NBCU the right to acquire all of such Subject
Securities at the proposed purchase price and upon the terms
and subject to the conditions of the proposed transfer as
set forth in the De Minimis First Offer Notice (the "De
Minimis First Offer"), provided, that, the De Minimis First
Offer must be accepted on an all or nothing basis. NBCU, or
a third party designated by NBCU, shall have a right, for a
period of five (5) business days after delivery of the De
Minimis First Offer Notice (the "De Minimis Acceptance
Period") to accept the De Minimis First Offer at the
purchase price and upon the
10
terms and subject to the conditions as set forth in the De
Minimis First Offer. Upon acceptance of the De Minimis First
Offer during the De Minimis Acceptance Period, NBCU or its
designee shall have thirty (30) days from the acceptance of
the De Minimis First Offer to consummate the transaction to
purchase the Subject Securities. If NBCU or its designee
shall fail to accept, or shall reject in writing, the De
Minimis First Offer, then CLP may transfer the Subject
Securities at a price and on terms not more favorable to the
purchaser thereof than the price and terms stated in the De
Minimis First Offer Notice, at any time within ninety (90)
days from the expiration of the De Minimis Acceptance
Period. For the avoidance of doubt, CLP will not be
obligated to provide NBCU with a Last Look Notice for
Subject Securities that were subject to a De Minimis First
Offer Notice.
D. Subsequent Transactions.
-----------------------
1. Delisting
---------
a. If possible, based on the number of shares outstanding and
the number of record holders of Class A Common Stock, the
Company shall delist and deregister the Class A Common Stock
following the consummation of the Company Tender Offer and
the Newco Tender Offer.
2. Merger
------
a. If not all outstanding shares of Class A Common Stock are
tendered in the Company Tender Offer and the Newco Tender
Offer, the remaining shares of Class A Common Stock (other
than the shares owned by CLP) will be acquired through a
long-form merger under Delaware law. In the merger,
outstanding employee options and restricted stock units will
be rolled over into new securities of the surviving entity.
The Transaction will be conditioned upon the approval by the
current Board of the terms of such merger.
3. New Board
---------
a. As promptly as practicable following the closing of the Call
Right, the members of the Board will resign and Newco will
elect new members to the Board.
4. Increase of Authorized Shares
-----------------------------
a. In connection with the Transaction, the Company's
certificate of incorporation will be amended to increase the
number of authorized shares of Class A, Class B and Class C
Common Stock to allow for the issuance of such stock upon
the conversion of Series A Convertible Preferred, Series B
Convertible Preferred and Series C Convertible Preferred.
11
E. Fees and Expenses
-----------------
1. If the Board does not approve the Transaction or the Transaction
does not close, each of the parties will be responsible for its
own expenses.
2. If the Transaction closes, the Company will pay the reasonable
fees and expenses incurred by all of the parties to the
Transaction.
F. Due Diligence
-------------
1. The Company will provide CLP and its representatives with an
opportunity to (i) meet with the Chief Executive Officer and the
Chief Financial Officer of the Company to further understand the
Company's current business plan and forecast for 2007, including
access to internal financial models and (ii) conduct tax,
accounting and legal due diligence of the Company, which CLP
expects would be completed not more than two weeks after being
provided access by the Company.
12
Schedule A
Term Sheet for the Subordinated Debt
------------------------------------
Issuer ION.
Initial Holders CLP and the former holders of 14-1/4% Junior Exchangeable
Preferred Stock and 9-3/4% Convertible Preferred Stock.
Ranking Junior to the First Priority Term Loans due 2012, the First
Priority Senior Secured Floating Rate Notes due 2012 and the
Second Priority Senior Secured Floating Rate Notes due 2013
(the "Senior Debt Securities") and pari passu with the
Convertible Subordinated Debt.
Maturity July 2013.
Interest 12% annual simple interest coupon, payable quarterly in
arrears, in cash or additional Subordinated Debt, at ION's
option.
Call Protection Subordinated Debt shall not be callable prior to maturity.
Conversion Subordinated Debt shall not be convertible.
Transferability Subordinated Debt shall be freely transferable, subject to
applicable securities laws.
Other Terms The indenture shall contain customary covenants and events of
default provisions to be negotiated by the parties and shall
be consistent with the indentures for the Senior Debt
Securities.
13
Schedule B
Term Sheet for the Convertible Subordinated Debt
------------------------------------------------
Issuer ION.
Initial Holder CLP and NBCU.
Ranking Junior to the Senior Debt Securities and pari passu
with the Subordinated Debt.
Maturity July 2013.
Interest 8% annual simple interest coupon, payable quarterly in
arrears, in cash or additional Convertible Subordinated
Debt, at ION's option.
Call Protection Convertible Subordinated Debt shall not be callable
prior to maturity.
Optional Convertible Subordinated Debt shall be convertible at
Conversion any time, at the holder's option, into shares of Class
A Common Stock at a conversion price of $0.75 per share
of Class A Common Stock.
Mandatory Convertible Subordinated Debt shall be converted into
Conversion shares into shares of Class A Common Stock, or, in the
case of Convertible Subordinated Debt issued to NBCU,
at NBCU's option, an equal number of Class C Common
Stock, upon the earliest of: (i) in the event shares of
Class A Common Stock are traded on a national stock
exchange, the trading price for fifteen (15)
consecutive trading days of Class A Common Stock on
such exchange is equal to or greater than $0.75 per
share, increasing at a rate per annum of 8% from the
issuance of Convertible Subordinated Debt through the
date of conversion (the "Mandatory Conversion Price"),
(ii) the issuance by ION of Class A Common Stock at an
issue price per share equal to or greater than the
Mandatory Conversion Price with an aggregate
consideration of no less than $100,000,000 in such
issuance, or (iii) a nationally recognized investment
bank chosen by the Company pursuant to Board action
values a share of Class A Common Stock at an amount
equal to or greater than the Mandatory Conversion
Price.
Adjustments The conversion prices shall be subject to customary
to Conversion adjustments for stock splits, dividends,
Price recapitalizations, below market issues and similar
events.
Registration Rights The holders of Convertible Subordinated Debt shall
enter into a registration rights agreement with ION,
pursuant to which the holders shall have demand rights,
and piggyback rights and other customary terms to be
negotiated by the parties in the event of a conversion
of Convertible Subordinated Debt into Class A Common
Stock.
Transferability Convertible Subordinated Debt shall be freely
transferable, subject to applicable securities laws and
in the case of Convertible Subordinated Debt issued to
CLP, the NBCU Right of First Offer and Last Offer.
14
Schedule B
Other Terms The indenture shall contain customary covenants and
events of default provisions to be negotiated by the
parties and shall be consistent with the indentures of
the Senior Debt Securities. The Convertible
Subordinated Debt shall include customary minority
protections for the benefit of NBCU and CLP.
15
Schedule C
Term Sheet for the Series A Convertible Preferred Stock
-------------------------------------------------------
Issuer ION.
Initial Holder CLP.
Ranking The Series A-1 Convertible Preferred Stock and the A-2
Convertible Preferred Stock (collectively, the "Series
A Convertible Preferred") will be junior to the Senior
Debt Securities, the Subordinated Debt and the
Convertible Subordinated Debt, senior to the Series B
Convertible Preferred, the Series C Convertible
Preferred and the 9-3/4% Preferred, and pari passu with
the 14-1/4% Preferred.
Maturity August 2013.
Liquidation The liquidation preference for each share of Series A
Preference Convertible Preferred shall be the greater of (i)
$10,000 per share plus any accumulated and unpaid
dividends from the issue date through and including the
date of liquidation and (ii) the aggregate amount per
share payable upon liquidation to the holders of shares
of Class A Common Stock multiplied by the number of
shares of Class A Common Stock into which each share of
Series A Convertible Preferred would be convertible.
Dividend As and if declared by the Board, the greater of
(determined on a cumulative basis from the issuance
date of the Series A Convertible Preferred to the date
of such determination), (x) 8% annual simple dividend,
payable quarterly in arrears, in cash, which amounts
shall accrue to the extent not paid in cash, and (y)
the aggregate dividends per share paid on Class A
Common Stock, multiplied by the number of shares of
Class A Common Stock into which each share of Series A
Convertible Preferred would be convertible.
Call Protection Series A Convertible Preferred shall not be callable
prior to maturity.
Optional Conversion Series A Convertible Preferred shall be convertible at
any time, at the holder's option, into Class A Common
Stock at a conversion price of $0.75 per share of Class
A Common Stock.
16
Schedule C
Mandatory Conversion The outstanding shares of Series A Convertible
Preferred shall be converted into shares of Class A
Common Stock upon the earliest of: (i) in the event
shares of Class A Common Stock are traded on a national
stock exchange, the trading price for fifteen (15)
consecutive trading days of Class A Common Stock on
such exchange is equal to or greater than $0.75 per
share, increasing at a rate per annum of 8% from the
date of the closing of the exchange offer through the
date of conversion (the "Mandatory Conversion Price"),
(ii) the issuance by ION of Class A Common Stock at an
issue price per share equal to or greater than the
Mandatory Conversion Price with an aggregate
consideration of no less than $100,000,000 in such
issuance, or (iii) a nationally recognized investment
bank chosen by the Company pursuant to Board action
values a share of Class A Common Stock at an amount
equal to or greater than the Mandatory Conversion
Price.
Adjustments to The conversion prices shall be subject to customary
Conversion Price adjustments for stock splits, dividends,
recapitalizations, below market issues and similar
events.
Voting Holders of shares of Series A Convertible Preferred
shall not be entitled to voting rights.
Registration Rights The holders of Series A Convertible Preferred shall
enter into a registration rights agreement with ION,
pursuant to which the holders shall have demand rights,
and piggyback rights and other customary terms to be
negotiated by the parties in the event of a conversion
of Series A Convertible Preferred into Class A Common
Stock.
Transferability Series A Convertible Preferred shall be freely
transferable, subject to applicable securities laws and
the NBCU Right of First Offer and Last Offer.
Other Terms Except as outlined in this term sheet, the other rights
and provisions of Series A Convertible Preferred shall
be substantially similar to the Series B Convertible
Preferred and the Series A Convertible Preferred shall
include customary minority protections for the benefit
of CLP.
17
Schedule D
Term Sheet for the Series B Convertible Preferred Stock
-------------------------------------------------------
Issuer ION.
Initial Holder NBCU.
Ranking Junior to the Senior Debt Securities, the Subordinated
Debt, the Convertible Subordinated Debt, the Series A
Convertible Preferred, the 14-1/4% Preferred and the
9-3/4% Preferred, but senior to the Series C
Convertible Preferred.
Maturity August 2013.
Liquidation The liquidation preference for each share of Series B
Preference Convertible Preferred shall be the greater of (i)
$10,000 per share plus any accumulated and unpaid
dividends from the issue date through and including the
date of liquidation and (ii) the aggregate amount per
share payable upon liquidation to the holders of shares
of Class A Common Stock multiplied by the number of
shares of Class A Common Stock into which each share of
Series B Convertible Preferred would be convertible.
Dividend As and if declared by the Board, the greater of
(determined on a cumulative basis from the issuance
date of the Series B Convertible Preferred to the date
of such determination), (x) 8% annual simple dividend,
payable quarterly in arrears, in cash, which amounts
shall accrue to the extent not paid in cash, and (y)
the aggregate dividends per share paid on Class A
Common Stock, multiplied by the number of shares of
Class A Common Stock into which each share of Series B
Convertible Preferred would be convertible.
Call Protection Series B Convertible Preferred shall not be callable
prior to maturity.
Optional Series B Convertible Preferred shall be convertible at
Conversion any time, at the holder's option, into Class A Common
Stock at a conversion price of $0.75 per share of Class
A Common Stock.
18
Schedule D
Mandatory The outstanding shares of Series B Convertible
Conversion Preferred shall be converted into shares of Class A
Common Stock, or, at NBCU's option, an equal number of
shares of Class C Common Stock, upon the earliest of:
(i) in the event shares of Class A Common Stock are
traded on a national stock exchange, the trading price
for fifteen (15) consecutive trading days of Class A
Common Stock on such exchange is equal to or greater
than $0.75 per share, increasing at a rate per annum of
8% from the date of the closing of the exchange offer
through the date of conversion (the "Mandatory
Conversion Price"), (ii) the issuance by ION of Class A
Common Stock at an issue price per share equal to or
greater than the Mandatory Conversion Price with an
aggregate consideration of no less than $100,000,000 in
such issuance, or (iii) a nationally recognized
investment bank chosen by the Company pursuant to Board
action values a share of Class A Common Stock at an
amount equal to or greater than the Mandatory
Conversion Price.
Adjustments to The conversion prices shall be subject to customary
Conversion Price adjustments for stock splits, dividends,
recapitalizations, below market issues and similar
events.
Voting Holders of shares of Series B Convertible Preferred
shall not be entitled to voting rights.
Registration Rights The holders of Series B Convertible Preferred shall
enter into a registration rights agreement with ION,
pursuant to which the holders shall have demand rights,
and piggyback rights and other customary terms to be
negotiated by the parties in the event of a conversion
of Series B Convertible Preferred into Class A Common
Stock.
Transferability Series B Convertible Preferred shall be freely
transferable, subject to applicable securities laws.
Other Terms Except as outlined in this term sheet, the other rights
and provisions of the Series B Convertible Preferred
shall be substantially similar to the Series A
Convertible Preferred and the Series B Convertible
Preferred shall include customary minority protections
for the benefit of NBCU.
19
Schedule E
Term Sheet for the Series C Convertible Preferred Stock
-------------------------------------------------------
Issuer ION.
Holder CLP and NBCU.
Ranking Junior to the Senior Debt Securities, the Subordinated
Debt, the Convertible Subordinated Debt, the Series A
Convertible Preferred, the 14-1/4% Preferred, the
9-3/4% Preferred and the Series B Convertible
Preferred.
Maturity September 2013.
Liquidation The liquidation preference for each share of Series C
Preference Convertible Preferred shall be the greater of (i)
$10,000 per share plus any accumulated and unpaid
dividends from the issue date through and including the
date of liquidation and (ii) the aggregate amount per
share payable upon liquidation to the holders of shares
of Class A Common Stock multiplied by the number of
shares of Class A Common Stock into which each share of
Series C Convertible Preferred would be convertible.
Dividend As and if declared by the Board, the greater of
(determined on a cumulative basis from the issuance
date of the Series C Convertible Preferred to the date
of such determination), (x) 8% annual simple dividend,
payable quarterly in arrears, in cash, which amounts
shall accrue to the extent not paid in cash, and (y)
the aggregate dividends per share paid on Class A
Common Stock, multiplied by the number of shares of
Class A Common Stock into which each share of Series C
Convertible Preferred would be convertible.
Call Protection Series C Convertible Preferred shall not be callable
prior to maturity.
Optional Series C Convertible Preferred shall be convertible at
Conversion any time, at the holder's option, into Class A Common
Stock at a conversion price of $0.75 per share of Class
A Common Stock.
20
Schedule E
Mandatory The outstanding shares of Series C Convertible
Conversion Preferred shall be converted into shares of Class A
Common Stock or, in the case of Series C Convertible
Preferred issued to NBCU, at NBCU's option, an equal
number of shares of Class C Common Stock, upon the
earliest of: (i) in the event shares of Class A Common
Stock are traded on a national stock exchange, the
trading price for fifteen (15) consecutive trading days
of Class A Common Stock on such exchange is equal to or
greater than $0.75 per share, increasing at a rate per
annum of 8% from the date of the closing of the
exchange offer through the date of conversion (the
"Mandatory Conversion Price"), (ii) the issuance by ION
of Class A Common Stock at an issue price per share
equal to or greater than the Mandatory Conversion Price
with an aggregate consideration of no less than
$100,000,000 in such issuance, or (iii) a nationally
recognized investment bank chosen by the Company
pursuant to Board action values a share of Class A
Common Stock at an amount equal to or greater than the
Mandatory Conversion Price.
Adjustments to The conversion prices shall be subject to customary
Conversion Price adjustments for stock splits, dividends,
recapitalizations, below market issues and similar
events.
Voting Holders of shares of Series C Convertible Preferred
shall not be entitled to voting rights.
Registration Rights The holders of Series C Convertible Preferred shall
enter into a registration rights agreement with ION,
pursuant to which the holders shall have demand rights,
and piggyback rights and other customary terms to be
negotiated by the parties in the event of a conversion
of Series C Convertible Preferred into Class A Common
Stock.
Transferability Series C Convertible Preferred shall be freely
transferable, subject to compliance with securities
laws and in the case of Series C Convertible Preferred
issued to CLP, the NBCU Right of First Offer and Last
Offer.
Other Terms The Series C Convertible Preferred shall include
customary minority protections for the benefit of NBCU
and CLP.
21
Schedule F
Term Sheet for the Series D Non-Convertible Preferred Stock
-----------------------------------------------------------
Issuer ION.
Holder NBCU.
Ranking Junior to the Senior Debt Securities, the Subordinated
Debt, the Convertible Subordinated Debt, the Series A
Convertible Preferred, the 14-1/4% Preferred, the
9-3/4% Preferred, the Series B Convertible Preferred
but senior to the Series C Convertible Preferred.
Maturity August 2013.
Liquidation The liquidation preference for each share of Series D
Preference Non-Convertible Preferred shall be the greater of
$10,000 per share plus any accumulated and unpaid
dividends from the issue date through and including the
date of liquidation.
Dividend As and if declared by the Board, 8% annual simple
dividend payable quarterly in arrears in cash.
Call Protection Series D Non-Convertible Preferred shall not be
callable prior to maturity.
Conversion Series D Non-Convertible Preferred shall not be
convertible at any time.
Voting Holders of shares of Series D Non-Convertible Preferred
shall not be entitled to voting rights.
Registration Rights The holders of Series D Non-Convertible Preferred shall
enter into a registration rights agreement with ION,
pursuant to which the holders shall have demand rights,
piggyback rights and other customary terms to be
negotiated by the parties.
Transferability Series D Non-Convertible Preferred shall be freely
transferable, subject to applicable securities laws.
Other Terms Except as outlined in this term sheet, the other rights
and provisions of the Series D Non-Convertible
Preferred shall be substantially similar to the Series
B Convertible Preferred and the Series D
Non-Convertible Preferred shall include customary
minority protections for the benefit of CLP.
22
Schedule G
Exhibit 1. Composition of Subordinated Debt, Convertible Subordinated Debt,
14-1/4% Preferred, 9-3/4% Preferred, Series A Convertible Preferred, and
Series B Convertible Preferred, Subject to the Exchange Offer and the
Preliminary Transactions
[See attached spreadsheet]
Exhibit 2. Transfer of Convertible Subordinated Debt from NBCU to CLP,
Subject to the Exchange Offer and the Preliminary Transactions
[See attached spreadsheet]
23
Schedule G(1)
- --------------------------- -------------------------------------------------------------------------------------------------------
% Exchanged Subordinated Debt
- --------------------------- -------------------------------------------------------------------------------------------------------
14.25% 9.75% CIG CIG 14.25% 9.75%
Preferred Preferred Tender Exchange NBCU Preferred Preferred Subtotal
- -------------- ------------ ----------------- ---------------- ----------------- ----------------- ---------------- ---------------
0% 0% $61,114,757 $114,948,971 $365,000,000 $0 $0 $541,063,728
10% 10% $61,114,757 $106,581,289 $340,182,185 $33,267,644 $7,311,018 $548,456,892
20% 20% $61,114,757 $96,453,265 $309,074,377 $66,535,288 $14,457,744 $547,635,430
30% 30% $61,114,757 $86,361,166 $278,094,936 $99,802,932 $21,440,176 $546,813,967
40% 40% $61,114,757 $76,304,992 $247,243,862 $133,070,576 $28,258,317 $545,992,504
50% 50% $61,114,757 $66,284,744 $216,521,156 $166,338,220 $34,912,165 $545,171,042
60% 60% $61,114,757 $56,300,421 $185,926,817 $199,605,863 $41,401,720 $544,349,579
70% 70% $61,114,757 $46,352,024 $155,460,845 $232,873,507 $47,726,983 $543,528,116
80% 80% $61,114,757 $36,439,552 $125,123,240 $266,141,151 $53,887,953 $542,706,653
90% 90% $61,114,757 $0 $0 $299,408,795 $59,884,631 $420,408,183
100% 100% $61,114,757 $0 $0 $332,676,439 $65,717,016 $459,508,212
- -------------- ------------ ----------------- ---------------- ----------------- ----------------- ---------------- ---------------
- --------------------------- ---------------------------------------------------------------------------------------
% Exchanged Preferred Stock
- --------------------------- ---------------------------------------------------------------------------------------
14.25% 9.75% 14.25% 9.75% CIG NBCU
Preferred Preferred Preferred Preferred Series A Series B Subtotal
- -------------- ------------ ----------------- ---------------- ----------------- ----------------- ----------------
0% 0% $475,252,056 $164,292,539 $0 $0 $639,544,595
10% 10% $427,726,850 $147,863,285 $7,256,571 $25,928,927 $608,775,633
20% 20% $380,201,645 $131,434,031 $16,273,484 $58,147,846 $586,057,006
30% 30% $332,676,439 $115,004,777 $25,254,472 $90,238,397 $563,174,086
40% 40% $285,151,234 $98,575,523 $34,199,534 $122,200,582 $540,126,873
50% 50% $237,626,028 $82,146,270 $43,108,671 $154,034,399 $516,915,368
60% 60% $190,100,822 $65,717,016 $51,981,883 $185,739,850 $493,539,571
70% 70% $142,575,617 $49,287,762 $60,819,169 $217,316,933 $469,999,481
80% 80% $95,050,411 $32,858,508 $69,620,530 $248,765,649 $446,295,098
90% 90% $47,525,206 $16,429,254 $104,948,971 $375,000,000 $543,903,431
100% 100% $0 $0 $104,948,971 $375,000,000 $479,948,971
- -------------- ------------ ----------------- ---------------- ----------------- ----------------- ----------------
Schedule G(2)
- ---------------------------- ----------------------------------------- ----------------------------------------- ------------------
% Exchanged Mechanical Economic Consideration
- ---------------------------- -------------------------------------- --------------------------------------------
14.25% 9.75% CIG Convertible NBCU Convertible CIG Convertible NBCU Convertible Transferred From
Preferred Preferred Subordinated Debt Subordinated Debt Subordinated Debt Subordinated Debt NBCU to CIG
- --------------- ------------ ------------------- ------------------ ----------------------- -------------------- ------------------
0% 0% $104,948,971 $375,000,000 $114,948,971 $365,000,000 $10,000,000
10% 10% $97,692,400 $349,071,073 $106,581,289 $340,182,185 $8,888,889
20% 20% $88,675,487 $316,852,154 $96,453,265 $309,074,377 $7,777,778
30% 30% $79,694,499 $284,761,603 $86,361,166 $278,094,936 $6,666,667
40% 40% $70,749,437 $252,799,418 $76,304,992 $247,243,862 $5,555,556
50% 50% $61,840,300 $220,965,601 $66,284,744 $216,521,156 $4,444,444
60% 60% $52,967,088 $189,260,150 $56,300,421 $185,926,817 $3,333,333
70% 70% $44,129,802 $157,683,067 $46,352,024 $155,460,845 $2,222,222
80% 80% $35,328,441 $126,234,351 $36,439,552 $125,123,240 $1,111,111
90% 90% $0 $0 $0 $0 $0
100% 100% $0 $0 $0 $0 $0
- --------------- ------------ ------------------- ------------------ ----------------------- -------------------- ------------------
N.B. - To the extent the amount of subordinated debt received by CLP
under the CIG Tender section of this Schedule G(1) is less than
$61,114,757, CLP will be entitled to modify the exchange ratio of its
preferred instruments into convertible subordinated debt such that the
incremental capacity in the basket represented by the difference
between the $61,114,757 and the amount of subordinated debt received
by CLP is filled by the Citadel convertible preferred. Any amount of
incremental convertible subordinated debt received by CLP under this
provision would reduce the amount of Series A-1 preferred stock
otherwise deliverable to CLP in the Transaction.
Schedule H
Term Sheet for the NBCU Option I
--------------------------------
Issuer Newco.
Holder NBCU.
NBCU Option I NBCU and Newco shall enter into a call agreement
providing for the grant by Newco to NBCU of an option
(the "NBCU Option I") to acquire 15,455,062 shares of
Class A Common Stock and 8,311,639 shares of Class B
Common Stock.
Exercise Price The exercise price of the NBCU Option I shall be $0.40
per share of Class A Common Stock and $0.40 per share
of Class B Common Stock, payable in cash.
Option Period The NBCU Option I shall be exercisable at any time
during the five-year period beginning on the earlier of
the business day following (i) the six (6) month
anniversary of the Call Closing and (ii) the Delisting
Date (as such date may be extended, the "NBCU Option I
Period").
The NBCU Option I shall be renewable by NBCU in
five-year increments, provided, that, the CLP Put Right
and NBCU Call Right shall automatically be extended to
be co-terminus with the NBCU Option I.
Option Exercise The holder may not exercise the NBCU Option I prior to
the later of the business day following (i) the six (6)
month anniversary of the date of the grant of the NBCU
Option I and (ii) the receipt of FCC approval and any
other required Governmental approvals (the "Restricted
Period"). After the expiration of the Restricted
Period, the holder may exercise the NBCU Option I at
any time during the NBCU Option I Period by delivering
a notice of exercise to Newco (the "NBCU Option I
Exercise Notice").
Option Closing The closing of the purchase and sale of the shares
after the delivery of an NBCU Option I Exercise Notice
shall occur as promptly as practicable after the
delivery of the NBCU Option I Exercise Notice, subject
to the receipt of all requisite third party consents
and governmental approvals, including approval of the
FCC, provided, that, no option exercise will be valid
if the closing has not occurred within eighteen (18)
months following the delivery of the NBCU Option I
Exercise Notice.
Transferability After expiration of the Restricted Period, the NBCU
Option I shall be freely transferable, subject to
applicable FCC and securities laws and the CLP Put
Right. The NBCU Option I shall not be transferable
during the Restricted Period.
24
Schedule H
Transferability of CLP may only transfer the shares of Class A Common
Underlying Shares Stock and Class B Common Stock underlying the NBCU
Option I in their entirety in connection with a
transfer of all of the Subject Securities owned by CLP
or its affiliates at the time of such transfer;
provided, however, if shares of Class A Common Stock or
Class B Common Stock underlying the NBCU Option I are
transferred, such shares shall remain subject to NBCU
Option I.
Adjustments to The exercise price of the NBCU Option I shall be
Exercise Price subject to customary adjustments for stock splits,
dividends, recapitalizations and similar events.
Representations, The NBCU Option I Call Agreement shall contain
Warranties and customary representations, warranties and covenants to
Covenants be negotiated by the parties.
25
Schedule I
Term Sheet for the NBCU Option II
---------------------------------
Issuer ION.
Holder NBCU.
NBCU Option II NBCU and ION shall enter into a call agreement
providing for the grant by ION to NBCU of an option to
acquire 26,688,361 shares of Class B Common Stock (the
"NBCU Option II").
Exercise Price The exercise price of the NBCU Option II shall be $0.50
per share of Class B Common Stock, payable in cash.
Option Period The NBCU Option II shall be exercisable at any time
during the five-year period beginning on the date of
the Call Closing (as such date may be extended, the
"NBCU Option II Period").
The NBCU Option II shall be renewable in five-year
increments, provided, that, (i) the NBCU Option I is
also being renewed and (ii) the CLP Put Right and NBCU
Call Right shall automatically be extended to be
co-terminus with the NBCU Option II.
Option Exercise The holder may exercise, subject to FCC regulations and
any other required Governmental approvals, the NBCU
Option II at any time during the NBCU Option II Option
Period by delivering a notice of exercise to ION (the
"NBCU Option II Exercise Notice").
Option Closing The closing of the purchase and sale of the shares
underlying the NBCU Option II after the delivery of an
NBCU Option II Exercise Notice shall occur as promptly
as practicable after the delivery of the NBCU Option II
Exercise Notice, subject to the receipt of all
requisite third party consents and governmental
approvals, including approval of the FCC, provided,
that, no option exercise will be valid if the closing
has not occurred within eighteen (18) months following
the delivery of the NBCU Option II Exercise Notice.
Transferability The NBCU Option II shall be freely transferable,
subject to applicable FCC and securities laws and the
CLP Put Right.
Adjustments to The exercise price of the NBCU Option II shall be
Exercise Price subject to customary adjustments for stock splits,
dividends, recapitalizations and similar events.
Reservation for At all times during the NBCU Option II Period, ION
Issuance shall maintain a sufficient number of authorized but
unissued shares of Class B Common Stock so that ION
shareholder approval is not required in connection with
the exercise of the NBCU Option II.
26
Schedule I
Representations, The NBCU Option II Call Agreement shall contain
Warranties customary representations, warranties and covenants to
and Covenants be negotiated by the parties.
27
Schedule J
Term Sheet for the CLP Put Right and the NBCU Call Right
--------------------------------------------------------
Term The CLP Put Right and the NBCU Call Right will be
effective as long as NBCU Option I or NBCU Option II
continues to be outstanding.
CLP Put Right Upon the occurrence of the Trigger Event, subject to
receipt of any required FCC approval, Newco will have
the right for 30 days thereafter to put (the "Put
Exercise Period") to NBCU all of its (i) Convertible
Subordinated Debt, (ii) Series A Convertible Preferred,
(iii) Series C Convertible Preferred, (iv) Warrants and
(v) Class A Common Stock issued upon conversion or
exercise of any of the foregoing securities or
currently held by CLP or its affiliates, (excluding,
for the avoidance of doubt, shares of Class A Common
Stock included in the Call Shares) (collectively, the
"Subject Securities") in an amount not to exceed the
amount of the Subject Securities owned by CLP
immediately following consummation of the Transaction
(the "Maximum Amount").
NBCU Call Right After the Trigger Event, if CLP has not exercised the
CLP Put Right during the Put Exercise Period, NBCU will
have the right for 30 days after the conclusion of the
Put Exercise Period (the "Call Right Period") to call
all of the Subject Securities.
Renewable If CLP does not exercise the CLP Put Right during the
Put Exercise Period and NBCU does not exercise the NBCU
Call Right during the Call Right Period, the Put
Exercise Period and Call Exercise Period will renew on
each of the first five (5) anniversaries of the Trigger
Event.
Purchase Price Upon consummation of the CLP Put Right, following
receipt of all necessary FCC or other regulatory
approvals, NBCU will pay CLP (or its transferee) cash
equal to the fair market value of the Subject
Securities. Upon exercise of the NBCU Call Right,
following receipt of all necessary FCC or other
regulatory approvals, NBCU will pay CLP (or its
transferee), cash equal to the greater of (x) the
accreted amount of the Subject Securities (with no
value attributed to the common stock currently held by
CLP) plus the conversion price attributed to any common
stock obtained by CLP upon conversion or exercise of
Subject Securities) and (y) the fair market value of
the Subject Securities. The parties will in good faith
seek to agree at the time of the put/call on the fair
market value of the Subject Securities and if an
agreement cannot be reached, the fair market value will
be determined by an independent investment banker
acceptable to the parties. Fair market value will be
determined as of the date of the exercise of the CLP
Put Right or the NBCU Call Right, as applicable, and
shall accrue interest at LIBOR plus one-hundred (100)
basis points as of the date of the exercise of the CLP
Put Right or the NBCU Call Right, as applicable,
through the closing of the CLP Put Right or NBCU Call
Right.
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Schedule J
Transferability If CLP transfers any of its Subject Securities to a
non-affiliated party (after compliance with NBCU's
Right of First Offer and Last Offer), such securities
shall no longer be subject to the CLP Put Right or the
NBCU Call Right. In the event CLP transfers all or
substantially all of its Subject Securities, CLP may
transfer the CLP Put Right to the transferee, subject
to the transferee being subject to the NBCU Call Right.
Any transferee will be prohibited from putting more
than the Maximum Amount of securities to NBCU. For the
avoidance of doubt, CLP may only transfer the Call
Shares in their entirety in connection with a transfer
of all of the Subject Securities owned by CLP or its
affiliates at the time of such transfer and the Call
Shares shall always be subject to NBCU Control Option
I.
Other Terms The CLP Put Right and the NBCU Call Right shall contain
customary terms to be negotiated by the parties.
29
Schedule K
Term Sheet for the Warrants
---------------------------
Issuer ION.
Holder Newco.
Term Seven years beginning on the issuance date (the
"Warrant Period").
Underlying 100,000,000 shares of Class A Common Stock.
Securities
Warrant Exercise The holder(s) of the Warrants may exercise the Warrants
in whole or in part at any time prior to the expiration
of the Warrant Period.
Exercise Price $0.75 per share, which must be paid by the holder in
cash and not on a net basis.
Adjustments to The exercise price of the Warrants and number of shares
Exercise Price underlying the Warrants shall be subject to customary
adjustments for stock splits, dividends,
recapitalizations and similar events.
Transferability The Warrants shall be freely transferable, subject to
applicable securities laws and the NBCU Right of First
Offer and Last Offer.
Other Terms The Warrants shall contain customary terms to be
negotiated by the parties and shall include customary
minority protections for the benefit of CLP.
30
