<PAGE>
1 of 15 Pages
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(A)
PAXSON COMMUNICATIONS CORPORATION
---------------------------------
(NAME OF ISSUER)
CLASS A COMMON STOCK, PAR VALUE $0.001 PER SHARE
------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
70423110
--------
(CUSIP NUMBER)
RICHARD COTTON, EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL,
NATIONAL BROADCASTING COMPANY, INC.
30 ROCKEFELLER PLAZA, NEW YORK, NY 10012,
(212) 664 7195
------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS)
SEPTEMBER 15, 1999
-----------------------------------------------------
(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 WHICH IS THE SUBJECT OF THIS SCHEDULE 13D, AND IS FILING THIS
SCHEDULE BECAUSE OF RULE 13D-1(B)(3) OR (4), 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 RULE 13D-7(B) FOR OTHER
PARTIES TO WHOM COPIES ARE TO BE SENT.
(CONTINUED ON FOLLOWING PAGES)
<PAGE>
SCHEDULE 13D
- -------------------------------------------------------------------------------
CUSIP NO. 70423110 PAGE 2 OF 15 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NBC PALM BEACH INVESTMENT I, INC. 13/4078684
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) [x]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 31,896,032
BENEFICIALLY OWNED BY
EACH
REPORTING
PERSON
WITH
- -------------------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
- -------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
31,896,032
- -------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
31,896,032
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
37.6%*
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
* Based on 53,477,372 shares of Class A Common Stock outstanding on
September 15, 1999 as reported by the Company in the Investment Agreement.
<PAGE>
SCHEDULE 13D
- -------------------------------------------------------------------------------
CUSIP NO. 70423110 PAGE 4 OF 15 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NBC PALM BEACH INVESTMENT II, INC. 13-4078685
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A
GROUP* (a)
(b) [x]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 13,065,507
BENEFICIALLY OWNED BY
EACH
REPORTING
PERSON
WITH
- -------------------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
- -------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
13,065,507
- -------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
13,065,507
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[x]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
15.3%**
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
* NBC Palm Beach Investment II, Inc. also owns a warrant ["Warrant B"]
exercisable for 18,966,620 shares of Class A Common Stock. Warrant B may
not be exercised until another warrant ["Warrant A", which is the warrant
exercisable for 13,065,507 shares of Class A Common Stock disclosed in
line 11 above] has been exercised in full and in no event can Warrant B be
exercised before February 1, 2002, if such exercise would result in Mr.
Lowell W. Paxson losing his status as Paxson Communications majority
stockholder. NBC Palm Beach Investment II, Inc., therefore disclaims
beneficial ownership of the 18,966,620 shares of Class A Common Stock
underlying Warrant B.
** Based on 53,477,372 shares of Class A Common Stock outstanding on
September 15, 1999 as reported by the Company in the Investment Agreement.
<PAGE>
SCHEDULE 13D
- -------------------------------------------------------------------------------
CUSIP NO. 70423110 PAGE 6 OF 15 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NATIONAL BROADCASTING COMPANY, INC. 14/1682529
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A
GROUP (a)
(b) [x]
- -------------------------------------------------------------------------------
SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES Disclaimed (See 11 Below)
BENEFICIALLY OWNED BY
EACH
REPORTING
PERSON
WITH
- -------------------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
- -------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
Disclaimed (See 11 Below)
- -------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Beneficial Ownership of all Shares Disclaimed by National Broadcasting
Company, Inc.
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES***
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Not Applicable (See 11 Above)
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
* NEITHER THE FILING OF THIS SCHEDULE 13D NOR ANY OF ITS CONTENTS SHALL BE
DEEMED TO CONSTITUTE AN ADMISSION THAT NATIONAL BROADCASTING COMPANY, 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.
<PAGE>
SCHEDULE 13D
- -------------------------------------------------------------------------------
CUSIP NO. 70423110 PAGE 8 OF 15 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
GENERAL ELECTRIC COMPANY 14-0689340
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) [x]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES Disclaimed (See 11 Below)
BENEFICIALLY OWNED BY
EACH
REPORTING
PERSON
WITH
- -------------------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
- -------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
Disclaimed (See 11 Below)
- -------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Beneficial Ownership of all Shares disclaimed by General
Electric Company
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Not Applicable (see 11 above)
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- -------------------------------------------------------------------------------
CUSIP NO. 70423110 PAGE 9 OF 15 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NATIONAL BROADCASTING COMPANY HOLDING, INC. 13-3448662
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A
GROUP* (a)
(b) [x]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES Disclaimed (See 11 Below)
BENEFICIALLY OWNED BY
EACH
REPORTING
PERSON
WITH
- -------------------------------------------------------------------------------
8 SHARED VOTING POWER
-0-
- -------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
Disclaimed (See 11 Below)
- -------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Beneficial Ownership of all Shares disclaimed by National Broadcasting
Company Holding, Inc.
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Not Applicable (see 11 above)
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
ITEM 1. Security and Issuer.
The title and class of equity security to which this statement
on Schedule 13D relates is the Class A Common Stock, par value $.001 per share
("Class A Common Stock"), of Paxson Communications Corporation, a Delaware
corporation (the "Company"). The address of the Company's principal executive
offices is 601 Clearwater Park Road, West Palm Beach, FL 33401.
ITEM 2. Identity and Background.
This statement is being filed by NBC Palm Beach Investment I,
Inc., and NBC Palm Beach Investment II, Inc., for and on behalf of themselves,
National Broadcasting Company, Inc. ("NBC"), General Electric Company, Inc.
("GE"), and National Broadcasting Company Holding, Inc. ("NBC Holding"). The
transactions disclosed in this statement are herein referred to as the
"Investment". NBC Palm Beach Investment I and NBC Palm Beach Investment II are
wholly owned subsidiaries of NBC. NBC is a wholly owned subsidiary of NBC
Holding, and NBC Holding is a wholly owned subsidiary of GE. NBC Palm Beach
Investment I, NBC Palm Beach Investment II, NBC, NBC Holding and GE are referred
to herein as the "Reporting Persons". An agreement among the Reporting Persons
with respect to the filing of this statement is attached hereto as Exhibit 1.
NBC Palm Beach Investment I is a California corporation with
its principal executive offices located at 30 Rockefeller Plaza, New York, New
York 10112. NBC Palm Beach Investment I is a holding company whose principal
business is the holding of the securities of the Company.
NBC Palm Beach Investment II is a California corporation with
its principal executive offices located at 30 Rockefeller Plaza, New York, New
York 10112. NBC Palm Beach Investment II is a holding company whose principal
business is the holding of the securities of the Company.
NBC is a Delaware corporation with its principal executive
offices located at 30 Rockefeller Plaza, New York, New York 10112. The principal
business activities of NBC are the operation of television and cable broadcast
networks and television stations and the provision of related media and Internet
services. NBC Holding is a Delaware corporation with its principal executive
offices located at 30 Rockefeller Plaza, New York, New York 10112. NBC Holding
is a holding company which owns all the common stock of NBC. GE is a New York
corporation with its principal executive offices located at 3135 Easton
Turnpike, Fairfield, Connecticut 06431. GE engages in providing a wide variety
of industrial, commercial and consumer products and services.
The name, business address, present principal occupation or
employment, and citizenship of each director and executive officer of NBC, GE,
NBC Holding, NBC Palm Beach Investment I and NBC Palm Beach Investment II are
set forth on Schedules A, B, C, D and E attached hereto, respectively.
Except as set forth on Schedule F hereto, during the last five
years none of the Reporting Persons, nor, to the best of their knowledge, any of
their directors or executive officers, has been (i) convicted of any criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to federal or state securities laws or finding any
violation with respect to such laws.
This statement is being filed while the Reporting Persons are
in the process of verifying information required herein from their respective
directors and executive officers. If the Reporting Persons obtain information
concerning such individuals which would cause a material change in the
disclosure contained herein, an amendment to this statement will be filed that
will disclose such change.
ITEM 3. Source and Amount of Funds or Other Consideration.
On September 15, 1999, NBC Palm Beach Investment I acquired
41,500 shares of 8% Series B Convertible Exchangeable Preferred Stock of the
Company, (the "Shares"), convertible into 31,896,032 shares of Class A Common
Stock (subject to adjustment under the terms of the Certificate of Designation).
On September 15, 1999, NBC Palm Beach Investment II acquired a warrant to
purchase up to 13,065,507 shares of Class A Common Stock ("Warrant A") and a
warrant to purchase up to 18,966,620 shares of Class A Common Stock ("Warrant
B", and together with Warrant A, the "Warrants"). NBC Palm Beach Investment I
and NBC Palm Beach Investment II paid an aggregate purchase price of $415
million from their working capital.
<PAGE>
ITEM 4. Purpose of Transaction.
NBC entered into an Investment Agreement, dated as of
September 15, 1999, (the "Investment Agreement"), with the Company and a Call
Agreement with Mr. Lowell W. Paxson ("Mr. Paxson"), Paxson Enterprises Inc. and
Second Crystal Diamond Limited Partnership in order to acquire the Shares,
Warrants and Call Rights described in this Item 4 and to effectuate the
transactions contemplated by the Agreements (as described below). Each of the
Agreements related to the foregoing is filed as an exhibit hereto (as indicated
below) and incorporated by reference herein.
NBC and the Company entered into an Investment Agreement
whereby NBC Palm Beach Investment I acquired the 41,500 Shares convertible into
31,896,032 shares of Common Stock (subject to adjustment under the terms of the
Certificate of Designation). NBC Palm Beach Investment II acquired (i) a warrant
to purchase up to 13,065,507 shares of Common Stock and (ii) a warrant to
purchase up to 18,966,620 shares of Common Stock. This description is not
complete and is subject to the terms of the Investment Agreement which is
attached as Exhibit 2.
NBC may, at any time, convert the 41,500 Shares into
31,896,032 shares of Class A Common Stock. If NBC determines that Federal
Communications Commission ("FCC") regulations prohibit it from holding shares of
Class A Common Stock, NBC may convert the Shares into an equal number of shares
of non-voting stock of the Company. Such non-voting common stock will be
immediately convertible into Class A Common Stock upon transfer by NBC Palm
Beach Investment I.
The Shares may also be converted into Exchange Debentures (as
defined in the Certificate of Designation), in whole or in part, on a pro rata
basis, at the option of NBC Palm Beach Investment I, or its transferee (the
"Exchange Right"). The exchange rate shall be $1.00 principal amount of Exchange
Debentures for each $1.00 of liquidation preference and accumulated and unpaid
dividends of the Shares. Certain limitations and qualifications of the Exchange
Right are set forth in the Certificate of Designation and the Form of Indenture.
This description is not complete and is subject to the terms of the Certificate
of Designation and the Form of Indenture, which are attached hereto as Exhibits
6 and 9, respectively.
The Certificate of Designation, by Paxson Communications
Corporation, sets forth the powers, preferences and relative, participating,
optional and other special rights of the Shares and any qualifications and
limitations thereof. The Certificate provides that there will be 41,500 shares,
par value $.001, with a liquidation preference of $10,000 per share. Other
special rights and the qualifications, limitations and restrictions of the
shares are set forth in the Certificate of Designation which is attached as
Exhibit 6.
Pursuant to the Investment Agreement between NBC and the
Company, NBC Palm Beach Investment II acquired a warrant to purchase up to
13,065,507 shares of Class A Common Stock and a warrant to purchase up to
18,966,620 shares of Class A Common Stock. Both Warrants may be exercised at the
option of NBC any time after September 15, 1999 through September 15, 2009
except as otherwise provided in the Warrants themselves and in the Investment
Agreement. This description of the Warrants is not complete and is subject to
the terms of the Warrants and the Investment Agreements which are attached as
Exhibits 8, 9 and 2, respectively.
The Stockholder Agreement among NBC and the Company, Mr.
Paxson, Second Crystal Diamond Limited Partnership and Paxson Enterprises, Inc.
provides that if no NBC nominee serves as a member of the Board of Directors,
then NBC may appoint an observer to attend all Board meetings. The Stockholders
agreement further provides that if NBC determines that the Communications Act of
1934, as amended, (the "Communications Act"), and FCC rules permit NBC to
appoint Board members, the Company will nominate NBC nominees and the parties to
the Stockholders agreement will vote their shares to elect the NBC nominees to
the Board of Directors.
<PAGE>
The Stockholder Agreement also provides that the parties will
vote (or cause to be voted) all shares in favor of the following proposals: (i)
an amendment to the Company's certificate of incorporation to provide for a
staggered Board; (ii) the issuance of shares sufficient to satisfy NBC's rights
under each of these agreements and to cause those shares to be listed on the
American Stock Exchange; and (iii) any other matters necessary to consummate the
transactions contemplated by the agreements listed as exhibits hereto. The
Stockholder Agreement further provides that the Company shall not, without the
prior written consent of NBC, enter into certain agreements or adopt certain
plans, as set forth in the Stockholder Agreement, which would be breached or
violated upon the acquisition of capital securities of the Company by NBC or its
affiliates or would otherwise restrict or impede the ability of NBC or its
affiliates to acquire additional shares of capital stock. This description of
the Stockholders Agreement is not complete and is subject to the terms of the
actual agreement which is attached as Exhibit 3.
NBC Palm Beach Investment II and Mr. Paxson, the Company,
Second Crystal Diamond Limited Partnership and Paxson Enterprises Inc. have also
entered into a Call Agreement. The Call Agreement gives NBC Palm Beach
Investment II the right to purchase 8,311,639 shares of Class B Common Stock,
par value $0.001 per share, held by Mr. Paxson, Second Crystal Diamond Limited
Partnership and Paxson Enterprises Inc. (and any other shares received by such
persons on account of a stock dividend, stock split, merger, recapitalization,
combination or other transaction involving the company). This description is not
complete and is subject to the terms of the Call Agreement which is attached as
Exhibit 5.
The Registration Rights Agreement, between NBC and the
Company, provides that the Company shall register, under certain circumstances,
any shares of Class A Common Stock issuable upon the conversion of the Shares
(or upon conversion of Exchange Debentures for which any of the Shares have been
exchanged), Warrant A or Warrant B and shares purchasable under the Call
Agreement. This description is not complete and is subject to the terms of the
Registration Rights Agreement which is attached as Exhibit 4.
Except as set forth above, none of the Reporting Persons have
any present plans or proposals which relate to or would result in any actions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. Interest in Securities of the Issuer.
(a) The responses of the Reporting Persons to Rows (7) through
(13) of the cover page of this statement on Schedule 13D are incorporated herein
by reference. Prior to the consummation of the Investment, the Reporting Persons
did not own any shares of the Class A Common Stock of the Company. NBC Palm
Beach Investment I has acquired 41,500 shares of 8% Series B Convertible
Exchangeable Preferred Stock that may be converted into 31,896,032 shares of
Class A Common Stock. NBC Palm Beach Investment II has acquired the Warrants
pursuant to which it may purchase 32,032,127 shares of Class A Common Stock.
Pursuant to the Investment, NBC and its affiliates will have beneficial
ownership of 49% of the outstanding common stock of the Company.
Except as disclosed in this Item 5(a), none of the Reporting Persons,
nor, to the best of their knowledge, any of their directors or executive
officers, beneficially owns any shares of the common stock of the Company.
(b) The responses of the Reporting Persons to (i) Rows (7)
through (13) of the cover pages of this statement on Schedule 13D and (ii) Item
5(a) hereof are incorporated herein by reference. Upon conversion, NBC Palm
Beach Investment I, through its 8% Series B Convertible Exchangeable Preferred
Stock will have the sole power to dispose of 31,896,032 shares of Class A Common
Stock. Upon exercise, NBC Palm Beach Investment II, through its Warrants, will
have the sole power to dispose of 32,032,127 shares of Class A Common Stock.
Except as disclosed in this Item 5(b), none of the Reporting
Persons, nor to the best of their knowledge, any of their directors or executive
officers, presently has the power to vote or to direct the vote or to dispose or
direct the disposition of any of the shares of Common Stock or other securities
of the Company which they may be deemed to beneficially own.
(c) Except as disclosed in Item 3 hereof, none of the
Reporting Persons, nor, to the best of their knowledge, any of their directors
or executive officers, has effected any transaction in the Common Stock of the
Company during the past 60 days.
(d) Not applicable.
(e) Not applicable.
<PAGE>
Neither the filing of this Schedule 13D or any amendment
thereto, nor anything contained herein is intended as, or should be construed
as, an admission that NBC is the "beneficial owner" of any shares of Common
Stock or other securities of the Company.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The response to Item 4 hereof is incorporated herein by
reference. Except as set forth in this Schedule 13D, to the best knowledge of
the Reporting Persons, there are no other contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Item 2 and between such persons and any person with respect to any securities of
the Issuer, including, but not limited to, transfer or voting of any of the
securities of the Issuer, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies, or a pledge or contingency the occurrence of which would
give another person voting power or investment power over the securities of the
Company. An agreement among the Reporting Persons with respect to the filing of
this statement is attached hereto as Exhibit 1.
<PAGE>
ITEM 7. Material to Be Filed as Exhibits.
Exhibit 1 Joint Filing Agreement, dated as of September 24, 1999 General
Electric Company, Inc., National Broadcasting Company Holding, Inc.,
National Broadcasting Company, Inc., NBC Palm Beach Investment I,
Inc., and NBC Palm Beach Investment II, Inc.
Exhibit 2 Investment Agreement, dated as of September 15, 1999, among
Paxson Communications Corporation and National Broadcasting Company,
Inc.
Exhibit 3 Stockholder Agreement, dated as of September 15, 1999 among
Paxson Communications Corporation, National Broadcasting Company,
Inc., Mr. Lowell W. Paxson, Second Crystal Diamond Limited
Partnership and Paxson Enterprises, Inc.
Exhibit 4 Registration Rights Agreement, dated as of September 15, 1999,
among Paxson Communications Corporation and National Broadcasting
Company, Inc.
Exhibit 5 Call Agreement, dated as of September 15, 1999, among Paxson
Communications Corporation, National Broadcasting Company, Inc.,
Mr. Lowell W. Paxson, Second Crystal Diamond Limited Partnership and
Paxson Enterprises, Inc.
Exhibit 6 Certificate of Designation, dated as of September 15, 1999, by
Paxson Communications Corporation.
Exhibit 7 Warrant A, dated as of September 15, 1999 by Paxson
Communications Corporation.
Exhibit 8 Warrant B, dated as of September 15, 1999 by Paxson
Communications Corporation.
Exhibit 9 Form of Exchange Indenture, dated September 15, 1999, among
Paxson Communications Corporation, its direct and indirect
subsidiaries and a trustee to be named.
Exhibit 10 Power of Attorney appointing Robert Healing a agent and
attorney-in-fact for General Electric Company.
<PAGE>
SIGNATURES
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/ Robert Healing
Name: Robert Healing
Title: Attorney-in-Fact
NATIONAL BROADCASTING COMPANY HOLDING, INC.
By: /s/ Mark W. Begor
Name: Mark W. Begor
Title: Vice President
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ Mark W. Begor
Name: Mark W. Begor
Title: Vice President
NBC PALM BEACH INVESTMENT I, INC.
By: /s/ Lawrence Rutkowski
Name: Lawrence Rutkowski
Title: Vice President
NBC PALM BEACH INVESTMENT II, INC.
By: /s/ Lawrence Rutkowski
Name: Lawrence Rutkowski
Title: Vice President
Dated: September 24, 1999
<PAGE>
SCHEDULE A TO SCHEDULE 13D
Filed by National Broadcasting Company, Inc.
National Broadcasting Company, Inc.
Directors and Executive Officers
<TABLE>
<CAPTION>
Name Present Business Address Present Principal Occupation
- ---- ------------------------ ----------------------------
<S> <C> <C>
Directors
- ---------
S.S. Cathcart 222 Wisconsin Avenue Retired Chairman, Illinois
Suite 103 Tool Works
Lake Forest, IL 60045
Andrea Jung Avon Products, Inc. President and Chief Operating Officer, Avon
1345 Avenue of the Americas Products, Inc.
New York, NY 10105
G.G. Michelson Federated Department Stores Former Member of the Board of Directors,
151 West 34th Street Federated Department Stores
New York, NY 10001
E.F. Murphy General Electric Company Vice Chairman of the Board and Executive
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06431
S. Nunn King & Spalding Partner, King & Spalding
191 Peachtree Street, N.E.
Atlanta, GA 30303
J.D. Opie General Electric Company Vice Chairman of the Board and Executive
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06431
R.S. Penske Penske Corporation Chairman of the Board and President, Penske
13400 Outer Drive, West Corporation
Detroit, MI 482394001
F.H.T. Rhodes Cornell University President Emeritus, Cornell University
3104 Snee Building
Ithaca, NY 14853
A.C. Sigler Champion International Corporation Retired Chairman of the Board and CEO and
1 Champion Plaza former Director, Champion International
Stamford, CT 06921 Corporation
D.A. Warner III J.P. Morgan & Co., Inc. Chairman of the Board, President, and Chief
and Morgan Guaranty Trust Co. Executive Officer, J.P. Morgan & Co.
60 Wall Street Incorporated and Morgan Guaranty Trust Company
New York, NY 10260
J.F. Welch, Jr. General Electric Company Chairman of the Board and Chief Executive
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06431
Executive Officers
- ------------------
John F. Welch Jr. National Broadcasting Company, Inc. Chairman
3135 Easton Turnpike
Fairfield, CT 06431
Robert C. Wright National Broadcasting Company, Inc. Chief Executive Officer & President
30 Rockefeller Plaza
New York, NY 10112
Mark Begor National Broadcasting Company, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
William Bolster CNBC, Inc. Executive Vice President
2200 Fletcher Avenue
Fort Lee, NJ 07024
Richard Cotton National Broadcasting Company, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
Duncan Ebersol National Broadcasting Company, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
Randel A. Falco National Broadcasting Company, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
Andrew Lack National Broadcasting Company, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
Donald Ohlmeyer National Broadcasting Company, Inc. Executive Vice President
3000 West Alameda Ave.
Burbank, CA 91523
Thomas Rogers National Broadcasting Company, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
Scott Sassa National Broadcasting Company, Inc. Executive Vice President
3000 West Alameda Ave.
Burbank, CA 91523
Edward Scanlon National Broadcasting Company, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
Patrick Wallace National Broadcasting Company, Inc. Executive Vice President
30 Rockefeller Plaza
New York, NY 10112
Kassie Canter National Broadcasting Company, Inc. Senior Vice President
30 Rockefeller Plaza
New York, NY 10112
<FN>
Each person listed above is a citizen of the United States of America except
Andrea Jung, who is a citizen of Canada.
</FN>
</TABLE>
<PAGE>
SCHEDULE B TO SCHEDULE 13D
Filed by General Electric Company
General Electric Company
Directors and Executive Officers
<TABLE>
<CAPTION>
Name Present Business Address Present Principal Occupation
- ---- ------------------------ ----------------------------
Directors
- ---------
<S> <C> <C>
J.I. Cash, Jr. Harvard Business School Professor of Business AdministrationGraduate
Baker Library 187 School of Business Administration, Harvard
Soldiers Field University
Boston, MA 02163
S.S. Cathcart 222 Wisconsin Avenue Retired Chairman, Illinois Tool Works
Suite 103
Lake Forest, IL 60045
D.D. Dammerman General Electric Company Vice Chairman of the Board and Executive
3135 Easton Turnpike Officer, General Electric Company; Chairman
Fairfield, CT 06431 and Chief Executive Officer, General Electric
Capital Services, Inc.
A.M. Fudge Kraft Foods, Inc. Executive Vice President
555 South Broadway
Tarrytown, NY 10591
P. Fresco Fiat SpA Chairman of the Board, Fiat SpA
via Nizza 250
10126 Torino, Italy
C.X. Gonzalez KimberlyClark de Mexico, Chairman of the Board and Chief Executive
S.A. de C.V. Officer, KimberlyClark de Mexico, S.A. de
Jose Luis Lagrange 103, C.V.
Tercero Piso
Colonia Los Morales
Mexico, D.F. 11510, Mexico
Andrea Jung Avon Products, Inc. President and Chief Operating Officer, Avon
1345 Avenue of the Americas Products, Inc.
New York, NY 10105
K.G. Langone Invemed Associates, Inc. Chairman, President and Chief Executive
375 Park Avenue Officer, Invemed Associates, Inc.
new York, NY 10152
G.G. Michelson Federated Department Stores Former Member of the Board of Directors,
151 West 34th Street Federated Department Stores
New York, NY 10001
S. Nunn King & Spalding Partner, King & Spalding
191 Peachtree Street, N.E.
Atlanta, GA 30303
J.D. Opie General Electric Company Vice Chairman of the Board and Executive
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06431
R.S. Penske Penske Corporation Chairman of the Board and President, Penske
13400 Outer Drive, West Corporation
Detroit, MI 482394001
F.H.T. Rhodes Cornell University President Emeritus, Cornell University
3104 Snee Building
Ithaca, NY 14853
A.C. Sigler Champion International Corporation Retired Chairman of the Board and CEO and
1 Champion Plaza former Director, Champion International
Stamford, CT 06921 Corporation
D.A. Warner III J.P. Morgan & Co., Inc. and Morgan Chairman of the Board, President, and Chief
Guaranty Trust Co. Executive Officer, J.P. Morgan & Co.
60 Wall Street Incorporated and Morgan Guaranty Trust Company
New York, NY 10260
J.F. Welch, Jr. General Electric Company Chairman of the Board and Chief Executive
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06431
Executive Officers
- ------------------
J.F. Welch, Jr. General Electric Company Chairman of the Board and Chief Executive
3135 Easton Turnpike Officer
Fairfield, CT 06431
P.D. Ameen General Electric Company Vice President and Comptroller
3135 Easton Turnpike
Fairfield, CT 06431
J.R. Bunt General Electric Company Vice President and Treasurer
3135 Easton Turnpike
Fairfield, CT 06431
W.J. Conaty General Electric Company Senior Vice President Human Resources
3135 Easton Turnpike
Fairfield, CT 06431
D.M. Cote General Electric Company Senior Vice President GE Appliances
3135 Easton Turnpike
Fairfield, CT 06431
D.D. Dammerman General Electric Company Vice Chairman of the Board and Executive
Officer, General Electric Company; Chairman
and Chief Executive Officer, General Electric
Capital Services, Inc.
L.S. Edelheit General Electric Company Senior Vice President Corporate Research
P.O. Box 8 and Development
Schenectady, NY 12301
B.W. Heineman, Jr. General Electric Company Senior Vice President General Counsel and
3135 Easton Turnpike Secretary
Fairfield, CT 06431
J.R. Immelt General Electric Company Senior Vice President GE Medical Systems
P.O. Box 414
Milwaukee, WI 53201
G.S. Malm General Electric Company Senior Vice President Asia
3135 Easton Turnpike
Fairfield, CT 06431
W.J. McNerney, Jr. General Electric Company Senior Vice President GE Aircraft Engines
1 Neumann Way
Cincinnati, OH 05215
R.L. Nardelli General Electric Company Senior Vice President GE Power Systems
1 River Road
Schenectady, NY 12345
R.W. Nelson General Electric Company Vice President Corporate Financial Planning
3135 Easton Turnpike and Analysis
Fairfield, CT 06431
J.D. Opie General Electric Company Vice Chairman of the Board and Executive
3135 Easton Turnpike Officer
Fairfield, CT 06431
G.M. Reiner General Electric Company Senior Vice President Chief Information
3135 Easton Turnpike Officer
Fairfield, CT 06431
J.G. Rice General Electric Company Vice President GE Transportation Systems
2901 East Lake Road
Erie, PA 16531
G.L. Rogers General Electric Company Senior Vice President GE Plastics
1 Plastics Avenue
Pittsfield, MA 01201
K.S. Sherin General Electric Company Senior Vice President Finance and Chief
3135 Easton Turnpike Financial Officer
Fairfield, CT 06431
L.G. Trotter General Electric Company Senior Vice President GE Industrial Systems
41 Woodward Avenue
Plainville, CT 06062
M.S. Zafirovski General Electric Company Senior Vice President GE Lighting
<FN>
Each person listed above is a citizen of the United States of America except:
C.X. Gonzalez, who is a citizen of Mexico; P. Fresco, who is a citizen of Italy;
Andrea Jung, who is a citizen of Canada; and G.S. Malm, who is a citizen of
Sweden.
</FN>
</TABLE>
<PAGE>
SCHEDULE C TO SCHEDULE 13D
Filed by National Broadcasting Company Holding, Inc.
National Broadcasting Company Holding, Inc.
Directors and Executive Officers
<TABLE>
<CAPTION>
Name Present Business Address Present Principal Occupation
- ---- ------------------------ ----------------------------
Directors
- ---------
<S> <C> <C>
J.I. Cash, Jr. Harvard Business School Professor of Business AdministrationGraduate
Baker Library 187 School of Business Administration, Harvard
Soldiers Field University
Boston, MA 02163
S.S. Cathcart 222 Wisconsin Avenue Retired Chairman, Illinois
Suite 103 Tool Works
Lake Forest, IL 60045
D.D. Dammerman General Electric Company Vice Chairman of the Board and Executive
3135 Easton Turnpike Officer, General Electric Company; Chairman
Fairfield, CT 06431 and Chief Executive Officer, General Electric
Capital Services, Inc.
P. Fresco Fiat SpA Chairman of the Board, Fiat SpA
via Nizza 250
10126 Torino, Italy
C.X. Gonzalez KimberlyClark de Mexico, Chairman of the Board and Chief Executive
S.A. de C.V. Officer, KimberlyClark de Mexico, S.A. de
Jose Luis Lagrange 103, C.V.
Tercero Piso
Colonia Los Morales
Mexico, D.F. 11510, Mexico
Andrea Jung Avon Products, Inc. President and Chief Operating Officer, Avon
1345 Avenue of the Americas Products, Inc.
New York, NY 10105
G.G. Michelson Federated Department Stores Former Member of the Board of Directors,
151 West 34th Street Federated Department Stores
New York, NY 10001
E.F. Murphy General Electric Company Vice Chairman of the Board and Executive
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06431
S. Nunn King & Spalding Partner, King & Spalding
191 Peachtree Street, N.E.
Atlanta, GA 30303
J.D. Opie General Electric Company Vice Chairman of the Board and Executive
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06431
R.S. Penske Penske Corporation Chairman of the Board and President, Penske
13400 Outer Drive, West Corporation
Detroit, MI 482394001
F.H.T. Rhodes Cornell University President Emeritus, Cornell University
3104 Snee Building
Ithaca, NY 14853
A.C. Sigler Champion International Corporation Retired Chairman of the Board and CEO and
1 Champion Plaza former Director, Champion International
Stamford, CT 06921 Corporation
D.A. Warner III J.P. Morgan & Co., Inc. and Morgan Chairman of the Board, President, and Chief
Guaranty Trust Co. Executive Officer, J.P. Morgan & Co.
60 Wall Street Incorporated and Morgan Guaranty Trust Company
New York, NY 10260
J.F. Welch, Jr. General Electric Company Chairman of the Board and Chief Executive
3135 Easton Turnpike Officer, General Electric Company
Fairfield, CT 06431
Executive Officers
- ------------------
Robert C. Wright National Broadcasting Company, Inc. Chief Executive Officer and President
30 Rockefeller Plaza
New York, NY 10112
Mark Begor National Broadcasting Company, Inc. Vice President and Treasurer
30 Rockefeller Plaza
New York, NY 10112
<FN>
Each person listed above is a citizen of the United States of America except:
C.X. Gonzalez, who is a citizen of Mexico; P. Fresco, who is a citizen of Italy;
and Andrea Jung, who is a citizen of Canada.
</FN>
</TABLE>
<PAGE>
SCHEDULE D TO SCHEDULE 13D
Filed By NBC Palm Beach Investment I, Inc.
NBC Palm Beach Investment I, Inc.
Directors and Executive Officers
<TABLE>
<CAPTION>
Name Present Business Address Present Principal Occupation
- ---- ------------------------ ----------------------------
<S> <C> <C>
Directors
- ---------
Mark Begor National Broadcasting Company, Inc. Treasurer
30 Rockefeller Plaza
New York, NY 10112
Randel Falco National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Thomas Rogers National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Robert C. Wright National Broadcasting Company, Inc. President
30 Rockefeller Plaza
New York, NY 10112
Officers
- --------
Robert C. Wright National Broadcasting Company, Inc. President
30 Rockefeller Plaza
New York, NY 10112
Randel Falco National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Thomas Rogers National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Lawrence Rutkowski National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Patrick Wallace National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Mark Begor National Broadcasting Company, Inc. Treasurer
30 Rockefeller Plaza
New York, NY 10112
Daniel Widawsky National Broadcasting Company, Inc. Assistant Treasurer
30 Rockefeller Plaza
New York, NY 10112
Richard Cotton National Broadcasting Company, Inc. Secretary
30 Rockefeller Plaza
New York, NY 10112
Elizabeth Newell National Broadcasting Company, Inc. Assistant Secretary
30 Rockefeller Plaza
New York, NY 10112
</TABLE>
<PAGE>
SCHEDULE E TO SCHEDULE 13D
Filed By NBC Palm Beach Investment II, Inc.
NBC Palm Beach Investment II, Inc.
Directors and Executive Officers
<TABLE>
<CAPTION>
Name Present Business Address Present Principal Occupation
- ---- ------------------------ ----------------------------
<S> <C> <C>
Directors
- ---------
Mark Begor National Broadcasting Company, Inc. Treasurer
30 Rockefeller Plaza
New York, NY 10112
Randel Falco National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Thomas Rogers National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Robert C. Wright National Broadcasting Company, Inc. President
30 Rockefeller Plaza
New York, NY 10112
Officers
- --------
Robert C. Wright National Broadcasting Company, Inc. President
30 Rockefeller Plaza
New York, NY 10112
Randel Falco National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Thomas Rogers National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Lawrence Rutkowski National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Patrick Wallace National Broadcasting Company, Inc. Vice President
30 Rockefeller Plaza
New York, NY 10112
Mark Begor National Broadcasting Company, Inc. Treasurer
30 Rockefeller Plaza
New York, NY 10112
Daniel Widawsky National Broadcasting Company, Inc. Assistant Treasurer
30 Rockefeller Plaza
New York, NY 10112
Richard Cotton National Broadcasting Company, Inc. Secretary
30 Rockefeller Plaza
New York, NY 10112
Elizabeth Newell National Broadcasting Company, Inc. Assistant Secretary
30 Rockefeller Plaza
New York, NY 10112
</TABLE>
<PAGE>
SCHEDULE F TO SCHEDULE 13D
GE CONVICTIONS WITHIN THE PAST FIVE YEARS
-----------------------------------------
1. Her Majesty's Inspectorate of Pollution v. IGE Medical Systems
Limited (St. Albans Magistrates Court, St. Albans, Hertsfordshire, England, Case
No. 04/00320181)
In April 1994, IGE Medical Systems Limited ("IGEMS"), a U.K.
subsidiary of GE Medical Systems, discovered the loss of a radioactive barium
source at the Radlett, England facility. The lost source, used to calibrate
nuclear camera detectors, emits a very low level of radiation. IGEMS immediately
reported the loss as required by the U.K. Radioactive Substances Act. An ensuing
investigation, conducted in cooperation with government authorities, failed to
locate the source. On July 21, 1994, Her Majesty's Inspectorate of Pollution
(AHMIP@) charged IGEMS with violating the Radioactive Substances Act by failing
to comply with a condition of registration. The Act provides that a registrant
like IGEMS, which "does not comply with a limitation or condition subject to
which (it) is so registered ... shall be guilty of (a criminal) offense."
Condition 7 of IGEMS' registration states that it "shall so far as is reasonably
practicable prevent ... loss of any registered source."
At the beginning of trial on February 24, 1995, IGEMS entered
a guilty plea and agreed to pay a fine of GBP 5,000 and assessed costs of GBP
5,754. The prosecutor's presentation focused primarily on the 1991 change in
internal IGEMS procedures and, in particular, the source logging procedure. The
prosecutor complimented IGEMS' investigation and efforts to locate the source
and advised the court that IGEMS had no previous violations of the Radioactive
Substances Act. He also told the court that the Radlett plant had been
highlighted as an exemplary facility to HMIP inspectors as part of their
training. In mitigation, IGEMS emphasized the significant infrastructure and
expense undertaken by IGEMS to provide security for radiation sources and the
significant effort and expense incurred in attempting to locate the missing
source.
Except for the foregoing, GE has not and, to the best of GE's
knowledge, none of the directors and executive officers of GE has been, during
the last five years, convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
2. GE has not and, to the best of GE's knowledge, none of the
directors and executive officers of GE has been, during the last five years, a
party to a civil proceeding of a judicial or administrative body of a competent
jurisdiction and as a result of such proceedings was or is subject to a
judgment, decree, or final order enjoining future violations of or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
Material to Be Filed as Exhibits.
- ---------------------------------
Exhibit 1 Joint Filing Agreement, dated as of September __, 1999 General
Electric Company, Inc., National Broadcasting Company Holding,
Inc., National Broadcasting Company, Inc., NBC Palm Beach
Investment I, Inc., and NBC Palm Beach Investment II, Inc.
Exhibit 2 Investment Agreement, dated as of September 15, 1999, among
Paxson Communications Corporation and National Broadcasting
Company, Inc.
Exhibit 3 Stockholder Agreement, dated as of September 15, 1999 among
Paxson Communications Corporation, National Broadcasting Company,
Inc., Mr. Lowell W. Paxson, Second Crystal Diamond Limited
Partnership and Paxson Enterprises, Inc.
Exhibit 4 Registration Rights Agreement, dated as of September 15, 1999,
among Paxson Communications Corporation and National Broadcasting
Company, Inc.
Exhibit 5 Call Agreement, dated as of September 15, 1999, among Paxson
Communications Corporation, National Broadcasting Company, Inc.,
Mr. Lowell W. Paxson, Second Crystal Diamond Limited Partnership
and Paxson Enterprises, Inc.
Exhibit 6 Certificate of Designation, dated as of September 15, 1999, by
Paxson Communications Corporation.
Exhibit 7 Warrant A, dated as of September 15, 1999 by Paxson
Communications Corporation.
Exhibit 8 Warrant B, dated as of September 15, 1999 by Paxson
Communications Corporation.
Exhibit 9 Form of Exchange Indenture, dated September 15, 1999, among
Paxson Communications Corporation, its direct and indirect
subsidiaries and a trustee to be named.
Exhibit 10 Power of Attorney appointing Robert Healing a agent and
attorney-in-fact for General Electric Company.
<PAGE>
Exhibit 1
JOINT FILING AGREEMENT
We, the signatories of the statement on Schedule 13D to which this
Agreement is attached, hereby agree that such statement is, and any amendments
thereto filed by any of us will be, filed on behalf of each of us.
Dated: September 24, 1999
GENERAL ELECTRIC COMPANY
By: /s/ Robert Healing
Name: Robert Healing
Title: Attorney-in-Fact
NATIONAL BROADCASTING HOLDING COMPANY, INC.
By: /s/ Mark W. Begor
Name: Mark W. Begor
Title: Vice President
- -
NATIONAL BROADCASTING COMPANY HOLDING, INC.
By: /s/ Mark W. Begor
Name: Mark W. Begor
Title: Executive Vice President
NBC PALM BEACH INVESTMENT I, INC.
By: /s/ Lawrence Rutkowski
Name: Lawrence Rutkowski
Title: Vice President
NBC PALM BEACH INVESTMENT II, INC.
By: /s/ Lawrence Rutkowski
Name: Lawrence Rutkowski
Title: Vice President
<PAGE>
Exhibit 2
INVESTMENT AGREEMENT
By and Between
PAXSON COMMUNICATIONS CORPORATION
AND
NATIONAL BROADCASTING COMPANY, INC.
Dated as of September 15, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. Definitions 1
Section 1.1 Definitions 1
ARTICLE II. Authorization, Sale and Purchase of the Securities
18
Section 2.1 Authorization; Agreement to Sell and Purchase 18
Section 2.2 Closing 18
Section 2.3 Use of Proceeds 19
ARTICLE III. Representations and Warranties 19
Section 3.1 Representations and Warranties of the Company 19
Section 3.2 Representations and Warranties of the Investor 37
ARTICLE IV. Conduct of Business 40
Section 4.1 Conduct of the Business 40
ARTICLE V. Other Agreements 43
Section 5.1 Public Statements 43
Section 5.2 Reasonable Commercial Efforts 43
Section 5.3 Government Filings 44
Section 5.4 Reservation of Shares 45
Section 5.5 Notification of Certain Matters 45
Section 5.6 Further Assurances 45
Section 5.7 Company Stockholder Meetings 45
Section 5.8 Access to Information 46
ARTICLE VI. Affirmative and Negative Covenants 46
Section 6.1 Maintenance of Existence and Property; FCC
Licenses 46
Section 6.2 Payment of Obligations 46
Section 6.3 Books and Records 47
Section 6.4 Insurance 47
Section 6.5 Compliance with Laws, Etc. 47
Section 6.6 Environmental Matters 47
Section 6.7 Capital Structure and Business 48
Section 6.8 ERISA 48
Section 6.9 Hazardous Materials 48
Section 6.10 No Impairment of Intercompany Transfers 48
Section 6.11 Limitation on Certain Asset Sales 49
Section 6.12 No Restrictive Covenants 49
ARTICLE VII. Operating Agreements 50
Section 7.1 Affiliation Conversions 50
Section 7.2 Investor Right of First Refusal 51
Section 7.3 Pre-empted NBC Network Shows 52
Section 7.4 Network Facilities 53
Section 7.5 Advertising for Equity Transactions 53
ARTICLE VIII. Deliveries at Closing 54
Section 8.1 Deliveries at Closing 54
ARTICLE IX. Redemption 55
Section 9.1 Basic Redemption 55
Section 9.2 Default Redemption 55
Section 9.3 Assignment of Redemption Obligation 56
Section 9.4 Failure to Redeem 56
Section 9.5 Company Sale. 57
ARTICLE X. Miscellaneous 57
Section 10.1 Survival of Representations and Warranties 57
Section 10.2 Notices 58
Section 10.3 Entire Agreement; Amendment 58
Section 10.4 Counterparts 59
SECTION 10.5 GOVERNING LAW; JURISDICTION; WAIVER OF JURY
TRIAL 59
Section 10.6 Fees and Expenses 59
Section 10.7 Indemnification by the Company 59
Section 10.8 Successors and Assigns; Third Party
Beneficiaries 60
Section 10.9 Arbitration 61
Section 10.10 Remedies 61
Section 10.11 Headings, Captions and Table of Contents 62
Section 10.12 Termination 62
<PAGE>
SCHEDULES
2.3 - Use of Proceeds
3.1(b) - Consents and Approvals
3.1(c) - Capitalization
3.1(e) - Certain Changes
3.1(g) - FCC Licenses and Applications
3.1(h) - Labor Matters
3.1(j) - Tax Matters
3.1(k) - Employee Plans
3.1(l) - Legal Proceedings
3.1(m) - Brokers and Finders
3.1(o) - Environmental Matters
3.1(r) - Material Agreements
3.1(v) - Company Stations
3.1(w) - Subscribers
3.1(y) - Affiliate Transactions
3.2(c) - Consents and Approvals
3.2(e) - Investor Stations
4.1(g) - Excluded Transactions
4.1(h) - Asset Acquisitions
5.4 - Required Consents
EXHIBITS
A - Form of Certificate of Designation
B - Form of Warrant A
C - Form of Warrant B
D - Form of Registration Rights Agreement
E - Form of Stockholder Agreement
F - Form of Call Agreement
G-1 - Form of Opinion of Company Counsel
G-2 - Form of Opinion of Company Counsel
<PAGE>
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT, dated as of September 15, 1999 (this
"Agreement"), by and between PAXSON COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Company"), and NATIONAL BROADCASTING COMPANY, INC., a Delaware
corporation (together with its permitted transferees, the "Investor").
Capitalized terms not otherwise defined where used shall have the meanings
ascribed thereto in Article I.
WHEREAS, the Investor has agreed to purchase from the Company,
and the Company has agreed to sell to the Investor, subject to the terms and
conditions of this Agreement, shares of the Company's Series B Convertible
Exchangeable Preferred Stock and warrants to purchase Common Stock; and
WHEREAS, the Company and the Investor desire to set forth
certain agreements herein.
NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained and intending to be
legally bound hereby, the parties hereby agree as follows:
ARTICLE I
Definitions
Section I.1 Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Accelerated Buyout" shall mean the Investor's right to
exercise in full any unexercised portions of Warrant A, Warrant B and
the Call Agreement, without regard to the limitation on exercisability
prior to February 1, 2002 of Warrant B and the Call Agreement otherwise
applicable and, with respect to Warrant B and the Call Agreement, at an
exercise price per share equal to the greater of (i) the average of the
closing prices of the Class A Common Stock on the American Stock
Exchange (or other applicable exchange) for the 45 consecutive trading
days ending on the trading date immediately preceding the date of the
delivery of the Notice of Default Redemption and (ii) to the extent
that the reference to $22.50 in Section 1(b) of Warrant B or Section
2.1(b) of the Call Agreement would otherwise apply, $20. Such $20.00
price shall be subject to all adjustments applicable to any floor
prices in Warrant B or the Call, as the case may be.
"Affiliate Conversion" shall have the meaning set forth in
Section 7.1(a).
"Affiliate" shall mean, with respect to any Person, any other
Person that controls, is controlled by, or is under common control
with, such Person, including the executive officers and directors of
such Person. As used in this definition, "control" (including its
correlative meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"Agreement" shall have the meaning set forth in the preamble.
"Ancillary Documents" shall mean the Certificate of
Designation, the Warrants, the Call Agreement, the Stockholder
Agreement, the Registration Rights Agreement, the Letter Agreements and
the Time Brokerage Agreements.
"Asset Sale" shall mean the sale, transfer or other
disposition (other than to the Company or any of its Company
Subsidiaries) in any single transaction or series of related
transactions involving assets with a fair market value in excess of
$2,000,000 of (a) any capital stock of or other equity interest in any
Company Subsidiary (b) all or substantially all of the assets of the
Company or of any Company Subsidiary, (c) real property, (d) all or
substantially all of the assets of any media property, or part thereof,
owned by the Company or any Company Subsidiary, or a division, line of
business or comparable business segment of the Company or any Company
Subsidiary or (e) any transaction involving the transfer of an FCC
licenses for a Company Station; provided that Asset Sales shall not
include sales, leases, conveyances, transfers or other dispositions to
the Company or to a wholly owned Company Subsidiary or to any other
Person if after giving effect to such sale, lease, conveyance, transfer
or other disposition such other Person becomes a wholly owned Company
Subsidiary.
"Bankruptcy Law" shall mean Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors.
"Board of Directors" shall mean the Board of Directors of the
Company as from time to time constituted.
"Budget" shall mean for any fiscal year the annual operating
budget for the Company, including the Network (but specifically
excluding all Company Station operations and programming, except for
Same Market Stations), which shall include Network programming items
(including capital expenditures, general corporate overhead expenses
and other operating expenses), prepared by the Company, provided that
if the Company and the Investor fail to agree on an annual operating
budget (i) for fiscal year 2000, the Budget shall be the budget
contained in the Business Plan previously provided by the Company to
the Investor and (ii) for any fiscal year after 2000, the Budget shall
be the Budget for the previous year.
"Business Day" shall mean any day, other than a Saturday,
Sunday or a day on which commercial banks in New York, New York are
authorized or obligated by law or executive order to close.
"Call Agreement" shall mean the Call Agreement, dated as of
the date hereof, to be executed and delivered by the Investor and the
other parties thereto at Closing, which shall be substantially in the
form of Exhibit F hereto, as from time to time amended, modified or
supplemented.
"Call Right" shall have the meaning set forth in Section 2.1
of the Call Agreement.
"Call Shares" shall have the meaning set forth in the Call
Agreement.
"Certificate of Designation" shall mean the Certificate of
Designation of the Shares of the Company, to be executed and filed with
the Secretary of State of the State of Delaware on or prior to the
Closing Date, which shall be substantially in the form of Exhibit A
hereto.
"Class A Common Stock" shall mean the shares of Class A Common
Stock, par value $0.001 per share, of the Company.
"Class B Common Stock" shall mean the shares of Class B Common
Stock, par value $0.001 per share, of the Company.
"Closing" and "Closing Date" shall have the meanings set forth
in Section 2.2(a).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Common Stock" shall mean the Class A Common Stock, Class B
Common Stock and Class C Common Stock, par value $0.001 per share, and
any other class of common stock of the Company hereafter created and
any securities of the Company into which such Common Stock may be
reclassified, exchanged or converted.
"Communications Act" shall mean the Communications Act of
1934, as amended (including, without limitation, the Cable
Communications Policy Act of 1984 and the Cable Television Consumer
Protection and Competition Act of 1992) and all rules and regulations
of the FCC, in each case as from time to time in effect.
"Company Plans" shall have the meaning set forth in Section
3.1(k).
"Company" shall have the meaning set forth in the preamble
hereto.
"Company Sale" shall have the meaning set forth in Section
9.5.
"Company Stations" shall have the meaning set forth in Section
3.1(g).
"Company Subsidiary" shall mean any Subsidiary of the Company.
"Controlled Group" shall have the meaning set forth in Section
3.1(k)(iii).
"Conversion Request" shall have the meaning set forth in
Section 7.1(a).
"Conversion Shares" shall have the meaning set forth in
Section 2.1(a).
"Custodian" shall mean any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
"Default Redemption Period" shall have the meaning set forth
in Section 9.2(b).
"Default Redemption Price" shall mean the greater of (i) the
Par Value Price and (ii) an amount per Conversion Share equal to the
average of the closing prices of the Common Stock on the American Stock
Exchange (or other applicable exchange) for the 45 consecutive trading
days ending on the trading date immediately preceding the date of
delivery of the Notice of Default Redemption, provided that if the
applicable Notice of Default Redemption is based upon an Event of
Default under clause (2)(C) of the definition of Event of Default, the
Default Redemption Price shall be the Par Value Price.
"DGCL" shall mean the Delaware General Corporation Law.
"Direct Investment" shall have the meaning set forth in
Section 7.5(a).
"Distribution Agreement" shall mean any agreement pursuant to
which the Network signal is transmitted on a Distribution System.
"Distribution System" shall mean a distribution system
operated by a multichannel video programming distributor including
cable television systems, MATV and SMATV systems, MMDS, TVRO and other
wired, wireless and direct broadcast satellite delivery methods, in all
cases, whether analog or digital.
"DMA" shall mean a Designated Market Area as determined by
Nielsen Media Research or such successor designation of television
markets that may in the future be recognized by the FCC for determining
television markets.
"Environmental Claim" shall mean any written notice, claim,
demand, action, suit, complaint, proceeding which has been served upon
or delivered or otherwise transmitted to the Company or any Company
Subsidiary, by any Person alleging material Environmental Liability or
potential material Environmental Liability.
"Environmental Laws" shall mean all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards
and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any applicable judicial
or administrative interpretation thereof, including any applicable
judicial or administrative order, consent decree, order or judgment,
imposing liability or standards of conduct for or relating to the
regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species
and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C. ss.ss. 9601 et seq.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. ss.ss. 5101 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. ss.ss. 136 et seq.); the Solid Waste Disposal Act (42 U.S.C.
ss.ss. 6901 et seq.); the Toxic Substance Control Act (15 U.S.C. ss.ss.
2601 et seq.); the Clean Air Act (42 U.S.C. ss.ss. 7401 et seq.); the
Federal Water Pollution Control Act (33 U.S.C. ss.ss. 1251 et seq.);
the Occupational Safety and Health Act (29 U.S.C. ss.ss. 651 et seq.);
and the Safe Drinking Water Act (42 U.S.C. ss.ss. 300(f) et seq.), each
as from time to time amended, and any and all regulations promulgated
thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval
statutes.
"Environmental Liabilities" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, response,
remedial and removal costs, investigation and feasibility study costs,
capital costs, operation and maintenance costs, losses, damages,
punitive damages, property damages, natural resource damages,
consequential damages, treble damages, costs and expenses (including
all fees, disbursements and expenses of counsel, experts and
consultants), fines, penalties, sanctions and interest incurred as a
result of or related to any claim, suit, action, investigation,
proceeding or demand by any Person, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil
statute or common law, including any arising under or related to any
Environmental Laws, Environmental Permits, or in connection with any
Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real
or personal property.
"Environmental Permits" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by
any Governmental Entity under any Environmental Laws.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation hereto), as amended from time to
time, and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to the Company or
any Company Subsidiary, any trade or business (whether or not
incorporated) which, together with the Company or such Company
Subsidiary, are treated as a single employer within the meaning of
Sections 414(b), (c), (m) or (o) of the Code.
"ERISA Event" shall mean, with respect to the Company, any
Company Subsidiary or any ERISA Affiliate (a) any event described in
Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the
withdrawal of the Company, any Company Subsidiary or ERISA Affiliate
from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (c) the complete or partial withdrawal of the
Company, any Company Subsidiary or any ERISA Affiliate from any
Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the
failure by the Company, any Company Subsidiary or ERISA Affiliate to
make when due required contributions to a Multiemployer Plan or Title
IV Plan unless such failure is cured within 30 days; (g) any other
event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or for the imposition of liability under Section
4069 or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan
under Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 of ERISA;(i) the loss of a
Qualified Plan's qualification or tax exempt status; or (j) the
termination of a Company Plan described in Section 4064 of ERISA.
"Event of Default" shall mean:
(1) the Company (or any other party to the Ancillary Documents
other than the Investor and its Affiliates) (i) is in material breach
or default under this Agreement or any Ancillary Document other than
the Time Brokerage Agreements (including any breach whatsoever of
Section 3.3 of the Stockholder Agreement), and (ii) either (A) if such
breach or default is not reasonably curable, the Company receives
notice of such breach or default from the Investor or (B) if such
breach or default is reasonably curable, the Company fails to cure such
breach or default within 30 days after the Company's receipt of notice
from the Investor of such breach or default,
(2) there is (A) a default in the payment at final maturity of
principal in an aggregate amount of $10,000,000 or more with respect to
any indebtedness of the Company or any Company Subsidiary which default
shall not be cured, waived or postponed pursuant to an agreement with
the holders of such Indebtedness within 60 days after written notice,
(B) an acceleration of any such Indebtedness aggregating $10,000,000 or
more which acceleration shall not be rescinded or annulled within 20
days after written notice to the Company of such Default by the
Investor or (C) a default or other event that permits the acceleration
of any such indebtedness aggregating $10,000,000 or more which default
or other event has not been cured or waived by the filing deadline for
the next SEC report of the Company on Form 10-K, 10-Q or 8-K or similar
report under the Exchange Act.
(3) a court of competent jurisdiction enters a final judgment
or judgments which can no longer be appealed for the payment of money
in excess of $10,000,000 against the Company or any Company Subsidiary
and such judgment remains undischarged for a period of 60 consecutive
days during which a stay of enforcement of such judgment shall not be
in effect;
(4) the Company or any Company Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become
due; or
(5) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any Company
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any
Company Subsidiary or for all or substantially all of the
property of the Company or any Company Subsidiary, or
(C) orders the liquidation of the Company or any
Company Subsidiary, and the order or decree remains unstayed
and in effect for 60 days.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Existing Preferred Stock" shall have the meaning set forth in
Section 3.1(c).
"Facilities" shall mean any facilities or equipment used by
the Company or any Company Subsidiary in any location, including
broadcast and network operations and transmission, traffic, HVAC
systems, mechanical systems, elevators, security systems, fire
suppression systems, telecommunications systems, and equipment, whether
or not owned by the Company.
"FCC" shall mean the Federal Communications Commission and any
successor Governmental Entity performing functions similar to those
performed by the Federal Communications Commission on the date hereof.
"FCC Authorization" shall have the meaning set forth in
Section 3.1(g)(i).
"Financial Statements" shall have the meaning set forth in
Section 3.1(e).
"Fiscal Quarter" shall mean any of the quarterly accounting
periods of the Company and the Company Subsidiaries ending on March 31,
June 30, September 30 and December 31 of each year.
"FTE Subscriber" shall mean one full-time equivalent
Subscriber which shall equal one Subscriber which receives the Network
on a full-time basis.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"GECC Credit Agreement" shall mean the Credit Agreement dated
as of August 28, 1998 among the Company and the Subsidiaries thereof
which are parties thereto from time to time, as borrowers, the lenders
which are parties thereto from time to time, as lenders, and General
Electric Capital Corporation, as agent and lender, as such agreement is
in effect on the date hereof and taking into account any amendment,
supplement, termination or other change prior to but not after the date
hereof.
"Governmental Entity" shall mean any nation or government, any
state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any self-regulating
organization, securities exchange or securities trading system,
including, without limitation, the FCC.
"Hazardous Material" shall mean any substance, material or
waste which is regulated by or forms the basis of liability now or
hereafter under, any Environmental Laws, including any material or
substance which is (a) defined as a "solid waste," "hazardous waste,
"hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "pollutant," "contaminant,"
hazardous constituent," "special waste," toxic substance" or other
similar term or phrase under any Environmental Laws, (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls
(PCB')s, or any radioactive substance.
"HDTV" shall have the meaning set forth in Section 7.1(b).
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indirect Investment" shall have the meaning set forth in
Section 7.5(a).
"Intellectual Property" shall mean all material patents,
copyright registrations, mask work registrations, trademark and service
mark registrations, applications for any of the foregoing, designs,
copyrights, mask works, service marks, trade dress, trade names, secret
formulae, trade secrets, secret processes, computer programs,
confidential information and know-how.
"Internal MIS Systems" shall mean any computer software and
systems (including hardware, firmware, operating system software,
utilities, and applications software) used in the ordinary course of
the Company's business by or on behalf of the Company, including the
Company's payroll, accounting, billing/receivables, inventory, asset
tracking, customer service, human resources, and e-mail systems.
"Investor Indemnitees" shall have the meaning set forth in
Section 10.7(a).
"Investor Recourse Period" shall have the meaning set forth in
Section 9.4.
"Investor Rights" shall mean the rights of the Investor set
forth in the Stockholder Agreement and in Articles IV hereof and
Article VI other than Section 6.12.
"Investor" shall have the meaning set forth in the preamble
hereto.
"Involuntary Redemption Period" shall have the meaning set
forth in Section 9.1(b).
"Letter Agreements" shall mean the three letter agreements,
dated as of the date hereof, executed and delivered by the Company and
the Investor at the Closing.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or security
agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement or
any financing lease having substantially the same effect as any of the
foregoing).
"Litigation" shall have the meaning set forth in Section
3.1(l).
"Losses" shall have the meaning set forth in Section 10.7(a).
"Material Adverse Effect" shall mean a material adverse effect
on (i) with respect to the Company, the business, assets, operations or
financial or other condition of the Company and the Company
Subsidiaries taken as a whole or (ii) with respect to any party to this
Agreement or any Ancillary Document, the ability of such party to
perform its obligations under this Agreement or any Ancillary Document
to which it is a party.
"Material Agreement" shall mean any contract, lease,
restriction, agreement, instrument or commitment to which the Company
or any Company Subsidiary is a party or by which its properties are
bound (i) which provides for the Company and the Company Subsidiaries
to receive or commits the Company or any Company Subsidiary to expend,
$1 million (including cash or the fair market value of non-cash assets)
or more in the aggregate in any 12-month period or $2 million or more
in the aggregate over any period, (ii) which if breached by any party
thereto would result in liability or loss to the Company and the
Company Subsidiaries of $1 million or more in the aggregate or (iii)
which is a stockholders agreement relating to the Company, partnership
agreement, joint venture agreement or Distribution Agreement pursuant
to which 20,000 or more Subscribers receive the Network.
"Minimum Investment" shall mean, as of any date of
determination,(i) during the period from the date hereof to the 30th
day after the Company files quarterly financial results with the SEC
indicating positive net earnings per share of Common Stock for any
fiscal quarter, 21,500,000 Underlying Shares or (ii) during any other
period thereafter, 26,000,000 Underlying Shares; provided that such
numbers shall be equitably adjusted for any conversions,
reclassifications, reorganizations, stock dividends, stock splits,
reverse splits and similar events which occur with respect to the
Common Stock. For purposes of the determination of whether the Minimum
Investment is owned (x) the Investor or its Affiliates holding any
Shares shall be deemed to hold the Conversion Shares for such Shares
and (y) any transferee of Subject Securities shall be deemed to hold
the Conversion Shares, and shares of Common Stock issuable upon
exercise of the Warrants and the Call Shares where the 30-day mandatory
exercise period for such Warrant or Call has not yet expired.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which the Company, any
Company Subsidiary or ERISA Affiliate is making, is obligated to make,
or has made or been obligated to make, contributions on behalf of
participants who are or were employed by any of them.
"National Coverage" shall mean, with respect to any television
network, the percentage of national television households that receive
such network's broadcast as listed in the Nielsen Television Index or
such successor measure of coverage equivalent thereto generally adopted
by the television industry.
"NBC" shall mean NBC Television Network, a division of
National Broadcasting Company, Inc., a Delaware corporation.
"NBC Network Affiliate" shall mean any party with whom NBC has
entered into a network affiliation agreement.
"NBC Nominee" shall have the meaning set forth in the
Stockholder Agreement.
"Network" shall mean the Pax TV Network.
"New Affiliation Agreement" shall have the meaning set forth
in Section 7.1(a).
"New Media Advertising" shall have the meaning set forth in
Section 7.5(a).
"New Media Company" shall have the meaning set forth in
Section 7.5(a).
"New Media Equity" shall have the meaning set forth in Section
7.5(a).
"Notice of Default Redemption" shall have the meaning set
forth in Section 9.2(a).
"Options" shall mean stock options to purchase Common Stock
issued or issuable under any of the Company's Stock Incentive Plan,
1996 Stock Incentive Plan or 1998 Stock Incentive Plan or any
employment, consulting or similar agreements in effect as of the date
hereof.
"Original Issue Price" shall mean $10,000 per Share.
"Par Value Price" shall have the meaning set forth in Section
9.1(a).
"Parent" shall mean General Electric Company, a Delaware
corporation.
"Paxson Stockholders" shall mean Paxson, Second Crystal
Diamond Limited Partnership and Paxson Enterprises, Inc.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Permits" shall have the meaning set forth in Section 3.1(a).
"Permitted Liens" shall mean (i) mechanics', carriers',
repairmen's or other like Liens arising or incurred in the ordinary
course of business, (ii) Liens arising under original purchase price
conditioned sales contracts and equipment leases with third parties
entered into in the ordinary course of business consistent with past
practice, (iii) statutory Liens for Taxes not yet due and payable, (iv)
Liens securing the indebtedness under the GECC Credit Agreement and the
Union Bank Credit Agreement and other indebtedness included as
"long-term debt" on the June 30, 1999 Financial Statements and (v)
other encumbrances or restrictions or imperfections of title which do
not materially impair the continued use and operation of the assets to
which they relate.
"Person" shall mean an individual, corporation, unincorporated
association, partnership, group (as defined in Section 13(d)(3) of the
Exchange Act), trust, joint stock company, joint venture, business
trust or unincorporated organization, limited liability company, any
Governmental Entity or any other entity of whatever nature.
"Pre-empted Shows" shall have the meaning set forth in Section
7.3(a).
"Preferred Stock" shall mean the preferred stock, par value
$0.001 per share, of the Company.
"Prime Time Hours" shall have the meaning set forth in Section
7.3(a).
"Purchase Price" shall have the meaning set forth in Section
2.1(b).
"Qualified Plan" shall mean a Company Plan which is intended
to be tax-qualified under Section 401(a) of the IRC.
"Registration Rights Agreement" shall mean the registration
rights agreement to be executed by the Investor and the Company at the
Closing, which shall be substantially in the form attached as Exhibit D
hereto.
"Release" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape,
injection, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Material in the indoor or outdoor
environment, including the movement of Hazardous Material through or in
the air, soil, surface water, ground water or property.
"Restricted Use" shall mean any of the following: (i) the
declaration or payment of any dividend or any other distribution or
payment on capital stock of the Company or any Company Subsidiary or
any payment made to the direct or indirect holders (in their capacities
as such) of capital stock of the Company or any Company Subsidiary,
(ii) the purchase, redemption or other acquisition or retirement for
value of any capital stock of the Company or any Company Subsidiaries
or (iii) the making of any investment in any Person.
"Same Market Station" shall mean any Company Station (i) in
which the Investor would be permitted to have an attributable interest
under the ownership rules adopted by the FCC in MM Docket Nos. 94-150,
92-51 and 87-154, as such rules may be amended from time to time, and
(ii) which, even if the Investor were deemed to have an attributable
interest therein, would not increase the Investor's national broadcast
coverage as calculated under the FCC's national ownership rules because
the Investor has an owned or operated television station in the same
DMA. For the purpose of this definition, a television station shall be
deemed to be "operated" by the Investor if the Investor supplies more
than 15% of the total weekly broadcast programming hours of such
station.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall have the meaning set forth in Section
3.1(d).
"Securities" shall mean the Shares and the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Senior Subordinated Notes Indenture" shall mean the
Indenture, dated as of September 28, 1995 relating to the Company's 11
5/8% Senior Subordinated Notes due 2002.
"Shares" shall have the meaning set forth in Section 2.1(a).
"Station Offer Notice" shall have the meaning set forth in
Section 7.2(a).
"Station Offer Price" shall have the meaning set forth in
Section 7.2(a).
"Station Third Party" shall have the meaning set forth in
Section 7.2(a).
"Station Transfer" shall have the meaning set forth in Section
4.1(f).
"Stockholder Agreement" shall mean the Stockholder Agreement,
to be executed and delivered by the Company, the Investor and the other
parties thereto at Closing, which shall be substantially in the form of
Exhibit E hereto.
"Subject Securities" shall mean the Preferred Stock, the
Warrants and the Call Agreement.
"Subscriber" shall mean a household which receives the Network
in a Distribution System. In the case of multiple dwelling units which
receive the Network pursuant to bulk rate arrangements, the number of
Subscribers shall be equal to 100% of all residential dwelling units in
the multiple dwelling unit complex. The term "Subscriber" shall not
include commercial Subscribers (i.e., Subscribers receiving the Network
in the course of their business, including, without limitation,
commercial establishments, hospitals, nursing homes, hotels, motels,
universities, offices, bars and restaurants).
"Subsidiary" shall mean, as to any Person, a corporation,
partnership, limited liability company, joint venture or other entity
of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person.
"Surviving Representations and Warranties" shall mean the
representations and warranties contained in Sections 3.1(c), 3.1(o) and
3.1(u).
"Tax Claim" shall have the meaning set forth in Section
3.1(j).
"Tax Returns" shall mean any return, amended return or other
report required to be filed with respect to any Tax, including
declaration of estimated tax and information returns.
"Tax" or, collectively, "Taxes" shall mean any and all
federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales,
use and occupation, and value added, ad valorem, transfer, gains,
franchise, withholding, payroll, recapture, employment, excise,
unemployment insurance, social security, business license, occupation,
business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with
respect to such amounts. For purposes of this Agreement, "Taxes" also
includes any obligations under any agreements or arrangements with any
other person with respect to Taxes of such other person (including
pursuant to Treas. Reg. Section 1.1502-6 or comparable provisions of
state, local or foreign tax law) and including any liability for taxes
of any predecessor entity.
"Time Brokerage Agreements" shall mean (i) the agreement
between NBC Stations Management, Inc. and Paxson Communications License
Company, LLC, (ii) the agreement between Outlet Broadcasting, Inc. and
CAP Communications License of New London, Inc., (iii) the agreement
between Outlet Broadcasting, Inc. and Ocean State Television, LLC, (iv)
the agreement between Outlet Broadcasting, Inc. and Paxson
Communications License Company, LLC and (v) the agreement between
Birmingham Broadcasting (WVTM TV), Inc. and Paxson Communications
License Company, LLC, each dated as of the date hereof.
"Title IV Plan" shall mean an employee pension benefit plan,
as defined in Section 3(2) of ERISA (other than a Multiemployer Plan),
which is covered by Title IV of ERISA, and which the Company, any
Company Subsidiary or ERISA Affiliate maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or
were employed by any of them.
"Transfer" shall have the meaning set forth in the Stockholder
Agreement.
"Underlying Shares" shall mean the shares of Common Stock into
which the Shares are convertible and the shares of Common Stock
issuable upon exercise of the Warrants, as such shares may be subject
to adjustment from time to time and any securities into which such
shares may be reclassified, exchanged or converted.
"Union Bank Credit Agreement" shall mean the Second Amended
and Restated Credit Agreement dated as of April 28, 1998 among the
Company, the several lenders from time to time, parties thereto and
Union Bank of California, N.A., as the agent, as such agreement is in
effect on the date hereof and taking into account any amendment,
supplement, termination or other change prior to but not after the date
hereof.
"Unrestricted Transfer" shall have the meaning set forth in
Section 9.4.
"Warrant A" shall have the meaning set forth in Section
2.1(a).
"Warrant B" shall have the meaning set forth in Section 2.1
(a).
"Warrants" shall mean Warrant A and Warrant B.
"Year 2000 Compliant" means that (1) the products, services,
or other item(s) at issue accurately process, provide and/or receive
all date/time data (including calculating, comparing, sequencing,
processing, and outputting) within, from, into, and between centuries
(including the twentieth and twenty-first centuries and the years 1999
and 2000), including leap year calculations, and (2) neither the
performance nor the functionality of the products, services, and other
item(s) at issue will be affected by any dates/times prior to, on,
after, or spanning January 1, 2000 except as could not reasonably be
expected to have a Material Adverse Effect.
ARTICLE II
Authorization, Sale and Purchase of the Securities
Section II.1 Authorization; Agreement to Sell and Purchase.
(A) Upon and subject to the terms and conditions set forth in this Agreement,
the Company has authorized the issuance and sale to the Investor of (i) 41,500
shares of 8% Series B Convertible Exchangeable Preferred Stock (the "Shares")
which, in accordance with the terms and conditions set forth in the Certificate
of Designation, shall be convertible into 31,896,032 shares of Common Stock
(subject to adjustment under the terms of the Certificate of Designation) (the
"Conversion Shares"), (ii) a warrant to purchase up to 13,065,507 shares of
Common Stock ("Warrant A") substantially in the form of Exhibit B attached
hereto and (iii) a warrant to purchase up to 18,966,620 shares of Common Stock
("Warrant B") substantially in the form of Exhibit C.
(b) Upon and subject to the terms and conditions of this
Agreement, and in reliance upon the representations and warranties hereinafter
set forth, the Company agrees to issue, sell and deliver to the Investor (or its
nominee that is a wholly owned subsidiary of Parent organized in the United
States) at the Closing provided for in Section 2.2 hereof, and the Investor
agrees to purchase from the Company, the Securities for an aggregate purchase
price of $415 million (the "Purchase Price").
Section 2.2 Closing. (a) The purchase and sale of the
Securities pursuant to Section 2.1 (the "Closing") shall take place at the
offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York,
simultaneously with the execution and delivery of this Agreement (the "Closing
Date"), or at such other time and place as may be mutually agreed upon by the
Investor and the Company.
(b) At the Closing: (i) the Company shall deliver to the
Investor, against payment of the purchase price therefor, stock and warrant
certificates for the Securities to be sold in accordance with the provisions of
Section 2.1, registered in the name of the Investor or its nominee that is a
wholly owned subsidiary of Parent organized in the United States (subject to the
provisions herein and in the Ancillary Documents) and in such denominations as
the Investor shall specify not less than three Business Days prior to the
Closing Date; (ii) the Investor, in full payment for the Securities, against
delivery of the stock and warrant certificates referred to above, shall deliver
to the Company on the Closing Date immediately available funds, by wire transfer
to such account as the Company shall specify at least two Business Days prior to
the Closing Date, in the amount of the purchase price to be paid hereunder by
the Investor pursuant to Section 2.1(b); and (iii) each party shall execute and
deliver such other instruments or documents set forth in Article VIII hereof.
Section II.3 Use of Proceeds. The proceeds of the sale of the
Securities shall be used by the Company for the purposes set forth on Schedule
2.3. Except as provided in Schedule 2.3, no proceeds will be used for any
Restricted Use.
ARTICLE III
Representations and Warranties
Section III.1 Representations and Warranties of the Company.
The Company represents and warrants to the Investor as follows:
(a) Corporate Existence; Compliance with Law. The Company and
each Company Subsidiary (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; (ii) is duly qualified to conduct business and is in
good standing in each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification,
except where the failure to be so qualified, individually or in the
aggregate, would not have a Material Adverse Effect; (iii) has the
requisite corporate power and authority and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to
lease the property it operates under lease and to conduct its business
as now, heretofore and proposed to be conducted; (iv) has all licenses,
permits, orders, consents, approvals, registrations, authorizations or
qualifications from or by, and has made all filings with, and has given
all notices to, all Governmental Entities having jurisdiction, to the
extent required for such ownership, operation and conduct
(collectively, the "Permits"), except where the failure to do so,
individually or in the aggregate, would not have a Material Adverse
Effect; (v) is in compliance with its charter and by-laws; and (vi) is
in compliance with all applicable provisions of law (including, without
limitation, the Communications Act) and the Permits, except where the
failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(b) Corporate Power, Authorization, Enforceable Obligations.
Except as set forth in Schedule 3.1(b), the execution, delivery and
performance by the Company of this Agreement and the Ancillary
Documents to which it is a party, and its obligations hereunder and
thereunder: (i) are within the Company's corporate power; (ii) have
been duly authorized by all necessary or proper corporate and
shareholder action; (iii) do not contravene any provision of the
Company's charter or bylaws; (iv) do not violate any law or regulation,
or any order or decree of any court or Governmental Entity applicable
to it; (v) do not conflict with or result in the breach or termination
of, constitute a default under or accelerate or permit the acceleration
of any performance required by, any material indenture, mortgage or
deed of trust or any Material Agreement to which the Company is a party
or by which the Company or any Company Subsidiary or any of its
property is bound; (vi) do not result in the creation or imposition of
any material Lien upon any of the property of the Company or any
Company Subsidiary; and (vii) do not require the consent or approval of
any Governmental Entity or any other Person, except (A) the filing of
all notices, reports and other documents required by, and the
expiration of all waiting periods under, the HSR Act and the rules and
regulations promulgated by the FCC, (B) such filings as may be required
under the blue sky laws of the various states, (C) the filing of the
Certificate of Designation with the Secretary of State of the State of
Delaware and (D) such consents or approvals which are immaterial to the
business, operations or financial position of the Company and the
Company Subsidiaries taken as a whole. This Agreement and each of the
Ancillary Documents to which the Company is a party is duly executed
and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company enforceable against it in accordance with its
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting
creditor's rights generally and subject to the availability of
equitable remedies.
(c) Capitalization. (i) As of the date hereof, the authorized
capital stock of the Company consists of (A) 197,500,000 shares of
Common Stock of which 53,366,147 shares of Class A Common Stock (plus
such additional shares of Common Stock that have been issued upon the
exercise of Options since June 30, 1999), 8,311,639 shares of Class B
Common Stock and no shares of Class C common stock are issued and
outstanding and (B) 1,000,000 shares of preferred stock of which (1)
33,000 shares have been designated as Junior Cumulative Compounding
Redeemable Preferred Stock of which 33,000 shares are issued and
outstanding, (2) 440,000 shares have been designated as 12 1/2%
Cumulative Exchangeable Preferred Stock of which 204,847 shares are
issued and outstanding, (3) 72,000 shares have been designated as 13
1/4% Cumulative Junior Exchangeable Preferred Stock of which 22,571
shares are issued and outstanding and (4) 17,500 shares have been
designated as 9 3/4% Series A Convertible Preferred Stock of which
8,304 shares are issued and outstanding (collectively, with any
additional shares of preferred stock that may be issued as dividends
thereon, the "Existing Preferred Stock"). As of the date hereof, no
shares of capital stock are held in treasury, and no shares of capital
stock are reserved for issuance upon exercise of outstanding stock
options except for 9,559,780 shares of Common Stock reserved in respect
of Options identified on Schedule 3.1(c)(i) under "Plan Options, as of
June 30, 1999 (less such shares issued upon exercise of such Options
since June 30, 1999), 6,037,085 shares of Common Stock issuable
(whether or not reserved) in respect of other Options identified on
Schedule 3.1(c)(i) under "Non-Plan Options", 5,189,375 shares of Common
Stock reserved in respect of the 9 3/4% Series A Convertible Preferred
Stock, 395,500 shares of Common Stock reserved in respect of
outstanding warrants and 8,311,639 shares of Class A Common Stock
reserved in respect of the Class B Common Stock. All of the issued and
outstanding shares of the Company's capital stock have been duly and
validly authorized and issued and are fully paid and nonassessable and
not subject to preemptive rights.
(ii) Upon delivery of and payment for the Shares on the
Closing Date as provided herein, such Shares will be duly and validly
authorized and issued, fully paid and nonassessable and not subject to
preemptive rights, and the Investor will acquire good title thereto,
free and clear of all Liens (other than any Lien created by the
Investor). The Underlying Shares have been reserved for issuance and,
when issued upon conversion of the Shares or exercise of the Warrants
in accordance with the terms thereof, will be duly and validly
authorized and issued, fully paid and nonassessable and not subject to
preemptive rights, and the owner of such shares will acquire good title
thereto, free and clear of all Liens (other than any Lien created by
such owner).
(iii) Other than (A) the requirement to issue the Shares
pursuant to the terms and conditions of this Agreement, (B) the
requirement to issue the Underlying Shares, (C) the shares referred to
in subsection 3.1(c)(i) and (D) as otherwise set forth in Schedule
3.1(c)(iii), (1) no equity securities of the Company are or may become
required to be issued by reason of any options, warrants, rights to
subscribe to, calls, preemptive rights, or commitments of any character
whatsoever, (2) there are outstanding no securities or rights
convertible into or exchangeable for shares of any capital stock of the
Company and (3) there are no contracts, commitments, understandings or
arrangements by which the Company is or will be bound to issue
additional shares of its capital stock or securities or rights
convertible into or exchangeable for shares of its capital stock or
options, warrants or rights to purchase or acquire any additional
shares of its capital stock. Except required by the terms of the
Existing Preferred Stock and as set forth in Schedule 3.1(c)(iii), the
Company is not subject to any obligation (contingent or otherwise) to
repurchase, redeem or otherwise acquire or retire any of its capital
stock.
(iv) Except as set forth on Schedule 3.1(c)(iv), the Company
is not a party to, and the Company has no knowledge of any, voting
trusts, proxies or other agreements or understandings with respect to
the voting of any capital stock of the Company.
(v) Except as set forth in Schedule 3.1(c)(v), the Company has
not granted or agreed to grant any rights relating to the registration
of its securities under applicable federal and state securities laws,
including piggyback rights.
(vi) The consummation of the transactions contemplated by this
Agreement will not trigger the anti-dilution provisions or other price
adjustment mechanisms of any outstanding subscriptions, options,
warrants, calls, contracts, preemptive rights, demands, commitments,
conversion rights or other agreements or arrangements of any character
or nature whatsoever under which the Company is or may be obligated to
issue or acquire its capital stock.
(vii) Except as set forth on Schedule 3.1(c)(vii), (A) all of
the shares of capital stock of each Company Subsidiary have been duly
and validly authorized and issued, are fully paid and nonassessable,
are not subject to preemptive rights and are owned by the Company or
another Company Subsidiary free and clear of all Liens, and (B) except
for the capital stock of the Company Subsidiaries, the Company does not
own, directly or indirectly, any capital stock or other ownership
interest in any Person.
(viii) Schedule 3.1(c)(viii) sets forth a complete and correct
list of all the Company Subsidiaries and any other Person in which,
directly or indirectly, the Company is party to a partnership or joint
venture and their respective jurisdictions of organization. Such
Schedule sets forth the direct or indirect percentage ownership of the
Company in each such Company Subsidiary and the identity and percentage
ownership of each other Person that has an equity interest in such
Company Subsidiary or other entity. Except as set forth in Schedule
3.1(c)(viii) the Company is not a party to any partnership agreement,
stockholders agreement, voting agreement or joint venture agreement
with any other Person.
(d) SEC Filings. The Company has filed and made available to
the Investor a true and complete copy of each report, schedule,
registration statement and definitive proxy statement required to be
filed by the Company with the SEC since January 1, 1997 (the "SEC
Documents"). As of their respective dates, the SEC Documents, after
giving effect to any amendments and supplements thereto filed prior to
the date hereof, complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may
be, applicable to such SEC Documents. None of the SEC Documents when
filed, after giving effect to any amendments and supplements thereto
filed prior to the date hereof, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(e) Financial Statements; No Material Adverse Change. (i) The
financial statements of the Company included in its Annual Report on
Form 10-K for the fiscal year ended December 31, 1998, and its
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1999 and June 30, 1999,(the "Financial Statements") comply as to form
in all material respects with the applicable accounting requirements
and with the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP during the periods
covered thereby (except as may be indicated in the notes thereto or, in
the case of the unaudited statements, as permitted by Form 10-Q of the
SEC, or for normal year-end adjustments) and fairly present in all
material respects the consolidated financial position of the Company
and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended. Since December 31, 1998, except for dividends on the
Existing Preferred Stock, there has not been any declaration, setting
aside or payment of a dividend or other distribution with respect to
shares of capital stock of the Company or any material change in
accounting methods or practices by the Company or any of its
Subsidiaries. The following Financial Statements and Form 10-Q have
been delivered on or prior to the date hereof:
(A) The audited consolidated and
consolidating balance sheet at December 31, 1998 and the
related statements of income and cash flows of the Company and
the consolidated Company Subsidiaries for the fiscal year then
ended, certified by PricewaterhouseCoopers.
(B) The unaudited consolidated and
consolidating balance sheets at June 30, 1999 and the related
statements of income and cash flows of the Company and the
consolidated Company Subsidiaries for the fiscal quarter then
ended.
(ii) Since December 31, 1998, except as disclosed in the SEC
Documents filed prior to the date hereof, and except for the execution,
delivery and performance of this Agreement and the Ancillary Documents
and the transactions contemplated hereby and thereby and as set forth
on Schedule 3.1(e)(ii), (A) none of the Company or any of the Company
Subsidiaries have incurred any obligations, contingent or
non-contingent liabilities, liabilities for Taxes, levies, liens,
claims or other charges, long-term leases or unusual forward or
long-term commitments (whether absolute, accrued, contingent or
otherwise, known or unknown, whether due or to become due, or whether
or not required by GAAP to be reflected in a consolidated balance sheet
of the Company and the Company Subsidiaries or disclosed in the notes
thereto), except liabilities and obligations which (x) are adequately
accrued or reserved against in the Financial Statements or disclosed in
the notes thereto, (y) were incurred after June 30, 1999 in the
ordinary course of business and consistent with past practice and are
not in the aggregate material to the Company, or (z) have been
discharged or paid in full,(B) no contract, lease or other agreement or
instrument has been entered into by the Company or any Company
Subsidiary or has become binding upon the Company's or any Company
Subsidiary's assets which, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect, and (C)
none of the Company or any Company Subsidiary is in default and to the
Company's knowledge no third party is in default under any Material
Agreement which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect, and (D) the
businesses of the Company and the Company Subsidiaries have been
operated in the usual and ordinary course consistent with past
practice, except as disclosed in the SEC Documents filed prior to the
date hereof. Since December 31, 1998 no event has occurred, which alone
or together with other events, could reasonably be expected to have a
Material Adverse Effect, except as disclosed in the SEC Documents filed
after December 31, 1998 and prior to the date hereof and except to the
extent resulting from (x) any changes in general economic conditions in
the United States or (y) any changes affecting the broadcast and cable
television industry in general.
(f) Ownership of Property; Liens. The Company or a Company
Subsidiary has good title to all of its owned real estate, subject only
to Permitted Liens, and valid leasehold interests in all of its
material leased real estate. The Company and each Company Subsidiary
has good title to, or valid leasehold interests in, all of its material
tangible personal properties. None of the properties and assets of the
Company and the Company Subsidiaries are subject to any Liens other
than Permitted Liens, and there are no facts, circumstances or
conditions known to the Company or any Company Subsidiary that would
reasonably be expected to result in any Liens (including Liens arising
under Environmental Laws) other than Permitted Liens, except as would
not reasonably be expected to cause a Material Adverse Effect. All of
the tangible assets of the Company and the Company Subsidiaries that
are material to the Company and the Company Subsidiaries, taken as a
whole, are in good operating condition and repair, ordinary wear and
tear excepted and taking into account the respective ages of such
assets.
(g) FCC and Other Regulatory Matters. (i) Set forth on
Schedule 3.1(g) is a list of (A) all licenses and construction permits
that are held as of the date hereof by the Company or any Company
Subsidiary for each full service television station owned and operated
by the Company or any Company Subsidiary (a "Company Station") and (B)
all applications that are pending before the FCC as of the date hereof
for construction permits for major modification of a Company Station's
facilities or for the acquisition or sale by the Company or any Company
Subsidiary, by assignment of license or transfer of control, of any
full service television station. The Company and each Company
Subsidiary has the right to use each FCC license and permit listed on
Schedule 3.1(g) and each other FCC license, permit or authorization
that is material to the operation of a Company Station (each, an "FCC
Authorization"). Each FCC Authorization was, to the Company's
knowledge, duly and validly issued by the FCC pursuant to procedures
which comply in all material respects with all requirements of
applicable law. The Company has no knowledge of the occurrence of any
event or the existence of any circumstance which, in the reasonable
judgment of the Company, is likely to lead to the revocation or
suspension of any FCC Authorization. Each FCC Authorization is in full
force and effect, and each holder thereof is in substantial compliance
therewith, except for such non-compliance that could not reasonably be
expected to have a Material Adverse Effect.
(ii) The Company and the Company Subsidiaries have duly filed
in a timely manner all material filings which are required to be filed
by the Company or the Company Subsidiaries under the Communications Act
and are in all material respects in substantial compliance with the
Communications Act, including, without limitation, the rules and
regulations of the FCC relating to the broadcast of television signals
or the operation of the Company's business, except for such filings the
failure of which to file or to file on a timely basis, and except for
such noncompliance, that could not reasonably be expected to have a
Material Adverse Effect.
(iii) With respect to each Company Station acquired by the
Company or a Company Subsidiary prior to October 1, 1996, each of the
Company or Company Subsidiary, on or before October 1, 1996, in
accordance with Section 76.64 of the FCC Rules (47 C.F.R. ss. 76.64),
made the required election between retransmission consent or must carry
status with each cable operator serving all or any part of the
television market (as defined by the FCC) of such Company Station, and
each of the Company or Company Subsidiary will, on or before October 1,
1999, make the same required election for such Company Station.
(h) Labor Matters. Schedule 3.1(h) sets forth a complete and
correct list of unions which presently represent any employees of the
Company or any Company Subsidiary and a complete list of all labor
union and collective bargaining agreements to which the Company or a
Company Subsidiary is a party or is subject. Except as set forth on
Schedule 3.1(h) and except for such matters as would not, in the
aggregate, reasonably be expected to result in a Material Adverse
Effect, (i) the Company and the Company Subsidiaries are in compliance
with all applicable laws, agreements, contracts and policies respecting
employment and employment practices, terms and conditions of employment
and wages and hours, and are not engaged in any unfair labor practices,
(ii) there is no unfair labor practice charge or complaint against the
Company or any Company Subsidiary pending, and, to the best knowledge
of the Company after reasonable inquiry, no such action is threatened
before any regulatory or judicial body, (iii) there is no, and during
the past three years there has been no, labor strike, slowdown,
stoppage, lockout or other material labor controversy in effect with
respect to, and, to the knowledge of the Company after reasonable
inquiry, no such action is threatened against, the Company or any of
the Company Subsidiaries, (iv) to the knowledge of the Company after
reasonable inquiry, no certification petition respecting the employees
of the Company or any of the Company Subsidiaries has been filed with
the National Labor Relations Board and no union is attempting to
organize or otherwise become the bargaining representative for any
employees of the Company or any Company Subsidiary, (v) neither the
Company nor any Company Subsidiary has closed any facility, effectuated
any systematic layoffs of employees or implemented any early
retirement, separation or window program within the last three years,
nor has the Company or any Company Subsidiary planned or announced any
such action or program for the future, (vi) the Company and each
Company Subsidiary is in compliance with its obligations pursuant to
the WARN Act, and all other notification and bargaining obligations
arising under any collective bargaining agreement, statute or otherwise
and (vii) all payments due from the Company or any Company Subsidiary
for employee health and welfare insurance have been paid or accrued as
a liability on the books of the Company or such Company Subsidiary.
(i) Government Regulation. None of the Company or any Company
Subsidiary is an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940 as
amended. None of the Company or any Company Subsidiary is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, or any other federal or state statute (other than
the Communications Act) that restricts or limits its ability to perform
its obligations hereunder. The performance of this Agreement and the
Ancillary Documents will not violate any provision of any statute or
any rule, regulation or order issued by the SEC.
(k) Taxes. Except as set forth on Schedule 3.1(j):
(i) The Company and each Company Subsidiary have
timely filed (or have had timely filed on their behalf) or
will timely file or cause to be timely filed, all Tax Returns
required by applicable law to be filed by any of them prior to
or as of the Closing Date. All such Tax Returns are or will be
true, complete and correct in all material respects. There are
no outstanding agreements or waivers extending the statutory
period of limitation applicable to any of such Tax Returns and
neither the Company nor any of the Company Subsidiaries has
requested any extension of time within which to file any
material Tax Return, which return has not yet been filed.
There is no pending or threatened material claim by any tax
authority of a jurisdiction where the Company or any of the
Company Subsidiaries has not filed Tax Returns that the
Company or such Company Subsidiary is or may have been subject
to taxation by that jurisdiction.
(ii) The Company and each Company Subsidiary have paid
(or have had paid on their behalf), or where payment is not
yet due, have established (or have had established on their
behalf and for their sole benefit and recourse), an adequate
accrual, in accordance with GAAP and reflected on the
Company's consolidated financial statements to the extent
accrued prior to the date thereof, for the payment of all
Taxes due with respect to any period beginning prior to or as
of the Closing Date. All Taxes required to be withheld by the
Company and the Company Subsidiaries with respect to their
activities, properties, employees or independent contractors
have been withheld and paid over to the appropriate tax
authority. No deficiency, action, suit, proceeding,
investigation, audit, claim, assessment or adjustment for any
Taxes (a "Tax Claim") has been threatened, proposed, asserted
or assessed in writing (and the Company is not aware of any
oral Tax Claim) against the Company or any Company Subsidiary.
There are no liens for Taxes upon the assets of the Company or
any Company Subsidiary, except for liens for current Taxes not
yet due.
(iii) Neither the Company nor any Company Subsidiary
is required to include in income any adjustment pursuant to
Section 481 (a) of the Code or any similar provision of state,
local or foreign law by reason of a voluntary change in
accounting method initiated by the Company or any Company
Subsidiary, and neither the Internal Revenue Service nor any
taxing authority has proposed in writing any such adjustment
or change in accounting method. Neither the Company nor any
Company Subsidiary has received a tax ruling or entered into a
closing agreement with any taxing authority that would have a
Material Adverse Effect.
(iv) Neither the Company nor any Company Subsidiary
has made any payments, is obligated to make any payments, or
is a party to any agreement that could obligate it to make any
payments that would not be deductible pursuant to Section
280(G) or Section 162(m) of the Code or similar provisions of
state, local or foreign law.
(v) The Company agrees that the Shares shall be
treated, for all Tax purposes, as common stock for purposes of
Section 305 of the Code or any similar provision of state,
local or foreign law, provided that the Company shall not be
obligated to expend funds or take any material actions to
defend this position should it be challenged by the Internal
Revenue Service or any other taxing authority.
(vi) Neither the Company nor any Company Subsidiary
(A) is a party to, is bound by, or has obligation under, any
Tax sharing agreement, Tax indemnification or similar contract
or arrangement, (B) has potential liability or obligation to
any person as a result of, or pursuant to, any such agreement,
contract or arrangement or (C) has any liability for Taxes of
another person by contract or otherwise, including liability
for Taxes of another person (other than the Company or any
Company Subsidiary) pursuant to Treasury Regulations Section
1.1502-6 or any similar provisions of state, local or foreign
law.
(vii) No claim has been asserted, and except as to
certain allocations of intercompany expenses related to
centralized operations which will not have a material effect
on state tax liability, the Company is not aware of any
reasonable basis for the assertion of any claim, by any taxing
authority that the Company or any Company Subsidiary is liable
for Taxes under, or as a result of, Section 482 of the Code or
any similar provision of state, local or foreign law.
(viii) Except with respect to net operating losses,
all Tax Returns of the Company and any Company Subsidiary for
all taxable years ending on or before December 31, 1995 are
closed for federal income tax purposes pursuant to the
statutory period of limitation applicable to such Tax Return.
(k) Employee Benefits. (i) Schedule 3.1(k) contains a true and
complete list of each "employee benefit plan" (within the meaning of
section 3(3) of ERISA), including, without limitation, multiemployer
plans within the meaning of ERISA section 3(37)), stock purchase, stock
option, severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA (including any funding
mechanism therefor now in effect or required in the future as a result
of the transaction contemplated by this Agreement or otherwise),
whether formal or informal, oral or written, under which any employee
or former employee of the Company or its Subsidiaries has any present
or future right to benefits and under which the Company or its
Subsidiaries has any present or future liability. All such plans,
agreements, programs, policies and arrangements shall be collectively
referred to as the "Company Plans".
(ii) With respect to each Company Plan, the Company
has delivered or made available to the Investor a current, accurate and
complete copy (or, to the extent no such copy exists, an accurate
description) thereof and, to the extent applicable: (A) any related
trust agreement or other funding instrument; (B) the most recent
determination letter, if applicable; (C) any summary plan description
and other written communications (or a description of any oral
communications) by the Company or its Subsidiaries to their employees
concerning the extent of the benefits provided under a Company Plan;
and (D) for the most recent year (1) the Form 5500 and attached
schedules, (2) audited financial statements, (3) actuarial valuation
reports and (4) attorney's response to an auditor's request for
information.
(iii) (A) Each Company Plan has been established and
administered materially in accordance with its terms, and materially in
compliance with the applicable provisions of ERISA, the Code and other
applicable laws, rules and regulations; (B) each Company Plan which is
intended to be qualified within the meaning of Code section 401(a) is
so qualified and has received a favorable determination letter as to
its qualification, and nothing has occurred, whether by action or
failure to act, that could reasonably be expected to cause the loss of
such qualification; (C) no event has occurred and no condition exists
that would subject the Company or its Subsidiaries, either directly or
by reason of their affiliation with any member of their "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code sections 414(b), (c),
(m) or (o)), to any tax, fine, lien, penalty or other liability imposed
by ERISA, the Code or other applicable laws, rules and regulations; (D)
for each Company Plan with respect to which a Form 5500 has been filed,
no material change has occurred with respect to the matters covered by
the most recent Form since the date thereof; (E) no "reportable event"
(as such term is defined in ERISA section 4043), "prohibited
transaction" (as such term is defined in ERISA section 406 and Code
section 4975) or "accumulated funding deficiency" (as such term is
defined in ERISA section 302 and Code section 412 (whether or not
waived)) has occurred with respect to any Company Plan; (F) no Company
Plan provides retiree welfare benefits and neither the Company nor its
Subsidiaries have any obligations to provide any retiree welfare
benefits except as required under COBRA; and (G) neither the Company
nor any ERISA Affiliate has (i) engaged in, or is a successor or parent
corporation to an entity that has engaged in, a transaction described
in Sections 4069 or 4212(c) of ERISA.
(iv) With respect to each of the Company Plans that
is not a multiemployer plan within the meaning of section 4001(a)(3) of
ERISA but is subject to Title IV of ERISA, as of the Closing Date, the
assets of each such Company Plan are at least equal in value to the
present value of the accrued benefits (vested and unvested) of the
participants in such Company Plan on a termination and projected
benefit obligation basis, based on the actuarial methods and
assumptions indicated in the most recent actuarial valuation reports.
(v) With respect to any multiemployer plan (within
the meaning of ERISA section 4001(a)(3)) to which the Company or any
ERISA Affiliate has any liability or contributes (or has at any time
contributed or had an obligation to contribute): (i) none of the
Company or any ERISA Affiliate has incurred any withdrawal liability
under Title IV of ERISA or would be subject to such liability if, as of
the Closing Date, the Company or any ERISA Affiliate, were to engage in
a complete withdrawal (as defined in ERISA section 4203) or partial
withdrawal (as defined in ERISA section 4205) from any such
multiemployer plan; and (ii) no such multiemployer plan is in
reorganization or insolvent (as those terms are defined in ERISA
sections 4241 and 4245, respectively).
(vi) With respect to any Company Plan, (A) no
actions, suits or claims (other than routine claims for benefits in the
ordinary course) are pending or threatened, (B) no facts or
circumstances exist that could reasonably be expected to give rise to
any such actions, suits or claims, and (C) no written or oral
communication has been received from the PBGC in respect of any Company
Plan subject to Title IV of ERISA concerning the funded status of any
such plan or any transfer of assets and liabilities from any such plan
in connection with the transactions contemplated herein.
(vii) Except as set forth on Schedule 3.1(k)(vii), no
Company Plan exists that could result in the payment to any present or
former employee of the Company or its Subsidiaries of any money or
other property or accelerate or provide any other rights or benefits to
any present or former employee of the Company or its Subsidiaries as a
result of the transaction contemplated by this Agreement or upon the
Investor's exercise of the Warrants.
(l) No Litigation. Except as set forth in Schedule 3.1(l),
there are no legal or administrative proceedings or arbitrations, and
no claims, demands, actions, proceedings or governmental investigations
of any nature pending against the Company or any Company Subsidiary or
to which the Company or any Company Subsidiary or any of their
properties or assets is subject, and, to the knowledge of the Company,
there has not been threatened any such proceeding, arbitration, claim,
action or governmental investigation against the Company or any of the
Company Subsidiaries (collectively "Litigation"), in each case, (i)
which challenges the Company's or any Company Subsidiary's right or
power to enter into or perform any of its obligations under this
Agreement or the Ancillary Documents to which it is a party, or the
validity or enforceability of this Agreement or any Ancillary Documents
or any action taken hereunder or thereunder, or (ii) which has a
reasonable risk of being determined adversely to the Company or any
Company Subsidiary and which, if so determined, would reasonably be
expected to have a Material Adverse Effect. Except as set forth in
Schedule 3.1(l), neither the Company nor any Company Subsidiary is
subject to any currently effective order, judgment or decree of any
Governmental Entity permanently or temporarily enjoining or barring any
of them from engaging in or continuing any conduct or practice in
connection with the businesses currently conducted by the Company and
the Company Subsidiaries.
(m) Brokers and Finders. Except as set forth in Schedule
3.1(m), neither the Company nor any Company Subsidiary has utilized any
broker, finder, placement agent or financial advisor or incurred any
liability for any fees or commissions in connection with any of the
transactions contemplated hereby or by the Ancillary Documents. The
Company is solely responsible for all fees or other amounts that may be
payable to each Person listed on Schedule 3.1(m).
(n) Full Disclosure. No representation or warranty of the
Company contained in this Agreement or any Ancillary Document contains
any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same
were made. The projections and pro forma financial information
contained in the letter from the Company to the Investor dated August
31, 1999 for the calendar years 2000 and 2001 receipt of which is
acknowledged by the Investor were based upon good faith estimates and
assumptions believed by the senior executives of the Company to be
reasonable as of the Closing Date, it being recognized by the Investor
that such projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by any
such projections may differ materially from the projected results.
Except as set forth in the preceding sentence, the Company makes no
representation or warranty, and expressly disclaims any implied
representation or warranty, as to the accuracy or completeness of any
projections, pro forma financial information or other forward looking
information provided to the Investor. There is no fact known to the
Company or any Company Subsidiary (other than matters of a general
economic nature or relating to the broadcasting industry or television
industry generally) that has had or could reasonably be expected to
have a Material Adverse Effect and that has not been disclosed herein
or in any Ancillary Documents.
(o) Environmental Matters. Except as set forth in Schedule
3.1(o): (i) the Company and the Company Subsidiaries are and have been
in compliance in all material respects with all Environmental Laws,
except for such noncompliance which would not result in Environmental
Liabilities which could reasonably be expected to have a Material
Adverse Effect; (ii) the Company and the Company Subsidiaries have
obtained, and are in compliance in all material respects with, all
Environmental Permits required by Environmental Laws for the operations
of their respective businesses as presently conducted or as proposed to
be conducted, except where the failure to so obtain or comply with such
Environmental Permits would not result in Environmental Liabilities
which could reasonably be expected to have a Material Adverse Effect,
and all such Environmental Permits are valid, uncontested and in good
standing, except as would not reasonably be expected to have a Material
Adverse Effect; (iii) none of the Company or any of the Company
Subsidiaries are involved in operations or know of any facts,
circumstances or conditions, including any Releases of Hazardous
Materials, that are likely to result in any Environmental Liabilities
of the Company or any Company Subsidiary or which could reasonably be
expected to have a Material Adverse Effect, and none of the Company or
any of the Company Subsidiaries have permitted any current or former
tenant of such Person to engage in any such operations, except as would
not reasonably be expected to have a Material Adverse Effect; (iv)
neither the Company nor any Company Subsidiary has received any
Environmental Claim, nor to their knowledge is any Environmental Claim
threatened, which would result in a Material Adverse Effect; (v) the
Company and the Company Subsidiaries have not assumed, contractually or
by operation of law, any material liabilities under any Environmental
Laws which could reasonably be expected to have a Material Adverse
Effect, and (vi) the Company and the Company Subsidiaries have not
entered into, have not agreed to, and are not subject to any material
judgment, decree, order or other similar requirement of any
governmental authority under any Environmental Laws, including without
limitation those relating to compliance with Environmental Laws or to
investigation, cleanup, remediation or removal of Hazardous Substances.
(p) Insurance Disclosure. The Company and the Company
Subsidiaries have at all times since December 31, 1998 maintained in
full force and effect, with financially sound and reputable insurers,
insurance with respect to its business against loss or damage, and
including directors and officers' liability insurance, all such
insurance of the kinds customarily carried or maintained under similar
circumstances by entities of established reputation engaged in similar
businesses.
q) Year 2000 Compliance. All of the Company's material
Internal MIS Systems and Facilities are Year 2000 Compliant. The
Company has furnished the Investor with a true, correct and complete
copy of any internal investigations, memoranda, budget plans, forecasts
or reports concerning the Year 2000 Compliance of the products,
services, operations, systems, supplies, and facilities of the Company
and the Company's vendors.
(r) Material Agreements. The Company has made available to the
Investor a true and correct copy of all Material Agreements. Each
Material Agreement is valid, binding, in full force and effect and
enforceable by the Company or the relevant Company Subsidiary in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors generally and by general equitable
principles, except as could not reasonably be expected to have a
Material Adverse Effect. Except as disclosed in Schedule 3.1(r), the
Company and the Company Subsidiaries are not (with or without the lapse
of time or the giving of notice, or both) in breach or default in any
material respect thereunder and, to the knowledge of the Company, no
other party to any of the Material Agreements is (with or without the
lapse of time or the giving of notice, or both) in breach or default in
any material respect thereunder.
(s) Intellectual Property. (i) The Company owns or has a valid
license to use, in the manner currently used, all Intellectual Property
used in its business.
(ii) No claims with respect to the Company's Intellectual
Property have been asserted, or to the knowledge of the Company are
threatened by any third person nor are there valid grounds, to the
knowledge of the Company for any bona fide claims (A) that the
broadcast, distribution, license, sublicense, use or licensing of the
Intellectual Property infringes the rights of any third parties, (B)
against the use of the Intellectual Property as used in the Company's
business as currently conducted or (C) challenging the ownership,
validity or effectiveness of the Intellectual Property, except as could
not reasonably be expected to have a Material Adverse Effect. To the
Company's knowledge, all registered trademarks, servicemarks,
copyrights and patents held by the Company, if any, are valid and
subsisting except as could not reasonably be expected to have a
Material Adverse Effect. None of the Company's owned Intellectual
Property is subject to any outstanding decree, order, judgment or
stipulation restricting in any manner the licensing thereof by the
Company except as could not reasonably be expected to have a Material
Adverse Effect.
(iii) To the Company's knowledge, there is no material
unauthorized use, infringement or misappropriation of any of the
Company's Intellectual Property by any third party, except as could not
reasonably be expected to have a Material Adverse Effect.
(t) Absence of Certain Business Practices. None of the
Company, the Company Subsidiaries or any officer, employee or agent
thereof, nor any other Person acting on behalf of the Company or any
Company Subsidiary, has, directly or indirectly, within the past
five years given or agreed to give any gift or similar benefit to
any customer, supplier, governmental employee or other Person or
entity who is or may be in a position to help or hinder the Company
(or assist the Company in connection with any actual or proposed
transaction) which (i) subjects any party or any of their respective
Subsidiaries, to any damage or penalty in any civil, criminal or
governmental litigation or proceeding which would have a Material
Adverse Effect, (ii) if not given in the past, could have had a
Material Adverse Effect or (iii) if not continued in the future,
could have a Material Adverse Effect.
(u) Antitakeover Statutes. The Board of Directors of the
Company has taken all actions necessary under the DGCL, including
approving the transactions contemplated by the Agreement and each of
the Ancillary Documents to which it is a party, to ensure that
Section 203 of the DGCL does not, and will not, apply to the
Investor or any of its affiliates in connection with the
transactions contemplated hereunder and thereunder. No other state
takeover or similar statute or regulation applies to this Agreement,
the Ancillary Documents or the transactions contemplated hereby and
thereby.
(v) Company Stations. Set forth on Schedule 3.1(v) is (i) a
complete list of all the television stations owned by the Company or a
Company Subsidiary and (ii) a complete list of all television stations
operated by the Company or a Company Subsidiary pursuant to a local
management agreement or similar arrangement.
(w) Subscribers. The Company has at least 57,400,000 FTE
Subscribers, at least 14,000,000 of which are represented by the
existing Distribution Agreements set forth on Schedule 3.1(w) hereto
and at least 39,181,525 of which were obtained pursuant to elections
made in accordance with Section 3.1(g)(iii) hereof.
(x) Exemption from Registration. Assuming the representations
and warranties of the Investor set forth in Section 3.2 hereof are true
and correct in all material respects, the offer and sale of the
Securities made pursuant to this Agreement and the acquisition of the
Underlying Shares upon each of the conversion of the Shares and the
exercise of the Warrants will be in compliance with the Securities Act,
subject to obtaining approval of the Company's stockholders as
described in Section 5.7, if necessary, the rules and regulations of
the American Stock Exchange and any applicable state securities laws
and will be exempt from the registration requirements of the Securities
Act and such state securities laws.
(y) Affiliate Transactions. Schedule 3.1(y) sets forth (i) all
contracts, agreements, other arrangements or transactions existing or
occurring at any time after December 31, 1997 between the Company or
any Company Subsidiary, on the one hand, and any of the Company's
Affiliates or any holder of 10% of the outstanding Common Stock of the
Company or a family member of such a holder, on the other hand, or any
of their respective Affiliates, except for those disclosed in the SEC
Documents and except for agreements relating to services provided as an
officer or director of the Company other than relating to any
extraordinary bonuses, and (ii) a description of all payments made to
or received from, the Company or any Company Subsidiary, on the one
hand, and any of the Company's Affiliates or any holder of 10% of the
outstanding Common Stock of the Company or a family member of such a
holder, on the other hand, or any of their respective Affiliates, since
December 31, 1997, except for dividends paid or distributions made with
respect to any outstanding class or series of Company securities,
payments of salary or other regular compensation for services in the
ordinary course, or as disclosed in the SEC Documents.
Section III.2 Representations and Warranties of the Investor. The
Investor represents and warrants to, and agrees with, the Company as follows:
(a) Corporate Existence; Compliance with Law. The Investor (i)
is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation; (ii) is duly
qualified to conduct business and is in good standing in each other
jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to
be so qualified, individually or in the aggregate would not have a
Material Adverse Effect; (iii) has the requisite corporate power and
authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates
under lease and to conduct its business as now, heretofore and proposed
to be conducted; (iv) has all licenses, permits, consents or approvals
from or by, and has made all filings with, and has given all notices
to, all Governmental Entities having jurisdiction, to the extent
required for such ownership, operation and conduct, except where the
failure to do so, individually or in the aggregate, would not have a
Material Adverse Effect; (v) is in compliance with its charter and
by-laws; and (vi) is in compliance with all applicable provisions of
law (including, without limitation, the Communications Act), except
where the failure to comply, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(b) Corporate Power, Authorization, Enforceable Obligations.
The execution, delivery and performance by the Investor of this
Agreement and the Ancillary Documents to which it is a party, and its
obligations hereunder and thereunder: (i) are within its corporate
power; (ii) have been duly authorized by all necessary or proper
corporate and shareholder action; (iii) do not contravene any provision
of its charter or bylaws; (iv) do not violate any law or regulation, or
any order or decree of any court or Governmental Entity applicable to
it; (v) do not conflict with or result in the breach or termination of,
constitute a default under or accelerate or permit the acceleration of
any performance required by, any material indenture, mortgage, deed of
trust, lease, agreement or other instrument to which the Investor is a
party or by which the Investor or any of its property is bound; (vi) do
not result in the creation or imposition of any material Lien upon any
of the property of the Investor; and (vii) do not require the consent
or approval of any Governmental Entity or any other Person, except (A)
the filing of all notices, reports and other documents required by, and
the expiration of all waiting periods under, the HSR Act and the rules
and regulations promulgated by the FCC, (B) such filings as may be
required under the blue sky laws of the various states, (C) the filing
of the Certificate of Designation with the Secretary of State of the
State of Delaware, and (D) such consents or approvals which are
immaterial to the business, operations or financial position of the
Investor. This Agreement is, and on or prior to the Closing Date, each
of the Ancillary Documents will be, duly executed and delivered by the
Investor and this Agreement and each such Ancillary Document shall then
constitute a legal, valid and binding obligation of the Investor
enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditor's rights generally and
subject to the availability of equitable remedies.
(c) No Litigation. There is no Litigation affecting the
Investor which challenges the Investor's right or power to enter into
or perform any of its obligations under this Agreement or the Ancillary
Documents to which it is a party, or the validity or enforceability of
this Agreement or any Ancillary Documents or any action taken hereunder
or thereunder.
(d) Securities Act. The Investor (i) is acquiring the
Securities solely for its own account for the purpose of investment and
not with a view to, or for resale in connection with, any distribution
thereof in violation of the Securities Act; (ii) has had the
opportunity to ask questions of the officers and directors of, and has
had access to financial and other information concerning, the Company
and the Securities; (iii) has received and reviewed the SEC Documents,
including the Financial Statements; (iv) is an "accredited investor" as
defined in Rule 501(a) under the Securities Act; (iv) has such
knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the
investment in the Company and the Securities; (v) has so evaluated the
merits and risks of such investment; (vi) is able to bear the economic
risk of such investment; and (vii) is able to afford a complete loss of
such investment.
(e) Investor Stations. Set forth on Schedule 3.2(e) is (i) a
complete list of all the television stations owned by the Investor or
its Subsidiaries and (ii) a complete list of all television stations
operated by the Investor or its Subsidiaries pursuant to a local
management agreement or similar arrangement.
f) Brokers and Finders. The Investor has not utilized any
broker, finder, placement agent or financial advisor or incurred any
liability for any fees or commissions in connection with any of the
transactions contemplated hereby or by the Ancillary Documents.
ARTICLE 4
Conduct of Business
Section IV.1 Conduct of the Business. The Company shall not
take nor permit any Company Subsidiary, or officer or director to take, any of
the following actions without the prior consent of the Investor or a permitted
transferee of the Investor Rights under the Stockholder Agreement:
(a) approval, not to be unreasonably withheld, of (i) a
Budget, (ii) any expenditures that materially exceed budgeted amounts
or (iii) any amendments to a Budget; provided, however, that for any
Budget after the Budget for the calendar year 2000, the Investor shall
withhold its approval of any proposed Budget by identifying those items
of the proposed Budget which are not approved and providing in writing
to the Company the Investor's basis for withholding such approval and,
in such event, the portions of such proposed Budget which are not
identified as unapproved, shall be deemed to be approved under this
Section 4.1(a).
(b) any programming acquisition, development of a new program
or series or acquisition of any package of programming, in each case at
the Network and Same Market Station levels only, that constitutes
greater than five (5) hours of the Network's or Same Market Station's,
as the case may be, broadcast time in any given season, except for (i)
acquisitions or developments specifically approved by the Board of
Directors and the Investor in a Budget in accordance with clause (a)
above and (ii) reasonable reorders or renewals of programming pursuant
to programming agreements in effect as of the date hereof or
subsequently approved by the Investor;
(c) any use of, or any transaction, agreement, business or
venture intended to exploit, the Company's digital broadcast spectrum
on a national or regional basis (i.e., other than individual station
uses of digital spectrum);
(d) any transaction, agreement or business arrangement with
ValueVision International Inc., or involving any of its assets;
(e) any material amendment of the Company's certificate of
incorporation or by-laws;
(f) sale, lease, assignment or other disposition of (x) more
than 50% of the stock of any Company Subsidiary that owns the primary
operating assets of, or any FCC license of, a Company Station or (y)
the primary operating assets of, or a FCC license of, a Company Station
(each a "Station Transfer"), in each case, if (i) such Company Station
is located in any of the 20 largest DMA's served by Company Stations as
of the date of such disposition or (ii) such disposition would result
in the Company's Network National Coverage being less than 70%;
(g) (i) any sale, transfer, assignment or other disposition of
assets involving, together with all other dispositions of assets during
any 12-month period, assets with a fair market value greater than 20%
of the book value of the Company's consolidated assets reflected on the
balance sheet most recently filed with the SEC, (ii) any acquisition of
assets, including pursuant to a merger, consolidation or other business
combination, if the consideration payable for such assets in any single
transaction exceeds 5% of the book value of the Company's consolidated
assets reflected on the balance sheet most recently filed with the SEC
or if the aggregate consideration payable for such transaction,
together with the consideration paid for all such acquisitions in any
12-month period exceeds 10% of the book value of the Company's
consolidated assets reflected on the balance sheet most recently filed
with the SEC (excluding, in each case, transactions involving the
issuance of capital stock of the Company that have been approved
pursuant to this Section 4.1 and transactions set forth on Schedule
4.1(g) attached hereto), or (iii) any merger or business combination
transaction where the Company is not the surviving entity or where
there is a Change of Control; provided that the prior consent of the
Investor shall not be required with respect to any transaction
conducted during any Default Redemption Period if such transaction is
structured to ensure that the Investor receives the full Default
Redemption Price for its redeemed Shares or Conversion Shares;
(h) issuance or sale of any capital stock of the Company or
any option, warrants or other rights to acquire capital stock of the
Company (including instruments convertible into capital stock), other
than (i) Options issued under the Company's stock option plans
identified under "Plan Options" on Schedule 3.1(c)(i) and common stock
issued on exercise thereof or on exercise of the other Options
identified under "Non-Plan Options" on Schedule 3.1(c)(i), (ii)
reasonable and customary stock options issued pursuant to an employee
stock option plan approved by the Company's Board of Directors and, as
necessary or advisable, the stockholders of the Company and common
stock issued on exercise thereof, (iii) preferred stock issued as
paid-in-kind dividends in accordance with the terms and conditions of
the Existing Preferred Stock, (iv) Common Stock issued upon conversion
of convertible preferred securities outstanding as of the date hereof,
(v) Common Stock issued in connection with the asset acquisitions that
are listed on Schedule 4.1(g) attached hereto (up to the number of
shares set forth in such Schedule and without duplication of issuances
under clause (i) above), (vi) capital stock issued in connection with
the satisfaction in full of the Company's redemption obligation set
forth in Sections 9.1 or 9.2 or the simultaneous satisfaction of the
Company's obligation under Section 9.5 and (vii) the issuance of
non-convertible preferred stock of the Company issued to fund the
redemption of Existing Preferred Stock with substantially similar terms
as the Existing Preferred Stock so redeemed; provided that the number
of shares of capital stock issued or issuable pursuant to clauses (i),
(ii) and (v) shall not exceed 18,382,660 shares;
(i) split, combine or reclassify any of its capital stock in
any manner adverse to the Investor;
j) entering into any agreement or transaction or a series of
related agreements or transactions with a Paxson Stockholder or an
Affiliate of a Paxson Stockholder or of the Company or a family member
of a Paxson Stockholder, which (i) is not on an arm's length basis or
(ii) involves an amount in excess of $100,000;
(k) entering into any employment, compensation or other
agreement with an employee or director of the Company or any of its
Subsidiaries (other than station managers) that (i) becomes effective
after January 1, 2001, (ii) provides for cash compensation (excluding
bonus) reasonably expected to be in excess of $400,000 per year or
(iii) has longer than a three-year term; provided that no consent of
the Investor shall be required for an employment agreement between the
Company and Paxson on terms not materially different from those terms
provided to the Investor in writing prior to the date hereof;
(l) any increase in the size of the Company's Board of
Directors other than an increase as a result of a Voting Rights
Triggering Event (as defined in the certificates of designation
relating to the Company's Existing Preferred Stock outstanding on the
date hereof) of up to two additional directors;
(m) any voluntary bankruptcy or winding up of the Company or
filing for protection under any Bankruptcy Law; or
(n) entering into any joint sales, joint services, time
brokerage, local marketing or similar agreement or arrangement (other
than agreements or arrangements that may be terminated at no cost to
the Company upon six month notice), but only if after entering into
such agreement or arrangement, Company Stations representing 20% or
more of the Company's National Coverage would be subject to such
agreements or arrangements.
If any member of the Board of Directors, who was a NBC Nominee, votes in such
capacity to approve any matter set forth in Section 4.1 that requires the
consent of the Investor, the Investor shall be deemed to have consented to such
matter for purposes of this Section 4.1. Notwithstanding the foregoing, the
parties agree that there is no expressed or implied agreement to elect any NBC
Nominee to the Board of Directors of the Company.
ARTICLE V
Other Agreements
Section V.1 Public Statements. Before any party or any
Affiliate of such party shall release any information concerning this Agreement
or the Ancillary Documents or the matters contemplated hereby or thereby which
is intended for or can reasonably be expected to result in public dissemination,
such party shall cooperate with the other party, shall furnish drafts of all
documents or proposed oral statements to the other party, provide the other
party the opportunity to review and comment upon any such documents or
statements and shall not release or permit release of any such information
without the consent of the other party, except to the extent required by
applicable law or the rules of any securities exchange or automated quotation
system on which its securities or those of its Affiliate are traded.
Section V.2 Reasonable Commercial Efforts. Subject to the
terms and conditions provided in this Agreement, each party shall use reasonable
commercial efforts to take promptly, or cause to be taken, all actions, and to
do promptly, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and to remove
any injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement; provided that notwithstanding anything to the contrary in this
Agreement, no party nor any of their Affiliates shall be required to make any
disposition of, or enter into any agreement to hold separate, any Subsidiary,
asset or business, and no party hereto nor any of their Affiliates shall be
required to make any payment of money nor shall any party or its Affiliates be
required to comply with any condition or undertaking or take any action which,
individually or in the aggregate, would materially adversely affect the economic
benefits to such party of the transactions contemplated hereby and by the
Ancillary Documents, taken as a whole, or materially adversely affect any other
business of such party or its Affiliates.
Section V.3 Government Filings. (a) Each of the Company and the
Investor will make as promptly as practicable, after notice to such effect by
the Investor to the Company, all filings required to be made, if any, by it
under the HSR Act with regard to the transactions which are the subject of this
Agreement and the Ancillary Documents (including without limitation the
conversion of the Shares, the exercise of the Warrants, the purchase of shares
pursuant to the Call Agreement and the holding of the Underlying Shares) and
each of them will take all reasonable steps within its control (including
providing information to the Federal Trade Commission and the Department of
Justice) to cause the waiting periods required by the HSR Act to be terminated
or to expire as promptly as practicable. The Company and the Investor will each
provide information and cooperate in all other respects to assist the other of
them in making its filings under the HSR Act.
(b) Each of the Company and the Investor will make as promptly
as practicable after notice to such effect by the Investor to the Company, all
filings required to be made, if any, by it under the Communications Act or the
rules and regulations related thereto with regard to the transactions which are
subject of this Agreement and the Ancillary Documents (including without
limitation the conversion of the Shares, the exercise of the Warrants, the
purchase of shares pursuant to the Call Agreement and the holding of the
Underlying Shares) and each of them will take all reasonable steps within its
control (including providing information to the FCC) to obtain any required
consents or approvals as promptly as practicable. The Company and the Investor
will each provide information and cooperate in all other respects to assist the
other of them in making its filings under the Communications Act.
(c) At any time that the Investor, either by reason of its
holding an attributable interest in the Company within the meaning of 47 C.F.R.
ss.73.3555 of the rules of the FCC (including any successor rule), or for any
other reason may be reported as a party to any or all applications of the
Company subsequently filed with the FCC, the Investor will cooperate fully with
the Company to have the qualifications of the Investor to hold an interest with
the Company passed upon by the FCC in an application submitted by the Company at
the earliest practicable opportunity.
Section V.4 Reservation of Shares. The Company agrees to keep
reserved for issuance at all times prior to conversion of the Shares and the
exercise of the Warrants the aggregate number of Underlying Shares issuable upon
conversion of the Shares and the exercise of the Warrants.
Section V.5 Notification of Certain Matters. Each party to
this Agreement shall give prompt notice to the other party of any failure of any
party to comply with or satisfy any covenant or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.5 shall not limit or otherwise affect any remedies
available to the party receiving such notice. No disclosure by any party
pursuant to this Section 5.5, however, shall be deemed to amend or supplement
the disclosures set forth on the Schedules to Article III or prevent or cure any
misrepresentations, breach of warranty or breach of covenant.
Section V.6 Further Assurances. Each party shall execute and
deliver such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate, carry out and
comply with all of the terms of this Agreement and the transactions contemplated
hereby, including, without limitation, making application as soon as practicable
for all consents and approvals required in connection with the transactions
contemplated hereby and diligently pursuing the receipt of such consents and
approvals in good faith.
Section V.7 Company Stockholder Meetings. At the first annual
meeting of the stockholders of the Company occurring after the Closing, and in
any event no later than May 15, 2000, the Company will seek stockholder approval
of (i) an amendment to the Company's certificate of incorporation providing for
three-year staggered terms of the members of the Board of Directors; (ii) the
election of directors for staggered terms; (iii) the issuance of the Underlying
Shares if and to the extent required to satisfy conditions to the listing
thereof under applicable rules of the American Stock Exchange, if necessary;
(iv) an amendment to the certificate of incorporation of the Company to provide
for a new series of non-voting common stock such that in the event that the
Investor, in its sole discretion, determines that the Communications Act
prevents the Investor from holding Class A Common Stock upon conversion of the
Shares, the Investor will have the option to acquire such new series of
non-voting common stock in place of Class A Common Stock; and (v) any other
matters necessary to consummate the transactions contemplated by this Agreement
and the Ancillary Documents. The Investor intends to nominate three directors
for the class of directors with initial terms of three years for election at
such annual stockholder meeting.
Section V.8 Access to Information. Subject to applicable laws,
the Company shall, and shall cause the Company Subsidiaries to, afford the
officers, employees, auditors and other agents of the Investor reasonable access
during normal business hours to their officers, employees, properties, offices,
plants and other facilities, and contracts, commitments, books and records
relating thereto, and shall furnish such Persons all such documents and such
financial, operating and other data and information regarding such businesses
and Persons that are in the possession of such Person as the Investor through
its officers, employees or agents may from time to time reasonably request. All
such information will be provided subject to the terms of the confidentiality
agreement dated May 12, 1999 between the Company and the Investor.
ARTICLE VI
Affirmative and Negative Covenants
Section VI.1 Maintenance of Existence and Property; FCC
Licenses. The Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and its
rights and franchises material to its business. The Company and each Company
Subsidiary shall maintain in good repair, working order and condition all of the
properties that are material to the Company and the Company Subsidiaries, taken
as a whole, used or useful in the business of such Person and from time to time
will make or cause to be made all appropriate (as reasonably determined by such
Person) repairs, renewals and replacements thereof. The Company shall, and shall
cause each Company Subsidiary to, use its best efforts to keep in full force and
effect all of its material FCC Licenses and shall provide the Investor with a
copy of any (or, in the event of any notice based on knowledge of such Person, a
brief description of such default and the basis of such knowledge) notice from
the FCC of any violation with respect to any material FCC License received by it
(or with respect to which such Person may have any knowledge).
Section VI.2 Payment of Obligations. (a) Subject to Section
6.2(b), the Company shall pay and discharge or cause to be paid and discharged
before any penalty accrues thereon all Taxes payable by it or any Company
Subsidiary.
(b) The Company and each Company Subsidiary may in good faith
contest, by appropriate proceedings, the validity or amount of any Taxes
described in Section 6.2(a); provided that (i) adequate reserves with respect to
such contest are maintained on the books of such Person, in accordance with GAAP
and (ii) such Person shall promptly pay or discharge such contested Taxes and
all additional charges, interest, penalties and expenses, if any, if such
contest is terminated or discontinued adversely to such Person or the conditions
set forth in this Section 6.2(b) are no longer met.
Section VI.3 Books and Records. The Company shall, and shall
cause each Company Subsidiary to, keep adequate books and records with respect
to its business activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financial Statements.
Section VI.4 Insurance. The Company shall, and shall cause
each Company Subsidiary to, maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to its business and
properties, including, without limitation, business interruption insurance,
insurance on fixed assets and directors and officers' liability insurance,
against loss or damage of the kinds customarily carried or maintained under
similar circumstances by entities of established reputation engaged in similar
businesses.
Section VI.5 Compliance with Laws, Etc. The Company shall, and
shall cause each Company Subsidiary to, comply with all (i) federal, state,
local and foreign laws and regulations applicable to it, including those
relating to the Communications Act, ERISA and labor matters and Environmental
Laws and Environmental Permits, except to the extent that any such
non-compliance has not had and could not reasonably be expected to have a
Material Adverse Effect and (ii) all provisions of all FCC licenses,
certifications and permits, franchises, or other permits and authorizations
relating to the operation of the Company's business and all other material
agreements, licenses or leases to which it is a party or of which it is a
beneficiary and suffer no loss or forfeiture thereof or thereunder, except to
the extent that any such non-compliance or loss or forfeiture has not had and
could not reasonably be expected to have a Material Adverse Effect.
Section VI.6 Environmental Matters. The Company shall, and
shall cause each Company Subsidiary to, and shall cause each Person within its
control to: (a) conduct its operations and keep and maintain its real estate in
compliance with all Environmental Laws and Environmental Permits other than
noncompliance which could not reasonably be expected to have a Material Adverse
Effect; (b) implement any and all investigation, remediation, removal and
response actions which are appropriate or necessary to comply with Environmental
Laws and Environmental Permits pertaining to the presence, generation,
treatment, storage, use, disposal, transportation or Release of any Hazardous
Material on, at, in, under, above, to, from or about any of its real estate,
except as could not reasonably be expected to have a Material Adverse Effect;
(c) notify the Investor promptly after such Person becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any of its real estate which is reasonably
likely to have a Material Adverse Effect; and (d) promptly forward to the
Investor a copy of any order, notice, request for information or any
communication or report received by such Person in connection with any such
violation or Release or any other matter relating to any Environmental Laws or
Environmental Permits that could reasonably be expected to have a Material
Adverse Effect, in each case whether or not the Environmental Protection Agency
or any Governmental Entity has taken or threatened any action in connection with
any such violation, Release or other matter.
Section VI.7 Capital Structure and Business. The Company shall
not make any changes in any of its business objectives, purposes or operations
which could reasonably be expected to have or result in a Material Adverse
Effect.
Section VI.8 ERISA. The Company shall not, and shall not cause
or permit any ERISA Affiliate to, cause or permit to occur an event which could
result in the imposition of a Lien under Section 412 of the Code or Section 302
or 4068 of ERISA or cause or permit to occur an ERISA Event to the extent such
ERISA Event could reasonably be expected to have a Material Adverse Effect.
Section VI.9 Hazardous Materials. The Company shall not, and
shall not cause or permit any Company Subsidiary to cause or permit a Release of
any Hazardous Material on, at, in, under, above, to, from or about any of its
real estate where such Release would violate in any material respect, or form
the basis for any material Environmental Liabilities under, any Environmental
Laws or Environmental Permits.
Section VI.10 No Impairment of Intercompany Transfers. The
Company shall not permit any Company Subsidiary to directly or indirectly enter
into or become bound by any agreement, instrument, indenture or other obligation
which could directly or indirectly restrict, prohibit or require the consent of
any Person with respect to the payment of dividends or distributions or the
making or repayment of intercompany loans by any Company Subsidiary to another
Company Subsidiary or the Company.
Section VI.11 Limitation on Certain Asset Sales. The Company
will not, and will not permit any Company Subsidiary to, consummate an Asset
Sale unless (i) the Company or such Company Subsidiary, as the case may be,
receives consideration at the time of such sale or other disposition at least
equal to the fair market value thereof on the date the Company or the Company
Subsidiary (as applicable) entered into the agreement to consummate such Asset
Sale (as determined in good faith by the Company's Board of Directors, and
evidenced by a resolution of the Board of Directors); (ii) not less than 75% of
the consideration received by the Company or such Company Subsidiary, as the
case may be, is in the form of cash or cash equivalents other than in the case
where the Company is exchanging all or substantially all of the assets of one or
more media properties operated by the Company (including by way of the transfer
of capital stock) for all or substantially all of the assets (including by way
of transfer of capital stock) constituting one or more media properties operated
by another Person, provided that at least 75% of the consideration received by
the Company in such exchange, other than the media properties, is in the form of
cash or cash equivalents; and (iii) the proceeds of such Asset Sale received by
the Company or such Company Subsidiary are applied first, to the extent the
Company elects or is required, to prepay, repay or purchase debt under any then
existing indebtedness of the Company or any Company Subsidiary within 180 days
following the receipt of the proceeds of such Asset Sale from any Asset Sale and
second, to the extent of the balance of the proceeds of such Asset Sale after
application as described above, to the extent the Company elects, to make an
Investment in assets (including capital stock or other securities purchased in
connection with the acquisition of capital stock or property of another Person)
used or useful in businesses similar or ancillary to the business of the Company
or any Company Subsidiary as conducted at the time of such Asset Sale, provided
that such investment occurs or the Company or any Company Subsidiary enters into
contractual commitments to make such investment, subject only to customary
conditions (other than the obtaining of financing), on or prior to the 181st day
following receipt of the proceeds of such Asset Sale and the proceeds of such
Asset Sale contractually committed are so applied within 360 days following the
receipt of the proceeds of such Asset Sale.
Section vi.12 No Restrictive Covenants. The Company and each
Company Subsidiary shall not enter into any agreement that would in any way
restrict or limit the Company's ability to perform its obligations under Article
IX.
ARTICLE VII
Operating Agreements
Section VII.1 Affiliation Conversions.
(a) At any time on or before September 10, 2009, the Investor,
in its sole discretion, may deliver a written notice (a "Conversion Request") to
the Company requesting that the Company or the relevant Company Subsidiary
convert any Company Station in a top fifty DMA (as determined at the time of
such Conversion Request) to a NBC Television Network affiliate (each a "NBC
Network Affiliate") in accordance with the terms and conditions of this Section
7.1 (an "Affiliation Conversion"). Upon receipt of any such Conversion Request,
the Company agrees to effect, or cause such Company Subsidiary to effect, the
Affiliation Conversion as promptly as practicable, and the Company and the
Investor will commence to negotiate in good faith a mutually agreed upon NBC
Television Network affiliation agreement for the Company Station, which shall
(i) not provide for any payment of compensation to the Company or the Company
Station by the Investor or its NBC Network Affiliates, (ii) not allow the
Company Station to preempt or otherwise refuse to clear any NBC Television
Network programming provided under the affiliation agreement (subject only to
preemptions pursuant to applicable FCC rules and regulations) and (iii) require
payments by the Company or Company Subsidiary to the Investor for special events
programming, with such payments calculated on the same terms as the terms
generally applicable to NBC Network Affiliates who have such payment obligations
(the "New Affiliation Agreement"). Except as set forth in clauses (i) through
(iii) above, a New Affiliation Agreement will otherwise include terms no less
favorable to the Company Station than those provided to other NBC Network
Affiliates in comparable DMAs as of the date of the Affiliation Conversion.
(b) Without limiting the generality of Section 7.1(a), any
Affiliation Conversion will provide the Investor with the right to program the
analog signal of such Company Station, as a NBC Network Affiliate, and, if such
Company Station is capable of broadcasting in a digital format, so long as such
format does not require more bandwidth than a "1080i" format, to broadcast the
NBC Network signal in high definition television in any format ("HDTV"). To the
extent the digital signal of the NBC Network, including any broadcast in HDTV,
does not require the full digital capacity of the Company Station, the Company
Station shall broadcast the NBC Network signal in HDTV, and shall have the right
to continue to use the remaining digital programming capacity.
(c) In connection with any Affiliation Conversion, the
Investor and the Company will work together to provide the Network with a
replacement Network affiliate, which may consist of carriage on Distribution
Systems, within one year of the date of the Affiliation Conversion. The Investor
will reimburse the Company for half of the costs actually incurred by the
Company in obtaining such replacement coverage, as documented in writing to the
Investor's reasonable satisfaction, but only to the extent such costs do not
exceed the cost of obtaining reasonably comparable replacement coverage on
Distribution Systems in the relevant market.
(d) Notwithstanding Section 7.1(a), the Company will not be
obligated to effect an Affiliation Conversion if, immediately following and as a
result of such conversion, the National Coverage of the Network would fall below
70%.
Section VII.2 Investor Right of First Refusal.
(a) If the Company or any Company Subsidiary at any time
intends to effect a Station Transfer to any Person other than a wholly owned
Company Subsidiary (a "Station Third Party"), the Company shall give written
notice 90 days prior to the effectiveness of such Station Transfer (a "Station
Offer Notice") to the Investor, stating the Company's intention to make such a
Station Transfer, the name of the proposed Station Third Party, the assets or
securities proposed to be transferred, the consideration to be paid for such
assets or securities (the "Station Offer Price") and in reasonable detail all
other material terms and conditions upon which such Station Transfer is
proposed. Notwithstanding the foregoing, the Investor shall not be entitled to a
right of first refusal with respect to the assets or securities of any Company
Station that is not located in one of the fifty largest DMAs.
(b) Upon receipt of the Station Offer Notice, the Investor
shall have an option to purchase all of the assets or securities proposed to be
transferred at the Station Offer Price and on the other material terms and
condition set forth in the Station Offer, which option may be exercised by
written notice to the Company given within 60 days of the Investor's receipt of
the Station Offer Notice. If any portion of the consideration to be paid by such
Station Third Party is not cash, the Investor may pay in lieu of such non-cash
consideration, cash equal to the fair market value thereof. The fair market
value shall be determined by mutual agreement or if no such agreement shall be
reached within ten days by the determination of an independent nationally
recognized appraiser selected by the Company and reasonably acceptable to the
Investor.
(c) If the Investor exercises its option pursuant to Section
7.2(b), the closing of such purchase shall take place within 30 days of the date
the Investor gives notice of such exercise, except to the extent FCC approval is
required or reasonably advisable for the transaction, in which case the closing
shall take place as soon as practicable after receipt of final, non-appealable
approval from the FCC.
(d) If the Investor determines not to exercise its option,
then for a period of 60 days from the earlier of (i) the expiration of the offer
to the Investor and (ii) the receipt of written notice from the Investor stating
that the Investor does not intend to exercise its option, or for such longer
period required or reasonably advisable for FCC approval, the Company shall be
free to sell the proposed assets or securities to the Station Third Party at a
price equal to or greater than the Station Offer Price and on substantially the
same terms as set forth in the Station Offer Notice.
Section VII.3 Pre-empted NBC Network Shows.
(a) The Company agrees to broadcast Pre-empted Shows (as
defined below), as offered by the Investor, on the Company Stations and, if
permitted under existing Network affiliation agreements, the Company's non-owned
affiliated stations, at the times and in the markets in which the shows are
pre-empted by NBC Network Affiliates, so long as the shows do not contain
excessive or gratuitous violence or explicit sex or foul language; provided,
however, that (i) without the consent of the Company, such Pre-empted Shows may
not account for more than thirty-five (35) Primetime Hours (as defined below)
broadcast by any single Company Station for any twelve-month period or more than
ten Primetime Hours in any quarter for any single Company Station, (ii) such
pre-emptions shall require a minimum of three (3) weeks advance notice to the
Company (or such greater advance notice period as is reasonably necessary to
notify program guides and significant promotional parties in the Company
Station's market) and (iii) the Company shall use all reasonable efforts to
cause its non-owned affiliates to agree to broadcast Pre-empted Shows on the
terms and conditions set forth in this Section 7.3. "Pre- empted Shows" means
programming provided by the Investor to NBC Network Affiliates' stations and
which any such affiliated station preempts or fails to clear or broadcast for
any reason. "Primetime Hours" mean any of the time from 8:00 pm through 11:00 pm
on Monday through Saturday, and from 7:00 p.m. through 11:00 p.m, Eastern
Standard time, on Sunday, and the comparable periods in other United States time
zones.
(b) The Company Stations will be entitled to sell all
non-Network advertising inventory available to NBC Network Affiliates generally
for the Pre-empted Shows; provided, however, that the Investor makes no
guarantees as to the amount of local inventory that will be available for any
given Pre-empted Show. In connection with a Company Station's broadcast of a
Pre-empted Show, the Investor, following receipt of written documentation
reasonably satisfactory to the Investor, will compensate the Company for the
allocable amount of net revenues lost by the Company as a result of such
broadcast, in an amount equal to (X) the average revenues allocable to, or
actually generated by, as the case may be, such Company Station from the Network
(determined as a proportion of such market's homes to the total network homes),
national and local sales during such preempted time period for the prior six
month period, less (Y) actual revenues collected by the Company, or the Investor
for the benefit of the Company, as the case may be, from advertising sales in
such market during local advertising inventory made available to the Company
Station by the Investor during such Pre-empted Show.
Section VII.4 Network Facilities. The Investor and the Company
will work together in good faith to explore the possibility of originating the
Network signal from the Investor's broadcast facilities in New York; provided
that in no event shall the Company be required to agree to any terms that would
impose an economic hardship on the Company, taking into account the Company's
need to be compensated for costs incurred in connection with the substitution of
broadcast facilities.
Section VII.5 Advertising for Equity Transactions.
(a) The Investor will be the Company's exclusive third-party
agent for negotiating and carrying out acquisitions of equity securities,
including warrants, options and other rights to acquire equity securities ("New
Media Equity"), of New Media Companies (as defined below) in exchange for the
Company's network and local advertising inventory ("New Media Advertising"). A
"New Media Company" is any Person a significant portion of whose business is
involved in, dependent upon or conducted through the Internet, interactive
television or any successor network or technologies. The Investor will have the
sole discretion to structure any such investment as a direct investment by the
Company (a "Direct Investment"), or an indirect investment in which the Investor
first purchases the New Media Advertising from the Company at a deeply
discounted rate that is nonetheless sufficient to satisfy the Company's
outstanding debt and Preferred Stock covenants regarding restricted payments,
and then uses such New Media Advertising to acquire New Media Equity (an
"Indirect Investment"). The Investor will receive a commission equal to 20% of
any New Media Equity acquired by the Company, in the case of a Direct
Investment, and 33% of any New Media Equity, in the case of an Indirect
Investment. Unless otherwise agreed by the Investor and the Company, all New
Media Advertising will be sold to New Media Companies at a price equal to 80% of
the Company's standard rate card for such advertising.
(b) All transactions negotiated and/or carried out by the
Investor pursuant to Section 7.5(a) will be subject to approval by the Company's
Board of Directors. Without the prior written consent of the Company, the
Investor shall not use more than $25 million per year of New Media Advertising
(calculated at 80% of the standard rate card) for purposes of carrying out the
transactions described in subsection 7.5(a).
ARTICLE VIII
Deliveries at Closing
Section VIII.1 Deliveries at Closing. Simultaneously with the
execution and delivery of this Agreement and the Closing:
(a) Stockholder Agreement. The Stockholder Agreement shall
have been duly executed and delivered by the parties referred to therein.
(b) Registration Rights Agreement. The Registration Rights
Agreement shall have been duly executed and delivered by the parties referred to
therein.
(c) Certificate of Designation. The Certificate of Designation
shall have been duly filed with the Secretary of State of the State of Delaware.
(d) Call Agreement. The Call Agreement shall have been duly
executed and delivered by the parties referred to therein.
(e) Time Brokerage Agreements. The Time Brokerage Agreements
shall have been duly executed by the parties referred to therein.
(f) Legal Opinion. The Investor shall have received from
counsel for the Company, opinions substantially in the form of Exhibit G-1 and
G-2 attached hereto, addressed to the Investor.
(g) Letter Agreements. The Letter Agreements shall have been
duly executed by the parties referred to therein.
(h) CNI Agreement. The Master Agreement For Overnight
Programming, Use of Digital Capacity and Public Interest Programing, dated
September 10, 1999, by and between The Christian Network, Inc. and Paxson
Communications Corporation shall have been duly executed and delivered by the
parties thereto.
ARTICLE IX
Redemption
Section IX.1 Basic Redemption. (a) (i) At any time there is a
final decision adopted by the full FCC, with respect to which no timely petition
for reconsideration is pending before the FCC, to the effect that the Investor's
investment in the Shares and acquisition of the other rights set forth in this
Agreement and the Ancillary Documents (without giving effect to any acquisition
of any other capital stock of the Company) is attributable (as defined by the
FCC) to the Investor or (ii) beginning with the third anniversary of the Closing
and on each anniversary thereafter, then, in each case, the Investor, at its
sole option, will have a period of 60 days during which to demand redemption, by
payment in cash, of all or any portion of the Shares at a price per share equal
to the Original Issue Price plus any accrued and unpaid dividends through and
including the date of redemption (the "Par Value Price").
(b) The Company or its assignee pursuant to Section 9.3 will
have a period of one year (the "Involuntary Redemption Period") from the date of
any such demand to consummate the redemption; provided that if at any time
during such one-year period, the Company's outstanding debt and preferred stock
covenants do not prohibit a redemption and the Company has funds on hand to
consummate such redemption, then the Company or its assignee shall consummate
such redemption at such time. Notwithstanding the foregoing, in the event the
Company assigns its redemption obligation to a third party pursuant to Section
9.3, then the Involuntary Redemption Period shall terminate on the earlier of
(i) one year from the date of such demand to consummate the redemption and (ii)
30 days after such assignment.
(c) The Investor shall not exercise any Warrants or the Call
Right during any Involuntary Redemption Period.
Section IX.2 Default Redemption. (a) In the event that an
Event of Default occurs, then the Investor will have the right to require the
Company to redeem, by payment in cash, any Shares or Conversion Shares at a
price equal to the Default Redemption Price by delivering notice to the Company
(the "Notice of Default Redemption") within 30 days of written notice by the
Company to the Investor of an Event of Default or written notice by the Investor
to the Company of an Event of Default.
(b) The Company or its assignee pursuant to Section 9.3 will
have a period of 180 days (the "Default Redemption Period") from the date of any
such demand to consummate the redemption; provided that if at any time during
such 180-day period, the Company's outstanding debt and preferred stock
covenants do not prohibit a redemption and the Company has funds on hand to
consummate such redemption, then the Company or its assignee shall consummate
such redemption at such time. Notwithstanding the foregoing, in the event the
Company assigns its redemption obligation to a third party pursuant to Section
9.3, then the Default Redemption Period shall terminate on the earlier of (i)
180 days from the date of such demand to consummate the redemption and (ii) 30
days after such assignment.
(c) The Investor shall not exercise any Warrants or the Call
Right during any Default Redemption Period.
Section IX.3 Assignment of Redemption Obligation. The Company
may assign its redemption obligation under Sections 9.1 and 9.2 to a third
party. The Company shall provide the Investor with notice at least 30 days prior
to any proposed assignment of its redemption obligation to a third party;
provided that if it is not possible to provide notice 30 days prior to such
assignment, the Company shall provide such notice as soon as possible.
Section IX.4 Failure to Redeem. (a) In the event the Company
or its assignee, as the case may be, does not consummate a redemption pursuant
to Section 9.1(a)(i) during the Involuntary Redemption Period, then the Investor
may sell the Shares, the Warrants, the Underlying Shares, Call Shares and the
Call Right and transfer the related rights under this Agreement, the Stockholder
Agreement and the Registration Rights Agreement to any party without regard to
the restrictions on transferability set forth therein, including any right of
first refusal, tag along right or consent right; provided that the mandatory
time periods within which the Warrants or the Call Right must be exercised shall
still apply following such transfer and, provided further, that the transfer of
the Investor Rights shall be subject to the transferee acquiring the Minimum
Investment (an "Unrestricted Transfer").
(b) In the event the Company or its assignee, as the case may
be, does not consummate a redemption pursuant to Section 9.1(a)(ii) during the
Involuntary Redemption Period, then the Investor may effect an Unrestricted
Transfer except that such Transfer shall be subject to the tag along provisions
in Section 4.1(d) of the Stockholder Agreement.
(c) In the event the Company or its assignee, as the case may
be, does not consummate a redemption pursuant to Section 9.2 during the Default
Redemption Period, then, for a period of 180 days after the expiration of the
Default Redemption Period (the "Investor Recourse Period"), the Investor, in its
sole discretion, shall have the right to effect an Unrestricted Transfer or an
Accelerated Buyout. If, at the end of the Investor Recourse Period, the Investor
has not effected either an Unrestricted Transfer or Accelerated Buyout, then the
Company shall have a 30-day period during which to effect a redemption at the
Default Redemption Price. If the Company does not effect redemption during such
period, then the Investor shall have the right to effect a Company Sale pursuant
to Section 9.5.
Section IX.5 Company Sale. (a) If the Company fails to effect
a redemption as set forth in Section 9.4(c), the Investor may require the
Company to effect, at the Company's option, either a public sale or a
liquidation of the Company (a "Company Sale"), exercisable by written notice to
the Company. If the Investor exercises such right, any NBC Nominees who have
been elected to the Board shall immediately resign as directors. The Investor
will retain the rights to participate as a bidder in any such sale; provided
that if the highest bid in any such public sale is not in an amount sufficient
to pay the Investor the Default Redemption Price for all the Shares and
Conversion Shares held by the Investor, the Investor will have a right of first
refusal to purchase the Company for such highest bid amount. The Company shall
be required to accept any offer it receives which provides for payment to the
Investor of the full Default Redemption Price for all Shares and Conversion
Shares held by the Investor; provided that if the Company receives more than one
such offer, the Company shall have the right to determine which offer to accept.
(b) The Investor shall not exercise any Warrants or the Call
during the period from the commencement of a process by which the Company
intends to effect a Company Sale through the earlier of (i) the consummation of
a Company Sale or (ii) the date on which the Company abandons its efforts to
effect a Company Sale.
ARTICLE X
Miscellaneous
Section X.1 Survival of Representations and Warranties. All
representations and warranties made herein or in any certificates delivered in
connection with the Closing shall survive for a period of three years after the
Closing, provided, however, that (a) the Surviving Representations and
Warranties shall not terminate pursuant to this Section 10.1 and shall continue
to survive indefinitely and (b) the representations and warranties in Section
3.1(j) shall survive until 30 days after the expiration of the applicable
statute of limitations relating to the taxes or other matters covered.
Section X.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered personally, by telecopier or sent by overnight courier as follows:
(a) If to the Investor, to:
National Broadcasting Company, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Fax: 212-664-2648
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: John W. Carr
Fax: (212) 455-2502
(b) If to the Company, to:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Chief Executive Officer
Fax: 561-655-9424
with copies to:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: General Counsel
Fax: 561-655-4754
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
Section X.3 Entire Agreement; Amendment. This Agreement, the
Ancillary Documents and the documents described herein and therein or attached
or delivered pursuant hereto or thereto set forth the entire agreement between
the parties hereto with respect to the transactions contemplated by this
Agreement. The letter agreement, dated as of August 12, 1999 is hereby
terminated and of no further force or effect. Any provision of this Agreement
may be amended or modified in whole or in part at any time by an agreement in
writing between the parties hereto executed in the same manner as this
Agreement. No failure on the part of any party to exercise, and no delay in
exercising, any right shall operate as a waiver thereof nor shall any single or
partial exercise by any party of any right preclude any other or future exercise
thereof or the exercise of any other right.
Section X.4 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the same document.
SECTION X.5 GOVERNING LAW; JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED
WITHIN SUCH STATE, AND EACH PARTY HEREBY SUBMITS TO THE JURISDICTION OF ANY
STATE OR U.S. FEDERAL COURT SITTING WITHIN THE COUNTY OF NEW YORK. THE PARTIES
HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING
BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
Section X.6 Fees and Expenses. Each party shall bear its own
costs and expenses incurred in connection with this Agreement and the Ancillary
Documents and the transactions contemplated hereby, including the fees and
expenses of their respective accountants and counsel.
Section X.7 Indemnification by the Company. (a) Subject to the
provisions of Section 10.7(b), the Company agrees to indemnify and save harmless
the Investor and each of the respective officers, directors, employees, agents
and Affiliates of the Investor in their respective capacities as such (the
"Investor Indemnitees"), from and against any and all actions, suits, claims,
proceedings, costs, damages, judgments, amounts paid in settlement (subject to
Section 10.7(b)) and expenses (including, without limitation, reasonable
attorneys' fees and disbursements)(collectively, "Losses"), suffered or incurred
by any of them relating to or arising out of any inaccuracy in or breach of the
representations, warranties, covenants or agreements made by the Company herein.
No payment for Investor's Losses shall be required except to the extent that the
cumulative aggregate amount of such Losses equals or exceeds $1,000,000. The
Company's liability to the Investor under this Section 10.7 shall not exceed the
Purchase Price.
(b) An Investor Indemnitee shall give written notice to the
Company of any claim with respect to which it seeks indemnification promptly
after the discovery by such party of any matters giving rise to a claim for
indemnification; provided that the failure of any Investor Indemnitee to give
notice as provided herein shall not relieve the Company of its obligations under
this Section 10.7 unless and to the extent that the Company shall have been
materially prejudiced by the failure of such Investor Indemnitee to so notify
the Company. In case any such action, suit, claim or proceeding is brought
against an Investor Indemnitee, the Company shall be entitled to participate in
the defense thereof and, to the extent that it may wish, to assume the defense
thereof, with counsel reasonably satisfactory to the Investor, and after notice
from the Company of its election so to assume the defense thereof, the Company
will not be liable to such Investor Indemnitee under this Section 10.7 for any
legal or other expense subsequently incurred by such Investor Indemnitee in
connection with the defense thereof; provided, however, that (i) if the Company
shall elect not to assume the defense of such claim or action or (ii) if outside
legal counsel to the Investor Indemnitee reasonably determines that there may be
a conflict between the positions of the Company and of the Investor Indemnitee
in defending such claim or action, then separate counsel shall be entitled to
participate in the conduct of the defense, and the Company shall be liable for
any legal or other expenses reasonably incurred by the Investor Indemnitee in
connection with the defense (but only with respect to one such separate
counsel). The Company shall not be liable for any settlement of any action,
suit, claim or proceeding effected without its written consent; provided,
however, that the Company shall not unreasonably withhold, delay or condition
its consent. The Company further agrees that it will not, without the Investor
Indemnitee's prior written consent (which consent shall not be unreasonably
withheld), settle or compromise any claim or consent to entry of any judgment in
respect thereof in any pending or threatened action, suit, claim or proceeding
in respect of which indemnification may be sought hereunder unless such
settlement or compromise includes an unconditional release of the Investor and
each other Investor Indemnitee from all liability arising out of such action,
suit, claim or proceeding.
Section X.8 Successors and Assigns; Third Party
Beneficiaries. Subject to applicable law and the following sentence, the
Investor may assign its rights under this Agreement in whole or in part only to
any Affiliate of the Investor, but no such assignment shall relieve the Investor
of its obligations hereunder. The Investor shall not assign any rights under
this Agreement to any other Person unless such Person expressly assumes pursuant
to a document in form and substance reasonably satisfactory to the Company all
of the obligations of the Investor associated with the rights proposed to be
assigned. The Company may not assign any of its rights or delegate any of its
duties under this Agreement without the prior written consent of the Investor.
Any purported assignment in violation of this Section shall be void. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any Person other than the parties hereto and their respective successors,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the parties hereto and their respective successors, and for the benefit of no
other Person.
Section X.9 Arbitration. Any controversy, dispute or claim
arising out of, in connection with or in relation to the interpretation,
performance or breach of this Agreement, shall be determined, at the request of
any party, by arbitration in a city mutually agreeable to the parties to such
controversy, dispute or claim, or, failing such agreement, in New York, New
York, before and in accordance with the then-existing Rules for Commercial
Arbitration of the American Arbitration Association, and any judgment or award
rendered by the arbitrator will be final, binding and unappealable and judgment
may be entered by any state or Federal court having jurisdiction thereof. The
pre-trial discovery procedures of the Federal Rules of Civil Procedure shall
apply to any arbitration under this Section 10.9. Any controversy concerning
whether a dispute is an arbitrable dispute or as to the interpretation or
enforceability of this Section 10.9 shall be determined by the arbitrator. The
arbitrator shall be a retired or former United States District Judge or other
person acceptable to each of the parties, provided such individual has
substantial professional experience with regard to corporate or partnership
legal matters. The parties intend that this agreement to arbitrate be valid,
enforceable and irrevocable.
Section X.10 Remedies. No right, power or remedy conferred
upon the Investor in this Agreement or the Ancillary Documents shall be
exclusive, and each such right, power or remedy shall be cumulative and in
addition to every other right, power or remedy whether conferred in this
Agreement or the Ancillary Documents or now or hereafter available at law or in
equity or by statute or otherwise. No course of dealing between the Investor and
the Company and no delay in exercising any right, power or remedy conferred in
this Agreement or now or hereafter existing at law or in equity or by statute or
otherwise shall operate as a waiver or otherwise prejudice any such right, power
or remedy. The parties hereto agree that irreparable damage would occur in the
event any provision of this Agreement or the Ancillary Documents was not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or the Ancillary Documents and to enforce specifically the terms and provisions
of this Agreement in addition to any other remedy to which they are entitled at
law or in equity.
Section X.11 Headings, Captions and Table of Contents. The
section headings, captions and table of contents contained in this Agreement are
for reference purposes only, are not part of this Agreement and shall not affect
the meaning or interpretation of this Agreement.
Section X.12 Termination. Sections 4.1, 5.5, 5.7 and 5.8 and
Article VI (other than Section 6.12) of this Agreement shall terminate if
neither (i) the Investor (together with its Affiliates) owns at least the
Minimum Investment nor (ii) a transferee of the Investor to whom the Investor
Rights were transferred in accordance with the Stockholder Agreement owns at
least the Minimum Investment. Article VII of this Agreement shall terminate if
the Investor (together with its Affiliates) does not own at least the Minimum
Investment. This Agreement shall terminate in its entirety upon the earlier of
(i) the Investor acquiring shares of capital stock that provide it with the
unfettered right to vote a sufficient number of Voting Shares to elect a
majority of the members of the Board of Directors or (ii) the tenth anniversary
of the date hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Lowell W. Paxson
Name: Lowell W. Paxson
Title: Chairman of the Board
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ Thomas A. Rogers
Name: Thomas A. Rogers
Title: Executive Vice President
<PAGE>
Exhibit 3
STOCKHOLDER AGREEMENT
dated as of September 15, 1999
among
PAXSON COMMUNICATIONS CORPORATION,
NATIONAL BROADCASTING COMPANY, INC.,
MR. LOWELL W. PAXSON,
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP
and
PAXSON ENTERPRISES, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS 1
Section 1.1 Definitions 1
ARTICLE II Certain Investor Rights 9
Section 2.1 Board of Directors. 9
Section 2.2 Reimbursement of Expenses; Attendance at Board Meetings;
Indemnification 10
ARTICLE III Certain Agreements 10
Section 3.1 Financial Statements and Other Reports 10
Section 3.2 Certain Other Matters 14
Section 3.3 Agreement to Vote Stock 15
Section 3.4 Company Sale 15
ARTICLE IV Transfer Restrictions 16
Section 4.1 Investor Restrictions 16
Section 4.2 Paxson Stockholder Restrictions 19
Section 4.3 Certain Transfer 22
Section 4.4 Legends 22
ARTICLE V Representations and Warranties 23
Section 5.1 Representations of the Company 23
Section 5.2 Representations of the Investor 24
Section 5.3 Representations of the Paxson Stockholders 26
ARTICLE VI Miscellaneous 27
Section 6.1 Notices 27
Section 6.2 Entire Agreement; Amendment 28
Section 6.3 Severability 28
Section 6.4 Counterparts 28
Section 6.5 Governing Law; Jurisdiction; Waiver of Jury Trial 29
Section 6.6 Successors and Assigns; Third Party Beneficiaries 29
Section 6.7 Arbitration 29
Section 6.8 Remedies 30
Section 6.9 Headings, Captions and Table of Contents 30
Section 6.10 Termination 30
Section 6.11 Additional Paxson Stockholders 30
EXHIBIT
Exhibit A - Assumption Agreement
<PAGE>
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of September 15, 1999, among
PAXSON COMMUNICATIONS CORPORATION, a Delaware corporation (together with its
successors, the "Company"), NATIONAL BROADCASTING COMPANY, INC., a Delaware
corporation (together with its successors, "Investor") and Mr. LOWELL W. PAXSON,
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP, a Nevada limited partnership, and
PAXSON ENTERPRISES, INC., a Nevada corporation (the "Paxson Stockholders").
W I T N E S S E T H :
WHEREAS, the Company and Investor have entered into an
Investment Agreement, dated as of September 15, 1999 (the "Investment
Agreement"), pursuant to which the Investor has agreed to purchase shares of
Convertible Exchangeable Preferred Stock and warrants to purchase Common Stock
of the Company; and
WHEREAS, as an integral part of the transactions contemplated
by the Investment Agreement, the parties hereto deem it in their best interests
and in the best interests of the Company to provide for certain matters with
respect to the governance of the Company and desire to enter into this Agreement
in order to effectuate that purpose.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Additional Offered Securities" shall have the meaning set
forth in subsection 4.1(c).
"Affiliate" shall mean, with respect to any Person, any other Person
that controls, is controlled by, or is under common control with, such
Person, including the executive officers and directors of such Person.
As used in this definition, "control" (including its correlative
meanings, "controlled by" and "under common control with") shall mean
the possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"Agreement" shall mean this Agreement, as from time to time
amended, modified or supplemented.
"Ancillary Documents" shall mean the Certificate of
Designation, the Warrants, the Call Agreement, the Stockholder Agreement, the
Registration Rights Agreement, the Letter Agreements and the Time Brokerage
Agreements.
"Beneficially Own" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
"Board of Directors" shall mean the Board of Directors of the
Company as from time to time constituted.
"Business Day" shall mean any day, other than a Saturday,
Sunday or a day on which commercial banks in New York, New York are authorized
or obligated by law or executive order to close.
"Call Agreement" shall mean the Call Agreement, dated as of
the date hereof, between the Investor and the Paxson Stockholders, as from time
to time amended, modified or supplemented.
"Call Price" shall have the meaning set forth in the Call
Agreement.
"Call Right" shall have the meaning set forth in Section 2.1
of the Call Agreement.
"Call Shares" shall mean the shares of Common Stock that are
subject to purchase by the Investor under the Call Agreement.
"Certificate of Designation" shall mean the Certificate of
Designation of the Preferred Stock of the Company, filed with the Secretary of
State of the State of Delaware on or prior to the date hereof.
"Change of Control" shall mean, with respect to the
Company,(i) any Person (including a Person's Affiliate), other than a Permitted
Holder, Beneficially Owning 50% or more of the Total Voting Power, (ii) any
Person (including a Person's Affiliate), other than a Permitted Holder,
Beneficially Owning more than 33 1/3% of the Total Voting Power, and the
Permitted Holders Beneficially Owning, in the aggregate, a lesser percentage of
the Total Voting Power than such other Person and not having the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors, (iii) the consummation of a
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which the Common Stock is
converted into cash, securities or other property, other than a consolidation or
merger of the Company in which the holders of Common Stock of the Company
outstanding immediately prior to the consolidation or merger hold, directly or
indirectly, at least a majority of the total voting power of the common stock of
the surviving corporation immediately after such consolidation or merger, (iv)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors (together with any new directors
whose election by such Board of Directors or whose nomination for election by
the stockholders of the Company has been approved by a majority of the directors
then still in office who either were directors at the beginning of such period
or whose election or recommendation for election was previously so approved)
cease to constitute a majority of the Board of Directors or (v) any "change of
control" occurs (as defined at such time) with respect to any outstanding
preferred stock or indebtedness of the Company.
"Class A Common Stock" shall mean the shares of Class A Common
Stock, par value $0.001 per share, of the Company.
"Class B Common Stock" shall mean the shares of Class B Common
Stock, par value $0.001 per share, of the Company.
"Common Stock" shall mean the Class A Common Stock, Class B
Common Stock and Class C Common Stock, par value $0.001 per share, and any other
class of common stock of the Company hereafter created and any securities of the
Company into which such Common Stock may be reclassified, exchanged or
converted.
"Communications Act" shall have the meaning set forth in the
Investment Agreement.
"Company" shall have the meaning set forth in the preamble
hereto.
"Company Sale" shall have the meaning set forth in the
Investment Agreement.
"Conversion Shares" shall mean the 31,896,032 shares of Common
Stock (subject to adjustment under the terms of the Certificate of Designation)
that the Preferred Stock are convertible into in accordance with the terms and
conditions set forth in the Certificate of Designation.
"DMA" shall have the meaning set forth in the Investment
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Existing Preferred Stock" shall have the meaning set forth in
the Investment Agreement.
"FCC" shall mean the Federal Communications Commission and any
successor governmental entity performing functions similar to those performed by
the Federal Communications Commission on the date hereof.
"FCC Single Majority Stockholder" shall mean a Person who
holds or has the right to vote shares of Voting Stock having more than 50% of
the Total Voting Power of all of the outstanding Voting Stock and voting capital
stock equivalents of the Company, whether such shares of Voting Stock are issued
to such Person or such Person's Affiliate.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"Governmental Entity" shall have the meaning set forth in the
Investment Agreement.
"Investment Agreement" shall have the meaning set forth in the
recitals hereto, as such agreement may from time to time be amended, modified or
supplemented.
"Investor" shall have the meaning set forth in the preamble
hereto.
"Investor Offer Notice" shall have the meaning set forth in
subsection 4.1(a).
"Investor Offer Price" shall have the meaning set forth in
subsection 4.1(a).
"Investor Offered Securities" shall have the meaning set forth
in subsection 4.1(a).
"Investor Participant" shall have the meaning set forth in
subsection 4.2(c).
"Investor Rights" shall mean the rights of the Investor set
forth herein and in Article IV of the Investment Agreement.
"Investor Third Party" shall have the meaning set forth in
subsection 4.1(a).
"Investor Transfer" shall have the meaning set forth in
subsection 4.1(a).
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or security agreement of any
kind or nature whatsoever (including, without limitation, any conditional sale
or other title retention agreement or any financing lease having substantially
the same effect as any of the foregoing).
"Material Adverse Effect" shall mean a material adverse effect
on (i) with respect to the Company, the business, assets, operations or
financial or other condition of the Company and the Company Subsidiaries taken
as a whole or (ii) with respect to any party to this Agreement or any Ancillary
Document, the ability of such party to perform its obligations under this
Agreement or any Ancillary Document to which it is a party.
"Minimum Investment" shall have the meaning set forth in the
Investment Agreement.
"NBC Nominee" shall mean any individual nominated by the
Investor for election to the Board of Directors, which individual shall not have
an attributable interest in the Investor or any entity having an attributable
interest in a broadcast license for purposes of the FCC, provided that
notwithstanding the foregoing, the parties agree that there is no express or
implied agreement that any NBC Nominee shall be elected to the Board of
Directors.
"Observers" shall have the meaning set forth in subsection
2.1(a).
"Operating Rights" shall mean the rights of the Investor set
forth in Article VII of the Investment Agreement or in any other agreement
entered between the Investor and the Company which by its terms provides that it
or any part thereof shall constitute Operating Rights for purposes of this
definition. "Options" shall mean stock options to purchase Common Stock.
"Parent" shall have the meaning set forth in the Investment
Agreement.
"Paxson" shall mean Mr. Lowell W. Paxson.
"Paxson Call Shares" shall have the meaning set forth in
subsection 4.2(a).
"Paxson Estate Planning Affiliates" shall mean all limited
partners of Second Crystal Diamond Limited Partnership, other than Paxson or
Paxson Enterprises, Inc.
"Paxson Non-Estate Planning Affiliates" shall mean Affiliates
(including family members) of Paxson other than the Paxson Estate Planning
Affiliates who acquire shares of Common Stock from a Paxson Stockholder after
the date hereof, and agree in writing to become subject to this Agreement, as a
Paxson Stockholder.
"Paxson Offer Notice" shall have the meaning set forth in
subsection 4.2(b).
"Paxson Offer Price" shall have the meaning set forth in
subsection 4.2(b).
"Paxson Offered Securities" shall have the meaning set forth
in subsection 4.2(b).
"Paxson Participant" shall have the meaning set forth in
subsection 4.1(d).
"Paxson Shares" shall have the meaning set forth in subsection
5.3(c).
"Paxson Stockholders" shall have the meaning set forth in the
preamble hereto and any other stockholders that become parties to this Agreement
pursuant to Section 6.11 after the date hereof.
"Paxson Third Party" shall have the meaning set forth in
subsection 4.2(b).
"Paxson Transfer" shall have the meaning set forth in
subsection 4.2(b).
"Paxson Transferor" shall have the meaning set forth in
subsection 4.2(b).
"Permitted Holders" shall mean, collectively, Paxson, his
spouse, children or other lineal descendants (whether adoptive or biological)
and any revocable or irrevocable inter vivos or testamentary trust or the
probate estate of any such individual, so long as one or more of the foregoing
individuals is the principal beneficiary of such trust or probate estate.
"Permitted Liens" shall have the meaning set forth in the
Investment Agreement.
"Person" shall mean an individual, corporation, unincorporated
association, partnership, group (as defined in subsection 13(d)(3) of the
Exchange Act), trust, joint stock company, joint venture, business trust or
unincorporated organization, limited liability company, any governmental entity
or any other entity of whatever nature.
"Preferred Stock" shall mean the Convertible Exchangeable
Preferred Stock, par value $0.001 per share, of the Company.
"Same Market Station" shall have the meaning set forth in the
Investment Agreement.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Senior Subordinated Notes Indenture" shall have the meaning
set forth in the Investment Agreement.
"Stockholders Meeting" shall mean the first annual meeting of
the stockholders of the Company occurring after the date of this Agreement,
which meeting the Company shall hold and convene no later than May 15, 2000 in
order to vote on certain matters including, but not limited to, the Stockholder
Proposals, and any adjournment thereof or action or approval by stockholder
consent with respect to all or any part of the Stockholder Proposals.
"Stockholder Proposals" shall mean the proposals to be
submitted to the stockholders of the Company for approval of: (i) an amendment
to the Company's certificate of incorporation providing for three-year staggered
terms of the members of the Board of Directors; (ii) the issuance of the
Underlying Shares if and to the extent required to satisfy conditions to the
listing thereof under applicable rules of the American Stock Exchange, if
required; (iii) an amendment to the certificate of incorporation of the Company
to provide for a new series of non-voting common stock such that in the event
that the Investor, in its sole discretion, determines that FCC regulations
prevent the Investor from holding Class A Common Stock upon conversion of the
Preferred Stock and exercise of the Warrants, the Investor will have the option
to acquire such new series of non-voting common stock in place of Class A Common
Stock; and (iv) any other matters necessary to consummate the transactions
contemplated by this Agreement and the Ancillary Documents.
"Subject Securities" shall mean the Preferred Stock, Warrant
A, Warrant B, the Call Right, and the Underlying Shares.
"Subsidiary" shall mean, as to any Person, a corporation,
partnership, limited liability company, joint venture or other entity of which
shares of stock or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
owned, directly or indirectly through one or more intermediaries (including,
without limitation, other Subsidiaries), or both, by such Person.
"Total Voting Power" shall mean, with respect to any
corporation, the total number of votes which may be cast in the election of
directors of such corporation if all securities entitled to vote in the election
of such directors (excluding shares of preferred stock that are entitled to
elect directors only upon the occurrence of customary events of default) are
present and voted.
"Transfer" shall mean, with respect to any shares of capital
stock, any direct or indirect sale, assignment, pledge, offer or other transfer
or disposal of any interest in such capital stock.
"Underlying Shares" shall mean the shares of Common Stock into
which the shares of Preferred Stock are convertible and the shares of Common
Stock issuable upon exercise of the Warrants, as such shares may be subject to
adjustment from time to time and any securities into which such shares may be
reclassified, exchanged or converted.
"Voting Stock" shall mean shares of the capital stock and any
other securities of the Company having the ordinary power to vote in the
election of directors of the Company.
"Warrant A" shall have the meaning set forth in the Investment
Agreement.
"Warrant B" shall have the meaning set forth in the Investment
Agreement.
"Warrants" shall mean Warrant A and Warrant B.
ARTICLE II
Certain Investor Rights
Section II.1 Board of Directors.
(a) If at any time no NBC Nominees serve as members of the
Board of Directors, by notice to such effect to the Company, the Investor may
appoint two representatives ("Observers") to receive notice of and have the
right to attend all meetings of the Board of Directors and any of its committees
and receive copies of all materials distributed to members of the Board of
Directors at the same time such materials are distributed to members of the
Board of Directors. Such Observers shall have no right to vote on any matters
presented to the Board of Directors.
(b) If, at any time, in the Investor's reasonable
determination, the Communications Act and the rules and regulations promulgated
by the FCC permit the Investor to have board appointment or similar rights, at
the request of the Investor, (i) the Company shall have the right to nominate
NBC Nominees for election or appointment to the Board of Directors as part of
the management slate that is included in the proxy statement (or consent
solicitation or similar document) of the Company relating to the election of
directors, and shall provide the same support for the election of each such NBC
Nominee as it provides to other persons standing for election as directors of
the Company as part of the Company's management slate, (ii) the Paxson
Stockholders will vote their shares of Voting Stock to elect the NBC Nominees to
the Board of Directors, (iii) the Company shall not permit the removal of, and
the Paxson Stockholders shall not vote their shares of Voting Stock to remove,
any of the NBC Nominees from the Board of Directors without the approval of the
Investor, and (iv) unless otherwise agreed to by the Investor, (A) at least one
NBC Nominee may attend all meetings of the Audit Committee and the Compensation
Committee of the Board of Directors, but shall not be a voting member of such
committees and (B) each other committee of the Board of Directors shall contain
a number of NBC Nominees (to the extent available), rounded upward to the
nearest whole number, equal to the total number of directors on such committee
multiplied by the percentage of the entire Board of Directors who are NBC
Nominees.
Section II.2 Reimbursement of Expenses; Attendance at Board
Meetings; Indemnification. The Company shall reimburse each NBC Nominee that
serves as a director for all reasonable costs and expenses (including travel
expenses) incurred in connection with such director's attendance at meetings of
the Board of Directors or any committee of the Board of Directors upon which
such director serves. The Company will not pay such director annual or other
fees for attending Board or committee meetings. The Company shall indemnify and
provide directors and officers liability insurance for each such director to the
same extent it indemnifies and provides such insurance for its other directors
pursuant to its organizational documents, applicable law or otherwise. The
Company may purchase such additional policies or endorsements to existing
insurance policies as are necessary to provide continuous directors and officers
liability insurance coverage, notwithstanding the acquisition by the Investor,
its Affiliates or their transferees of a majority of the Total Voting Power,
including coverage for claims asserted up to six years after the termination of
such a policy that arise out of matters occurring prior to such policy
terminations.
ARTICLE III
Certain Agreements
Section III.1 Financial Statements and Other Reports. The
Company shall deliver, or cause to be delivered to the Investor:
(a) Monthly Financials: as soon as practicable and in any
event within 30 days after the end of each calendar month of the Company, copies
of the monthly sales pacing reports and operating cash flow statements for each
operating property for such month, and copies of the consolidated and
consolidating income statement, operating cash flow statement and performance to
budget analysis for the Company and its consolidated Subsidiaries for and as of
the end of such month;
(b) Quarterly Financials: as soon as practicable and in any
event within 45 days after the end of each fiscal quarter of the Company, a
consolidated balance sheet of the Company and its consolidated Subsidiaries as
at the end of such period, and the related unaudited consolidated statements of
income and of cash flows, as contained in the Form 10-Q for such fiscal quarter
provided by the Company to the SEC, and if such Form 10-Q is no longer required
to be so provided by the Company, then the Company shall provide the Investor
with comparable financial statements, certified by the chief financial officer
of the Company that they fairly present the financial condition and results of
operations of the Company and its consolidated Subsidiaries, as appropriate, as
at the end of such periods and for such periods, subject to changes resulting
from audit and normal year-end adjustments;
(c) Year-End Financials: as soon as practicable and in any
event within 90 days after the end of each fiscal year of the Company, the
audited consolidated balance sheet of the Company and its consolidated
Subsidiaries, as at the end of such year, and the related consolidated
statements of income, shareholders' equity and cash flows of the Company and its
consolidated Subsidiaries for such fiscal year, (1) accompanied by a report
thereon of independent certified public accountants of recognized national
standing selected by the Company and reasonably satisfactory to the Investor,
which report shall state that the examination by such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards without any limitations being imposed on the scope
of such examination and (2) certified by the chief financial officer of the
Company that they fairly present the financial condition and results of
operations of the Company and its consolidated Subsidiaries, as at the dates and
for the periods indicated, as appropriate;
(d) Reconciliation Statement: if, as a result of any change in
accounting principles and policies from those used in the preparation of the
financial statements, the financial statements of the Company and its
consolidated Subsidiaries delivered pursuant to subsections (b), (c) or (f) of
this Section 3.1 will differ in any material respect from the financial
statements that would have been delivered pursuant to such subsections had no
such change in accounting principles and policies been made, then, together with
the first delivery of financial statements pursuant to subsection (b), (c) or
(f) following such change, financial statements of the Company and its
consolidated Subsidiaries prepared on a pro forma basis, for (1) the current
year to the effective date of such change and (2) the one full fiscal year
immediately preceding the fiscal year in which such change is made, as if such
change had been in effect during such period;
(e) Accountants' Certification: so long as not contrary to the
then current recommendations of the American Institute of Certified Public
Accountants, the year-end financial statements delivered pursuant to this
Section 3.1 shall be accompanied by a written statement of the Company's
independent certified public accountants that in making the examination
necessary for certification of such financial statements nothing has come to
their attention which would lead them to believe that the Company is not in
compliance with the terms of the instruments governing its outstanding debt and
Preferred Stock or, if any such violation has occurred, specifying the nature
and period of existence thereof, it being understood that such accountants shall
not be liable directly or indirectly for any failure to obtain knowledge of any
such violation.
(f) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all
significant reports submitted to the Company by independent public accountants
in connection with each annual, interim or special audit of the financial
statements of the Company made by such accountants, including, without
limitation, the comment letter submitted by such accountants to management in
connection with their annual audit;
(g) Reports and Filings: within five days after the same are
sent, copies of all financial statements and reports which the Company sends to
its stockholders, and within five days after the same are filed, copies of all
financial statements and reports which the Company may make to, or file with,
the SEC;
(h) Events of Default etc.: promptly upon, but in any event no
later than two Business Days after, any executive officer of the Company
obtaining knowledge (1) of any condition or event that constitutes a violation
or default, or becoming aware that any lender has given any notice or taken any
other action with respect to a claimed violation or default under the
instruments governing its outstanding debt and Preferred Stock, (2) that any
Person has given any notice to the Company or any of its Subsidiaries or taken
any other action with respect to a claimed default or event or condition that
would be required to be disclosed in a current report filed by the Company with
the SEC on Form 8-K (Items 1, 2, 4 and 5 of such Form as in effect on the date
hereof) or (3) of any condition or event which has had or could reasonably be
expected to have a Material Adverse Effect, an officer's certificate specifying
the nature and period of existence of such condition or event, or specifying the
notice given or action taken by such holder or Person and the nature of such
claimed violation, default, event or condition, and what action the Company has
taken, is taking and proposes to take with respect thereto;
(i) Litigation: promptly upon any executive officer of the
Company obtaining knowledge of (1) the institution of any action, suit,
proceeding, governmental investigation or arbitration against or affecting the
Company or any Company Subsidiary not previously disclosed by the Company to the
Investor or (2) any material adverse development in any such action, suit,
proceeding, governmental investigation or arbitration that, in any case involves
claims in excess of $5,000,000 in the aggregate or would reasonably be expected
to cause a Material Adverse Effect, the Company shall promptly give notice
thereof to the Investor and provide such other information as may be reasonably
available to them to enable the Investor and their counsel to evaluate such
matters;
(j) ERISA Events: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event (as defined in the
Investment Agreement) in connection with any Employee Benefit Plan (as defined
in the Investment Agreement) or any trust created thereunder, with a written
notice specifying the nature thereof, what action the Company or ERISA Affiliate
(as defined in the Investment Agreement) has taken, is taking or proposes to
take with respect thereto and, when known, any action taken or threatened by the
IRS, the Department of Labor or the PBGC (as defined in the Investment
Agreement) with respect thereto;
(k) ERISA Notices: with reasonable promptness, copies of (1)
all notices received by the Company or any of its ERISA Affiliates from the
Pension Benefit Guarantee Corporation ("PBGC") relating to an ERISA Event, (2)
each Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by the Company or any of its ERISA Affiliates with the IRS with respect to
each Pension Plan (as defined in the Investment Agreement), if any, and (3) all
notices received by the Company or any of its ERISA Affiliates from a
Multiemployer Plan (as defined in the Investment Agreement) sponsor concerning
an ERISA Event;
(l) Financial Plans: as soon as practicable and in any event
no later than 30 days after the end of any fiscal year of the Company, a budget
and financial forecast for the Company and the Company Subsidiaries including,
(1) a forecasted operating cash flows statement of the Company and the Company
Subsidiaries for the next succeeding fiscal year, (2) forecasted operating cash
flows statement of the Company and the Company Subsidiaries for each fiscal
quarter of the next succeeding fiscal year and (3) such other information and
projections as the Investor may reasonably request, in each case, in a format
satisfactory to the Investor; and
(m) Other Information: with reasonable promptness, such other
information and data with respect to the Company or any of its Subsidiaries or
Affiliates as from time to time may be reasonably requested by the Investor.
Section III.2 Certain Other Matters. The Company agrees that
except with the prior written consent of the Investor, it and its Subsidiaries
shall not, directly or indirectly:
(i) adopt any shareholders rights plan, or amend any of its
organizational documents or issue any capital stock or other securities or enter
into any agreement that is material to the Company and the Company Subsidiaries
taken as a whole, the provisions of which, upon the acquisition of capital
securities of the Company by the Investor or its Affiliates: (A) would be
violated or breached, would require a consent or approval thereunder, or would
result in a default thereof (or an event which, with notice or lapse of time or
both, would constitute a default), (B) would result in the termination thereof
or accelerate the performance required thereby, or result in a right of
termination or acceleration thereunder, (C) would result in the creation of any
Lien (except Permitted Liens) upon any of the properties or assets of the
Company or any Company Subsidiary thereunder, (D) would disadvantage the
Investor or its Affiliates relative to other stockholders on the basis of the
size of their shareholdings, or (E) would otherwise restrict or impede the
ability of the Investor and its Affiliates to acquire additional shares of
capital stock, or dispose of such capital stock, in any manner permitted by
Section 4.1; provided that the Company may (x) enter into senior loan agreements
that contain customary provisions permitting acceleration of the related
indebtedness upon a change of control and (y) issue debt securities or preferred
stock that contain customary change of control provisions permitting the holders
of such debt securities or preferred stock to demand repurchase of their debt
securities or preferred stock upon a change of control of the Company to any
party other than to Parent or its wholly owned domestic Subsidiary.
(ii) take any action that would cause any ownership interest in any
of the following to be attributable to the Investor or any of its Affiliates for
purposes of FCC regulations: (A) a U.S. broadcast radio or television station
(other than the Same Market Stations), (B) a U.S. cable television system, (C) a
U.S. "daily newspaper" (as such term is defined in Section 73.3555 of the rules
and regulations of the Federal Communications Commission, as the same may be
amended from time to time), (D) any U.S. communications facility operated
pursuant to a license granted by the FCC and subject to the provisions of
Section 310(b) of the Communications Act, or (E) any other business which is
subject to FCC regulations under which the ownership of a Person may be subject
to limitation or restriction as a result of the interest in such business being
attributed to such Person.
Section III.3 Agreement to Vote Stock. At the Stockholder
Meeting, each of the Paxson Stockholders irrevocably agrees that it shall vote
(or cause to be voted) all of the Voting Stock that it has the power to vote on
the record date of any such vote or action (i) in favor of the approval of each
of the Stockholder Proposals and (ii) prior to the Stockholder Meeting and the
approval of the Stockholder Proposals, against any proposal that would upon
consummation result in a Change of Control. The Paxson Stockholders shall not
take, or commit or agree to take, any action inconsistent with the foregoing.
Section III.4 Company Sale. If at any time the Investor
exercises its rights under Section 9.5 of the Investment Agreement to cause the
Company to consummate a Company Sale, the Paxson Stockholders agree to take all
necessary and reasonably desirable actions to enable the Company to effectuate
such Company Sale pursuant to Section 9.5. Without limiting the generality of
the foregoing, each Paxson Stockholder shall vote all of the Voting Stock that
it has the power to vote in favor of any Company Sale which is in the form of a
merger, consolidation or other reorganization, sale of substantially all assets
or complete liquidation, dissolution, winding up or other transaction that
requires the approval of the Company's stockholders and shall tender all shares
of Common Stock held by it in connection with a Company Sale in the form of a
transaction involving a tender or exchange offer, on the same terms and
conditions offered to holders of Common Stock generally.
ARTICLE IV
Transfer Restrictions
Section IV.1 Investor Restrictions.
(a) COMPANY RIGHT OF FIRST REFUSAL. (i) If the Investor at any
time intends to Transfer any Subject Securities (other than pursuant to (A) a
merger, consolidation or reorganization to which the Company is a party or a
tender offer approved by the Board of Directors of the Company or (B) after
February 1, 2002, any transaction or series of related transactions that require
the exercise of Warrant B and the purchase of the Call Shares and after giving
effect to such transaction or transactions neither Paxson nor any of his
Affiliates and family members continue to qualify as the FCC Single Majority
Stockholder (each, an "Investor Transfer")) to any Person other than an
Affiliate of the Investor or the Company (an "Investor Third Party"), the
Investor shall give written notice 90 days prior to the effectiveness of such
Transfer (an "Investor Offer Notice") to the Company and the Paxson
Stockholders, stating the Investor's intention to make such a Transfer, the name
of the proposed Investor Third Party transferee, the Subject Securities proposed
to be transferred (the "Investor Offered Securities"), the aggregate
consideration to be paid for the Investor Offered Securities and the implied
price per share or Underlying Share (which shall include the exercise price in
the case of the Warrants and the Call Price in the case of the Call Agreement)
(the "Investor Offer Price") and in reasonable detail all other material terms
and conditions upon which such Transfer is proposed. If the Investor indicates
that the Investor Offer Price is the then current market price or the
consideration is not cash, then the Investor Offer Price shall be the closing
price for shares of the Company on the American Stock Exchange on the day
immediately preceding the date of the Investor Offer Notice.
(ii) The Investor shall require as a condition to any Investor
Transfer of any Warrants or of rights to acquire shares under the Call Agreement
that the Investor Third Party transferee exercise in full the transferred
portion of the Warrants or the entire right to acquire shares under the Call
Agreement within 30 days after the later of (A) the consummation of such
Investor Transfer and (B), unless waived in writing by the Company, the date on
which such Warrant or the Call Agreement first becomes exercisable in accordance
with its terms.
(iii) Upon receipt of the Investor Offer Notice, the Company
shall have an option to purchase all of the Investor Offered Securities at the
Investor Offer Price, which option may be exercised by written notice to the
Investor given within 30 days of the Company's receipt of the Investor Offer
Notice.
(iv) If the Company exercises its option to purchase
the Investor Offered Securities, the closing of such purchase shall
take place within 60 days of the date the Company gives notice of such
exercise.
(v) If the Company determines not to exercise its option to
purchase the Investor Offered Securities, then the Investor shall be free, for a
period of 60 days from the earlier of (A) the expiration of the offer to the
Company and (B) the receipt of written notice from the Company stating that the
Company does not intend to exercise its option, to sell the Investor Offered
Securities to the Investor Third Party transferee at a price equal to or greater
than the Investor Offer Price and on substantially the same terms as set forth
in the Investor Offer Notice.
(vi) This subsection 4.1(a) shall not apply in the case of an
Unrestricted Transfer (as defined in the Investment Agreement) pursuant to
Section 9.4 of the Investment Agreement, a Company Sale pursuant to Section 9.5
of the Investment Agreement, a transfer pursuant to subsection 4.1(c)(ii) of
this Agreement or a transfer pursuant to open market sales.
(b) TRANSFER OF OPERATING RIGHTS AND INVESTOR RIGHTS. The
Investor may not transfer the Operating Rights and may not transfer the Investor
Rights except in conjunction with a transfer of Subject Securities and except as
provided in this subsection 4.1(b).
(i) If after giving effect to any Transfer of Subject
Securities, the Investor and its Affiliates own the Minimum Investment, the
Operating Rights and the Investor Rights shall continue unaffected by such
Transfer.
(ii) If after giving effect to any Transfer of Subject
Securities, neither the Investor and its Affiliates nor the transferee of such
Subject Securities would own the Minimum Investment, then the Operating Rights
and the Investor Rights shall terminate upon the effectiveness of such Transfer.
(iii) If after giving effect to any Transfer of Subject
Securities, the Investor and its Affiliates would not hold the Minimum
Investment and the transferee of such Subject Securities would own the Minimum
Investment, then the transfer of Investor Rights shall be subject to the prior
written consent of the Company, which consent shall not be unreasonably withheld
or delayed and shall be subject to subsection 4.1(c) below. Upon the
effectiveness of such Transfer, (A) the Operating Rights shall terminate, (B) if
the Company has not consented to the Transfer, on the 30th day after the
effectiveness of such Transfer, the Investor Rights shall terminate and (C) if
the Company has consented to the Transfer, the Investor Rights shall be
transferred and continue unaffected by such Transfer.
This subsection 4.1(b) shall not apply to a transfer of the Investor Rights in
(A) an Unrestricted Transfer pursuant to Section 9.4 of the Investment Agreement
or (B) a transfer pursuant to the last sentence of subsection 4.1(c)(ii) of this
Agreement.
(c) COMPANY PURCHASE OBLIGATION. (i) After February 1, 2002,
if the Company does not consent to a proposed Transfer of the Investor Rights
within 45 days following the Company's receipt of the applicable Investor Offer
Notice, then the Company shall be obligated to offer to purchase or designate a
purchaser for the Investor Offered Securities (together with any Additional
Offered Securities(as defined below)) at the Investor Offer Price set forth in
the Investor Offer Notice. The Investor may set forth in the Investor Offer
Notice any additional Subject Securities (the "Additional Offered Securities")
that the Investor determines in its sole discretion must be included as part of
the securities that the Company or its designee is required to offer to purchase
if the Company does not consent to a proposed Transfer of the Investor Rights.
Upon receipt of notice of the Company's refusal to consent to the proposed
transferee of the Investor Rights or the end of such 45-day period, if such
consent is not granted by the Company, the Investor may elect, by written notice
to the Company within five business days thereafter, to withdraw the Investor
Offer Notice, in which case the Company and any designee shall have no right or
obligation to purchase the Investor Offered Securities or any Additional Offered
Securities. If the Investor does not give written notice to the Company of the
Investor's election to withdraw an Investor Offer Notice then the Company or its
designee, as the case may be, shall be obligated to purchase the Investor
Offered Securities (and any Additional Offered Securities) at a price or prices
per share or Underlying Share (net of any applicable exercise price) equal to
the Investor Offer Price, and on the same terms and conditions set forth in the
Investor Offer Notice.
(ii) If the Company or its designee is obligated to purchase
the Investor Offered Securities (and any Additional Offered Securities) pursuant
to the preceding subsection 4.1(c)(i), the closing of such purchase shall take
place prior to ten days after the earlier of (x) the 30th day after the date the
Company gives notice of its determination not to consent to a Transfer or (y)
the end of the 45-day period referred to in subsection 4.1(c)(i), if no consent
to transfer is given by the Company. If the Company fails to purchase the
Investor Offered Securities (and any Additional Offered Securities) within such
period, then the Investor shall be free to sell such Investor Offered Securities
without regard to any restrictions on transfer thereof set forth herein
(including without limitation any rights of first refusal or tag-along rights).
(d) PAXSON TAG-ALONG RIGHT. If the Company consents to the
transfer of the Investor Rights in connection with a Transfer, the Paxson
Stockholders and the Paxson Estate Planning Affiliates may elect to participate
in such Transfer by giving written notice of its election to the Investor within
45 days of the Company's receipt of the applicable Investor Offer Notice (each
Person electing to participate, a "Paxson Participant"). Each Paxson Participant
shall be entitled to sell in the proposed Transfer, at a price per share of
Common Stock equal to the Investor Offer Price and on the same terms and
conditions as the Investor, up to a number of shares of Common Stock equal to
the product of (I) the number of Paxson Shares set forth on Schedule 5.2(c) then
owned by such Paxson Participant multiplied by (II) the quotient of (A) the
number of shares of Common Stock included in the Investor Offered Securities
plus the number of Underlying Shares represented by the Investor Offered
Securities divided by (B) the total number of shares of Common Stock then owned
by the Investor and its Affiliates (which shall include all Underlying Shares
and Call Shares). Each Paxson Participant shall be obligated to pay its pro rata
portion of the transaction costs associated with any Transfer. If the aggregate
number of securities proposed to be sold by the Investor and the Paxson
Participants is greater than the number that the proposed transferee agrees to
purchase, then the number of securities proposed to be sold by the Investor and
each of the Paxson Participants shall be decreased pro rata. This subsection
4.1(d) shall not apply in the case of an Unrestricted Transfer (except if such
Unrestricted Transfer is triggered only because of the exercise of the
Investor's right to redemption after the third anniversary of the date hereof
pursuant to subsection 9.1(a)(ii) of the Investment Agreement) pursuant to
Section 9.4 of the Investment Agreement, a Company Sale pursuant to Section 9.5
of the Investment Agreement, a transfer pursuant to subsection 4.1(c)(ii) of
this Agreement or a transfer pursuant to open market sales.
Section IV.2 Paxson Stockholder Restrictions.
(a) TRANSFER RESTRICTIONS. Until the earlier of (i) such time
as the Investor is permitted under the Communications Act and the FCC rules and
regulations promulgated thereunder to own all of the Conversion Shares, the
Underlying Shares and the Call Shares or (ii) the sixth anniversary of the date
hereof, Paxson and the Paxson Non-Estate Planning Affiliates shall not, directly
or indirectly, Transfer any Voting Stock to any Person unless after taking into
account such Transfer, Paxson or an Affiliate or family member of Paxson
continues to be the FCC Single Majority Stockholder of the Company. In order to
permit Transfers by Paxson and the Paxson Non-Estate Planning Affiliates
pursuant to the initial sentence of this subsection (a) the Investor agrees to
grant to Paxson a revocable proxy (in a form reasonably satisfactory to the
Investor) to vote a sufficient number of Underlying Shares owned by the Investor
to assist Paxson or an Affiliate or family member of Paxson remain the FCC
Single Majority Stockholder; provided that (i) the Investor makes no
representation or warranty as to the effectiveness of such arrangement in
satisfying the requirements for Paxson to remain the FCC Single Majority
Shareholder and (ii) in connection with such proxy, the Investor shall have no
obligations to acquire shares of Voting Stock, convert Preferred Stock or
exercise Warrants. Notwithstanding anything contained in this Section 4.2 to the
contrary, the Paxson Stockholders may not transfer any of the Call Shares,
except to the extent permitted in the Call Agreement.
(b) INVESTOR RIGHT OF FIRST REFUSAL. (i) If any Paxson
Stockholder at any time intends to Transfer any Common Stock (other than
pursuant to a merger, consolidation or reorganization to which the Company is a
party or a tender offer approved by the Board of Directors of the Company)(each,
a "Paxson Transfer") to any Person other than to another Paxson Stockholder (a
"Paxson Third Party"), the transferring Paxson Stockholders (each, a "Paxson
Transferor")shall give written notice 90 days prior to the effectiveness of such
Transfer (a "Paxson Offer Notice") to the Investor, stating such Paxson
Transferor's intention to make such a Transfer, the name of the proposed Paxson
Third Party transferee, the Common Stock proposed to be transferred (the "Paxson
Offered Securities"), the aggregate consideration to be paid for the Paxson
Offered Securities and the price per share of Common Stock (the "Paxson Offer
Price") and in reasonable detail all other material terms and conditions upon
which such Transfer is proposed. If the Paxson Transferor indicates that the
Paxson Offer Price is the then current market price or the consideration is not
cash, then the Paxson Offer Price shall be the closing price for shares of the
Company on the American Stock Exchange on the day immediately preceding the date
of the Paxson Offer Notice. Notwithstanding the preceding provisions of this
subsection 4.1 (b), the Investor shall have no right to purchase pursuant to
subsection 4.1(b) (i) the Call Shares, (ii) shares held by Paxson Estate
Planning Affiliates and (iii) up to the first 2,000,000 shares of Class A Common
Stock transferred by the Paxson Stockholders in the aggregate. This subsection
4.2(b) shall not apply with respect to open market sales.
(ii) Upon receipt of the Paxson Offer Notice, the Investor
shall have an option to purchase all of the Paxson Offered Securities at the
Paxson Offer Price, which option may be exercised by written notice to the
Paxson Transferors given within 30 days of the Investor's receipt of the Paxson
Offer Notice.
(iii) If the Investor exercises its option to purchase the
Paxson Offered Securities, the closing of such purchase shall take place within
60 days of the date the Investor gives notice of such exercise.
(iv) If the Investor determines not to exercise its option to
purchase the Paxson Offered Securities, then the Paxson Transferors shall be
free, for a period of 60 days from the earlier of (A) the expiration of the
offer to the Investor and (B) the receipt of written notice from the Investor
stating that the Investor does not intend to exercise its option, to sell the
Paxson Offered Securities to the Paxson Third Party transferee at a price equal
to or greater than the Paxson Offer Price and on substantially the same terms as
set forth in the Paxson Offer Notice.
(c) INVESTOR TAG-ALONG RIGHT. If any Paxson Transfer that is
otherwise permitted hereunder and under the Call Agreement would result in a
Change of Control of the Company, the Investor and its Affiliates may elect to
participate in such Paxson Transfer by giving written notice of its election to
the Paxson Transferor within 45 days of the Investor's receipt of the applicable
Paxson Offer Notice (each Person electing to participate, an "Investor
Participant"). Each Investor Participant shall be entitled to sell in the
proposed Paxson Transfer, at a price or prices per share or Underlying Share
equal to the Paxson Offer Price as the case may be, and on the same terms and
conditions as the Paxson Transferor, up to a number of Subject Securities (other
than the Call Right) owned by the Investor Participant equal to the product of
(I) the aggregate number of shares of Common Stock then owned by the Investor
Participant and its Affiliates (which shall include all Underlying Shares and
Call Shares) multiplied by (II) the quotient of (A) the Paxson Offered
Securities divided by (B) the total number of Paxson Shares set forth on
Schedule 5.3(c) then owned by the Paxson Stockholders and the Paxson Estate
Planning Affiliates. The purchase price for any Subject Securities that the
Investor Participant elects to sell shall be (x) in the case of Common Stock,
the Paxson Offer Price per share, (y) in the case of Warrants, the Paxson Offer
Price per share of Underlying Stock, net of the applicable exercise price for
such Warrants, assuming the Exercise Date (as defined in Warrant B) is the date
of the Paxson Offer Notice and (z) in the case of Preferred Stock, the Paxson
Offer Price per Conversion Share. Each Investor Participant shall be obligated
to pay its pro rata portion of the transaction costs associated with any
Transfer. If the aggregate number of securities proposed to be sold by the
Paxson Stockholders and the Investor Participants is greater than the number of
securities that the proposed transferee agrees to purchase, then the number of
securities proposed to be sold by the Paxson Transferors and each of the
Investor Participants shall be decreased pro rata.
Section IV.3 Certain Transfer. Notwithstanding anything herein
to the contrary, after February 1, 2002 the transfer restrictions, including the
tag along rights, right of first refusal and consent to transfer of Investor
Rights, in this Article IV shall not apply to any Transfer of the Subject
Securities in connection with any transaction or series of related or
substantially concurrent transactions that require the exercise of Warrant B in
full and the purchase of the Call Shares, provided that after giving effect to
such transaction or transactions (taking into account any delays in consummation
of such exercise), Paxson and Affiliates or family members of Paxson no longer
qualify as the FCC Single Majority Stockholder. The Investor shall give the
Company and the Paxson Stockholders five days prior written notice of any such
Transfer of Subject Securities in connection with any transaction or series of
related transactions.
Section IV.4 Legends. (a) Subject to the provisions of this
Section 4.4, if the Investor or any of its Affiliates decides to dispose of any
of the Subject Securities, each such party understands and agrees that it may do
so only pursuant to an effective registration statement under the Securities Act
or pursuant to an exemption from registration under the Securities Act. The
Investor agrees to the imprinting, so long as appropriate, of substantially the
following legends on certificates representing any of the securities referenced
in the preceding sentence:
NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES ISSUABLE UPON EXERCISE OF THE SECURITIES
REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE
OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND THE
OTHER TERMS OF A STOCKHOLDER AGREEMENT, DATED AS OF SEPTEMBER
15, 1999, AMONG PAXSON COMMUNICATIONS CORPORATION, NATIONAL
BROADCASTING COMPANY, INC., SECOND CRYSTAL DIAMOND, LIMITED
PARTNERSHIP AND PAXSON ENTERPRISES, INC.
The legend set forth above shall be removed if and when (i) the securities
represented by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or (ii) the Investor delivers to
the Company an opinion of counsel reasonably acceptable to the Company to the
effect that such legends are no longer necessary.
(b) The Paxson Stockholders agree to the imprinting of
substantially the following legends on certificates representing any of the
Paxson Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND OTHER TERMS OF A STOCKHOLDER AGREEMENT, DATED AS OF SEPTEMBER 15,
1999, AMONG PAXSON COMMUNICATIONS CORPORATION, NATIONAL BROADCASTING COMPANY,
INC., SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP, AND PAXSON ENTERPRISES, INC.
Section IV.5 Price Calculations. Calculations of price per
share or Underlying Share shall be based on total consideration paid per share
including any exercise price or the Call Price required in connection with the
exercise of any Warrant or the Call Right. The Call Price for purposes of such
calculations shall be the Call Price determined under the Call Agreement
assuming the date of the Call Notice (as defined in the Call Agreement) is the
date of the applicable notice for which such calculation is being made. The
exercise price for Warrant B for purposes of such calculation shall be the
exercise price determined under Warrant B assuming the Exercise Date (as defined
in Warrant B) is the date of the applicable notice for which such calculation is
being made.
ARTICLE V
Representations and Warranties
Section 5.1 Representations of the Company. The Company
represents and warrants to the Investor and the Paxson Stockholders as follows:
(a) Corporate Existence; Compliance with Law. The Company (i)
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (ii) is duly qualified to conduct
business and is in good standing in each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified, individually or in the aggregate,
would not have a Material Adverse Effect; (iii) has the requisite corporate
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease and to conduct its business as now, heretofore and proposed to be
conducted; (iv) is in compliance with its charter and by-laws; and (v) is in
compliance with all applicable provisions of law (including, without limitation,
the Communications Act), except where the failure to comply, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Corporate Power, Authorization, Enforceable Obligations.
The execution, delivery and performance by the Company of this Agreement and its
obligations hereunder: (i) are within the Company's corporate power; (ii) have
been duly authorized by all necessary or proper corporate and shareholder
action; (iii) do not contravene any provision of the Company's charter or
bylaws; (iv) do not violate any law or regulation, or any order or decree of any
court or Governmental Entity applicable to it; (v) do not conflict with or
result in the breach or termination of, constitute a default under or accelerate
or permit the acceleration of any performance required by, any material
indenture, mortgage, deed of trust, or any Material Agreement (as defined in the
Investment Agreement) to which the Company is a party or by which the Company or
any of its property is bound; (vi) do not result in the creation or imposition
of any material Lien upon any of the property of the Company; and (vii) do not
require the consent or approval of any Governmental Entity or any other Person,
except the filing of all notices, reports and other documents required by, and
the expiration of all waiting periods under, the HSR Act and the rules and
regulations promulgated by the FCC. This Agreement is duly executed and
delivered by the Company and this Agreement constitutes a legal, valid and
binding obligation of the Company enforceable against it in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditor's rights generally
and subject to the availability of equitable remedies.
Section V.2 Representations of the Investor. The Investor
represents and warrants to the Company and the Paxson Stockholders as follows:
(a) Corporate Existence; Compliance with Law. The Investor (i)
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (ii) is duly qualified to conduct
business and is in good standing in each other jurisdiction where its ownership
or lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified, individually or in the aggregate
would not have a Material Adverse Effect; (iii) has the requisite corporate
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease and to conduct its business as now, heretofore and proposed to be
conducted; (iv) is in compliance with its charter and by-laws; and (v) is in
compliance with all applicable provisions of law (including, without limitation,
the Communications Act), except where the failure to comply, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Corporate Power, Authorization, Enforceable Obligations.
The execution, delivery and performance by the Investor of this Agreement and
its obligations hereunder: (i) are within its corporate power; (ii) have been
duly authorized by all necessary or proper corporate and shareholder action;
(iii) do not contravene any provision of its charter or bylaws; (iv) do not
violate any law or regulation, or any order or decree of any court or
Governmental Entity applicable to it; (v) do not conflict with or result in the
breach or termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any material indenture, mortgage,
deed of trust, lease, agreement or other instrument to which the Investor is a
party or by which the Investor or any of its property is bound; (vi) do not
result in the creation or imposition of any material Lien upon any of the
property of the Investor; and (vii) do not require the consent or approval of
any Governmental Entity or any other Person, except the filing of all notices,
reports and other documents required by, and the expiration of all waiting
periods under, the HSR Act and the rules and regulations promulgated by the FCC.
This Agreement is duly executed and delivered by the Investor and this Agreement
shall constitute a legal, valid and binding obligation of the Investor
enforceable against it in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditor's rights generally and subject to the availability of
equitable remedies.
Section V.3 Representations of the Paxson Stockholders. Each
of the Paxson Stockholders represents and warrants to the Investor and the
Company as follows:
(a) Corporate Existence; Compliance with Law. Each Paxson
Stockholder (i) is a corporation or partnership duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
formation; (ii) is duly qualified to conduct business and is in good standing in
each jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified, individually or in the aggregate, would not have a Material Adverse
Effect; (iii) has the requisite corporate or partnership power and authority and
the legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its
business as now, heretofore and proposed to be conducted; (iv) is in compliance
with its charter, by-laws and other organizational documents; and (v) is in
compliance with all applicable provisions of law (including, without limitation,
the Communications Act), except where the failure to comply, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Corporate Power, Authorization, Enforceable Obligations.
The execution, delivery and performance by each of the Paxson Stockholders of
this Agreement, and their obligations hereunder: (i) are within such Person's
corporate or partnership power; (ii) have been duly authorized by all necessary
or proper corporate, partnership and shareholder action; (iii) do not contravene
any provision of such Person's charter, bylaws or other organizational
documents; (iv) do not violate any law or regulation, or any order or decree of
any court or Governmental Entity applicable to it; (v) do not conflict with or
result in the breach or termination of, constitute a default under or accelerate
or permit the acceleration of any performance required by, any material
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (vi) do not result in the creation or imposition of any material Lien
upon any of the property of such Person; and (vii) do not require the consent or
approval of any Governmental Entity or any other Person, except the filing of
all notices, reports and other documents required by, and the expiration of all
waiting periods under, the HSR Act and the rules and regulations promulgated by
the FCC. This Agreement is duly executed and delivered by each of the Paxson
Stockholders and this Agreement constitutes a legal, valid and binding
obligation of each of the Paxson Stockholders enforceable against it in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditor's
rights generally and subject to the availability of equitable remedies.
(c) Capitalization; Ownership. Schedule 5.3(c) sets forth, for
each Paxson Stockholder and the Paxson Estate Planning Affiliates, all of the
shares of Common Stock, Options and other equity securities of the Company that
each Beneficially Owns as of the date hereof (the "Paxson Shares").
(d) Voting Power. The Paxson Stockholders have, and at the
Stockholders Meeting will have, the power to vote a sufficient number of shares
of capital stock of the Company to approve each of the Stockholder Proposals
without the vote of any other Company stockholder.
ARTICLE VI
Miscellaneous
Section VI.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered personally, by telecopier or sent by overnight courier as follows:
(a) If to the Investor, to:
National Broadcasting Company, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Fax: 212-664-2648
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: John W. Carr
Fax: (212) 455-2502
(b) If to the Company, to:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Chief Executive Officer
Fax: 561-655-9424
with copy to:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: General Counsel
Fax: 561-655-4754
c) If to the Paxson Stockholders, to:
Lowell W. Paxson
601 Clearwater Park Road
West Palm Beach, Florida 33401
Fax: 561-655-9424
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
Section VI.2 Entire Agreement; Amendment. This Agreement, the
Investment Agreement and the other Ancillary Documents and the documents
described herein and therein or attached or delivered pursuant hereto or thereto
set forth the entire agreement between the parties hereto with respect to the
transactions contemplated by this Agreement. Any provision of this Agreement may
be amended or modified in whole or in part at any time by an agreement in
writing between the parties hereto executed in the same manner as this
Agreement. No failure on the part of any party to exercise, and no delay in
exercising, any right shall operate as a waiver thereof nor shall any single or
partial exercise by any party of any right preclude any other or future exercise
thereof or the exercise of any other right.
Section VI.3 Severability. In the event that any one or more
of the provisions contained in this Agreement or in any other instrument
referred to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or any other such
instrument.
Section VI.4 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the same document.
SECTION VI.5 GOVERNING LAW; JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED
WITHIN SUCH STATE, AND EACH PARTY HEREBY SUBMITS TO THE JURISDICTION OF ANY
STATE OR U.S. FEDERAL COURT SITTING WITHIN THE COUNTY OF NEW YORK, NEW YORK. THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT.
Section VI.6 Successors and Assigns; Third Party
Beneficiaries. The Company may not assign any of its rights or delegate any of
its duties under this Agreement without the prior written consent of the
Investor. Subject to applicable law and the following sentence, the Investor may
assign its rights under this Agreement in whole or in part only in accordance
with this Agreement or to any Affiliate of the Investor, but no such assignment
shall relieve the Investor of its obligations hereunder. Except as set forth in
subsection 4.2(a), the Paxson Stockholders may not assign any of their rights or
delegate any of their duties under this Agreement without the prior written
consent of the Investor. The Investor may not assign any of its rights under
this Agreement unless such assignee expressly assumes all of the obligations of
the Investor associated with the rights proposed to be assigned. Any purported
assignment in violation of this Agreement shall be void. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any Person
other than the parties hereto and their respective successors, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and their respective successors, and for the benefit of no other Person.
Section Vi.7 Arbitration. Any controversy, dispute or claim
arising out of, in connection with or in relation to the interpretation,
performance or breach of this Agreement, shall be determined, at the request of
any party, by arbitration in a city mutually agreeable to the parties to such
controversy, dispute or claim before and in accordance with the then-existing
Rules for Commercial Arbitration of the American Arbitration Association, and
any judgment or award rendered by the arbitrator will be final, binding and
unappealable and judgment may be entered by any state or Federal court having
jurisdiction thereof. The pre-trial discovery procedures of the Federal Rules of
Civil Procedure shall apply to any arbitration under this Section 6.7. Any
controversy concerning whether a dispute is an arbitrable dispute or as to the
interpretation or enforceability of this Section 6.7 shall be determined by the
arbitrator. The arbitrator shall be a retired or former United States District
Judge or other person acceptable to each of the parties, provided such
individual has substantial professional experience with regard to corporate or
partnership legal matters. The parties intend that this agreement to arbitrate
be valid, enforceable and irrevocable.
Section VI.8 Remedies. (a) No right, power or remedy conferred
upon any party in this Agreement shall be exclusive, and each such right, power
or remedy shall be cumulative and in addition to every other right, power or
remedy whether conferred in this Agreement or now or hereafter available at law
or in equity or by statute or otherwise. No course of dealing between the
Investor, the Company and the Paxson Stockholders and no delay in exercising any
right, power or remedy conferred in this Agreement or now or hereafter existing
at law or in equity or by statute or otherwise shall operate as a waiver or
otherwise prejudice any such right, power or remedy. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in addition to any other remedy to which they are entitled at law or in equity.
(b) In addition to and not in limitation of, the remedies set
forth in subsection 6.8(a), if any Paxson Stockholder breaches the provisions of
Section 3.3 (other than any failure to vote for resolutions under clauses (i)
and (iv) of the definition of "Stockholder Proposals") and as a result of such
failure, the resolutions under clauses (ii) and (iii) do not receive the
requisite shareholder vote for approval and such breach remains uncured for 120
days after written notice thereof from the Investor delivered not later than 30
days after the Stockholders Meeting, then the Investor (or any transferee) shall
have the irrevocable right to acquire all of the Call Shares for a purchase
price of $10 per share, exercisable immediately by the Investor (or any
transferee).
Section VI.9 Headings, Captions and Table of Contents. The
section headings, captions and table of contents contained in this Agreement are
for reference purposes only, are not part of this Agreement and shall not affect
the meaning or interpretation of this Agreement.
Section VI.10 Termination. Articles II, III and IV of this
Agreement shall terminate if neither (i) the Investor (together with its
Affiliates) owns at least the Minimum Investment nor (ii) a transferee of the
Investor, to whom the Investor Rights were transferred in accordance with the
Stockholder Agreement, owns at least the Minimum Investment. This Agreement
shall terminate in its entirety upon the earlier of (i) the Investor acquiring
shares of Capital Stock that provide it with the unfettered right to vote a
sufficient number of Voting Shares to elect a majority of the members of the
Board of Directors or (ii) the tenth anniversary of the date hereof.
Section VI.11 Additional Paxson Stockholders. Each Affiliate
(including family members) of Paxson who acquires shares of Common Stock from a
Paxson Stockholder after the date hereof shall become a Paxson Stockholder for
all purposes of this Agreement and shall execute and deliver to the Company an
Assumption Agreement in the form of Exhibit A hereto.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto or by
their respective duly authorized representatives, all as of the date first above
written.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Lowell W. Paxson
Name: Lowell W. Paxson
Title: Chairman of the Board
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ Thomas A. Rogers
Name: Thomas A. Rogers
Title: Executive Vice President
MR. LOWELL W. PAXSON
/s/ Lowell W. Paxson
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP
By: Paxson Enterprises, Inc., its general partner
By: /s/ Lowell W. Paxson
Name: Lowell W. Paxson
Title: President
PAXSON ENTERPRISES, INC.
By: /s/ Lowell W. Paxson
Name: Lowell W. Paxson
Title: President
<PAGE>
Exhibit A
ASSUMPTION AGREEMENT
ASSUMPTION AGREEMENT, dated as of ____________ __, ____, made
by ______________________________, (the "Additional Stockholder"), in connection
with the Stockholder Agreement dated as of September 15, 1999, among Paxson
Communications Corporation, National Broadcasting Company, Inc., Lowell W.
Paxson, Second Crystal Diamond Limited Partnership and Paxson Enterprises, Inc.
(the "Stockholder Agreement"). All capitalized terms not defined herein shall
have the meaning ascribed to them in the Stockholder Agreement.
W I T N E S S E T H :
WHEREAS, the Paxson Stockholders have entered into the Stockholder
Agreement, which requires the Additional Stockholder to become a party to the
Stockholder Agreement in connection with the transfer of shares of Paxson Stock
to the Additional Stockholder; and the Additional Stockholder has agreed to
execute and deliver this Assumption Agreement in order to become a party to the
Stockholder Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Assumption. By executing and delivering this Assumption
Agreement, the Additional Stockholder, as provided in Section 6.11 of the
Stockholder Agreement, hereby becomes a party to the Stockholder Agreement with
the same force and effect as if originally named therein as a Paxson Stockholder
and, without limiting the generality of the foregoing, hereby expressly assumes
all obligations and liabilities of a Paxson Stockholder thereunder. The
information set forth in Annex 1 hereto is hereby added to the information set
forth in Schedule 5.3(c) to the Stockholder Agreement. The Additional
Stockholder hereby represents and warrants that each of the representations and
warranties contained in Section 5.3 of the Stockholder Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption
Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered as of the date first above written.
[ADDITIONAL STOCKHOLDER]
By:
------------------------
Name:
Title:
<PAGE>
Exhibit 4
REGISTRATION RIGHTS AGREEMENT
between
PAXSON COMMUNICATIONS CORPORATION
and
NATIONAL BROADCASTING COMPANY, INC.
Dated as of September 15, 1999
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Definitions 2
Section 2. Demand Registration 3
(a) Requests for Registration by Holders 3
(b) Filing and Effectiveness 4
(c) Priority on Demand Registration 5
(d) Postponement of Demand Registration 6
Section 3. Piggyback Registration 6
(a) Right to Piggyback 6
(b) Priority on Piggyback Registrations 6
Section 4. Restrictions on Sale by Holders 7
Section 5. Registration Procedures 7
Section 6. Registration Expenses 14
Section 7. Indemnification 15
(a) Indemnification by the Company 15
(b) Indemnification by Holders 16
(c) Conduct of Indemnification Proceedings 16
(d) Contribution 18
Section 8. Underwritten Registrations 19
Section 9. Miscellaneous 19
(a) Remedies 19
(b) Amendments and Waivers 19
(c) Notices 19
(e) Successors and Assigns 20
(f) Counterparts 21
(g) Headings 21
(h) Governing Law 21
(i) Severability 21
(j) Entire Agreement 21
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made
and entered into as of September 15, 1999, by and between PAXSON COMMUNICATIONS
CORPORATION, a Delaware corporation (together with is successors and assigns,
the "Company"), NATIONAL BROADCASTING COMPANY, INC., a Delaware corporation
(together with its successors and assigns, the "Investor"), and each other
person who becomes a Holder hereunder.
RECITALS
WHEREAS, pursuant to an Investment Agreement dated as of
September 15, 1999 (the "Investment Agreement") between the Company and the
Investor, the Investor is purchasing shares of Convertible Exchangeable
Preferred Stock of the Company, par value $0.001 per share (including any
securities into which such preferred stock may be or has been converted or
exchanged in any merger, consolidation or reclassification, the "Preferred
Stock"), that are convertible into Class A Common Stock of the Company, par
value $0.001 per share (the "Class A Common Stock"); and
WHEREAS, pursuant to the Investment Agreement the Investor is
purchasing warrants to purchase shares of Class A Common Stock (together with
warrants received under the Investment Agreement, the "Warrants"); and
WHEREAS, pursuant to the Call Agreement dated as September 15,
1999 (the "Call Agreement") by and among Lowell W. Paxson, Second Crystal
Diamond, Limited Partnership, and Paxson Enterprises, Inc. (collectively, the
"Paxson Stockholders") and NBC Palm Beach Investments II, Inc., a California
corporation, the Paxson Stockholders have agreed to a call arrangement with NBC
Palm Beach Investments II, Inc., with respect to all of the Paxson Stockholders'
shares of Class B Common Stock, par value $0.001 of the Company (the "Class B
Common Stock", and, as covered by the Call Agreement, the "Call Shares"); and
WHEREAS, the Company's shares of Class A Common Stock are
registered with the SEC and quoted on the American Stock Exchange; and
WHEREAS, to induce the Investor to execute and deliver the
Investment Agreement and to enter into the transactions related thereto, the
Company has agreed to provide to the Holders (as defined below) certain
registration rights under the Securities Act; and
WHEREAS, the execution and delivery of this agreement by the
parties hereto is a condition to the closing of the transactions contemplated by
the Investment Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein and in the Investment Agreement, and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Definitions. For purposes of this Agreement, the
following capitalized terms have the following meanings:
"Common Stock": The Class A Common Stock and the Class B
Common Stock of the Company and any securities into which such common stock may
be or has been converted or exchanged in any merger, consolidation or
reclassification.
"Exchange Act": The Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchange Debentures": The Exchange Debentures due 2009 (if
issued) issued under an Indenture among the parties thereto in the form as of
the date hereof.
"Holders": Each Restricted Party that from time to time owns
Registrable Securities and each of their permitted transferees pursuant to
Section 9(e) who agree to be bound by the provisions of this Agreement in
accordance with said section; provided, however, that a Holder shall no longer
be a Holder at the date that such Holder owns of record less than 10,000 shares
of Registrable Securities.
"Prospectus": The prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to such
prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus.
"Registrable Securities": All shares of Class A Common Stock
(i) held from time to time by the Holders who are Restricted Parties (the
"Restricted Party Common Stock") or (ii) held by Holders who are not Restricted
Parties (but only to the extent that such Class A Common Stock previously
constituted Restricted Party Common Stock or Class A Common Stock described in
clause (iii) below) or (iii) issued or issuable upon the conversion of Preferred
Stock into Class A Common Stock or upon conversion of the Exchange Debentures
into Class A Common Stock or (iv) issued or issuable upon the exercise of
Warrants or (v) issuable upon conversion of the Call Shares, excluding shares of
Class A Common Stock that have been disposed of by a Holder pursuant to a
Registration Statement relating to the sale thereof that has become effective
under the Securities Act or pursuant to Rule 144 or Rule 145 under the
Securities Act. Registrable Securities shall also include any shares of the
Class A Common Stock or other securities (or shares of Class A Common Stock
underlying such other securities) that may be received by the Holders (x) as a
result of a stock dividend on or stock split of Registrable Securities or (y) on
account of Registrable Securities in a recapitalization of or other transaction
involving the Company.
"Registration Statement": Any registration statement of the
Company under the Securities Act that covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the related Prospectus,
any preliminary prospectus, all amendments and supplements to such registration
statement (including post-effective amendments), all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
"Restricted Party": Each of Investor and each subsidiary of
Investor.
"SEC": The Securities and Exchange Commission.
"Securities Act": The Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Stockholder Agreement": The Stockholder Agreement, dated as
of the date hereof, between the Company and the Investor, as such agreement may
be amended, supplemented or otherwise modified from time to time.
"Underwritten Offering": A distribution, registered pursuant
to the Securities Act, in which securities of the Company are sold to the public
through one or more underwriters.
Section 2. Demand Registration.
(a) Requests for Registration by Holders. Subject to the terms
and conditions of the Stockholder Agreement, at any time and from time to time,
subject to the conditions set forth in this Agreement: (i) one or more Holders
will have the right, by written notice delivered to the Company (a "Demand
Notice"), to require the Company to register Registrable Securities under and in
accordance with the provisions of the Securities Act (a "Demand Registration"),
provided that the Holders may not make in the aggregate more than four (4)
Demand Registrations under this Agreement; provided, further, that: (i) no such
Demand Registration may be required unless the Holders requesting such Demand
Registration provide to the Company a certificate (the "Authorizing
Certificate"), seeking to include Registrable Securities in such Demand
Registration with a market value of at least $100,000,000 in the case of any
Underwritten Offering or $20,000,000 in all other cases (calculated based on the
closing sale price of such securities on the principal securities exchange where
such securities are listed on the business day immediately preceding the date of
the Demand Notice) as of the date the Demand Notice is given; and (ii) no Demand
Notice may be given prior to six (6) months after the effective date of the
immediately preceding Demand Registration or, if later, the date on which a
registration pursuant to this Section 2 is terminated in its entirety prior to
the effective date of the applicable registration statement. The Authorizing
Certificate shall set forth (A) the name of each Holder signing such Authorizing
Certificate, (B) the number of Registrable Securities held by each such Holder,
and, if different, the number of Registrable Securities such Holder has elected
to have registered, and (C) the intended methods of disposition of the
Registrable Securities. Notwithstanding the foregoing, a good faith decision by
a Holder to withdraw Registrable Securities from registration will not affect
the Company's obligations hereunder even if the amount remaining to be
registered has a market value of less than $100,000,000 in the case of any
Underwritten Offering or $20,000,000 in all other cases (calculated as
aforesaid), provided that: (1) such continuing registration shall constitute a
Demand Registration, (2) the withdrawing Holder reimburses the Company for any
registration and filing fees (including any fees payable to the National
Association of Securities Dealers, Inc. or any successor organization) it has
incurred with respect to the withdrawn Registrable Securities (unless all
Registrable Securities are withdrawn, in which case the withdrawing Holder(s)
shall reimburse the Company for all costs and expenses incurred by it in
connection with the registration of such Registrable Securities) and (3) such
Holder (or the other Holders participating in the subject registration) did not
include the withdrawn Registrable Securities as a means of circumventing the
applicable $100,000,000 or $20,000,000 threshold described above. Subject to
compliance with clause (2) of the preceding proviso, a registration that is
terminated in its entirety prior to the effective date of the applicable
registration statement will not constitute a Demand Registration.
(b) Filing and Effectiveness. The Company will file a
Registration Statement relating to any Demand Registration as promptly as
practicable (but in any event within 60 days) following the date on which the
Demand Notice is received and will use all reasonable efforts to cause the same
to be declared effective by the SEC as soon as practicable thereafter. If any
Demand Registration is requested to be effected as a shelf registration pursuant
to Rule 415 under the Securities Act by the Holders demanding such Demand
Registration, the Company will keep the Registration Statement filed in respect
thereof effective for a period of six (6) months from the date on which the SEC
declares such Registration Statement effective (subject to extension pursuant to
Section 5) or such shorter period that will terminate when all Registrable
Securities covered by such Registration Statement have been sold pursuant to
such Registration Statement.
Within ten (10) business days after receipt of such Demand
Notice, the Company will serve written notice thereof (the "Notice") to all
other Holders and will, subject to the provisions of Section 2(c), include in
such registration all Registrable Securities with respect to which the Company
receives written requests for inclusion therein within ten (10) business days
after receipt of the Notice by the applicable Holder. Subject to the proviso at
the end of Section 2(a), the Holder will be permitted to withdraw in good faith
all or part of the Registrable Securities from a Demand Registration at any time
prior to the effective date of such Demand Registration, in which event the
Company will promptly amend or, if applicable, withdraw the related Registration
Statement.
(c) Priority on Demand Registration. If Registrable Securities
are to be registered pursuant to a Demand Registration, the Company shall
provide written notice to the other Holders and will permit all such Holders who
have timely and properly requested to be included in the Demand Registration to
include any or all Registrable Securities held by such Holders in such Demand
Registration. Notwithstanding the foregoing, if the managing underwriter or
underwriters of an Underwritten Offering to which such Demand Registration
relates advises the Holders that the total amount of Registrable Securities that
such Holders intend to include in such Demand Registration is in the aggregate
such as to materially and adversely affect the success of such offering, then
the number of Registrable Securities to be included in such Demand Registration
will, if necessary, be reduced and there will be included in such underwritten
offering the number of Registrable Securities that, in the opinion of such
managing underwriter or underwriters, can be sold without materially and
adversely affecting the success of such Underwritten Offering. The Registrable
Securities of the Holder or Holders initiating the Demand Registration shall
receive priority in such Underwritten Offering to the full extent of the
Registrable Securities such Holder or Holders desire to sell (unless these
securities would materially and adversely affect the success of such offering,
in which case the number of such Holder's Registrable Securities included in the
offering shall be reduced to the extent necessary) and the remaining allocation
available for sale, if any, shall be allocated pro rata among the other Holders
on the basis of the amount of Registrable Securities requested to be included
therein by each such Holder.
(d) Postponement of Demand Registration. The Company will be
entitled to postpone the filing period of any Demand Registration or suspend the
effectiveness of any Registration Statement for a reasonable period of time not
in excess of 90 calendar days if the Company determines, in the good faith
exercise of the business judgment of its Board of Directors, that such
registration and offering could materially interfere with a bona fide business
or financing transaction of the Company or would require disclosure of
information, the premature disclosure of which could materially and adversely
affect the Company. If the Company postpones the filing of, or suspends the
effectiveness of, a Registration Statement, it will promptly notify the Holders
in writing (i) when the events or circumstances permitting such postponement or
suspension have ended and (ii) that the decision to postpone or suspend was made
by the Board of Directors of the Company in accordance with this Section 2(d).
Section 3. Piggyback Registration.
(a) Right to Piggyback. If at any time the Company proposes to
file a Registration Statement, whether or not for sale for the Company's own
account, on a form and in a manner that would also permit registration of
Registrable Securities, the Company shall give to Holders holding Registrable
Securities, written notice of such proposed filing at least ten (10) business
days before the anticipated filing. The notice referred to in the preceding
sentence shall offer Holders holding at least 100,000 shares of Registrable
Securities the opportunity to register such amount of Registrable Securities as
each Holder may request (a "Piggyback Registration"). Subject to Section 3(b),
the Company will include in each such Piggyback Registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein. Subject to clause (2) of the proviso at the end of Section
2(a), the Holders will be permitted to withdraw all or part of the Registrable
Securities from a Piggyback Registration at any time prior to the effective date
of such Piggyback Registration.
Notwithstanding the foregoing, the Company will not be
obligated to effect any registration of Registrable Securities under this
Section 3 as a result of the registration of any of its securities solely in
connection with mergers, acquisitions, exchange offers, dividend reinvestment
and share purchase plans offered solely to current holders of the Common Stock,
rights offerings or option or other employee, directors or consultant benefit
plans or other similar rights.
(b) Priority on Piggyback Registrations. The Company will
cause the managing underwriter or underwriters of a proposed Underwritten
Offering to permit Holders holding Registrable Securities requested to be
included in the registration for such offering to include therein all such
Registrable Securities requested to be so included on the same terms and
conditions as any securities of the Company included therein (other than the
indemnification by the Holders, which will be limited as set forth in Section 7
hereof). Notwithstanding the foregoing, if the managing underwriter or
underwriters of such Underwritten Offering advises the Holders to the effect
that the total amount of securities that such Holders and the Company propose to
include in such Underwritten Offering is such as to materially and adversely
affect the success of such offering, then the Company will include in such
registration (i) first, 100% of the Class A Common Stock of the Person who
requests such registration, if any, (ii) second, 100% of the Class A Common
Stock the Company proposes to sell, and (iii) third, to the extent of the number
of Registrable Securities requested to be included in such registration which,
with the advice of such managing underwriter, can be sold without having the
adverse effect referred to above, the number of Registrable Securities which the
Holders have requested to be included in such registration, such amount to be
allocated pro rata among all requesting Holders on the basis of the relative
number of Registrable Securities then held by each such Holder.
Section 4. Restrictions on Sale by Holders. Each Holder
agrees, if such Holder is so requested (pursuant to a timely written notice) by
the managing underwriter or underwriters in an Underwritten Offering, not to
effect any public sale or distribution of any of the Company's securities of
such class or securities convertible or exchangeable into such class (except as
part of such underwritten offering), including a sale pursuant to Rule 144 under
the Securities Act, during the 15-calendar day period prior to, and during the
90-calendar day period beginning on, the closing date of such Underwritten
Offering.
Section 5. Registration Procedures. In connection with the
Company's registration obligations pursuant to Sections 2 and 3, the Company
will effect such registrations to permit the sale of such Registrable Securities
in accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible, and in each case
to the extent applicable (it being understood that the obligations of the
Company in clauses (a), (b), (d), (e), (h), (j), (k), (m), (n) and (p) of this
Section 5 will be subject to Section 2(d) and, except as provided in Section
2(a) and Section 3(b), the Holders will not have any right to effect an
underwritten public offering under Section 3):
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the holders thereof in
accordance with the intended method or methods of distribution thereof, and
cause each such Registration Statement to become effective and remain effective
as provided herein; provided, however, that before filing a Registration
Statement or Prospectus or any amendments or supplements thereto (including
documents that would be incorporated or deemed to be incorporated therein by
reference) the Company will furnish to the Holders holding Registrable
Securities covered by such Registration Statement, not more than one counsel
chosen by Holders holding a majority of the Registrable Securities being
registered ("Special Counsel") and the managing underwriters, if any, copies of
all such documents proposed to be filed, which documents will be subject to the
review of such Holders, such Special Counsel and such underwriters, and the
Company will not file any such Registration Statement or amendment thereto or
any Prospectus or any supplement thereto (excluding such documents that, upon
filing, will be incorporated or deemed to be incorporated by reference therein)
to which the Holders holding a majority of the Registrable Securities covered by
such Registration Statement or the managing underwriter, if any, shall
reasonably conclude to potentially be misleading, omit a material fact or fail
to comply with rules or common practice of the SEC or the securities industry.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable
periods specified in Section 2; cause the related Prospectus to be supplemented
by any required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Registration Statement
as so amended or in such Prospectus as so supplemented.
(c) Notify the selling Holders and the managing underwriters,
if any, promptly, and (if requested by any such person) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC or any other federal or state governmental authority for
amendments or supplements to a Registration Statement or related Prospectus or
for additional information, (iii) of the issuance by the SEC or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose, (iv) if at any time the representations and warranties of the
Company contained in any agreement contemplated by Section 5(m) (including any
underwriting agreement) cease to be true and correct in any material respect,
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (vi) of the occurrence of any
event that makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in a Registration Statement, Prospectus or any such document so that, in
the case of the Registration Statement, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and, in the
case of the Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (vii) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) Use every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction, at the
earliest possible moment.
(e) If requested by the managing underwriters, if any, or
Holders holding a majority of the Registrable Securities being registered, (i)
promptly incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, reasonably conclude, based on
the advice of counsel, must be included therein as may be required by applicable
law and (ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; provided, however, that the Company will not be
required to take any actions under this Section 5(e) that are not, in the
opinion of counsel for the Company, in compliance with applicable law.
(f) Furnish to each selling Holder and each managing
underwriter, if any, without charge, at least one conformed copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements (but excluding schedules, all documents incorporated or
deemed incorporated therein by reference and all exhibits, unless requested in
writing by such holder or underwriter).
(g) Deliver to each selling Holder and the underwriters, if
any, without charge as many copies of the Prospectus or Prospectuses relating to
such Registrable Securities (including each preliminary prospectus) and any
amendment or supplement thereto as such persons may reasonably request; and,
subject to the last paragraph of this Section 5, the Company hereby consents to
the use of such Prospectus or each amendment or supplement thereto by each of
the selling Holders and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus or
any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to
register or qualify or cooperate with the selling Holders, the underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions within the United States as any seller or underwriter
reasonably requests in writing; use all reasonable efforts to keep such
registration or qualification (or exemption therefrom) effective during the
period the applicable Registration Statement is required to be kept effective
and do any and all other acts or things necessary or advisable to enable the
disposition in each such jurisdiction of the Registrable Securities covered by
the applicable Registration Statement; provided, however, that the Company will
not be required to (i) qualify to do business in any jurisdiction where it is
not then so required to be qualified or (ii) take any action that would subject
it to taxation or service of process in any such jurisdiction where it is not
then so subject.
(i) Cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and enable such
Registrable Securities to be in such denominations and registered in such names
as the managing underwriters, if any, shall request at least two business days
prior to the closing of any sale of Registrable Securities to the underwriters.
(j) Upon the occurrence of any event contemplated by Section
5(c)(vi) or 5(c)(vii), prepare a supplement or post-effective amendment to each
Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(k) If requested by Holders holding a majority of the
Registrable Securities covered by such Registration Statement or the managing
underwriters, if any, use its best efforts to cause all Registrable Securities
covered by such Registration Statement to be (i) listed on each securities
exchange, if any, on which securities issued by the Company of the same class
are then listed or, if no such securities issued by the Company are then so
listed, on the New York Stock Exchange or another national securities exchange
if the securities qualify to be so listed or (ii) authorized to be quoted on the
National Association of Securities Dealers Automated Quotation System ("Nasdaq")
or the National Market System of Nasdaq, if the securities qualify to be so
quoted.
(l) As needed, (i) engage an appropriate transfer agent and
provide the transfer agent with printed certificates for the Registrable
Securities in a form eligible for deposit with The Depository Trust Company and
(ii) provide a CUSIP number for the Registrable Securities.
(m) Enter into such customary agreements (including, in the
event of an Underwritten Offering, an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such other
commercially reasonable and customary actions in connection therewith (including
those reasonably requested by the Holders holding a majority of the Registrable
Securities being sold or, in the event of an Underwritten Offering, those
reasonably requested by the managing underwriters) in order to facilitate the
disposition of such Registrable Securities and in such connection, but only
where an underwriting agreement is entered into in connection with an
underwritten registration, (i) make such representations and warranties to the
underwriters with respect to the businesses of the Company and its subsidiaries,
the Registration Statement, Prospectus and documents incorporated by reference
or deemed incorporated by reference therein, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested; (ii) in the
case of an Underwritten Offering, obtain opinions of counsel to the Company and
updates thereof, which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters, if any, addressed to
each of the underwriters covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be reasonably
requested by such underwriters; (iii) in the case of an Underwritten Offering,
use reasonable efforts to obtain "comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if necessary, any
other certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and financial
data is, or is required to be, included in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "comfort" letters in
connection with underwritten offerings; and (iv) deliver such documents and
certificates as may be reasonably requested by the managing underwriters, if
any, to evidence the continued validity of the representations and warranties of
the Company and its subsidiaries made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in the underwriting
agreement entered into by the Company. The foregoing actions will be taken in
connection with each closing under such underwriting agreement as and to the
extent required thereunder.
(n) Upon three (3) business days' notice, make available for
reasonable inspection during normal business hours by a representative of the
Holders holding Registrable Securities being sold, any underwriter participating
in any disposition of Registrable Securities, and any attorney or accountant
retained by such selling Holders or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company and
its subsidiaries to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with such
Registration Statement; provided, however, that any records, information or
documents that are designated by the Company in writing as confidential at the
time of delivery of such records, information or documents will be kept
confidential by such persons unless (i) such records, information or documents
are in the public domain or otherwise publicly available, (ii) disclosure of
such records, information or documents is required by court or administrative
order or is necessary to respond to inquiries of regulatory authorities, or
(iii) disclosure of such records, information or documents, in the reasonable
opinion of counsel to such person, is otherwise required by law (including,
without limitation, pursuant to the requirements of the Securities Act).
(o) Comply with all applicable rules and regulations
of the SEC and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 calendar days after the end of any
12-month period (or 90 calendar days after the end of any 12-month
period if such period is a fiscal year), subject to any applicable
extension pursuant to Rule 12b-25 of the Exchange Act, (i) commencing
at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm commitment or best efforts underwritten
offering, or (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company,
after the effective date of a Registration Statement, which statements
shall cover such 12-month period.
(p) In connection with any Underwritten Offering, cause
appropriate members of management to cooperate and participate on a reasonable
basis in the underwriters' "road show" conferences related to such offering.
The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may, from time to time, reasonably request in writing, and the Company
may exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. The Company may require each seller of Registrable
Securities (i) to agree to sell such Registrable Securities on the basis
reasonably provided in any underwriting agreements entered into in connection
with such offering and (ii) to complete and execute all questionnaires, powers
of attorney, custody agreements, indemnities, underwriting agreements and other
documents required under the terms of such underwriting agreements.
Each Holder will be deemed to have agreed by virtue of its
acquisition of Registrable Securities that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in Section 2(d),
5(c)(ii), 5(c)(iii), 5(c)(v), 5(c)(vi) or 5(c)(vii) ("Suspension Notice"), such
Holder will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus (a "Black- Out") until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k), or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and
such Holder has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus.
Except as expressly provided herein, there shall be no limitation with regard to
the number of Suspension Notices that the Company is entitled to give hereunder;
provided, however, that in no event shall the aggregate number of days the
Holders are subject to Black-Out during any period of 12 consecutive months
exceed 90 days.
Section 6. Registration Expenses. Subject to clause (2) of the
proviso at the end of section 2(a), all fees and expenses incident to the
performance of or compliance with this Agreement by the Company will be borne by
the Company whether or not any of the Registration Statements become effective.
Such fees and expenses will include, without limitation, (i) all registration
and filing fees (including, without limitation, fees and expenses for compliance
with securities or "blue sky" laws), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities in a
form eligible for deposit with The Depository Trust Company and of printing a
reasonable number of prospectuses if the printing of such prospectuses is
requested by the Holders holding a majority of the Registrable Securities
included in any Registration Statement), (iii) messenger, telephone and delivery
expenses incurred by the Company, (iv) fees and disbursements of counsel for the
Company incurred by the Company, (v) fees and disbursements of all independent
certified public accountants referred to in Section 5(m)(iii) (including the
expenses of any special audit and "comfort" letter required by or incident to
such performance) incurred by the Company, (vi) Securities Act liability
insurance, if any, and (vii) fees and expenses of Special Counsel retained by
the Holders in connection with the registration and sale of their Registrable
Securities (which counsel will be selected by the Holders of a majority of the
Registrable Securities being sold) not in excess of $50,000 per single
registration. In addition, the Company will pay internal expenses (including
without limitation all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange on which securities of the same class
issued by the Company are then listed and the fees and expenses of any person,
including special experts, retained by the Company. In no event, however, will
the Company be responsible for any underwriting discount or selling commission
with respect to any sale of Registrable Securities pursuant to this Agreement,
and the Holders shall be responsible on a pro rata basis for any taxes of any
kind (including, without limitation, transfer taxes) with respect to any
disposition, sale or transfer of Registrable Securities and for any legal,
accounting and other expenses incurred by them in connection with any
Registration Statement.
Section 7. Indemnification.
(a) Indemnification by the Company. The Company will, without
limitation as to time, indemnify and hold harmless, to the fullest extent
permitted by law, each Holder holding Registrable Securities registered pursuant
to this Agreement, the officers, directors and agents and employees of each of
them, each person who controls such a Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of any such controlling person, from and against
all losses, claims, damages, liabilities, costs (including without limitation
the costs of investigation and attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or form of Prospectus or in any amendment or supplement thereto or in
any preliminary prospectus, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar and
to the extent as the same are based upon information furnished in writing to the
Company by such Holder for use therein; provided, however, that the Company will
not be liable to any Holder to the extent that any such Losses arise out of or
are based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Registration Statement, Prospectus or preliminary
prospectus if either (A) (i) such Holder failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written confirmation of the sale by
such Holder of a Registrable Security to the person asserting the claim from
which such Losses arise and (ii) the Prospectus would have corrected such untrue
statement or alleged untrue statement or such omission or alleged omission; or
(B) such untrue statement or alleged untrue statement, omission or alleged
omission is corrected in an amendment or supplement to the Prospectus previously
furnished by or on behalf of the Company with copies of the Prospectus, and such
Holder thereafter fails to deliver such Prospectus as so amended or supplemented
prior to or concurrently with the sale of a Registrable Security to the person
asserting the claim from which such Losses arise.
(b) Indemnification by Holders. In connection with any
Registration Statement in which a Holder is participating, such Holder will
furnish to the Company in writing such information as the Company reasonably
requests for use in connection with any Registration Statement, Prospectus or
preliminary prospectus and will indemnify, to the fullest extent permitted by
law, the Company, its directors and officers, agents and employees, each person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling persons, from and against all Losses arising out
of or based upon any untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or arising out of
or based upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company for use in
such Registration Statement, Prospectus or preliminary prospectus and was relied
upon by the Company in the preparation of such Registration Statement,
Prospectus or preliminary prospectus. In no event will the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the
proceeds (net of payment of all expenses) received by such Holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any person
shall become entitled to indemnity hereunder (an "indemnified party"), such
indemnified party shall give prompt notice to the party from which such
indemnity is sought (the "indemnifying party") of any claim or of the
commencement of any action or proceeding with respect to which such indemnified
party seeks indemnification or contribution pursuant hereto; provided, however,
that the failure to so notify the indemnifying party will not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been prejudiced materially by such failure. All
reasonable fees and expenses (including any reasonable fees and expenses
incurred in connection with investigating or preparing to defend such action or
proceeding) will be paid to the indemnified party (provided appropriate
documentation for such expenses is also submitted with such notice), as
incurred, within five calendar days of written notice thereof to the
indemnifying party (regardless of whether it is ultimately determined that an
indemnified party is not entitled to indemnification hereunder). The
indemnifying party will not consent to entry of any judgment or enter into any
settlement or otherwise seek to terminate any action or proceeding in which any
indemnified party is or could be a party and as to which indemnification or
contribution could be sought by such indemnified party under this Section 7,
unless such judgment, settlement or other termination includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such claim or litigation
for which such indemnified party would be entitled to indemnification hereunder.
In the case of parties indemnified pursuant to Section 7(a) above, counsel to
the indemnified parties shall be selected by the Holder which is the indemnified
party and, in the case of parties indemnified pursuant to Section 7(b) above,
counsel to the indemnified parties shall be selected by the Company.
Notwithstanding the foregoing sentence, in case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the election of the
indemnifying party to assume the defense of such litigation or proceeding, such
indemnified party shall have the right to employ separate counsel and to
participate in the defense of such litigation or proceeding, and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel and shall pay such fees, costs and expenses at least quarterly
(provided that with respect to any single litigation or proceeding or with
respect to several litigations or proceedings involving substantially similar
legal claims, such indemnifying party shall not be required to bear the fees,
costs and expenses of more than one such counsel) if (i) in the reasonable
judgment of such indemnified party the use of counsel chosen by such
indemnifying party to represent such indemnified party would present such
counsel with a conflict of interest, (ii) the defendants in, or targets of, any
such litigation or proceeding include both an indemnifying party and an
indemnified party, and such indemnified party shall have reasonably concluded
that there may be legal defenses available to it or to other indemnified parties
which are different from or additional to those available to such indemnifying
party (in which case such indemnifying party shall not have the right to direct
the defense of such action on behalf of the indemnified party), (iii) such
indemnifying party shall not have employed counsel satisfactory to such
indemnifying party, in the exercise of such indemnified party's reasonable
judgment, to represent such indemnified party within a reasonable time after
notice of the institution of such litigation or proceeding or (iv) any
indemnifying party shall authorize in writing such indemnified party to employ
separate counsel at the expense of such indemnifying party.
(d) Contribution. If the indemnification provided for in this
Section 7 is unavailable to an indemnified party under Section 7(a) or 7(b) in
respect of any Losses or is insufficient to hold such indemnified party
harmless, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, will, severally but not jointly, contribute to the amount
paid or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or indemnifying parties, on the one hand, and such indemnified party, on
the other hand, in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party or indemnifying parties, on the
one hand, and such indemnified party, on the other hand, will be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been taken or made by, or related to
information supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses will be deemed to include any legal
or other fees or expenses incurred by such party in connection with any action
or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 7(d), an indemnifying
party that is a selling Holder will not be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities sold by such indemnifying party and distributed to the public were
offered to the public exceeds the amount of any damages that such indemnifying
party has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement
obligations of the Company hereunder will be in addition to any liability the
Company may otherwise have hereunder or otherwise. The provisions of this
Section 7 shall survive the sale of the Registrable Securities pursuant to a
Registration Statement, notwithstanding any permitted transfer of the
Registrable Securities by any Holder thereof or any termination of this
Agreement.
Section 8. Underwritten Registrations. If any of the
Registrable Securities included in any Demand Registration are to be sold in an
Underwritten Offering, the Holders holding a majority of the Registrable
Securities included in the Demand Notice may select an investment banker or
investment bankers and manager or managers to manage the Underwritten Offering,
provided that such investment banker or bankers is (are) reasonably acceptable
to the Company. If any Piggyback Registration is an Underwritten Offering, the
Company will have the exclusive right to select the investment banker or
investment bankers and managers to administer the offering. The Company agrees
that, in connection with any Underwritten Offering hereunder, it shall undertake
to offer customary indemnification to the participating underwriters.
Section 9. Miscellaneous.
(1) Remedies. In the event of a breach by a party of its
obligations under this Agreement, each other party, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
Each party agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any provision of this Agreement
and hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it will waive the defense that a remedy
at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented without the prior written consent
of the Company, and Holders holding in excess of 50% of the Registrable
Securities in respect of which Registrable Securities are issuable.
(c) Notices. Except as set forth below, all notices and other
communications provided for or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered personally or sent by telex or
telecopier, registered or certified mail (return receipt requested), postage
prepaid or courier or overnight delivery service to the Company at the following
address and to a Holder at the address set forth on his or her signature page to
this Agreement (or at such other address for any party as shall be specified by
like notice, provided that notices of a change of address shall be effective
only upon receipt thereof):
If to the Company: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Chief Executive Officer
Fax: 561-655-9424
With a copy to: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: General Counsel
Fax: 561-655-4754
If to the Investor:
National Broadcasting Company, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Fax: 212-664-2648
With a copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: John W. Carr
Fax: (212) 455-2502
(d) Merger or Consolidation of the Company. If the Company is
a party to any merger or consolidation pursuant to which the Preferred Stock or
Registrable Securities are converted into or exchanged for securities or the
right to receive securities of any other person ("Conversion Securities"), the
issuer of such Conversion Securities shall assume (in a writing delivered to all
Holders) all obligations of the Company hereunder. The Company will not effect
any merger or consolidation described in the immediately preceding sentence
unless the issuer of the Conversion Securities complies with this Section 9(d).
(e) Successors and Assigns. Subject to the terms and
conditions of the Stockholder Agreement, (i) any transferee of all or a portion
of the Preferred Stock or Registrable Securities and (ii) any Restricted Party
that holds Registrable Securities shall become a Holder hereunder to the extent
it agrees in writing to be bound by all of the provisions applicable hereunder
to the transferring Holder (such acknowledgment being evidenced by execution of
a Counterpart and Acknowledgment substantially in the form of Exhibit A).
Subject to the requirements of this Section 9(e), this Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the parties
hereto.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed will be deemed to be an original and all of which taken
together will constitute one and the same instrument.
(g) Headings. The headings in this Agreement are for
convenience of reference only and will not limit or
otherwise affect the meaning.
(h) Governing Law. This agreement will be governed by and
construed in accordance with the laws of the State of New York, as applied to
contracts made and performed within the State of New York.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein will remain in full force and effect
and will in no way be affected, impaired or invalidated, and the parties hereto
will use their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(j) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be the complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to such subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto or by their respective duly authorized representatives, all as of
the date first above written.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Lowell W. Paxson
Name: Lowell W. Paxson
Title: Chairman of the Board
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ Thomas A. Rogers
Name: Thomas A. Rogers
Title: Executive Vice President
<PAGE>
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
COUNTERPART AND ACKNOWLEDGMENT
TO: The Company
RE: The Registration Rights Agreement (the "Agreement") dated as of
_______, 1999, by and among the Company and the Holders (as defined in
the Agreement)
The undersigned hereby agrees to be bound by the terms of the
Agreement as a party to the Agreement, and shall be entitled to all benefits of
the Holders (as defined in the Agreement) and shall be subject to all
obligations and restrictions of the Holders pursuant to the Agreement, as fully
and effectively as though the undersigned had executed a counterpart of the
Agreement together with the other parties to the Agreement. The undersigned
hereby acknowledges having received and reviewed a copy of the Agreement.
DATED this _____ day of ____________, _____
By:
-----------------------
Title:
-----------------------
Number of
Shares of
Registrable Securities:
<PAGE>
Exhibit 5
CALL AGREEMENT
CALL AGREEMENT, dated as of September 15, 1999 (this
"Agreement"), by and among, MR. LOWELL W. PAXSON, SECOND CRYSTAL DIAMOND
LIMITED PARTNERSHIP, a Nevada limited partnership, and PAXSON ENTERPRISES, INC.,
a Nevada corporation (collectively, the "Call Stockholders") and NBC PALM BEACH
INVESTMENT II, INC., a California corporation (together, with its permitted
transferees, the "Investor").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Paxson Communications Corporation, a Delaware corporation (the
"Company") and the National Broadcasting Company, Inc., a Delaware corporation,
have entered into an Investment Agreement, dated as of September 15, 1999 (the
"Investment Agreement"); and
WHEREAS, the Call Stockholders are the record and beneficial
owners of 8,311,639 shares of Class B Common Stock, par value $0.001 per share,
of the Company; and
WHEREAS, the Call Stockholders have agreed to grant the
Investor the right to purchase the Call Shares subject to certain terms and
conditions.
NOW, THEREFORE, in consideration of the mutual agreements
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1. Definitions. Unless otherwise defined herein,
capitalized terms defined in the Investment Agreement are used herein as defined
therein. As used in this Agreement, the following terms shall have the meanings
set forth below:
"Call Shares" shall mean the 8,311,639 shares of Class B
Common Stock, par value $0.001 per share, of the Company, and any shares of
Common Stock or other securities that may be received by the Call Stockholders
with respect to such Call Shares (x) as a result of a stock dividend on or split
of Call Shares or (y) on account of Call Shares in a merger, combination,
recapitalization or other transaction involving the Company.
ARTICLE II
CALL RIGHT
Section 2.1 Call Right. (a) The Call Stockholders hereby grant
to the Investor an irrevocable option to (i) purchase from the Call Stockholders
all of the Call Shares on the terms and conditions set forth herein and (ii) to
designate a nominee to purchase from the Call Stockholders all of the Call
Shares on the terms and conditions set forth herein (the "Call Right").
(b) At any time on or after February 1, 2002 or, if sooner,
the triggering of the Investor's right to effect an Accelerated Buyout, provided
the Investor has exercised in full Warrant B, the Investor may exercise the Call
Right, in whole but not in part, and purchase the Call Shares for a purchase
price (the "Call Price") equal to the greater of (i) $22.50 per share, if the
Call Right is exercised by delivery of the Call Notice (as defined below) on or
prior to the third anniversary of the Closing Date, or $20.00 per share, if the
Call Right is exercised by delivery of the Call Notice after the third
anniversary of the Closing Date or in the event of an Accelerated Buyout (the
"Call Floor Price") and (ii) the average of the closing prices of the Class A
Common Stock on the American Stock Exchange (or other applicable exchange), for
the 45 consecutive trading days ending on the trading date immediately preceding
the date of the Call Notice; provided that notwithstanding the foregoing, in the
case of clause (ii) the Call Price shall not be lower than 17.5% below, or
higher than 17.5% above, the average of the closing sales prices of the Common
Stock for the six-month period ending on the trading date immediately preceding
the date of the Call Notice. The Call Price (and the reference to $22.50 and
$20.00) shall be subject to adjustment in the same manner as the Exercise Price
is adjusted in Section 9 of Warrant A.
Section 2.2 Call Notice. Notice of the exercise of the Call
Right (the "Call Notice") shall be sent to the Call Stockholders at the
addresses provided for in Section 5.1. The Call Notice shall state the Call
Price and the manner, time and place at which payment for the Call Shares will
be made. The Investor shall fix the date for the exercise of the Call Right (the
"Call Date") no earlier than thirty (30) but not more than sixty (60) days after
the Call Notice is sent, unless otherwise agreed to by the Investor and the Call
Stockholders.
Section 2.3 Closing. The closing ("Call Closing") of the
exercise of the Call Right shall take place on the Call Date at the place
designated by the Investor and set forth in the Call Notice. At the Call Closing
(i) the Call Stockholders shall deliver to the Investor, or its nominee,
certificates representing all of the Call Shares, duly endorsed in blank or
accompanied by stock powers duly executed in blank, with all necessary stock
transfer stamps affixed thereto and (ii) the Investor, or its nominee, shall pay
the aggregate Call Price by wire transfer in immediately available funds to the
account or accounts specified by the Call Stockholders three days prior to the
date of the Call Closing. The obligation of the Investor to pay the Call Price
shall be subject to the receipt of all the Call Shares free and clear of any
Lien.
Section 2.4 Limitation on Transfer of the Call Shares. The
Call Stockholders shall not Transfer any of the Call Shares except as
specifically permitted pursuant to this Section 2.4. Prior to the sixth
anniversary of the date hereof, the Call Stockholders may not Transfer the Call
Shares. If the Investor has not exercised the Call Right prior to the sixth
anniversary of the Closing Date, then thereafter (i) upon ninety (90) days'
prior written notice to the Investor and (ii) subject to the restrictions on
Transfer set forth in Section 4.2 of the Stockholder Agreement, the Call
Stockholders may transfer any or all of the Call Shares; provided, however, that
during such ninety day notice period, the Investor may exercise the Call Right
pursuant to this Agreement. Upon any permitted transfer of the Call Shares
pursuant to this Section 2.4, such transferred Call Shares shall no longer be
subject to the Call Right.
Section 2.5 Conversion of Call Shares. The Call Stockholders
shall not convert any of the Call Shares into any other security of the Company.
Section 2.6 Legends. The Call Stockholders agree to the
imprinting, for so long as appropriate, of substantially the following legends
on certificates representing any of the Call Shares:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A STOCKHOLDER AGREEMENT, DATED AS OF SEPTEMBER 15, 1999, AMONG PAXSON
COMMUNICATIONS CORPORATION, LOWELL W. PAXSON, SECOND CRYSTAL DIAMOND
LIMITED PARTNERSHIP, PAXSON ENTERPRISES AND NATIONAL BROADCASTING
COMPANY, INC.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF
A CALL AGREEMENT DATED AS OF SEPTEMBER 15, 1999, AMONG SECOND CRYSTAL
DIAMOND LIMITED PARTNERSHIP, PAXSON ENTERPRISES, INC. AND NATIONAL
BROADCASTING COMPANY, INC.
Section 2.7 Expiration of the Call Right. The Call Right shall
expire on the earlier of (i) the termination of the Investor Rights pursuant to
Section 10.12 of the Investment Agreement and (ii) the tenth anniversary of the
date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Call
Stockholders. Each Call Stockholder represents and warrants to the Investor as
follows:
V) Corporate Existence; Compliance with Law. Such Call Stockholder, if not an
individual, (i) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization; (ii) is duly qualified to conduct
business and is in good standing in each jurisdiction where the conduct of its
affairs requires such qualification; (iii) has the requisite corporate,
partnership, trust or other power and authority and the legal right to own,
pledge, mortgage or otherwise encumber its properties, and to conduct its
affairs as now, heretofore and proposed to be conducted; (iv) is in compliance
with its charter, by-laws and other organizational documents; and (vi) is in
compliance with all applicable provisions of law (including, without limitation,
the Communications Act), except where the failure to comply, individually or in
the aggregate, (x) could not reasonably be expected to have a material adverse
effect on such Call Stockholder (y) or would not have an adverse effect on the
ability of such Call Stockholder to perform its obligations hereunder.
VI) Corporate Power, Authorization, Enforceable Obligations. The execution,
delivery and performance by such Call Stockholder of this Agreement and its
obligations hereunder: (i) are within its corporate, partnership, trust or other
power; (ii) have been duly authorized by all necessary or proper corporate,
partnership, trust and shareholder or other action; (iii) do not contravene any
provision of its charter, bylaws or other organizational documents; (iv) do not
violate any law or regulation, or any order or decree of any court or
governmental entity applicable to it; (v) do not conflict with or result in the
breach or termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any material indenture, mortgage,
deed of trust, lease, agreement or other instrument to which such Person is a
party or by which it or any of its property is bound; (vi) do not result in the
creation or imposition of any material Lien upon any of its property; and (vii)
do not require the consent or approval of any other Person, except (A) the
filing of all notices, reports and other documents required by, and the
expiration of all waiting periods under, the HSR Act, and (B) the filing of all
notices, reports and other documents required by the rules and regulations
promulgated by the FCC. This Agreement is duly executed and delivered by such
Call Stockholder and this Agreement constitutes the legal, valid and binding
obligation of such Call Stockholder enforceable against it in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditor's rights generally
and subject to the availability of equitable remedies.
VII) Capitalization; Ownership. As of the date hereof and upon delivery of and
payment for the Call Shares at the Call Closing as provided herein, the Investor
will acquire good title to the Call Shares, free and clear of all Liens (other
than any Lien created by the Investor). Such Call Stockholder is not a party to,
and none of them have any knowledge of any, voting trusts, proxies or any other
agreements or understandings with respect to the Call Shares. Upon delivery to
the Investor, and payment for the Call Shares pursuant to the Call Agreement,
the Investor shall own all of the outstanding shares of Class B Common Stock.
Section 3.2. Survival of Representations and Warranties. All
representations and warranties made herein or in any certificates delivered in
connection with the Call Closing shall survive for a period of three years after
the Call Closing.
ARTICLE IV
OTHER AGREEMENTS
Section 4.1 Governmental Filings. Each of the Call
Stockholders and the Investor will make as promptly as practicable after notice
to such effect by the Investor to the Call Stockholders, all filings required to
be made, if any, by it under the Communications Act or the rules and regulations
related thereto with regard to the transactions which are the subject of this
Agreement (including, without limitation, the purchase of shares pursuant to the
Call Agreement and the holding of the Call Shares) and each of them will take
all reasonable steps within its control (including providing information to the
FCC) to obtain any required consents or approvals as promptly as practicable.
The Call Stockholders and the Investor will each provide information and
cooperate in all other respects to assist the other of them in making its
filings under the Communications Act.
ARTICLE V
MISCELLANEOUS
Section 5.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given, if
delivered personally, by telecopier or sent by overnight courier as follows:
(a) If to the Investor, to:
NBC PALM BEACH INVESTMENT II, INC.
c/o National Broadcasting Company, Inc.
30 Rockefeller Plaza
New York, New York 10112
Attention: General Counsel
Fax: 212-664-2648
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: John W. Carr
Fax: (212) 455-2502
(b) If to the Call Stockholders, to:
Lowell W. Paxson
601 Clearwater Park Road
West Palm Beach, Florida 33401
Fax: 561-655-9424
or to such other address or addresses as shall be designated in
writing. All notices shall be effective when received.
Section 5.2 Entire Agreement; Amendment. This Agreement and
the Stockholder Agreement and the documents described herein and therein or
attached or delivered pursuant hereto or thereto set forth the entire agreement
between the parties hereto with respect to the transactions contemplated by this
Agreement. Any provision of this Agreement may be amended or modified in whole
or in part at any time by an agreement in writing between the parties hereto
executed in the same manner as this Agreement. No failure on the part of any
party to exercise, and no delay in exercising, any right shall operate as a
waiver thereof nor shall any single or partial exercise by any party of any
right preclude any other or future exercise thereof or the exercise of any other
right.
Section 5.3 Severability. In the event that any one or more of
the provisions contained in this Agreement or in any other instrument referred
to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or any other such
instrument.
Section 5.4 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the same document.
SECTION 5.5 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED WITHIN SUCH
STATE, AND EACH PARTY HEREBY SUBMITS TO THE JURISDICTION OF ANY STATE OR U.S.
FEDERAL COURT SITTING WITHIN THE COUNTY OF NEW YORK. THE PARTIES HERETO WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE
OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT.
Section 5.6 Successors and Assigns; Third Party Beneficiaries.
The Call Stockholders may not assign any of their rights or delegate any of its
duties under this Agreement without the prior written consent of the Investor.
Subject to applicable law and the following sentence, the Investor may assign
its rights under this Agreement in whole or in part only in accordance with the
Stockholder Agreement or to any Affiliate of the Investor, but no such
assignment shall relieve the Investor of its obligations hereunder. The Investor
shall not assign any rights under this Agreement unless such assignee expressly
assumes all of the obligations of the Investor associated with the rights
proposed to be assigned. Any purported assignment in violation of this Section
shall be void. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any Person other than the parties hereto and their
respective successors, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and their respective successors, and for
the benefit of no other Person.
Section 5.7 Arbitration. Any controversy, dispute or claim
arising out of, in connection with or in relation to the interpretation,
performance or breach of this Agreement, shall be determined, at the request of
any party, by arbitration in a city mutually agreeable to the parties to such
controversy, dispute or claim, or, failing such agreement, in New York, New
York, before and in accordance with the then-existing Rules for Commercial
Arbitration of the American Arbitration Association, and any judgment or award
rendered by the arbitrator will be final, binding and unappealable and judgment
may be entered by any state or Federal court having jurisdiction thereof. The
pre-trial discovery procedures of the Federal Rules of Civil Procedure shall
apply to any arbitration under this Section 4.7. Any controversy concerning
whether a dispute is an arbitrable dispute or as to the interpretation or
enforceability of this Section 4.7 shall be determined by the arbitrator. The
arbitrator shall be a retired or former United States District Judge or other
person acceptable to each of the parties, provided such individual has
substantial professional experience with regard to corporate or partnership
legal matters. The parties intend that this agreement to arbitrate be valid,
enforceable and irrevocable.
Section 5.8 Remedies. No right, power or remedy conferred upon
the Investor in this Agreement shall be exclusive, and each such right, power or
remedy shall be cumulative and in addition to every other right, power or remedy
whether conferred in this Agreement or now or hereafter available at law or in
equity or by statute or otherwise. No course of dealing between the Investor,
the Company and the Call Stockholders and no delay in exercising any right,
power or remedy conferred in this Agreement or now or hereafter existing at law
or in equity or by statute or otherwise shall operate as a waiver or otherwise
prejudice any such right, power or remedy. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in
addition to any other remedy to which they are entitled at law or in equity.
Section 5.9 Further Assurances. Each party shall execute and
deliver such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate, carry out and
comply with all of the terms of this Agreement and the transactions contemplated
hereby.
Section 5.10 Headings, Captions and Table of Contents. The
section headings, captions and table of contents contained in this Agreement are
for reference purposes only, are not part of this Agreement and shall not affect
the meaning or interpretation of this Agreement.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto or by
their respective duly authorized representative all as of the date first above
stated.
SECOND CRYSTAL DIAMOND LIMITED PARTNERSHIP
By: Paxson Enterprises, Inc.
By: /s/ Lowell W. Paxson
Name: Lowell W. Paxson
Title: President
PAXSON ENTERPRISES, INC.
By: /s/ Lowell W. Paxson
Name: Lowell W. Paxson
Title: President
NBC PALM BEACH INVESTMENT II, INC.
By: /s/ Thomas A. Rogers_
Name: Thomas A. Rogers
Title: Vice President
MR. LOWELL W. PAXSON
BY: /s/ Lowell W. Paxson
<PAGE>
Exhibit 6
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 8% SERIES B
CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
Paxson Communications Corporation (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Corporation (the "Board of Directors") by its
Certificate of Incorporation, as amended (hereinafter referred to as the
"Certificate of Incorporation"), and pursuant to the provisions of Section 151
of the General Corporation Law of the State of Delaware, said Board of
Directors, on September 9, 1999, duly approved and adopted the following
resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board
of Directors by its Certificate of Incorporation, the Board of
Directors does hereby create, authorize and provide for the issuance of
8% Series B Convertible Exchangeable Preferred Stock, par value $.001
per share, with a liquidation preference of $10,000 per share,
consisting of 41,500 shares, having the designations, preferences,
relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth
in the Certificate of Incorporation and in this Resolution as follows:
(a) Designation. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Corporation a class of Preferred Stock
designated as the "8% Series B Convertible Exchangeable Preferred Stock." The
number of shares constituting such class shall be 41,500 and are referred to as
the "Series B Convertible Preferred Stock." The liquidation preference of the
Series B Convertible Preferred Stock shall be $10,000.00 per share.
(b) Rank. The Series B Convertible Preferred Stock shall, with respect
to dividends and distributions upon liquidation, winding up or dissolution of
the Corporation, rank (i) senior to all classes of Common Stock of the
Corporation and to each other class of Capital Stock of the Corporation or
series of Preferred Stock of the Corporation hereafter created, the terms of
which do not expressly provide that it ranks senior to, or on a parity with, the
Series B Convertible Preferred Stock as to dividends and distributions upon
liquidation, winding up or dissolution of the Corporation (collectively referred
to, together with all classes of Common Stock of the Corporation, as "Junior
Securities"); (ii) on a parity with any class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation hereafter created
the terms of which expressly provide that such class or series will rank on a
parity with the Series B Convertible Preferred Stock as to dividends and
distributions upon liquidation, winding up or dissolution (collectively referred
to as "Parity Securities"), provided that any such Parity Securities not issued
in accordance with the requirements of paragraph (f)(i) hereof shall be deemed
to be Junior Securities and not Parity Securities; and (iii) junior to the
Existing Preferred Stock and to each other class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation hereafter created
the terms of which expressly provide that such class or series will rank senior
to the Series B Convertible Preferred Stock as to dividends and distributions
upon liquidation, winding up or dissolution of the Corporation (collectively
referred to as "Senior Securities"), provided that any such Senior Securities
not issued in accordance with the requirements of paragraph (f)(i) hereof shall
be deemed to be Junior Securities and not Senior Securities.
(c) Dividends.
(i) Beginning on the Issue Date, the Holders of the
outstanding shares of Series B Convertible Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, dividends on each share of Series B Convertible
Preferred Stock at the higher of (determined on a cumulative basis from the
Issue Date to the date of such determination) (x) a rate per annum equal to 8%
of the Original Issue Price, which rate shall be adjusted on the fifth
anniversary of the Issue Date to equal the Cost of Capital Dividend Rate, which
rate shall remain in effect thereafter for so long as the Series B Convertible
Preferred Stock shall be outstanding, and (y) the aggregate cash dividends per
share paid on the Class A Common Stock from the Issue Date to the date of such
determination, multiplied by the number of shares of Class A Common Stock into
which each share of Series B Convertible Preferred Stock is convertible. All
dividends shall be cumulative, whether or not earned or declared, on a daily
basis from the Issue Date, but shall be payable only at such time or times as
may be fixed by the Board of Directors or as otherwise provided herein.
Dividends shall be payable to the Holders of record as they appear on the stock
books of the Corporation on such dates as the Board of Directors may determine
with respect to such dividends. Dividends shall cease to accumulate in respect
of shares of the Series B Convertible Preferred Stock on the date of the
redemption of such shares unless the Corporation shall have failed to pay the
relevant redemption price on the date fixed for redemption.
(ii) All dividends paid with respect to shares of the Series B
Convertible Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata
to the Holders entitled thereto.
(iii) Dividends payable on the Series B Convertible Preferred
Stock for any period less than a year shall be computed on the basis of a
360-day year of twelve 30-day months and the actual number of days elapsed in
the period for which payable.
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the Holders of
shares of Series B Convertible Preferred Stock then outstanding shall be
entitled to be paid, out of the assets of the Corporation available for
distribution to its stockholders and before any distribution shall be made or
any assets distributed to the holders of any of the Junior Securities,
including, without limitation, the Common Stock of the Corporation, an amount in
cash equal to the greater of (A) the liquidation preference for each share
outstanding, plus without duplication, an amount in cash equal to accumulated
and unpaid dividends thereon to the date fixed for liquidation, dissolution or
winding up, and (B) the amount per share payable upon liquidation, dissolution
or winding up to the holders of shares of the Corporation's Class A Common Stock
(without deduction for the liquidation preference otherwise payable pursuant to
clause (A) hereof), multiplied by the number of such shares into which the
shares of Series B Convertible Preferred Stock are then convertible. Except as
provided in the preceding sentence, Holders of Series B Convertible Preferred
Stock shall not be entitled to any distribution in the event of any liquidation,
dissolution or winding up of the affairs of the Corporation. If the assets of
the Corporation are not sufficient to pay in full the liquidation payments
payable to the Holders of outstanding shares of the Series B Convertible
Preferred Stock and all Parity Securities, then, (x) should the holders of the
Series B Convertible Preferred Stock be entitled to receive the liquidation
amount described in clause (A) above, the holders of all such shares shall share
equally and ratably in such distribution of assets first in proportion to the
full liquidation preference to which each is entitled until such preferences are
paid in full, and then in proportion to their respective amounts of accumulated
but unpaid dividends; and (y) should the holders of the Series B Convertible
Preferred Stock be entitled to receive the liquidation amount described in
clause (B) above, the holders of all such shares shall share equally and ratably
in such distribution of assets in proportion to the full liquidation payments to
which each is entitled.
(ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with or into one
or more entities shall be deemed to be a liquidation, dissolution or winding up
of the affairs of the Corporation.
(e) Redemption.
(i) Optional Redemption. (A) Commencing on the fifth
anniversary of the Issue Date, the Corporation may, at its option, at any time
and from time to time, redeem, in whole or in part, in the manner provided for
in paragraph (e)(ii) hereof, any or all of the outstanding shares of Series B
Convertible Preferred Stock, at a price per share equal to the Redemption Price.
(B) In the event of a redemption pursuant to paragraph
(e)(i)(A) hereof of only a portion of the then outstanding shares of the Series
B Convertible Preferred Stock, the Corporation shall effect such redemption on a
pro rata basis according to the number of shares held by each Holder of the
Series B Convertible Preferred Stock, except that the Corporation may redeem all
shares held by any Holders of fewer than one share (or shares held by Holders
who would hold less than one share as a result of such redemption), as may be
determined by the Corporation, provided that no optional redemption shall be
authorized or made unless prior thereto full accumulated and unpaid dividends
are declared and paid in full, or declared and a sum in cash set apart
sufficient for such payment, on the Series B Convertible Preferred Stock for all
dividends prior to the Redemption Date.
(ii) Procedures for Redemption. (A) At least 90 days prior to
the date fixed for any redemption of the Series B Convertible Preferred Stock
pursuant to paragraph (e)(i), written notice (the "Redemption Notice") shall be
given by first class mail, postage prepaid, to each Holder of record on the
record date fixed for such redemption of the Series B Convertible Preferred
Stock at such Holder's address as it appears on the stock books of the
Corporation, provided that no failure to give such notice nor any deficiency
therein shall affect the validity of the procedure for the redemption of any
shares of Series B Convertible Preferred Stock to be redeemed except as to the
Holder or Holders to whom the Corporation has failed to give said notice or to
whom such notice was defective. The Redemption Notice shall state:
(1) the Redemption Price;
(2) whether all or less than all the outstanding shares of the
Series B Convertible Preferred Stock are to be redeemed and
the total number of shares of the Series B Convertible
Preferred Stock being redeemed;
(3) the date fixed for redemption;
(4) that the Holder is to surrender to the Corporation, in the
manner, at the place or places and at the price designated,
his certificate or certificates representing the shares of
Series B Convertible Preferred Stock to be redeemed; and
(5) that dividends on the shares of the Series B Convertible
Preferred Stock to be redeemed shall cease to accumulate on
such Redemption Date unless the Corporation defaults in the
payment of the Redemption Price.
(B) Each Holder of Series B Convertible Preferred Stock shall
surrender the certificate or certificates representing such shares of Series B
Convertible Preferred Stock to the Corporation, duly endorsed (or otherwise in
proper form for transfer, as determined by the Corporation), in the manner and
at the place designated in the Redemption Notice, and on the Redemption Date the
full Redemption Price, for such shares shall be payable in cash to the Person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled and retired. In the event that
less than all of the shares represented by any such certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares.
(C) On and after the Redemption Date, unless the Corporation
defaults in the payment in full of the Redemption Price, dividends on the Series
B Convertible Preferred Stock called for redemption shall cease to accumulate on
the Redemption Date, and all rights of the Holders of redeemed shares shall
terminate with respect thereto on the Redemption Date, other than the right to
receive the Redemption Price, without interest; provided, however, that if a
notice of redemption shall have been given as provided in paragraph (ii)(A)
above and the funds necessary for redemption (including an amount in respect of
all dividends that will accrue to the Redemption Date) shall have been
segregated and irrevocably deposited in trust for the equal and ratable benefit
of the Holders of the shares to be redeemed, then, at the close of business on
the day on which such funds are segregated and set aside, the Holders of the
shares to be redeemed shall cease to be stockholders of the Corporation and
shall be entitled only to receive the Redemption Price.
(iii) Redemption at the Option of the Holders. The Series B
Convertible Preferred Stock is subject to redemption at the option of certain
Holders in accordance with the terms and conditions set forth in Article IX of
the Investment Agreement.
(f) Voting Rights. Holders of Series B Convertible Preferred Stock
shall have no voting rights, except as required by the General Corporation Law
of the State of Delaware, and as expressly provided in this Certificate of
Designation.
(i) (A) So long as any shares of the Series B Convertible
Preferred Stock are outstanding, the Corporation may not issue any additional
shares of Series B Convertible Preferred Stock, any new class of Parity
Securities or Senior Securities (or amend the provisions of any existing class
of capital stock to make such class of capital stock Parity Securities or Senior
Securities) without the approval of the holders of at least a majority of the
shares of Series B Convertible Preferred Stock then outstanding, voting or
consenting, as the case may be, together as one class; provided, however, that
the Corporation may, without the approval of the holders of at least a majority
of the shares of Series B Convertible Preferred Stock then outstanding, voting
or consenting, as the case may be, together as one class: (I) issue a new class
of Senior Securities (or amend the provisions of any existing class of capital
stock to make such class of capital stock Senior Securities) at any time after
the Common Stock Trading Price first exceeds 120% of the Conversion Price (as
then in effect) for 20 consecutive trading days; (II) issue additional shares of
Existing Preferred Stock, Parity Securities or Senior Securities, which Senior
Securities are PARI PASSU with the Existing Preferred Stock, and which Senior
Securities or Parity Securities require cash dividends at a time and in an
amount not in excess of one percentage point greater than the dividend rate
borne by any series of the Existing Preferred Stock (as existing on the Issue
Date) and which does not prevent either the payment of cash dividends on the
Series B Convertible Preferred Stock or the exchange of the Series B Convertible
Preferred Stock for the New Exchange Debentures, in an amount sufficient to
acquire any series of the Existing Preferred Stock in accordance with its terms
on the Issue Date (including any premium required to be paid), plus the amount
of reasonable expenses incurred by the Corporation in acquiring such series of
Existing Preferred Stock and issuing such additional Existing Preferred Stock,
Parity Securities or Senior Securities (as the case may be); with such shares
being issued no sooner than the date the Corporation repurchases, redeems or
otherwise retires such series of the Existing Preferred Stock; and (III) issue
additional shares of Existing Preferred Stock as dividends on the Existing
Preferred Stock in accordance with the certificates of designation of the
Existing Preferred Stock, as in existence on the Issue Date.
(B) So long as any shares of the Series B Convertible
Preferred Stock are outstanding, the Corporation shall not amend this Resolution
so as to affect materially and adversely the rights, preferences or privileges
of Holders of shares of Series B Convertible Preferred Stock without the
affirmative vote or consent of Holders of at least a majority of the issued and
outstanding shares of Series B Convertible Preferred Stock, voting or
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting.
(C) While any of the Series B Convertible Preferred Stock is
outstanding, the Corporation shall not amend or modify the Indenture for the New
Exchange Debentures (the "New Exchange Indenture") in the form executed by the
parties thereto (except as expressly provided therein in respect of amendments
without the consent of Holders of New Exchange Debentures) as permitted by
Section 8.02 of the New Exchange Indenture to be amended or modified by (I) a
majority vote (x) without the affirmative vote or consent of Holders of at least
a majority of the shares of Series B Convertible Preferred Stock then
outstanding or, (y) if any New Exchange Debentures are then outstanding, without
the affirmative vote or consent of, in the aggregate, Holders of at least a
majority in liquidation preference of the Series B Convertible Preferred Stock
and holders of at least a majority in principal amount of the New Exchange
Debentures, or (II) unanimous consent, without the consent of each Holder of
Series B Convertible Preferred Stock and each holder of New Exchange Debentures,
in the case of each of clauses (I)(x) and (y) and (II), voting or consenting, as
the case may be, as one class, and given in person or by proxy, either in
writing or by resolution adopted at an annual or special meeting (in the case of
Holders of Series B Convertible Preferred Stock and, in accordance with the
terms of the New Exchange Indenture, in the case of holders of New Exchange
Debentures).
(D) Except as set forth in paragraph (f)(i)(A) above, the
creation, authorization or issuance of any shares of any Junior Securities,
Parity Securities or Senior Securities or the increase or decrease in the amount
of authorized Capital Stock of any class, including Preferred Stock, shall not
require the consent of Holders of Series B Convertible Preferred Stock and shall
not be deemed to affect adversely the rights, preferences or privileges of
Holders of Series B Convertible Preferred Stock.
(ii) Without the affirmative vote or consent of Holders of a
majority of the issued and outstanding shares of Series B Convertible Preferred
Stock, voting or consenting, as the case may be, as a separate class, given in
person or by proxy, either in writing or by resolution adopted at an annual or
special meeting, the Corporation shall not, in a single transaction or series of
related transactions, consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
Corporation's assets (as an entirety or substantially as an entirety in one
transaction or series of related transactions) to, another Person (other than a
Wholly-Owned Subsidiary with, into or to another Wholly-Owned Subsidiary) or
adopt a plan of liquidation unless (A) either (I) the Corporation is the
surviving or continuing Person or (II) the Person (if other than the
Corporation) formed by such consolidation or into which the Corporation is
merged or the Person that acquires by conveyance, transfer or lease the
properties and assets of the Corporation substantially as an entirety or, in the
case of a plan liquidation, the Person to which assets of the Corporation have
been transferred shall be a corporation, partnership or trust organized and
existing under the laws of the United States or any State thereof or the
District of Columbia; (B) the Series B Convertible Preferred Stock shall be
converted into or exchanged for and shall become shares of such successor,
transferee or resulting Person with the same powers, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereon, that the Series B Convertible Preferred
Stock had immediately prior to such transaction; (C) immediately after giving
effect to such transaction and the use of the proceeds therefrom (on a PRO FORMA
basis, including giving effect to any Indebtedness incurred or anticipated to be
incurred in connection with such transaction), the Corporation (in the case of
clause (I) of the foregoing clause (A)) or such Person (in the case of clause
(II) of the foregoing clause (A)) shall be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) under paragraph
(l)(i) hereof; (D) immediately after giving effect to such transactions, no
Voting Rights Triggering Event shall have occurred or be continuing; and (E) the
Corporation has delivered to the transfer agent for the Series B Convertible
Preferred Stock prior to the consummation of the proposed transaction an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer complies with the terms hereof and that all
conditions precedent herein relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of related transactions) of all or
substantially all of the properties and assets of one or more Subsidiaries of
the Corporation, the Capital Stock of which constitutes all or substantially all
of the properties and assets of the Corporation shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Corporation.
(iii) (A) If (I) the Corporation fails to discharge any
redemption or conversion obligation with respect to the Series B Convertible
Preferred Stock; (II) the Corporation fails to make a Change of Control Offer
(whether pursuant to the terms of paragraph (h)(v) or otherwise) following a
Change of Control if such Change of Control Offer is required by paragraph (h)
hereof or fails to purchase shares of Series B Convertible Preferred Stock from
Holders who elect to have such shares purchased pursuant to the Change of
Control Offer; (III) the Corporation breaches or violates one of the provisions
set forth in any of paragraphs (1)(i), (1)(ii), (l)(iii) or (l)(iv) hereof and
the breach or violation continues for a period of 60 days or more after the
Corporation receives notice thereof specifying the default from the holders of
at least 25% of the shares of Series B Convertible Preferred Stock then
outstanding; (IV) the Corporation fails to pay at the final stated maturity
(giving effect to any extensions thereof) the principal amount of any
Indebtedness of the Corporation or any Restricted Subsidiary of the Corporation,
or the final stated maturity of any such Indebtedness is accelerated, if the
aggregate principal amount of such Indebtedness, together with the aggregate
principal amount of any other such Indebtedness in default for failure to pay
principal at the final stated maturity (giving effect to any extensions thereof)
or which has been accelerated, aggregates $10,000,000 or more at any time, in
each case, after a 20-day period during which such default shall not have been
cured or such acceleration rescinded; or (V) any event occurs or condition
exists which results in an increase in the dividend rate borne by the Private
Preferred Stock in accordance with the terms thereof, then in the case of any of
clauses (I) - (V) the number of directors constituting the Board of Directors
shall be adjusted by the number, if any, necessary to permit the Holders of the
then outstanding shares of Series B Convertible Preferred Stock, voting
separately and as one class, to elect the lesser of two directors and that
number of directors constituting 25% of the members of the Board of Directors.
Each such event described in clauses (I), (II), (III), (IV), and (V) is a
"Voting Rights Triggering Event." Holders of a majority of the issued and
outstanding shares of Series B Convertible Preferred Stock, voting separately
and as one class, shall have the exclusive right to elect the lesser of two
directors and that number of directors constituting 25% of the members of the
Board of Directors at a meeting therefor called upon occurrence of such Voting
Rights Triggering Event, and at every subsequent meeting at which the terms of
office of the directors so elected by the Holders of the Series B Convertible
Preferred Stock expire (other than as described in (f)(iii)(B) below). The
voting rights provided herein shall be the exclusive remedy at law or in equity
of the holders of the Series B Convertible Preferred Stock for any Voting Rights
Triggering Event.
(B) The right of the Holders of Series B Convertible Preferred
Stock voting together as a separate class to elect members of the Board of
Directors as set forth in subparagraph (f)(iii)(A) above shall continue until
such time as in all other cases, the failure, breach or default giving rise to
such Voting Rights Triggering Event is remedied, cured (including, but not
limited to, in the case of clause (IV) of subparagraph (f)(iii)(A) above through
the issuance of Refinancing Indebtedness or the waiver of any breach or default
by the holder of such Indebtedness) or waived by the holders of at least a
majority of the shares of Series B Convertible Preferred Stock then outstanding
and entitled to vote thereon, at which time (I) the special right of the Holders
of Series B Convertible Preferred Stock so to vote as a class for the election
of directors and (II) the term of office of the directors elected by the Holders
of the Series B Convertible Preferred Stock shall each terminate and the
directors elected by the holders of Common Stock or Capital Stock (other than
the Series B Convertible Preferred Stock), if applicable, shall constitute the
entire Board of Directors. At any time after voting power to elect directors
shall have become vested and be continuing in the Holders of Series B
Convertible Preferred Stock pursuant to paragraph (f)(iii) hereof, or if
vacancies shall exist in the offices of directors elected by the Holders of
Series B Convertible Preferred Stock, a proper officer of the Corporation may,
and upon the written request of the Holders of record of at least 25% of the
shares of Series B Convertible Preferred Stock then outstanding addressed to the
secretary of the Corporation shall, call a special meeting of the Holders of
Series B Convertible Preferred Stock, for the purpose of electing the directors
which such Holders are entitled to elect. If such meeting shall not be called by
a proper officer of the Corporation within 20 days after personal service of
said written request upon the secretary of the Corporation, or within 20 days
after mailing the same within the United States by certified mail, addressed to
the secretary of the Corporation at its principal executive offices, then the
Holders of record of at least 25% of the outstanding shares of Series B
Convertible Preferred Stock may designate in writing one of their number to call
such meeting at the reasonable expense of the Corporation, and such meeting may
be called by the Person so designated upon the notice required for the annual
meetings of stockholders of the Corporation and shall be held at the place for
holding the annual meetings of stockholders. Any Holder of Series B Convertible
Preferred Stock so designated shall have, and the Corporation shall provide,
access to the lists of stockholders to be called pursuant to the provisions
hereof.
(C) At any meeting held for the purpose of electing directors
at which the Holders of Series B Convertible Preferred Stock shall have the
right, voting together as a separate class, to elect directors as aforesaid, the
presence in person or by proxy of the Holders of at least a majority of the
outstanding shares of Series B Convertible Preferred Stock shall be required to
constitute a quorum of such Series B Convertible Preferred Stock.
(D) Any vacancy occurring in the office of a director elected
by the Holders of Series B Convertible Preferred Stock may be filled by the
remaining directors elected by the Holders of Series B Convertible Preferred
Stock unless and until such vacancy shall be filled by the Holders of Series B
Convertible Preferred Stock.
(E) The provisions of this paragraph (f)(iii) shall apply only
so long as the Holder is able to elect directors as aforesaid pursuant to
applicable laws and regulations of the FCC as determined jointly by the Holder
and the Corporation.
(iv) In any case in which the Holders of Series B Convertible
Preferred Stock shall be entitled to vote pursuant to this paragraph (f) or
pursuant to Delaware law, each Holder of Series B Convertible Preferred Stock
entitled to vote with respect to such matter shall be entitled to one vote for
each share of Series B Convertible Preferred Stock held.
(g) Conversion.
(i) Shares of the Series B Convertible Preferred Stock will be
convertible at the option of the Holder thereof, at any time and from time to
time after the Issue Date, into (A) a number of shares of Class A Common Stock
or (B) in the case of the Initial Holder only, if the Initial Holder determines
in its sole discretion that it is prevented under applicable laws and
regulations of the FCC from holding shares of Class A Common Stock issuable upon
conversion of its shares of Series B Convertible Preferred Stock, into a number
of shares of non-voting Common Stock of the Corporation (which upon disposition
by the Initial Holder shall automatically be converted into shares of Class A
Common Stock), equal to the Original Issue Price of the shares of Series B
Convertible Preferred Stock surrendered for conversion plus without duplication,
an amount in cash equal to accumulated and unpaid dividends thereon, divided by
the Conversion Price then in effect, except that, if shares of Series B
Convertible Preferred Stock are called for redemption, the conversion right will
terminate at the close of business on the Redemption Date. No fractional shares
or securities representing fractional shares will be issued upon conversion; in
lieu of fractional shares the Corporation will, at its option, either round up
the number of shares to be issued to the nearest whole share or pay a cash
adjustment based upon the current market price of the Class A Common Stock at
the close of business on the first Business Day preceding the date of
conversion. The Series B Convertible Preferred Stock shall be converted by the
holder thereof by surrendering the certificate or certificates representing the
shares of Series B Convertible Preferred Stock to be converted, appropriately
completed, to the transfer agent for the Common Stock. The transfer agent shall
issue one or more certificates representing the Conversion Shares in the name or
names requested by the Holder. The transfer agent will deliver to the Holder a
new certificate representing the shares of Series B Convertible Preferred Stock
in excess of those being surrendered for conversion. The conversion rights
stated herein are subject to compliance by the holder with all applicable laws
and regulations, including, without limitation, the Communications Act, and as a
condition precedent to the Corporation's obligation to issue Conversion Shares
to the Initial Holder or its Affiliates upon conversion of shares of Series B
Convertible Preferred Stock, the Corporation may require that such persons
deliver to the Corporation an opinion of legal counsel reasonably acceptable to
the Corporation to the effect that the issuance of Conversion Shares to such
persons or their designees upon conversion will not violate or conflict with the
Communications Act.
(ii) (A) In case the Corporation shall (I) pay a dividend or
distribution in shares of its Class A Common Stock on its shares of Class A
Common Stock, (II) subdivide its outstanding shares of Class A Common Stock into
a greater number of shares, (III) combine its outstanding shares of Class A
Common Stock into a smaller number of shares, or (IV) issue, by reclassification
of its shares of Class A Common Stock, any shares of its capital stock (each
such transaction being called a "Stock Transaction"), then and in each such
case, the Conversion Price in effect immediately prior thereto shall be adjusted
so that the Holder of a share of Series B Convertible Preferred Stock
surrendered for conversion after the record date fixing stockholders to be
affected by such Stock Transaction shall be entitled to receive upon conversion
the number of Conversion Shares which such Holder would have been entitled to
receive after the happening of such event had such share of Series B Convertible
Preferred Stock been converted immediately prior to such record date. Such
adjustment shall be made whenever any of such events shall happen, but shall
also be effective retroactively as to shares of Series B Convertible Preferred
Stock converted between such record date and the date of the happening of any
such event.
(B) If the Corporation shall, at any time or from time to time
while any shares of Series B Convertible Preferred Stock are outstanding, issue,
sell or distribute any right or warrant to purchase, acquire or subscribe for
shares of Class A Common Stock (including a right or warrant with respect to any
security convertible into or exchangeable for shares of Class A Common Stock)
generally to holders of Common Stock (including by way of a reclassification of
shares or a recapitalization of the Corporation), for a consideration on the
date of such issuance, sale or distribution less than the Common Stock Trading
Price of the shares of Class A Common Stock underlying such rights or warrants
on the date of such issuance, sale or distribution, then and in each such case,
the Conversion Price shall be adjusted by multiplying such Conversion Price by a
fraction, the numerator of which shall be the sum of (I) the Common Stock
Trading Price per share of Common Stock on the first trading day after the date
of the public announcement of the actual terms (including the price terms) of
such issuance, sale or distribution multiplied by the number of shares of Class
A Common Stock outstanding immediately prior to such issuance, sale or
distribution plus (II) the aggregate Fair Market Value of the consideration to
be received by the Corporation in respect of the purchase of the shares of Class
A Common Stock underlying such right or warrant, and the denominator of which
shall be the Common Stock Trading Price per share of Class A Common Stock on the
trading day immediately preceding the public announcement of the actual terms
(including the price terms) of such issuance, sale or distribution multiplied by
the aggregate number of shares of Class A Common Stock (I) outstanding
immediately prior to such issuance, sale or distribution plus (II) underlying
such rights or warrants at the time of such issuance. For the purposes of the
preceding sentence, the aggregate consideration receivable by the Corporation in
connection with the issuance, sale or distribution of any such right or warrant
shall be deemed to be equal to the sum of the aggregate offering price (before
deduction of reasonable underwriting discounts or commissions and expenses) of
all such rights or warrants.
(C) In the event the Corporation shall at any time or from
time to time while any shares of Series B Convertible Preferred Stock are
outstanding declare, order, pay or make a dividend or other distribution
generally to holders of Common Stock in stock or other securities or rights or
warrants to subscribe for securities of the Corporation or any of its
subsidiaries or evidences of indebtedness of the Corporation or any other person
or pay any Extraordinary Cash Dividend (other than any dividend or distribution
on the Class A Common Stock (I) referred to in paragraphs (A) or (B) above or
(II) if in conjunction therewith the Corporation declares and pays or makes a
dividend or distribution on each share of Series B Convertible Preferred Stock
which is the same as the dividend or distribution that would have been made or
paid with respect to such share of Series B Convertible Preferred Stock had such
share been converted into shares of Class A Common Stock immediately prior to
the record date for any such dividend or distribution on the Class A Common
Stock), then, and in each such case, an appropriate adjustment to the Conversion
Price shall be made so that the Holder of each share of Series B Convertible
Preferred Stock shall be entitled to receive, upon the conversion thereof, the
number of shares of Class A Common Stock determined by multiplying (x) the
number of shares of Class A Common Stock into which such share was convertible
on the day immediately prior to the record date fixed for the determination of
stockholders entitled to receive such dividend or distribution by (y) a
fraction, the numerator of which shall be the Common Stock Trading Price per
share of Class A Common Stock as of such record date, and the denominator of
which shall be such Common Stock Trading Price per share of Class A Common Stock
less the Fair Market Value per share of Class A Common Stock of such dividend or
distribution (as determined in good faith by the Board of Directors, as
evidenced by a Board Resolution mailed to each holder of Series B Convertible
Preferred Stock). An adjustment made pursuant to this paragraph (C) shall be
made upon the opening of business on the next business day following the date on
which any such dividend or distribution is made and shall be effective
retroactively to the close of business on the record date fixed for the
determination of stockholders entitled to receive such dividend or distribution.
(iii) No adjustment in the Conversion Price will be required
to be made in any case until cumulative adjustments amount to 1% or more of the
Conversion Price, but any such adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment. The Corporation may, to the extent permitted by law, make such
reductions in the Conversion Price in addition to those described in paragraph
(ii) above as it, in its sole discretion, shall determine to be advisable in
order that certain stock related distributions hereafter made by the Corporation
to its stockholders shall not be taxable to such stockholders.
(iv) In the event of any capital reorganization (other than a
capital reorganization covered by paragraph (ii) (C) above) or reclassification
of outstanding shares of Common Stock (other than a reclassification covered by
paragraph (ii) (A) above), or in case of any merger, consolidation or other
corporate combination of the Corporation with or into another corporation, or in
case of any sale or conveyance to another corporation of the property of the
Corporation as an entirety or substantially as an entirety (each of the
foregoing being referred to as a "Transaction"), each share of Series B
Convertible Preferred Stock shall continue to remain outstanding if the
Corporation is the Surviving Person (as defined below) of such Transaction, and
shall be subject to all the provisions hereof, as in effect prior to such
Transaction, or if the Corporation is not the Surviving Person, each share of
Series B Convertible Preferred Stock shall be exchanged for a new series of
convertible preferred stock of the Surviving Person, or in the case of a
Surviving Person other than a corporation, comparable securities of such
Surviving Person, in either case having economic terms as nearly equivalent as
possible to, and with the same voting and other rights as, the Series B
Convertible Preferred Stock, including entitling the holder thereof to receive,
upon presentation of the certificate therefor to the Surviving Person subsequent
to the consummation of such Transaction, the kind and amount of shares of stock
and other securities and property receivable (including cash) upon the
consummation of such Transaction by a holder of that number of shares of Class A
Common Stock into which one share of Series B Convertible Preferred Stock was
convertible immediately prior to such Transaction. In case securities or
property other than common stock shall be issuable or deliverable upon
conversion as aforesaid, then all references in this paragraph (iv) shall be
deemed to apply, so far as appropriate and as nearly as may be, to such other
securities or property.
Notwithstanding anything contained herein to the contrary, the
Corporation will not effect any Transaction unless, prior to the consummation
thereof, proper provision is made to ensure that the holders of shares of Series
B Convertible Preferred Stock will be entitled to receive the benefits afforded
by this paragraph (iv).
For purposes of this paragraph (iv), "Surviving Person" shall mean the
continuing or surviving Person of a merger, consolidation or other corporate
combination, the Person receiving a transfer of all or a substantial part of the
properties and assets of the Corporation, or the Person consolidating with or
merging into the Corporation in a merger, consolidation or other corporate
combination in which the Corporation is the continuing or surviving Person, but
in connection with which the Series B Convertible Preferred Stock or Common
Stock of the Corporation is exchanged, converted or reclassified into the
securities of any other Person or cash or any other property.
(v) The Conversion Price shall initially equal $13.0110228131,
and shall increase from and after the Issue Date at a rate equal to the dividend
rate in effect from time to time on the Series B Convertible Preferred Stock as
set forth in paragraph (c)(i). The Conversion Price shall be subject to
adjustment as provided in this paragraph (g).
(vi) The Corporation shall cause the shares of Class A Common
Stock issuable upon conversion of the Series B Convertible Preferred Stock (or
in the case of the Initial Holder's election to convert into non-voting Common
Stock, upon conversion of such non-voting Common Stock) to be approved for
listing on the American Stock Exchange (or such other principal securities
exchange on which the Class A Common Stock may at the time be listed for
trading), subject to official notification of issuance, prior to the date of
issuance thereof. Notwithstanding anything in this Resolution to the contrary,
no Holders shall be entitled to exercise the conversion rights set forth in this
paragraph (g) until such time as the conditions for listing of the Class A
Common Stock issuable upon conversion of the Series B Convertible Preferred
Stock on the American Stock Exchange (or such other principal securities
exchange on which the Class A Common Stock may be listed for trading) which are
set forth, as of the Issue Date, in Section 713 of the American Stock Exchange
Company Guide (or substantially similar provisions of such other exchange, in
each case as such exchange rules may be hereafter in effect from time to time)
have been satisfied, whether through stockholder approval of the issuance of the
Series B Convertible Preferred Stock or otherwise.
(h) Change of Control.
(i) In the event of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Corporation shall notify the
Holders of the Series B Convertible Preferred Stock in writing of such
occurrence and shall make an offer to purchase (the "Change of Control Offer")
all then outstanding shares of Series B Convertible Preferred Stock at a
purchase price of 101% of the liquidation preference thereof plus, without
duplication, an amount in cash equal to all accumulated and unpaid dividends
thereon (such applicable purchase price being hereinafter referred to as the
"Change of Control Purchase Price").
(ii) Within 30 days following the Change of Control Date, the
Corporation shall (x) cause a notice of the Change of Control to be sent at
least once to the Dow Jones News Service or similar business news service in the
United States and (y) send by first class mail, postage prepaid, a notice to
each Holder of Series B Convertible Preferred Stock at such Holder's address as
it appears in the register maintained by the Transfer Agent, which notice shall
govern the terms of the Change of Control Offer. The notice to the Holders shall
contain all instructions and materials necessary to enable such Holders to
tender Series B Convertible Preferred Stock pursuant to the Change of Control
Offer. Such notice shall state:
(A) that a Change of Control has occurred, that the Change of
Control Offer is being made pursuant to this paragraph (h) and that all Series B
Convertible Preferred Stock validly tendered and not withdrawn will be accepted
for payment;
(B) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 30 Business Days nor later than
60 Business Days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date");
(C) that any shares of Series B Convertible Preferred Stock
not tendered will continue to accumulate dividends;
(D) that, unless the Corporation defaults in making payment of
the Change of Control Purchase Price any share of Series B Convertible Preferred
Stock accepted for payment pursuant to the Change of Control Offer shall cease
to accumulate dividends after the Change of Control Payment Date;
(E) that Holders accepting the offer to have any shares of
Series B Convertible Preferred Stock purchased pursuant to a Change of Control
Offer will be required to surrender their certificate or certificates
representing such shares, properly endorsed for transfer together with such
customary documents as the Corporation and the transfer agent may reasonably
require, in the manner and at the place specified in the notice prior to the
close of business on the Business Day preceding to the Change of Control Payment
Date;
(F) that Holders will be entitled to withdraw their acceptance
if the Corporation receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
number of shares of Series B Convertible Preferred Stock the Holder delivered
for purchase and a statement that such Holder is withdrawing his election to
have such shares of Series B Convertible Preferred Stock purchased;
(G) that Holders whose shares of Series B Convertible
Preferred Stock are purchased only in part will
be issued a new certificate representing the number of shares of Series B
Convertible Preferred Stock equal to the unpurchased portion of the certificate
surrendered; and
(H) the circumstances and relevant facts regarding such Change
of Control.
(iii) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of the Series B Convertible Preferred Stock in connection with a
Change of Control Offer.
(iv) On the Change of Control Payment Date, the Corporation
shall (A) accept for payment the shares of Series B Convertible Preferred Stock
tendered pursuant to the Change of Control Offer, (B) promptly mail to each
Holder of shares so accepted payment in an amount in cash equal to the Change of
Control Purchase Price for such Series B Convertible Preferred Stock, (C)
execute and issue a new Series B Convertible Preferred Stock certificate equal
to any unpurchased shares of Series B Convertible Preferred Stock represented by
certificates surrendered and (D) cancel and retire each surrendered certificate.
Unless the Corporation defaults in the payment for the shares of Series B
Convertible Preferred Stock tendered pursuant to the Change of Control Offer,
dividends will cease to accumulate with respect to the shares of Series B
Convertible Preferred Stock tendered and all rights of Holders of such tendered
shares will terminate, except for the right to receive payment therefor, on the
Change of Control Payment Date.
(v) If the purchase of the Series B Convertible Preferred
Stock would violate or constitute a default or be prohibited under the Credit
Facility, any then outstanding Senior Debt, the Existing Debt Indentures or the
Existing Preferred Stock, then, notwithstanding anything to the contrary
contained above, prior to complying with the foregoing provisions, but in any
event within 30 days following the Change of Control Date, the Corporation
shall, to the extent required to permit such purchase of the Series B
Convertible Preferred Stock, either (A) repay in full all Indebtedness under the
Credit Facility, such Senior Debt, the Existing Notes and the Existing Exchange
Debentures and, in the case of the Credit Facility or such other Senior Debt,
terminate all commitments outstanding thereunder and effect the termination of
any such prohibition under the Existing Preferred Stock, or (B) obtain the
requisite consents, if any, under the Credit Facility, the instruments governing
such Senior Debt, the Existing Debt Indentures and the certificates of
designation governing the Existing Preferred Stock required to permit the
repurchase of the Series B Convertible Preferred Stock required by this
paragraph (h). Until the requirements of the immediately preceding sentence are
satisfied, the Corporation shall not make, and shall not be obligated to make,
any Change of Control Offer; provided that the Corporation's failure to comply
with this paragraph (h)(v) shall constitute a Voting Rights Triggering Event.
(i) Conversion or Exchange. Other than as set forth in paragraph (g)
above, the Holders of shares of Series B Convertible Preferred Stock shall not
have any rights hereunder to convert such shares into or exchange such shares
for shares of any other class or classes or of any other series of any class or
classes of Capital Stock of the Corporation.
(j) Reissuance of Series B Convertible Preferred Stock. Shares of
Series B Convertible Preferred Stock that have been issued and reacquired in any
manner, including shares purchased or redeemed or exchanged, shall (upon
compliance with any applicable provisions of the laws of Delaware) have the
status of authorized and unissued shares of Preferred Stock undesignated as to
series and may be redesignated and reissued as part of any series of Preferred
Stock; provided that any issuance of such shares as Series B Convertible
Preferred Stock must be in compliance with the terms hereof.
(k) Business Day. If any payment or redemption shall be required by the
terms hereof to be made on a day that is not a Business Day, such payment or
redemption shall be made on the immediately succeeding Business Day.
(l) Certain Additional Provisions.
(i) Limitation on Incurrence of Additional Indebtedness. The
Corporation shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, incur any Indebtedness (including Acquired Indebtedness)
other than Permitted Indebtedness. Notwithstanding the foregoing limitation, the
Corporation and its Restricted Subsidiaries may incur Indebtedness if on the
date of the incurrence of such Indebtedness (i) no Voting Rights Triggering
Event shall have occurred and be continuing or shall occur as a consequence
thereof and (ii) after giving effect to the incurrence of such Indebtedness and
the receipt and application of the proceeds thereof, the ratio of the
Corporation's total Indebtedness to the Corporation's Consolidated EBITDA
(determined on a PRO FORMA basis for the last four full fiscal quarters of the
Corporation for which financial statements are available at the date of
determination) is less than 7.0 to 1; provided, however, that if the
Indebtedness which is the subject of a determination under this provision is
Acquired Indebtedness, or Indebtedness incurred in connection with the
simultaneous acquisition of any Person, business, property or assets, then such
ratio shall be determined by giving effect (on a PRO FORMA basis, as if the
transaction had occurred at the beginning of the four quarter period) to both
the incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by the Corporation and the inclusion in the Corporation's
Consolidated EBITDA of the Consolidated EBITDA of the acquired Person, business,
property or assets; and provided, further, that in the event that the
Consolidated EBITDA of the acquired Person, business, property or assets
reflects an operating loss, no amounts shall be deducted from the Corporation's
Consolidated EBITDA in making the determination described above.
(ii) Limitation on Restricted Payments. (A) The Corporation
shall not, and shall not permit any of its Restricted Subsidiaries to, directly
or indirectly, make any Restricted Payment if at the time of such Restricted
Payment and immediately after giving effect thereto (I) any Voting Rights
Triggering Event shall have occurred and be continuing; or (II) the Corporation
could not incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with paragraph (l)(i) above; or (III) the aggregate
amount of Restricted Payments declared or made after the Issue Date (the amount
expended for such purposes, if other than in cash, being the fair market value
of such property as determined by the Board of Directors in good faith) exceeds
the sum of (x) 100% of the Corporation's Cumulative Consolidated EBITDA minus
1.4 times the Corporation's Cumulative Consolidated Interest Expense, plus (y)
100% of the aggregate Net Proceeds and the fair market value of securities or
other property received by the Corporation from the issue or sale, after the
Issue Date, of Capital Stock (other than Disqualified Capital Stock of the
Corporation or Capital Stock of the Corporation issued to any Restricted
Subsidiary) of the Corporation or any Indebtedness or other securities of the
Corporation convertible into or exercisable or exchangeable for Capital Stock
(other than Disqualified Capital Stock) of the Corporation which have been so
converted or exercised or exchanged, as the case may be, plus (c) $10,000,000.
(B) Notwithstanding the foregoing, these provisions will not
prohibit: (I) the payment of any dividend or the making of any distribution
within 60 days after the date of its declaration if such dividend or
distribution would have been permitted on the date of declaration; or (II) the
purchase, redemption or other acquisition or retirement of any Capital Stock of
the Corporation or any warrants, options or other rights to acquire shares of
any class of such Capital Stock (x) solely in exchange for shares of Qualified
Capital Stock or other rights to acquire Qualified Capital Stock, (y) through
the application of the Net Proceeds of a substantially concurrent sale for cash
(other than to a Restricted Subsidiary) of shares of Qualified Capital Stock or
warrants, options or other rights to acquire Qualified Capital Stock or (z) in
the case of Disqualified Capital Stock, solely in exchange for, or through the
application of the Net Proceeds of a substantially concurrent sale for cash
(other than to a Restricted Subsidiary) of, Disqualified Capital Stock that has
a redemption date no earlier than, is issued by the Corporation or the same
Person as and requires the payment of current dividends or distributions in cash
no earlier than, in each case, the Disqualified Capital Stock being purchased,
redeemed or otherwise acquired or retired and which Disqualified Capital Stock
does not prohibit cash dividends on the Series B Convertible Preferred Stock or
the exchange thereof for New Exchange Debentures.
(iii) Limitations on Transactions with Affiliates. (A) The
Corporation shall not, and shall not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate or holder of 10% or more of the Corporation's Common Stock (an
"Affiliate Transaction") or extend, renew, waive or otherwise modify the terms
of any Affiliate Transaction entered into prior to the Issue Date unless (I)
such Affiliate Transaction is between or among the Corporation and its
Wholly-Owned Subsidiaries; (II) such Affiliate Transaction is between or among
the Corporation and any of its Subsidiaries, on the one hand, and the Initial
Holder or any of its Affiliates, on the other hand; or (III) the terms of such
Affiliate Transaction are fair and reasonable to the Corporation or such
Restricted Subsidiary, as the case may be, and the terms of such Affiliate
Transaction are at least as favorable as the terms which could be obtained by
the Corporation or such Restricted Subsidiary, as the case may be, in a
comparable transaction made on an arm's-length basis between unaffiliated
parties. In any Affiliate Transaction involving an amount or having a value in
excess of $1,000,000 which is not permitted under clause (I) above the
Corporation must obtain a Board Resolution certifying that such Affiliate
Transaction complies with clause (III) above. In any Affiliate Transaction
involving an amount or having a value in excess of $5,000,000 which is not
permitted under clause (I) above, unless such transaction is with a Subsidiary
in which no Affiliate has a minority interest, the Corporation must obtain a
valuation of the assets subject to such transaction by an Independent Appraiser
or a written opinion as to the fairness of such a transaction from an
independent investment banking firm or an Independent Appraiser.
(B) The foregoing provisions shall not apply to (I) any
Restricted Payment that is not prohibited by the provisions described in
paragraph (1) (ii) above, (II) any transaction approved by the Board of
Directors with an officer or director of the Corporation or of any Subsidiary in
his or her capacity as officer or director entered into in the ordinary course
of business, including compensation and employee benefit arrangements with any
officer or director of the Corporation or of any Subsidiary that are customary
for public companies in the broadcasting industry, or (III) modifications of the
Existing Preferred Stock.
(iv) Limitation on Preferred Stock of Restricted Subsidiaries.
The Corporation shall not permit any Restricted Subsidiary to issue any
Preferred Stock (except to the Corporation or to a Restricted Subsidiary) or
permit any Person (other than the Corporation or a Restricted Subsidiary) to
hold any such Preferred Stock unless the Corporation or such Restricted
Subsidiary would be entitled to incur or assume Indebtedness in compliance with
paragraph (l)(i) above in an aggregate principal amount equal to the aggregate
liquidation value of the Preferred Stock to be issued.
(v) Reports. The Corporation shall provide to the holders of
Series B Convertible Preferred Stock, within 15 days after it files them with
the Commission, copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) which the Corporation files
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. In the
event that the Corporation is no longer required to furnish such reports to its
securityholders pursuant to the Exchange Act, the Corporation will provide to
the Holders copies of all annual and quarterly reports and other information
which the Corporation would have been required to file with the Commission
pursuant to Sections 13 and 15(d) of the Exchange Act had it been so subject
without cost to the Holders.
(m) Exchange.
(i) Requirements. The outstanding shares of Series B
Convertible Preferred Stock are exchangeable, in whole or in part, on a pro rata
basis, at the option of the Holder, for the New Exchange Debentures to be
substantially in the form of Exhibit A to the New Exchange Indenture, a copy of
which is on file with the secretary of the Corporation; provided, however, that
each partial exchange shall be with respect to shares of Series B Convertible
Preferred Stock outstanding with an aggregate liquidation preference of not less
than $50,000,000 or all such shares remaining outstanding, if less; and
provided, further, that any such exchange prior to January 1, 2007, may only be
made if (A) there shall be no contractual impediment to such exchange; (B) such
exchange would be permitted under the terms of the Existing Preferred Stock (or
any other Preferred Stock of the Company issued to fund redemption of any
Existing Preferred Stock with substantially similar terms as the Existing
Preferred Stock so redeemed), to the extent then outstanding, and immediately
after giving effect to such exchange, no Default or Event of Default (as defined
in the New Exchange Indenture) would exist under the New Exchange Indenture, no
default or event of default would exist under the Credit Facility or the
Existing Debt Indentures and no default or event of default under any other
material instrument governing Indebtedness outstanding at the time (including
Indebtedness incurred to refinance any of the Credit Facility or the Existing
Debt Indentures on substantially comparable terms) would be caused thereby; and
(C) the New Exchange Indenture has been qualified under the Trust Indenture Act
of 1939, as amended, if such qualification is required at the time of such
exchange. The exchange rate shall be $1.00 principal amount of New Exchange
Debentures for each $1.00 of liquidation preference and accumulated and unpaid
dividends of Series B Convertible Preferred Stock, including, to the extent
necessary, New Exchange Debentures in principal amounts less than $1,000,
provided that the Corporation shall have the right, at its option, to pay cash
in an amount equal to the principal amount of that portion of any New Exchange
Debenture that is not an integral multiple of $1,000 instead of delivering a New
Exchange Debenture in a denomination of less than $1,000.
(ii) Exchange Procedures. (A) At least 30 days prior to the
Exchange Date, the Holder shall give the Corporation written notice by
first-class mail, postage prepaid, to the Corporation's principal office, which
notice shall state: (I) the Exchange Date, and (II) the number of shares and
aggregate liquidation preference of the Series B Convertible Preferred Stock to
be exchanged. On or before the Exchange Date, each Holder of Series B
Convertible Preferred Stock shall surrender to the Corporation the certificate
or certificates representing such shares of Series B Convertible Preferred
Stock. The Corporation shall cause the New Exchange Debentures to be executed on
the Exchange Date and, upon surrender of the certificates for any shares of
Series B Convertible Preferred Stock so exchanged, duly endorsed (or otherwise
in proper form for transfer, as determined by the Corporation), such shares
shall be exchanged by the Corporation for New Exchange Debentures. In the event
that any certificate surrendered pursuant to this paragraph (m) represents
shares in excess of those being surrendered for exchange, the Corporation shall
issue a new certificate representing the unexchanged portion of shares of Series
B Convertible Preferred Stock. Dividends on the shares of Series B Convertible
Preferred Stock to be exchanged shall cease to accrue on the Exchange Date
whether or not certificates for shares of Series B Convertible Preferred Stock
are surrendered for exchange on such Exchange Date unless the Corporation shall
default in the delivery of New Exchange Debentures. The Corporation shall pay
interest on the New Exchange Debentures from the Exchange Date whether or not
certificates for shares of Series B Convertible Preferred Stock are surrendered
for exchange on such Exchange Date.
(B) If notice has been given as aforesaid, and if before the
Exchange Date (I) the New Exchange Indenture shall have been duly executed and
delivered by the Corporation and the trustee thereunder and (II) all New
Exchange Debentures necessary for such exchange shall have been duly executed by
the Corporation and delivered to the trustee under the New Exchange Indenture
with irrevocable instructions to authenticate the New Exchange Debentures
necessary for such exchange, then the rights of the Holders of Series B
Convertible Preferred Stock so exchanged as stockholders of the Corporation
shall cease (except the right to receive New Exchange Debentures and, if the
Corporation so elects, cash in lieu of any New Exchange Debenture not an
integral multiple of $1,000), and the Person or Persons entitled to receive the
New Exchange Debentures issuable upon exchange shall be treated for all purposes
as the registered Holder or Holders of such New Exchange Debentures as of the
Exchange Date.
(iii) No Exchange in Certain Cases. Notwithstanding the
foregoing provisions of this paragraph (m), the Corporation shall not be
obligated to exchange the Series B Convertible Preferred Stock for New Exchange
Debentures if such exchange, or any term or provision of the New Exchange
Indenture or the New Exchange Debentures, or the performance of the
Corporation's obligations under the New Exchange Indenture or the New Exchange
Debentures, shall violate any applicable law or if, at the time of such
exchange, the Corporation is insolvent or if it would be rendered insolvent by
such exchange.
(n) Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person
(including an Unrestricted Subsidiary) existing at the time such Person becomes
a Restricted Subsidiary or assumed in connection with the acquisition of assets
from such Person.
"AFFILIATE" means, for any Person, a Person who, directly or
indirectly, through one or more intermediaries controls, or is controlled by, or
is under common control with, such other Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. With respect to the
Corporation, Affiliate will also include any Permitted Holders or Persons
controlled by the Permitted Holders.
"AFFILIATE TRANSACTION" shall have the meaning ascribed to it
in paragraph (1)(iii) hereof.
"ASSET SALE" means the sale, transfer or other disposition
(other than to the Corporation or any of its Restricted Subsidiaries) in any
single transaction or series of related transactions involving assets with a
fair market value in excess of $2,000,000 of (a) any Capital Stock of or other
equity interest in any Restricted Subsidiary other than in a transaction where
the Corporation or a Restricted Subsidiary receives therefor one or more media
properties with a fair market value equal to the fair market value of the
Capital Stock issued, transferred or disposed of by the Corporation or the
Restricted Subsidiary (with such fair market values being determined by the
Board of Directors), (b) all or substantially all of the assets of the
Corporation or of any Restricted Subsidiary, (c) real property or (d) all or
substantially all of the assets of any media property, or part thereof, owned by
the Corporation or any Restricted Subsidiary, or a division, line of business or
comparable business segment of the Corporation or any Restricted Subsidiary;
provided that Asset Sales shall not include sales, leases, conveyances,
transfers or other dispositions to the Corporation or to a Restricted Subsidiary
or to any other Person if after giving effect to such sale, lease, conveyance,
transfer or other disposition such other Person becomes a Restricted Subsidiary,
or the sale of all or substantially all of the assets of the Corporation or a
Restricted Subsidiary in a transaction complying with f(ii), in which case only
the assets not so sold shall be deemed an Asset Sale.
"BOARD OF DIRECTORS" shall have the meaning ascribed to it in
the first paragraph of this Resolution.
"BOARD RESOLUTION" means a copy of a resolution certified
pursuant to an Officers' Certificate to have been duly adopted by the Board of
Directors of the Corporation and to be in full force and effect.
"BUSINESS DAY" means any day except a Saturday, a Sunday, or
any day on which banking institutions in New York, New York are required or
authorized by law or other governmental action to be closed.
"CAPITAL STOCK" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock, including each class of common stock and
preferred stock of such Person and (ii) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the
obligation of such Person to pay rent or other amounts under a lease to which
such Person is a party that is required to be classified and accounted for as
capital lease obligations under GAAP and, for purposes of this definition, the
amount of such obligations at any date shall be the capitalized amount of such
obligations at such date, determined in accordance with GAAP.
"CASH EQUIVALENTS" means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no
more than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any U.S. branch of a foreign bank having at the date
of acquisition thereof combined capital and surplus of not less than
$250,000,000; (v) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above entered
into with any bank meeting the qualifications specified in clause (iv) above;
and (vi) investments in money market funds which invest substantially all their
assets in securities of the types described in clauses (i) through (v) above.
"CERTIFICATE OF INCORPORATION" shall have the meaning ascribed
to it in the first paragraph of this Resolution.
A "CHANGE OF CONTROL" of the Corporation will be deemed to
have occurred at such time as (i) any Person (including a Person's Affiliates),
other than a Permitted Holder, becomes the beneficial owner (as defined under
Rule 13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of 50% or more of the total voting power of the Corporation's Common Stock,
(ii) any Person (including a Person's Affiliates), other than a Permitted
Holder, becomes the beneficial owner of more than 33 1/3% of the total voting
power of the Corporation's Common Stock, and the Permitted Holders beneficially
own, in the aggregate, a lesser percentage of the total voting power of the
Common Stock of the Corporation than such other Person and do not have the right
or ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Corporation, (iii) there
shall be consummated any consolidation or merger of the Corporation in which the
Corporation is not the continuing or surviving corporation or pursuant to which
the Common Stock of the Corporation would be converted into cash, securities or
other property, other than a merger or consolidation of the Corporation in which
the holders of the Common Stock of the Corporation outstanding immediately prior
to the consolidation or merger hold, directly or indirectly, at least a majority
of the voting power of the Common Stock of the surviving corporation immediately
after such consolidation or merger, (iv) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Corporation (together with any new directors whose election by
such Board of Directors or whose nomination for election by the shareholders of
the Corporation has been approved by a majority of the directors then still in
office who either were directors at the beginning of such period or whose
election or recommendation for election was previously so approved) cease to
constitute a majority of the Board of Directors or (v) any "change in control"
occurs (as defined at such time) with respect to the Existing Preferred Stock or
any issue of Disqualified Capital Stock.
"CHANGE OF CONTROL DATE" shall have the meaning ascribed to it
in paragraph (h)(i) hereof.
"CHANGE OF CONTROL OFFER" shall have the meaning ascribed to
it in paragraph (h)(i) hereof.
"CHANGE OF CONTROL PAYMENT DATE" shall have the meaning
ascribed to it in paragraph (h)(ii) hereof.
"CHANGE OF CONTROL PURCHASE PRICE" shall have the meaning
ascribed to it in paragraph (h)(i) hereof.
"CLASS A COMMON STOCK" means the Class A Common Stock, par
value $.001 per share, of the Corporation.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of, such Person's common stock, whether
outstanding on the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"COMMON STOCK TRADING PRICE" on any date means, with respect
to the Class A Common Stock, the Closing Price for the Class A Common Stock on
such date. The "Closing Price" on any date shall mean the last sale price for
the Class A Common Stock, regular way, or, in case no such sale takes place on
such date, the average of the closing bid and asked prices, regular way, for the
Class A Common Stock in either case as reported in the principal consolidated
transaction reporting system with respect to the principal national securities
exchange on which the Class A Common Stock is listed or admitted to trading or,
if the Class A Common Stock is not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the principal automated quotation system that may then be in use or, if the
Class A Common Stock is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Class A Common Stock selected by the Board of Directors or, in
the event that no trading price is available for the Class A Common Stock, the
fair market value of the Class A Common Stock, as determined in good faith by
the Board of Directors.
"COMMUNICATIONS ACT" means the Communications Act of 1934, as
amended (including, without limitation, the Cable Communications Policy Act of
1984 and the Cable Television Consumer Protection and Competition Act of 1992)
and all rules and regulations of the FCC, in each case as from time to time in
effect.
"CONSOLIDATED EBITDA" means, for any Person, for any period,
an amount equal to (a) the sum of Consolidated Net Income for such period, plus,
to the extent deducted from the revenues of such Person in determining
Consolidated Net Income, (i) the provision for taxes for such period based on
income or profits and any provision for taxes utilized in computing a loss in
Consolidated Net Income above, plus (ii) Consolidated Interest Expense, net of
interest income earned on cash or cash equivalents for such period (including,
for this purpose, dividends on the Existing Preferred Stock and any Redeemable
Dividends in each case only to the extent that such dividends were deducted in
determining Consolidated Net Income), plus (iii) depreciation for such period on
a consolidated basis, plus (iv) amortization of intangibles and broadcast
program licenses for such period on a consolidated basis, minus (b) scheduled
payments relating to broadcast program license liabilities, except that with
respect to the Corporation each of the foregoing items shall be determined on a
consolidated basis with respect to the Corporation and its Restricted
Subsidiaries only; provided, however, that, for purposes of calculating
Consolidated EBITDA during any fiscal quarter, cash income from a particular
Investment of such Person shall be included only if cash income has been
received by such Person as a result of the operation of the business in which
such Investment has been made in the ordinary course without giving effect to
any extraordinary, unusual and non-recurring gains.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any
Person, for any period, the aggregate amount of interest which, in conformity
with GAAP, would be set forth opposite the caption "interest expense" or any
like caption on an income statement for such Person and its Subsidiaries on a
consolidated basis, including, but not limited to, Redeemable Dividends, whether
paid or accrued, on Subsidiary Preferred Stock, imputed interest included in
Capitalized Lease Obligations, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with hedging obligations, amortization of
other financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other non-cash
interest expense (other than interest amortized to cost of sales) plus, without
duplication, all net capitalized interest for such period and all interest
incurred or paid under any guarantee of Indebtedness (including a guarantee of
principal, interest or any combination thereof) of any Person, all time
brokerage fees relating to financing of radio or television stations which the
Corporation has an agreement or option to acquire, plus the amount of all
dividends or distributions paid on Disqualified Capital Stock (other than
dividends paid or payable in shares of Capital Stock of the Corporation).
"CONSOLIDATED NET INCOME" means, with respect to any Person,
for any period, the aggregate of the net income (or loss) of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that (a) the net income of any Person (the "other
Person") in which the Person in question or any of its Subsidiaries has less
than a 100% interest (which interest does not cause the net income of such other
Person to be consolidated into the net income of the Person in question in
accordance with GAAP) shall be included only to the extent of the amount of
dividends or distributions paid to the Person in question or to the Subsidiary,
(b) the net income of any Subsidiary of the Person in question that is subject
to any restriction or limitation on the payment of dividends or the making of
other distributions (other than pursuant to the Existing Exchange Debentures or
the Existing Notes) shall be excluded to the extent of such restriction or
limitation, (c) (i) the net income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition and
(ii) any net gain (but not loss) resulting from an Asset Sale by the Person in
question or any of its Subsidiaries other than in the ordinary course of
business shall be excluded, (d) extraordinary, unusual and non-recurring gains
and losses shall be excluded, (e) losses associated with discontinued and
terminated operations in an amount not to exceed $1,000,000 per annum shall be
excluded and (f) all non-cash items (including, without limitation, cumulative
effects of changes in GAAP and equity entitlements granted to employees of the
Corporation and its Restricted Subsidiaries) increasing and decreasing
Consolidated Net Income and not otherwise included in the definition of
Consolidated EBITDA shall be excluded.
"CONVERSION PRICE" has the meaning ascribed to it in paragraph
(g)(v) hereof.
"CONVERSION SHARES" means (i) the number of shares of Class A
Common Stock or (ii) in the case of the Initial Holder only, if the Initial
Holder determines in its sole discretion that it is prevented under the
Communications Act from holding shares of Class A Common Stock issuable upon
conversion of its shares of Series B Convertible Preferred Stock, the number of
shares of non-voting Common Stock of the Corporation (which upon disposition by
the Initial Holder shall automatically be converted into shares of Class A
Common Stock) into which the Series B Convertible Preferred Stock is from time
to time convertible.
"CORPORATION" shall have the meaning ascribed to it in the
first paragraph of this Resolution.
"COST OF CAPITAL DIVIDEND RATE" means a rate per annum equal
to the dividend rate on the Series B Convertible Preferred Stock at which the
Series B Convertible Preferred Stock would trade at its liquidation preference
on such date of determination. The Cost of Capital Dividend Rate shall be
determined by a nationally recognized independent investment banking firm (i) if
the Corporation is publicly traded on a national exchange, chosen in the sole
discretion of the Corporation, and (ii) if the Corporation is not publicly
traded on a national exchange, chosen in the sole discretion of the Holder.
"CREDIT FACILITY" means the Second Amended and Restated Credit
Agreement dated as of April 28, 1998, among the Corporation, the financial
institutions party thereto in their capacities as lenders thereunder and Union
Bank of California, N.A., as agent, as the same may be amended from time to
time, and any one or more agreements evidencing the refinancing, modification,
replacement, renewal, restatement, refunding, deferral, extension, substitution,
supplement, reissuance or resale thereof.
"CUMULATIVE CONSOLIDATED EBITDA" means, with respect to any
Person, as of any date of determination, Consolidated EBITDA from the Issue Date
to the end of such Person's most recently ended full fiscal quarter prior to
such date, taken as a single accounting period.
"CUMULATIVE CONSOLIDATED INTEREST EXPENSE" means, with respect
to any Person, as of any date of determination, Consolidated Interest Expense
plus any cash dividends paid on Senior Securities or Parity Securities not
already reflected in Consolidated Interest Expense, in each case from the Issue
Date to the end of such Person's most recently ended full fiscal quarter prior
to such date, taken as a single accounting period.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof, in whole
or in part, on or prior to December 31, 2009. Without limitation of the
foregoing, Disqualified Capital Stock shall be deemed to include (i) any
Preferred Stock of a Restricted Subsidiary, (ii) any Preferred Stock of the
Corporation, with respect to either of which, under the terms of such Preferred
Stock, by agreement or otherwise, such Restricted Subsidiary or the Corporation
is obligated to pay current dividends or distributions in cash during the period
prior to December 31, 2009; and (iii) as long as the Series B Convertible
Preferred Stock remains outstanding, Senior Securities and Parity Securities;
provided, however, that (i) Preferred Stock of the Corporation or any Restricted
Subsidiary that is issued with the benefit of provisions requiring the
Corporation to make an offer to purchase such Preferred Stock in the event of a
change of control of the Corporation or Restricted Subsidiary shall not be
deemed to be Disqualified Capital Stock solely by virtue of such provisions;
(ii) the Existing Preferred Stock and the Series B Convertible Preferred Stock,
as in effect on the Issue Date, shall not be considered Disqualified Capital
Stock; and (iii) Capital Stock paid as dividends on Preferred Stock existing on
the Issue Date or subsequently issued, in each case in accordance with the terms
of such Preferred Stock at the time it was issued, shall not be considered
Disqualified Capital Stock.
"EXCHANGE DATE" means the date of original issuance of the New
Exchange Debentures.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"EXISTING DEBT INDENTURES" means the Existing Exchange
Indentures and the Existing Indenture.
"EXISTING EXCHANGE DEBENTURES" means the 12 1/2% Exchange
Debentures due 2006 (if issued) and the 13 1/4% Exchange Debentures due 2006 (if
issued) issued under the Existing Exchange Indentures.
"EXISTING EXCHANGE INDENTURES" means the indentures dated
October 4, 1996, and June 10, 1998, between the Corporation, the guarantors
thereto and The Bank of New York, as trustee, which govern the Existing Exchange
Debentures.
"EXISTING INDENTURE" means the indenture dated as of September
28, 1995 among the Corporation and The Bank of New York, as trustee which
governs the Existing Notes.
"EXISTING NOTES" means the 11 5/8% Senior Subordinated Notes
due 2002 issued under the Existing Indenture.
"EXISTING PREFERRED STOCK" means the Junior Cumulative
Compounding Redeemable Preferred Stock, $.001 par value, 12% dividend rate per
annum, of which 33,000 shares are outstanding as of the Issue Date with a
liquidation preference of $1,000 per share; the 12 1/2% Cumulative Exchangeable
Preferred Stock, $.001 par value, of which 204,847 shares are outstanding as of
the Issue Date with a liquidation preference of $1,000 per share; the 13 1/4%
Cumulative Junior Exchangeable Preferred Stock, par value $.001 per share, of
which 22,571 shares are outstanding as of the Issue Date with a liquidation
preference of $10,000 per share; and the 9 3/4% Series A Convertible Preferred
Stock, $.001 par value, of which 8,304 shares are outstanding as of the Issue
Date with a liquidation preference of $10,000 per share.
"EXTRAORDINARY CASH DIVIDEND" means cash dividends with
respect to the Class A Common Stock the aggregate amount of which in any fiscal
year exceeds 10% of Consolidated EBITDA of the Corporation and its subsidiaries
for the fiscal year immediately preceding the payment of such dividend.
"FAIR MARKET VALUE" of any consideration other than cash or of
any securities shall mean the amount which a willing buyer would pay to a
willing seller in an arm's length transaction as determined by an independent
investment banking or appraisal firm experienced in the valuation of such
securities or property selected in good faith by the Board of Directors or a
committee thereof.
"FCC" means the Federal Communications Commission and any
successor governmental entity performing functions similar to those performed by
the Federal Communications Commission on the Issue Date.
"GAAP" means generally accepted accounting principles
consistently applied as in effect in the United States from time to time.
"HOLDER" means a holder of shares of Series B Convertible
Preferred Stock as reflected in the stock books of the Corporation.
"INCUR" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred," "incurrable" and "incurring" shall
have meanings correlative to the foregoing); provided that a change in GAAP that
results in an obligation of such Person that exists at such time becoming
Indebtedness shall not be deemed an incurrence of such Indebtedness.
"INDEBTEDNESS" means (without duplication), with respect to
any Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar instruments
or representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables and other accrued liabilities arising in the ordinary
course of business, including, without limitation, any and all programming
broadcast obligations) if and to the extent any of the foregoing indebtedness
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and shall also include, to the extent not otherwise
included, (i) any Capitalized Lease Obligations, (ii) obligations secured by a
Lien to which the property or assets owned or held by such Person are subject,
whether or not the obligation or obligations secured thereby shall have been
assumed (provided, however, that if such obligation or obligations shall not
have been assumed, the amount of such Indebtedness shall be deemed to be the
lesser of the principal amount of the obligation or the fair market value of the
pledged property or assets), (iii) guarantees of items of other Persons which
would be included within this definition for such other Persons (whether or not
such items would appear upon the balance sheet of the guarantor), (iv) all
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (v) in the case of the
Corporation, Disqualified Capital Stock of the Corporation or any Restricted
Subsidiary and (vi) obligations of any such Person under any Interest Rate
Agreement applicable to any of the foregoing (if and to the extent such Interest
Rate Agreement obligations would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP). The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency giving
rise to the obligation, provided that (i) the amount outstanding at any time of
any Indebtedness issued with original issue discount is the principal amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with GAAP
and (ii) Indebtedness shall not include any liability for federal, state, local
or other taxes. Notwithstanding any other provision of the foregoing definition,
any trade payable arising from the purchase of goods or materials or for
services obtained in the ordinary course of business or contingent obligations
arising out of customary indemnification agreements with respect to the sale of
assets or securities shall not be deemed to be "Indebtedness" of the Corporation
or any Restricted Subsidiaries for purposes of this definition. Furthermore,
guarantees of (or obligations with respect to letters of credit supporting)
Indebtedness otherwise included in the determination of such amount shall not
also be included.
"INDEPENDENT APPRAISER" means an appraiser of national
reputation in the United States (i) which does not, and whose directors,
executive officers and Affiliates do not, have a direct or indirect financial
interest in excess of 5% of fully diluted outstanding voting securities of the
Corporation at the time of determination and (ii) which, in the judgment of the
Corporation, is independent from the Corporation as evidenced by an Officer's
Certificate.
"INITIAL HOLDER" means National Broadcasting Company, Inc.
"INTEREST RATE AGREEMENT" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect the party indicated therein
against fluctuations in interest rates.
"INVESTMENT" means, directly or indirectly, any advance,
account receivable (other than an account receivable arising in the ordinary
course of business), loan or capital contribution to (by means of transfers of
property to others, payments for property or services for the account or use of
others or otherwise), the purchase of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities of, the acquisition,
by purchase or otherwise, of all or substantially all of the business or assets
or stock or other evidence of beneficial ownership of, any Person or the making
of any investment in any Person. Investments shall exclude extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices and repurchases or redemptions of the Existing Notes, the Existing
Exchange Debentures, the Existing Preferred Stock or the Series B Convertible
Preferred Stock by the Corporation.
"INVESTMENT AGREEMENT" means the Investment Agreement, dated
September 15, 1999, entered into by and among the Corporation and National
Broadcasting Company, Inc.
"ISSUE DATE" means the date of original issuance of the Series
B Convertible Preferred Stock.
"JUNIOR SECURITIES" shall have the meaning ascribed to it in
paragraph (b) hereof.
"LIEN" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"MAJOR ASSET SALE" means on Asset Sale or series of related
Asset Sales involving assets with a fair market value in excess of $25,000,000.
"NET PROCEEDS" means (a) in the case of any sale of Capital
Stock by the Corporation, an Asset Sale or a Major Asset Sale, the aggregate net
proceeds received by the Corporation, after payment of expenses, commissions and
the like incurred in connection therewith, whether such proceeds are in cash or
in property (valued at the fair market value thereof, as determined in good
faith by the Board of Directors, at the time of receipt) and (b) in the case of
any exchange, exercise, conversion or surrender of outstanding securities of any
kind for or into shares of Capital Stock of the Corporation which is not
Disqualified Capital Stock, the net book value of such outstanding securities on
the date of such exchange, exercise, conversion or surrender (plus any
additional amount required to be paid by the holder to the Corporation upon such
exchange, exercise, conversion or surrender, less any and all payments made to
the holders, E.G., on account of fractional shares and less all expenses
incurred by the Corporation in connection therewith).
"NEW EXCHANGE DEBENTURES" shall mean the Convertible Exchange
Debentures due 2009 (if issued) issued under the New Exchange Indenture.
"NEW EXCHANGE INDENTURE" shall have the meaning ascribed to it
in paragraph (f)(i)(C) hereof.
"OBLIGATIONS" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing, or otherwise relating to,
any Indebtedness.
"OFFICERS' CERTIFICATE" means a certificate signed by two
officers or by an officer and either an Assistant Treasurer or an Assistant
Secretary of the Corporation which certificate shall include a statement that,
in the opinion of such signers all conditions precedent to be performed by the
Corporation prior to the taking of any proposed action have been taken. In
addition, such certificate shall include (i) a statement that the signatories
have read the relevant covenant or condition, (ii) a brief statement of the
nature and scope of such examination or investigation upon which the statements
are based, (iii) a statement that, in the opinion of such signatories, they have
made such examination or investigation as is reasonably necessary to express an
informed opinion and (iv) a statement as to whether or not, in the opinion of
the signatories, such relevant conditions or covenants have been complied with.
"OPINION OF COUNSEL" means an opinion of counsel that, in such
counsel's opinion, all conditions precedent to be performed by the Corporation
prior to the taking of any proposed action have been taken. Such opinion shall
also include the statements called for in the second sentence under "Officers'
Certificate".
"ORIGINAL ISSUE PRICE" means $10,000 per share of Series B
Convertible Preferred Stock.
"PARITY SECURITIES" shall have the meaning ascribed to it in
paragraph (b) hereof.
"PERMITTED HOLDERS" means collectively Lowell W. Paxson, his
spouse, children or other lineal descendants (whether adoptive or biological)
and any revocable or irrevocable INTER VIVOS or testamentary trust or the
probate estate of any such individual, so long as one or more of the foregoing
individuals is the principal beneficiary of such trust or probate estate.
"PERMITTED INDEBTEDNESS" means, without duplication, each of
the following:
(i) Indebtedness under the New Exchange Debentures and
the guarantees related thereto, including any New
Exchange Debentures issued in accordance with the New
Exchange Indenture as payment of interest on the New
Exchange Debentures;
(ii) Indebtedness under the Existing Exchange Debentures,
and the guarantees related thereto, including any
Existing Exchange Debentures issued in accordance
with the Existing Exchange Indentures as payment of
interest on the Existing Exchange Debentures;
(iii) Indebtedness incurred pursuant to any Credit Facility
in an aggregate principal amount at any time
outstanding not to exceed $25,000,000;
(iv) all other Indebtedness of the Corporation and its
Restricted Subsidiaries outstanding on the Issue
Date, including, without limitation, the Existing
Notes, reduced by the amount of any scheduled
amortization payments or mandatory prepayments when
actually paid or permanent reductions thereon;
(v) Obligations under Interest Rate Agreements of the
Corporation covering Indebtedness of the Corporation
or any of its Restricted Subsidiaries; provided,
however, that such Interest Rate Agreements are
entered into to protect the Corporation and its
Restricted Subsidiaries from fluctuations in interest
rates on Indebtedness incurred in accordance with
paragraph (l)(i) hereof to the extent the notional
principal amount of such Interest Rate Agreement does
not exceed the principal amount of the Indebtedness
to which such Interest Rate Agreement relates;
(vi) Indebtedness of a Restricted Subsidiary to the
Corporation or to a Restricted Subsidiary for so long
as such Indebtedness is held by the Corporation or a
Restricted Subsidiary, in each case subject to no
Lien held by a Person other than the Corporation or a
Restricted Subsidiary; provided that if as of any
date any Person other than the Corporation or a
Restricted Subsidiary owns or holds any such
Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the
incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of the Corporation to a Restricted
Subsidiary for so long as such Indebtedness is held
by a Restricted Subsidiary, in each case subject to
no Lien; provided that (a) any Indebtedness of the
Corporation to any Restricted Subsidiary is unsecured
and subordinated, pursuant to a written agreement, to
the Corporation's Obligations under the New Exchange
Indenture and the New Exchange Debentures and (b) if
as of any date any Person other than a Restricted
Subsidiary owns or holds any such Indebtedness or any
Person holds a Lien in respect of such Indebtedness,
such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness
by the Corporation;
(viii) Purchase Money Indebtedness and Capitalized Lease
Obligations incurred to acquire property in the
ordinary course of business which Indebtedness and
Capitalized Lease Obligations do not in the aggregate
exceed 5% of the Corporation's consolidated total
assets at any one time;
(ix) Refinancing Indebtedness; and
(x) Additional Indebtedness of the Corporation in an aggregate
principal amount not to exceed $10,000,000 at any one time outstanding.
"PERMITTED INVESTMENTS" means, for any Person, Investments
made on or after the Issue Date consisting of:
(i) Investments by the Corporation, or by a
Restricted Subsidiary, in the Corporation or
a Restricted Subsidiary;
(ii) Cash Equivalents;
(iii) Investments by the Corporation, or by a Restricted
Subsidiary, in a Person (or in all or substantially
all of the business or assets of a Person) if as a
result of such Investment (a) such Person becomes a
Restricted Subsidiary, (b) such Person is merged,
consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets
to, or is liquidated into, the Corporation or a
Restricted Subsidiary or (c) such business or assets
are owned by the Corporation or a Restricted
Subsidiary;
(iv) reasonable and customary loans made to
employees not to exceed $5,000,000 in the
aggregate at any one time outstanding;
(v) an Investment that is made by the Corporation or a
Restricted Subsidiary in the form of any stock,
bonds, notes, debentures, partnership or joint
venture interests or other securities that are issued
by a third party to the Corporation or a Restricted
Subsidiary solely as partial consideration for the
consummation of an Asset Sale or pursuant to the
arrangements described in Section 7.5 of the
Investment Agreement;
(vi) time brokerage and other similar agreements (which
term shall include in any event all local marketing
agreements, joint sales agreements and similar
agreements, however denominated) under which
separately owned and licensed broadcast properties
enter into cooperative arrangements and which may
include an option to acquire the broadcast property
at a future date;
(vii) accounts receivable of the Corporation and its
Restricted Subsidiaries generated in the ordinary
course of business;
(viii) loans and guarantees of loans by third-party lenders
to third parties in connection with the acquisition
of media properties, secured by substantially all of
such Person's assets (to the extent permitted by the
rules of the FCC), which are made in conjunction with
the execution of a time brokerage agreement;
(ix) options on media properties entered into in
connection with the execution of time brokerage
agreements; and
(x) additional Investments of the Corporation and its
Restricted Subsidiaries from time to time of an
amount not to exceed $75,000,000.
"PERSON" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"PREFERRED STOCK" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemption or upon liquidation.
"PRIVATE PREFERRED STOCK" means the Junior Cumulative
Compounding Redeemable Preferred Stock, $.001 par value, 12% dividend rate per
annum, of which 33,000 shares are outstanding with a liquidation preference of
$1,000 per share.
"PURCHASE MONEY INDEBTEDNESS" means any Indebtedness incurred
in the ordinary course of business by a Person to finance the cost (including
the cost of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"QUALIFIED CAPITAL STOCK" means any Capital Stock that is not
Disqualified Capital Stock.
"REDEEMABLE DIVIDEND" means, for any dividend or distribution
with regard to Disqualified Capital Stock, the quotient of the dividend or
distribution divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the issuer of such Disqualified Capital Stock.
"REDEMPTION DATE" means, with respect to any shares of Series
B Convertible Preferred Stock, the date on which such shares of Series B
Convertible Preferred Stock are redeemed by the Corporation.
"REDEMPTION NOTICE" shall have the meaning ascribed to it in
paragraph (e)(ii) hereof.
"REDEMPTION PRICE" means the higher of (i) the Original Issue
Price plus all accrued and unpaid dividends through and including the date of
redemption, and (ii) 80% (representing a liquidity discount) of the average of
the Common Stock Trading Price for the ten consecutive trading days ending on
the trading day prior to the date of the Redemption Notice, multiplied by the
number of Conversion Shares per share of Series B Convertible Preferred Stock.
"REFINANCE" means, in respect of any security or Indebtedness,
to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire,
or to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part, "Refinanced" and "Refinancing"
shall have correlative meanings.
"REFINANCING INDEBTEDNESS" means any refinancing by the
Corporation or any Restricted Subsidiary of Indebtedness that does not (i)
result in an increase in the aggregate principal amount of Indebtedness of such
Person as of the date of such proposed refinancing (plus the amount of any
premium required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by the
Corporation in connection with such refinancing) or (ii) create Indebtedness
with (a) a Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Indebtedness being refinanced or (b) a final
maturity earlier than the final maturity of the Indebtedness being refinanced;
provided that (x) if such Indebtedness being refinanced is Indebtedness of the
Corporation, then such Refinancing Indebtedness shall be Indebtedness solely of
the Corporation and (y) if such Indebtedness being Refinanced is subordinate or
junior to the New Exchange Debentures, then such Refinancing Indebtedness shall
be subordinate to the New Exchange Debentures at least to the same extent and in
the same manner as the Indebtedness being Refinanced.
"RESTRICTED PAYMENT" means (i) the declaration or payment of
any dividend or the making of any other distribution (other than dividends or
distributions payable in Qualified Capital Stock) on shares of Parity Securities
or Junior Securities, (ii) any purchase, redemption, retirement or other
acquisition for value of any Junior Securities, or any warrants, rights or
options to acquire shares of Junior Securities, other than through the exchange
of such Junior Securities or any warrants, rights or options to acquire shares
of any class of such Junior Securities for Qualified Capital Stock or warrants,
rights or options to acquire Qualified Capital Stock, (iii) the making of any
Investment (other than a Permitted Investment), (iv) any designation of a
Restricted Subsidiary as an Unrestricted Subsidiary on the basis of the fair
market value of such Subsidiary utilizing standard valuation methodologies and
approved by the Board of Directors, excluding any such Subsidiary with a fair
market value equal to or less than $500, or (v) forgiveness of any Indebtedness
of an Affiliate of the Corporation to the Corporation or a Restricted
Subsidiary.
"RESTRICTED SUBSIDIARY" means a Subsidiary of the Corporation
other than an Unrestricted Subsidiary and includes all of the Subsidiaries of
the Corporation existing as of the Issue Date. The Board of Directors of the
Corporation may designate any Unrestricted Subsidiary or any Person that is to
become a Subsidiary as a Restricted Subsidiary if immediately after giving
effect to such action (and treating any Acquired Indebtedness as having been
incurred at the time of such action), the Corporation could have incurred at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to paragraph (l)(i) above.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"SENIOR DEBT" means the principal of and premium, if any, and
interest (including, without limitation, interest accruing or that would have
accrued but for the filing of a bankruptcy, reorganization or other insolvency
proceeding whether or not such interest constitutes an allowed claim in such
proceeding) on, and any and all other fees, expense reimbursement obligations,
indemnities and other amounts due pursuant to their terms of all agreements,
documents and instruments providing for, creating, securing or evidencing or
otherwise entered into in connection with (a) all Indebtedness of the
Corporation owed under the Credit Facility, (b) all obligations of the
Corporation with respect to any Interest Rate Agreement, (c) all obligations of
the Corporation to reimburse any bank or other person in respect of amounts paid
under letters of credit, acceptances or other similar instruments, (d) all other
Indebtedness of the Corporation which does not provide that it is to rank PARI
PASSU with or subordinate to the New Exchange Debentures and (e) all deferrals,
renewals, extensions and refundings of, and amendments, modifications and
supplements to, any of the Senior Debt described above. Notwithstanding anything
to the contrary in the foregoing, Senior Debt will not include (i) Indebtedness
of the Corporation to any of its Subsidiaries, (ii) Indebtedness represented by
the New Exchange Debentures, (iii) any Indebtedness which by the express terms
of the agreement or instrument creating, evidencing or governing the same is
junior or subordinate in right of payment to any item of Senior Debt, (iv) any
trade payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business or (v) Indebtedness incurred in
violation of paragraph (l)(i) hereof.
"SENIOR SECURITIES" shall have the meaning ascribed to it in
paragraph (b) hereof.
"SERIES B CONVERTIBLE PREFERRED STOCK" shall have the meaning
ascribed to it in paragraph (a) hereof.
"SUBSIDIARY", with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such Person
or (ii) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at the time, directly or indirectly, owned by
such Person.
"UNRESTRICTED SUBSIDIARY" means (a) any Subsidiary of an
Unrestricted Subsidiary and (b) any Subsidiary of the Corporation which is
classified after the Issue Date as an Unrestricted Subsidiary by a resolution
adopted by the Board of Directors; provided that a Subsidiary organized or
acquired after the Issue Date may be so classified as an Unrestricted Subsidiary
only if such classification is not in violation of the covenant set forth under
paragraph (l)(i) above. The transfer agent for the Series B Convertible
Preferred Stock shall be given prompt notice by the Corporation of each
resolution adopted by the Board of Directors under this provision, together with
a copy of each such resolution adopted.
"VOTING RIGHTS TRIGGERING EVENT" shall have the meaning
ascribed to it in paragraph (f)(iii) hereof.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"WHOLLY-OWNED SUBSIDIARY" means any Restricted Subsidiary all
of the outstanding voting securities (other than directors' qualifying shares)
of which are owned, directly or indirectly, by the Corporation.
<PAGE>
IN WITNESS WHEREOF, said Paxson Communications Corporation has
caused this Certificate to be signed this 15th day of September, 1999.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Jeffrey Sagansky
Name: Jeffrey Sagansky
Title: President and Chief Executive Officer
<PAGE>
Exhibit 7
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT (1) IT WILL
NOT, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE
COMPANY A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE COMPANY), (C) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (D) PURSUANT TO
THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF
AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND (2) WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE ACT. THIS SECURITY IS SUBJECT TO THE TERMS OF A
STOCKHOLDER AGREEMENT, DATED AS OF SEPTEMBER 15, 1999, AMONG PAXSON
COMMUNICATIONS CORPORATION, NATIONAL BROADCASTING COMPANY, INC. AND THE OTHER
PARTIES NAMED THEREIN (THE "STOCKHOLDER AGREEMENT").
Class A Common Stock Purchase Warrant
Date of Issuance: September 15, 1999
Warrant No. 1999-A
PAXSON COMMUNICATIONS CORPORATION
Warrant Certificate
Paxson Communications Corporation (the "COMPANY"), for value received,
hereby certifies that NBC Palm Beach Investment II, Inc., a wholly-owned
subsidiary of National Broadcasting Company, Inc. (the "INVESTOR"), or
registered assigns (the "HOLDER"), is entitled, subject to the terms of this
Warrant (the "WARRANT") as set forth below, to purchase from the Company, during
the Exercise Period (as defined in Section 1), a maximum of 13,065,507 shares
(the "WARRANT SHARES") of Class A Common Stock of the Company, par value $.001
per share (the "CLASS A COMMON STOCK") at a price of $12.60 per share (the
"EXERCISE PRICE"). The number of Warrant Shares and the Exercise Price are
subject to adjustment from time to time as hereinafter provided.
The Warrant is issued under and in accordance with that certain
Investment Agreement between the Company and the Investor, dated September 15,
1999 (the "INVESTMENT AGREEMENT"), and is subject to the terms and provisions
contained in the Investment Agreement, which are incorporated herein by
reference and made a part hereof. The Warrant and the Warrant Shares are
entitled to the benefits of that certain Registration Rights Agreement, dated
September 15, 1999, between the Company and the Investor (the "REGISTRATION
RIGHTS AGREEMENT"). Copies of the Investment Agreement, the Stockholder
Agreement and the Registration Rights Agreement may be obtained for inspection
by the Holder at the principal office of the Company upon prior written request
to the Company.
Section 1. Exercise. Subject to the terms hereof, the Holder shall have
the right, which may be exercised at any time during the period (the "EXERCISE
PERIOD") commencing as of September 15, 1999 (the "ISSUE DATE") and continuing
until the earlier of (i) the termination of the Investor Rights (as defined in
the Investment Agreement), and (ii) 5:00 p.m., New York City time, on September
15, 2009 (the "EXPIRATION DATE"), to purchase from the Company the number of
fully paid and nonassessable Warrant Shares which the Holder may at the time be
entitled to receive on exercise of the Warrant and payment of the Exercise Price
then in effect for such Warrant Shares. Notwithstanding the foregoing, if in the
written opinion of counsel to the Company reasonably acceptable to the Holder
approval of the Federal Communications Commission (the "FCC") is required before
the Company may issue Warrant Shares upon the exercise of the Warrant, the
Company may defer the issuance of such Warrant Shares until such time as
approval of the FCC is obtained or is no longer required. The Company shall
promptly notify the Holder in writing of any event which requires it to suspend
exercise of the Warrant pursuant to the preceding sentence and of the
termination of any such suspension. To the extent the Warrant is not exercised
prior to the Expiration Date, it shall become void and all rights hereunder
shall cease as of such time.
If this Warrant is transferred, in whole or in part (except for
transfers to affiliates of the Investor who are domestic subsidiaries of the
Investor's ultimate parent corporation ("Control Group Affiliates")), it shall
expire to the extent of the transferred portion 30 days after the later of (A)
the date of such transfer and (B) the date on which this Warrant first became
exercisable with respect to the transferred portion hereof. This Warrant shall
not be exercisable by the Investor and its affiliates during any Involuntary
Redemption Period or Default Redemption Period, as such terms are defined in the
Investment Agreement, or from and after the date the Investor elects to cause
the Company to effectuate a Company Sale pursuant to Section 9.5 of the
Investment Agreement.
Should a Holder which is a Control Group Affiliate determine, in its
sole discretion, that it is prevented under applicable laws and regulations of
the FCC from holding shares of Class A Common Stock issuable upon exercise of
this Warrant, then, subject to adoption and approval of the stockholder proposal
described in clause (iii) of the definition of "Stockholder Proposal" in the
Stockholder Agreement, such Holder shall have the option to acquire shares of
non-voting common stock of the Company upon exercise of this Warrant, on the
same terms and conditions of exercise as are applicable to Class A Common Stock
hereunder.
The Warrant may be exercised, in whole or in part, at the election of
the Holder, upon surrender at the principal office of the Company of the
certificate or certificates evidencing the Warrant with the form of election to
purchase attached as Exhibit A duly completed and signed ("PURCHASE FORM"), and
upon payment to the Company of the Exercise Price, as it may be adjusted as
herein provided, for the number of Warrant Shares in respect of which the
Warrant is then exercised; provided that the Warrant shall be exercisable in
part only for a minimum of 1,000,000 Warrant Shares per exercise, or if less,
the entire number of Warrant Shares which the Holder is entitled to purchase
hereunder. Payment of the aggregate Exercise Price shall be made by wire
transfer of immediately available funds to such account as the Company may
specify. The Exercise Price shall be subject to adjustment as provided in
Section 9.
Subject to the provisions of Section 4 hereof, upon surrender of the
Warrant and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
Holder a certificate or certificates for the number of Warrant Shares issuable
upon the exercise of the Warrant together with cash as provided in Section 10.
Such certificate or certificates shall be deemed to have been issued and the
Holder shall be deemed to have become a holder of record of such Warrant Shares
as of the date of the surrender of the Warrant and payment of the Exercise
Price.
In the event that this Warrant is exercised in respect of fewer than
all of the Warrant Shares issuable on such exercise at any time prior to the
Expiration Date, a new certificate evidencing the remaining Warrant or Warrants
will be issued, and the Company shall countersign and deliver the required new
Warrant Certificate or Certificates. When surrendered upon exercise of the
Warrant, this Warrant Certificate shall be cancelled and disposed of by the
Company.
Section 2. Registration. The Company shall number and register the
Warrant Certificate on the books of the Company maintained at its principal
office. Warrant Certificates shall be manually countersigned by the Company by a
duly authorized officer and shall not be valid for any purpose unless so
countersigned. The Company may deem and treat the Holders of the Warrant
Certificate as the absolute owners thereof (notwithstanding any notation of
ownership or other writing thereon made by anyone) for all purposes, and the
Company shall not be affected by any notice to the contrary.
Section 3. Transfer and Exchange of Warrants. THIS WARRANT IS SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY SET FORTH IN THE STOCKHOLDER AGREEMENT, AND
MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE PROVISIONS THEREOF. Subject to
the foregoing and the limitations of Section 4, the Company shall from time to
time register the transfer of the Warrant upon the records to be maintained by
it for that purpose, upon surrender of this Warrant Certificate duly endorsed or
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to it, duly executed by the registered Holder or
by the duly appointed legal representative thereof or by a duly authorized
attorney; provided that this Warrant may be transferred only with respect to a
minimum of 1,000,000 Warrant Shares per transfer. Subject to the terms hereof,
this Certificate may be exchanged for another certificate or certificates
entitling the Holder to purchase a like aggregate number of Warrant Shares as
the Certificate surrendered then entitles the Holder to purchase; provided that
each such new certificate shall be in minimum denominations of 1,000,000 Warrant
Shares. A Holder desiring to exchange this Certificate shall make such request
in writing delivered to the Company, and shall surrender, duly endorsed or
accompanied (if so required by the Company) by a written instrument or
instruments of transfer in form satisfactory to the Company, this Warrant
Certificate to be so exchanged.
Upon registration of transfer, the Company shall issue to the
transferees and countersign a new Warrant Certificate or Certificates and
deliver by certified mail such new Warrant Certificate or Certificates to the
persons entitled thereto. No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that is imposed in connection with any such exchange or
registration of transfer.
Section 4. Registration of Transfers and Exchanges. Subject to Section
3 hereof, when Warrants represented by this Certificate are presented to the
Company with a request to register the transfer of the Warrants, or to exchange
such Warrants for an equal number of Warrants of other authorized denominations,
the Company shall register the transfer or make the exchange as requested if the
requirements set forth in Section 3 and the following requirements are
satisfied:
(I) the Certificate shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the
Company, duly executed by the Holder or his attorney duly
authorized in writing; and
(II) if the offer and sale of the Warrants have not been registered
pursuant to an effective Registration Statement under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), the
Certificate shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Warrants are being delivered to the Company
by a Holder for registration in the name of such
Holder, without transfer, a certification from such
Holder to that effect (in substantially the form of
Exhibit B hereto); or
(B) if such Warrants are being transferred pursuant to an
exemption from registration in accordance with Rule
144 ("RULE 144") or Regulation S ("REGULATION S"), in
each case, under the Securities Act, a certification
to that effect (in substantially the form of Exhibit
B hereto); or
(C) if such Warrants are being transferred to an
institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities
Act (an "INSTITUTIONAL ACCREDITED INVESTOR")),
delivery of a certification to that effect (in
substantially the form of Exhibit B hereto) and a
Transferee Certificate for Institutional Accredited
Investors in substantially the form of Exhibit C
hereto and an opinion of counsel and/or other
information satisfactory to the Company to the effect
that such transfer is in compliance with the
Securities Act; or
(D) if such Warrants are being transferred in reliance on
another exemption from the registration requirements
of the Securities Act, a certification to that effect
(in substantially the form of Exhibit B hereto) and
an opinion of counsel reasonably satisfactory to the
Company to the effect that such transfer is in
compliance with the Securities Act.
Section 5. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of the Warrant; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
Section 6. Mutilated or Missing Warrant Certificate. In case this
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company
will issue and countersign, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction of the Warrant Certificate and an indemnification
agreement satisfactory to the Company with respect to such loss, theft or
destruction. Applicants for such substitute Warrant Certificate(s) shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
Section 7. Reservation of Warrant Shares. The Company will at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Class A Common Stock or its authorized and issued
Class A Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of the Warrant, the
maximum number of shares of Class A Common Stock which may then be deliverable
upon the exercise of the Warrant. Following approval of the Stockholder
Proposal, the Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued
non-voting common stock for the purpose of enabling it to satisfy any obligation
to issue such non-voting common stock upon exercise of the Warrant, the maximum
number of shares of non-voting common stock which may then be deliverable upon
the exercise of the Warrant.
The transfer agent for the Class A Common Stock (the "TRANSFER AGENT")
and every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the Warrant will be irrevocably authorized
and directed at all times to reserve such number of authorized shares as shall
be required for such purpose. The Company will keep a copy of this Warrant
Certificate on file with the Transfer Agent and with every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of the Warrant. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 10. The Company will furnish
such Transfer Agent a copy of all notices of adjustments and certificates
related thereto transmitted to each holder pursuant to Section 11 hereof.
The Company covenants that all Warrant Shares which may be issued upon
exercise of the Warrant in accordance with the terms of the Warrant Certificate
will, upon payment of the Exercise Price therefor and issue, be validly
authorized and issued, fully paid, nonassessable, free of preemptive rights and
free from all taxes, liens, charges and security interests with respect to the
issuance thereof. The Company will take no action to increase the par value of
the Class A Common Stock to an amount in excess of the Exercise Price, and the
Company will not enter into any agreements inconsistent with the rights of the
Holder hereunder. The Company will use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations hereunder. The Company shall not take any action reasonably within
its control, including the hiring of a broker to solicit exercises, which would
render unavailable an exemption from registration under the Securities Act which
might otherwise be available with respect to the issuance of Warrant Shares upon
exercise of the Warrant.
Section 8. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of the Warrant, will be listed
on the principal securities exchanges and markets within the United States of
America on which other shares of Class A Common Stock are then listed. In the
event that, at any time during the period in which the Warrant is exercisable,
the Class A Common Stock is not listed on any principal securities exchanges or
markets within the United States of America, the Company will use its best
efforts to permit the Warrant Shares to be designated PORTAL securities in
accordance with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. relating to trading in the Private Offering, Resales
and Trading through Automated Linkages market.
Section 9. Adjustment of Number of Warrant Shares Issuable and Exercise
Price. The number of shares of Class A Common Stock issuable upon the exercise
of the Warrant (the "EXERCISE RATE") and the Exercise Price are subject to
adjustment from time to time upon the occurrence of the events enumerated in
this Section 9.
(a) Adjustment for Change in Capital Stock. If the Company (1)
pays a dividend or makes a distribution on its Class A Common Stock in shares of
its Class A Common Stock; (2) subdivides its outstanding shares of Class A
Common Stock into a greater number of shares; (3) combines its outstanding
shares of Class A Common Stock into a smaller number of shares; or (4) issues,
by reclassification of its shares of Class A Common Stock, any shares of its
capital stock; then and in each such case the Exercise Rate in effect
immediately prior to such action shall be adjusted so that the holder of any
Warrant thereafter exercised shall be entitled to receive, upon exercise of the
Warrant, the number of shares of Class A Common Stock or other securities of the
Company which such holder would have owned immediately following such action if
the Warrant had been exercised immediately prior to such action; provided,
however, that notwithstanding the foregoing, upon the occurrence of an event
described in clause (1) above which otherwise would have given rise to an
adjustment, no adjustment shall be made if the Company includes the Holder in
such distribution pro rata according to the number of shares of Common Stock
issued and outstanding as if the Warrant Shares were issued and outstanding.
Any adjustment hereunder shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification
(each such time, the "TIME OF DETERMINATION"). Such adjustment shall be made
successively whenever any event listed above shall occur.
If after an adjustment the Holder upon exercise of the Warrant may
receive shares of two or more classes of capital stock of the Company, the Board
of Directors of the Company shall determine the allocation of the adjusted
Exercise Price and Exercise Rate between the classes of capital stock. After
such allocation, the Exercise Price and Exercise Rate of each class of capital
stock shall thereafter be subject to adjustment on terms comparable to those
applicable to the Class A Common Stock in this Section.
(b) Adjustment for Certain Issuances of Class A Common Stock.
If the Company issues or distributes to all holders of its Class A Common Stock
any rights or warrants to purchase, acquire or subscribe for shares of Class A
Common Stock (including a right or warrant with respect to any security
convertible into or exchangeable for shares of Class A Common Stock) at a price
per share of Class A Common Stock less than the Common Stock Trading Price at
the Time of Determination, the Exercise Rate shall be adjusted in accordance
with the formula:
E' = E x O + N
---------
O + N x P
-----
M
where:
E' = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the
Time of Determination for any such
distribution.
O = the number of Fully Diluted Shares (as
defined in Section 9(m)) outstanding at the
Time of Determination for any such issuance
or distribution.
N = the number of additional shares of the
Class A Common Stock issued or issuable upon
exercise of such rights, options or
warrants.
P = the sum of the consideration per share
received for the issuance of such rights,
options or warrants and the exercise price
per share of such rights, options or
warrants.
M = the Common Stock Trading Price per share
of the Class A Common Stock at the Time of
Determination for any such issuance, sale or
distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued or distributed and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive the rights, options or warrants. If at the end of the period during
which any such rights, options or warrants are exercisable, not all rights,
options or warrants shall have been exercised, the Exercise Rate shall be
immediately readjusted to what it would have been if "N" in the above formula
had been the number of shares actually issued.
(c) Adjustment for Other Distributions. If the Company
distributes to all holders of its Class A Common Stock (i) any securities of the
Company or rights, options or warrants to purchase or subscribe for securities
of the Company (other than those dividends and distributions referred to in
Sections 9(a) and 9(b) above), (ii) any evidences of indebtedness of the Company
or any other person, or (iii) any Extraordinary Cash Dividend, the Exercise Rate
shall be adjusted in accordance with the formula:
E' = E x M
-----
M - F
where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate on the record date
mentioned below.
M = the Common Stock Trading Price per share
of Class A Common Stock on the record date
mentioned below.
F = the fair market value on the record date
mentioned below of the indebtedness, assets
(including the Extraordinary Cash Dividend),
rights, options or warrants distributable
with respect to one share of Class A Common
Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
Notwithstanding the foregoing provisions of this Section 9(c), an event which
would otherwise give rise to an adjustment pursuant to this Section 9(c) shall
not give rise to such an adjustment if the Company includes the Holder in such
distribution pro rata to the number of shares of Class A Common Stock issued and
outstanding after giving effect to the Warrant Shares as if they were issued and
outstanding.
(d) Adjustment of Exercise Price. Whenever the number of
Warrant Shares purchasable upon the exercise of the Warrant is adjusted, as
herein provided, the Exercise Price per Warrant Share payable upon exercise of
the Warrant shall be adjusted (calculated to the nearest $.0001) so that it
shall equal the price determined by multiplying the Exercise Price immediately
prior to such adjustment by a fraction, the numerator of which shall be the
number of Warrant Shares purchasable upon the exercise of the Warrant
immediately prior to such adjustment, and the denominator of which shall be the
number of Warrant Shares so purchasable immediately thereafter.
(e) Definitions.
"COMMON STOCK TRADING PRICE" on any date means, with respect to the
Class A Common Stock, the Closing Price for the Class A Common Stock on such
date. The "CLOSING PRICE" on any date shall mean the last sale price for the
Class A Common Stock, regular way, or, in case no such sale takes place on such
date, the average of the closing bid and asked prices, regular way, for the
Class A Common Stock in either case as reported in the principal consolidated
transaction reporting system with respect to the principal securities exchange
on which the Class A Common Stock is listed or admitted to trading or, if the
Class A Common Stock is not listed or admitted to trading on any securities
exchange, the last quoted price, or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
principal automated quotation system that may then be in use or, if the Class A
Common Stock is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Class A Common Stock selected by the Board of Directors of the Company
or, in the event that no trading price is available for the Class A Common
Stock, the fair market value of the Class A Common Stock, as determined in good
faith by the Board of Directors of the Company.
"EXTRAORDINARY CASH DIVIDEND" means cash dividends with respect to the
Class A Common Stock the aggregate amount of which in any fiscal year exceeds
10% of Adjusted EBITDA (as defined in the certificate of designation for the
Company's Series A Convertible Preferred Stock as in existence on the date
hereof) of the Company and its subsidiaries for the fiscal year immediately
preceding the payment of such dividend.
"FAIR MARKET VALUE" of any consideration other than cash or of any
securities shall mean the amount which a willing buyer would pay to a willing
seller in an arm's length transaction as determined by an independent investment
banking or appraisal firm experienced in the valuation of such securities or
property selected in good faith by the Board of Directors of the Company or a
committee thereof.
(g) When De Minimis Adjustment May Be Deferred. No adjustment
in the Exercise Rate need be made unless the adjustment would require an
increase or decrease of at least 1.0% in the Exercise Rate. Notwithstanding the
foregoing, any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment, provided that no such adjustment
shall be deferred beyond the date on which a Warrant is exercised. All
calculations under this Section 9 shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be.
(h) When No Adjustment Required. If an adjustment is made upon
the establishment of a record date for a distribution subject to subsections
(a), (b) or (c) hereof and such distribution is subsequently cancelled, the
Exercise Rate then in effect shall be readjusted, effective as of the date when
the Board of Directors determines to cancel such distribution, to that which
would have been in effect if such record date had not been fixed.
(i) Notice of Adjustment. Whenever the Exercise Rate or
Exercise Price is adjusted, the Company shall provide the notices required by
Section 11 hereof.
(j) When Issuance or Payment May Be Deferred. In any case in
which this Section 9 shall require that an adjustment in the Exercise Rate be
made effective as of a record date for a specified event, the Company may elect
to defer until the occurrence of such event (i) issuing to the Holder of any
Warrant exercised after such record date the Warrant Shares and other capital
stock of the Company, if any, issuable upon such exercise over and above the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise on the basis of the Exercise Rate prior to such adjustment, and
(ii) paying to such Holder any amount in cash in lieu of a fractional share
pursuant to Section 10; provided, however, that the Company shall deliver to the
Holder a due bill or other appropriate instrument evidencing such Holder's right
to receive such additional Warrant Shares, other capital stock and cash upon the
occurrence of the event requiring such adjustment.
(k) Reorganizations. In the event of any capital
reorganization or reclassification of outstanding shares of Class A Common Stock
(other than in the cases referred to in Sections 9(a), (b) or (c) hereof), or in
case of any merger, consolidation or other corporate combination of the Company
with or into another corporation (other than a merger or consolidation in which
the Company is the continuing corporation and which does not result in any
reclassification of the outstanding shares of Class A Common Stock into shares
of stock or other securities or property), or in case of any sale or conveyance
to another corporation of the property of the Company as an entirety or
substantially as an entirety (each of the foregoing being referred to as a
"REORGANIZATION"), there shall thereafter be deliverable upon exercise of the
Warrants (in lieu of the number of shares of Class A Common Stock theretofore
deliverable) the number of shares of stock or other securities or property to
which a holder of the number of shares of Class A Common Stock that would
otherwise have been deliverable upon the exercise of the Warrants would have
been entitled upon such Reorganization if the Warrants had been exercised in
full immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a duly adopted resolution
certified by the Company's Secretary or Assistant Secretary, shall be made in
the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise of the Warrants.
The Company shall not effect any such Reorganization unless prior to or
simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such Reorganization or the corporation
purchasing or leasing such assets or other appropriate corporation or entity
shall expressly assume the obligation to deliver to the Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions, the
Holder may be entitled to purchase, and all other obligations and liabilities
under the Warrant.
The foregoing provisions of this Section 9(k) shall apply to successive
Reorganization transactions.
(l) Form of Warrants. Irrespective of any adjustments in the
number or kind of shares purchasable upon the exercise of the Warrant, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant as initially issued.
(m) Miscellaneous. For purposes of this Section 9 the term
"CLASS A COMMON STOCK" shall mean (i) the shares of stock designated as the
Class A Common Stock, par value $.001 per share, of the Company as of the date
of this Warrant, and (ii) shares of any other class of stock resulting from
successive changes or reclassification of such shares consisting solely of
changes in par value, or from par value to no par value, or from no par value to
par value. For purposes of this Section 9 the term "FULLY DILUTED SHARES" shall
mean (i) the shares of Class A Common Stock outstanding as of a specified date,
and (ii) shares of Class A Common Stock into or for which rights, options,
warrants or other securities outstanding as of such date are exercisable or
convertible (other than this Warrant and that certain Warrant 1999-B issued by
the Company to the Holder, dated September 15, 1999). In the event that at any
time, as a result of an adjustment made pursuant to this Section 9, the Holder
shall become entitled to purchase any securities of the Company other than, or
in addition to, shares of Class A Common Stock, thereafter the number or amount
of such other securities so purchasable upon exercise of the Warrants shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in subsections (a) through (j) of this Section 9, inclusive, and the
provisions of Sections 1, 5, 7 and 10 with respect to the Warrant Shares or the
Class A Common Stock shall apply on like terms to any such other securities.
(n) Certain Events. If any change in the outstanding Common
Stock of the Company or any other event occurs as to which the provisions of
this Section 9 are not strictly applicable or, if strictly applicable, would not
fairly protect the purchase rights of the Holder in accordance with such
provisions, then the Board of Directors of the Company shall make such
adjustments to the Exercise Rate, the Exercise Price or the application of such
provisions as may be necessary to protect such purchase rights as aforesaid and
to assure that the Holder, upon exercise for the same aggregate Exercise Price,
shall receive the total number, class and kind of shares as it would have owned
had the Warrant been exercised prior to the event and had the Holder continued
to hold such shares until after the event requiring adjustment.
Section 10. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of the Warrant. If more than one
Warrant Certificate shall be presented for exercise in full at the same time by
the same Holder, the number of full Warrant Shares which shall be issuable upon
the exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrant so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 10,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the Common Stock Trading Price on
the trading day immediately preceding the date the Warrant is presented for
exercise, multiplied by such fraction.
Section 11. Notices to Holder. Upon any adjustment pursuant to Section
9 hereof, the Company shall give prompt written notice of such adjustment to the
Holder at its address appearing on the records of the Company within ten days
after such adjustment, by first class mail, postage prepaid, and shall deliver
to the Holder a certificate of the Chief Financial Officer of the Company,
accompanied by the report thereon by a firm of independent public accountants
selected by the Board of Directors of the Company (who may be the regular
accountants for the Company), setting forth in reasonable detail (i) the number
of Warrant Shares purchasable upon the exercise of the Warrant and the Exercise
Price of the Warrant after such adjustment(s), (ii) a brief statement of the
facts requiring such adjustment(s) and (iii) the computation by which such
adjustment(s) was made. Where appropriate, such notice may be given in advance
and included as a part of the notice required under the other provisions of this
Section 11.
In case:
(a) the Company proposes to take any action that would require
an adjustment to the Exercise Rate or the Exercise Price pursuant to Section 9
hereof; or
(b) of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is required, or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Class A
Common Stock issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), or a tender offer or exchange
offer for shares of Class A Common Stock; or
(c) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall give prompt written notice to the Holder at its address
appearing on the records of the Company, at least 30 days (or 20 days in any
case specified in clause (a) above) prior to the applicable record date
hereinafter specified, or the date of the event in the case of events for which
there is no record date, by first-class mail, postage prepaid, stating (i) the
date as of which the holders of record of shares of Class A Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Class A Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective or be consummated, and the date as
of which it is expected that holders of record of shares of Class A Common Stock
shall be entitled to exchange such shares for securities or other property, if
any, deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure by the Company to
give such notice or any defect therein shall not affect the legality or validity
of any distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote upon any action.
The Company shall give prompt written notice to the Holder of any
determination to make a distribution or dividend to the holders of its Class A
Common Stock of any assets (including cash), debt securities, preferred stock,
or any rights or warrants to purchase debt securities, preferred stock, assets
or other securities (other than Class A Common Stock, or rights, options, or
warrants to purchase Class A Common Stock) of the Company, which notice shall
state the nature and amount of such planned dividend or distribution and the
record date therefor, and shall be received by the Holder at least 30 days prior
to such record date therefor.
Nothing contained in this Warrant Certificate shall be construed as
conferring upon the Holder the right to vote or to consent or to receive notice
as shareholders in respect of the meetings of shareholders or the election of
Directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company.
Section 12. Notices to the Company. Any notice or demand to be given or
made by the Holder to or on the Company shall be sufficiently given or made when
received at the office of the Company expressly designated by the Company as its
office for purposes of this Certificate, as follows:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: General Counsel
Section 13. Supplements and Amendments. The Warrant may not be
supplemented or amended without the written approval of both the Holder and the
Company.
Section 14. Successors. All the covenants and provisions of
this Certificate by or for the benefit of the Company or the Holder shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 15. Termination. This Certificate and the Warrants
represented hereby shall terminate on the Expiration Date. Notwithstanding the
foregoing, this Certificate will terminate on any earlier date if all Warrants
have been exercised pursuant hereto.
Section 16. Governing Law. The Warrant Certificate shall be
deemed to be a contract made under the laws of the State of New York.
Section 17. Benefits of This Certificate. Nothing in this
Certificate shall be construed to give to any person or corporation other than
the Company and the registered Holder any legal or equitable right, remedy or
claim hereunder; but this Certificate shall be for the sole and exclusive
benefit of the Company and the registered Holder.
<PAGE>
IN WITNESS WHEREOF, Paxson Communications Corporation has
caused this Certificate to be duly executed by the undersigned.
Dated: September 15, 1999
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Lowell W. Paxson
Name: Lowell W. Paxson
Title: President
By: /s/ Jeffrey Sagansky
Name: Jeffrey Sagansky
Title: President and Chief Executive Officer
<PAGE>
Exhibit 8
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT (1) IT WILL
NOT, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE
COMPANY A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE COMPANY), (C) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT, (D) PURSUANT TO
THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF
AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
AND (2) WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY PRIOR TO THE RESALE RESTRICTION TERMINATION DATE, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE ACT. THIS SECURITY IS SUBJECT TO THE TERMS OF A
STOCKHOLDER AGREEMENT, DATED AS OF SEPTEMBER 15, 1999, AMONG PAXSON
COMMUNICATIONS CORPORATION, NATIONAL BROADCASTING COMPANY, INC. AND THE OTHER
PARTIES NAMED THEREIN (THE "STOCKHOLDER AGREEMENT").
Class A Common Stock Purchase Warrant
Date of Issuance: September 15, 1999
Warrant No. 1999-B
PAXSON COMMUNICATIONS CORPORATION
Warrant Certificate
Paxson Communications Corporation (the "COMPANY"), for value received,
hereby certifies that NBC Palm Beach Investment II, Inc., a wholly-owned
subsidiary of National Broadcasting Company, Inc. (the "INVESTOR"), or
registered assigns (the "HOLDER"), is entitled, subject to the terms of this
Warrant (the "WARRANT") as set forth below, to purchase from the Company, during
the Exercise Period (as defined in Section 1), a maximum of 18,966,620 shares
(the "WARRANT SHARES") of Class A Common Stock of the Company, par value $.001
per share (the "CLASS A COMMON STOCK") at a price per share equal to the
Exercise Price (as defined in Section 1(b)). The number of Warrant Shares and
the Exercise Price are subject to adjustment from time to time as hereinafter
provided.
The Warrant is issued under and in accordance with that certain
Investment Agreement between the Company and the Investor, dated September 15,
1999 (the "INVESTMENT AGREEMENT"), and is subject to the terms and provisions
contained in the Investment Agreement, which are incorporated herein by
reference and made a part hereof. The Warrant and the Warrant Shares are
entitled to the benefits of that certain Registration Rights Agreement, dated
September 15, 1999, between the Company and the Investor (the "REGISTRATION
RIGHTS AGREEMENT"). Copies of the Investment Agreement, the Stockholder
Agreement and the Registration Rights Agreement may be obtained for inspection
by the Holder at the principal office of the Company upon prior written request
to the Company.
Section 1. Exercise. Subject to the terms hereof, the Holder shall have
the right, which may be exercised at any time during the period (the "EXERCISE
PERIOD") commencing as of September 15, 1999 (the "ISSUE DATE") and continuing
until the earlier of (i) the termination of the Investor Rights (as defined in
the Investment Agreement), and (ii) 5:00 p.m., New York City time, on September
15, 2009 (the "EXPIRATION DATE"), to purchase from the Company the number of
fully paid and nonassessable Warrant Shares which the Holder may at the time be
entitled to receive on exercise of the Warrant and payment of the Exercise Price
then in effect for such Warrant Shares. Notwithstanding the foregoing, if in the
written opinion of counsel to the Company reasonably acceptable to the Holder
approval of the Federal Communications Commission (the "FCC") is required before
the Company may issue Warrant Shares upon the exercise of the Warrant, the
Company may defer the issuance of such Warrant Shares until such time as
approval of the FCC is obtained or is no longer required. The Company shall
promptly notify the Holder in writing of any event which requires it to suspend
exercise of the Warrant pursuant to the preceding sentence and of the
termination of any such suspension. To the extent the Warrant is not exercised
prior to the Expiration Date, it shall become void and all rights hereunder
shall cease as of such time.
(a) Procedures; Limitations on Exercise. The Warrant may be
exercised, in whole or in part, at the election of the Holder, upon surrender at
the principal office of the Company of the certificate or certificates
evidencing the Warrant with the form of election to purchase attached as Exhibit
A duly completed and signed ("PURCHASE FORM"), and upon payment to the Company
of the Exercise Price, as it may be adjusted as herein provided, for the number
of Warrant Shares in respect of which the Warrant is then exercised; provided
that the Warrant shall be exercisable in part only for a minimum of 2,500,000
Warrant Shares per exercise, or if less, the entire number of Warrant Shares
which the Holder is entitled to purchase hereunder. Payment of the aggregate
Exercise Price shall be made by wire transfer of immediately available funds to
such account as the Company may specify.
Subject to the provisions of Section 4 hereof, upon surrender of the
Warrant and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
Holder a certificate or certificates for the number of Warrant Shares issuable
upon the exercise of the Warrant together with cash as provided in Section 10.
Such certificate or certificates shall be deemed to have been issued and the
Holder shall be deemed to have become a holder of record of such Warrant Shares
as of the date of the surrender of the Warrant and payment of the Exercise
Price.
In the event that this Warrant is exercised in respect of fewer than
all of the Warrant Shares issuable on such exercise at any time prior to the
Expiration Date, a new certificate evidencing the remaining Warrant or Warrants
will be issued, and the Company shall countersign and deliver the required new
Warrant Certificate or Certificates. When surrendered upon exercise of the
Warrant, this Warrant Certificate shall be cancelled and disposed of by the
Company.
Notwithstanding anything to the contrary contained herein, the exercise
of the Warrant, in whole or in part, is subject to the following restrictions:
(i) The Warrant may not be exercised, in whole or in
part, until that certain Warrant 1999-A issued by the Company to the
Investor, or registered assigns, dated September 15, 1999 ("WARRANT
A"), has been exercised with respect to the full number of shares of
Class A Common Stock issuable under such warrant.
(ii) Prior to February 1, 2002, the Warrant shall not
be exercisable to the extent that, after giving effect to such
exercise, Lowell W. Paxson ("MR. PAXSON") or any of his affiliates
(including members of his family) would not constitute the FCC Single
Majority Stockholder of the Company (as defined in the Stockholder
Agreement). The restrictions set forth in this clause (ii) shall not
apply in the event of an Accelerated Buyout (as defined in the
Investment Agreement).
(iii) After February 1, 2002, the Warrant shall not
be exercisable to the extent that, after giving effect to such
exercise, Mr. Paxson or any of his affiliates (including members of his
family) would not constitute the FCC Single Majority Stockholder of the
Company, unless the Warrant is exercised for the full number of Warrant
Shares and concurrently with such exercise the Investor or its
permitted assignee has exercised the Call Right with respect to all of
the Call Shares (as such terms are defined in the Call Agreement, dated
September 15, 1999, among the Call Stockholders named therein and the
Investor).
(iv) If this Warrant is transferred in whole or in part (except for
transfers to affiliates of the Investor who are domestic subsidiaries of the
Investor's ultimate parent corporation ("Control Group Affiliates"), it shall
expire to the extent of the transferred portion 30 days after the later of (A)
the date of such transfer and (B) the date on which this Warrant first became
exercisable with respect to the transferred portion hereof. This Warrant shall
not be exercisable by the Investor and its affiliates during any Involuntary
Redemption Period or Default Redemption Period, as such terms are defined in the
Investment Agreement, or from and after the date the Investor elects to cause
the Company to effectuate a Company Sale pursuant to Section 9.5 of the
Investment Agreement.
Should a Holder which is a Control Group Affiliate determine, in its
sole discretion, that it is prevented under applicable laws and regulations of
the FCC from holding shares of Class A Common Stock issuable upon exercise of
this Warrant, then, subject to adoption and approval of the stockholder proposal
described in clause (iii) of the definition of "Stockholder Proposal" in the
Stockholder Agreement, such Holder shall have the option to acquire shares of
non-voting common stock of the Company upon exercise of this Warrant, on the
same terms and conditions of exercise as are applicable to Class A Common Stock
hereunder.
(b) Exercise Price. The "EXERCISE PRICE" on any date shall
mean the arithmetic average of the Closing Price of the Class A Common Stock for
the 45 consecutive trading days ending on the trading day immediately preceding
the Exercise Date; provided, that, the Exercise Price shall not be less than the
Minimum Exercise Price nor greater than the Maximum Exercise Price; and provided
further, that, for any Exercise Date from the Issue Date through and including
the third anniversary of the Issue Date, the Exercise Price shall not be less
than $22.50 per share. The Exercise Price shall be subject to adjustment as
provided in Section 9.
The "EXERCISE DATE" shall mean the date of delivery of the Purchase
Form and payment of the Exercise Price to the Company; provided, that, if FCC
approval of the issuance of Warrant Shares is required, the Exercise Date shall
be the date of delivery of the Purchase Form.
The "CLOSING PRICE" on any date shall mean the last sale price for the
Class A Common Stock, regular way, or, in case no such sale takes place on such
date, the average of the closing bid and asked prices, regular way, for the
Class A Common Stock in either case as reported in the principal consolidated
transaction reporting system with respect to the principal securities exchange
on which the Class A Common Stock is listed or admitted to trading or, if the
Class A Common Stock is not listed or admitted to trading on any securities
exchange, the last quoted price, or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
principal automated quotation system that may then be in use or, if the Class A
Common Stock is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Class A Common Stock selected by the Board of Directors of the Company
or, in the event that no trading price is available for the Class A Common
Stock, the fair market value of the Class A Common Stock, as determined in good
faith by the Board of Directors of the Company.
The "MINIMUM EXERCISE PRICE" shall be equal to the product of (i) the
arithmetic average of the Closing Price of the Class A Common Stock for each
trading day occurring during the six month period ending on the trading date
immediately preceding the Exercise Date and (ii) .825.
The "MAXIMUM EXERCISE PRICE" shall be equal to the product of (i) the
arithmetic average of the Closing Price of the Class A Common Stock for the each
trading day occurring during the six month period ending on the trading day
immediately preceding the Exercise Date and (ii) 1.175.
Section 2. Registration. The Company shall number and register the
Warrant Certificate on the books of the Company maintained at its principal
office. Warrant Certificates shall be manually countersigned by the Company by a
duly authorized officer and shall not be valid for any purpose unless so
countersigned. The Company may deem and treat the Holders of the Warrant
Certificate as the absolute owners thereof (notwithstanding any notation of
ownership or other writing thereon made by anyone) for all purposes, and the
Company shall not be affected by any notice to the contrary.
Section 3. Transfer and Exchange of Warrants. THIS WARRANT IS SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY SET FORTH IN THE STOCKHOLDER AGREEMENT, AND
MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE PROVISIONS THEREOF. Subject to
the foregoing and the limitations of Section 4, the Company shall from time to
time register the transfer of the Warrant upon the records to be maintained by
it for that purpose, upon surrender of this Warrant Certificate duly endorsed or
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to it, duly executed by the registered Holder or
by the duly appointed legal representative thereof or by a duly authorized
attorney; provided that this Warrant may be transferred only with respect to a
minimum of 2,500,000 Warrant Shares per transfer. Subject to the terms hereof,
this Certificate may be exchanged for another certificate or certificates
entitling the Holder to purchase a like aggregate number of Warrant Shares as
the Certificate surrendered then entitles the Holder to purchase; provided that
each such new certificate shall be in minimum denominations of 2,500,000 Warrant
Shares. A Holder desiring to exchange this Certificate shall make such request
in writing delivered to the Company, and shall surrender, duly endorsed or
accompanied (if so required by the Company) by a written instrument or
instruments of transfer in form satisfactory to the Company, this Warrant
Certificate to be so exchanged.
Upon registration of transfer, the Company shall issue to the
transferees and countersign a new Warrant Certificate or Certificates and
deliver by certified mail such new Warrant Certificate or Certificates to the
persons entitled thereto. No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that is imposed in connection with any such exchange or
registration of transfer.
Section 4. Registration of Transfers and Exchanges. Subject to Section
3 hereof, when Warrants represented by this Certificate are presented to the
Company with a request to register the transfer of the Warrants, or to exchange
such Warrants for an equal number of Warrants of other authorized denominations,
the Company shall register the transfer or make the exchange as requested if the
requirements set forth in Section 3 and the following requirements are
satisfied:
(I) the Certificate shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the
Company, duly executed by the Holder or his attorney duly
authorized in writing; and
(II) if the offer and sale of the Warrants have not been registered
pursuant to an effective Registration Statement under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), the
Certificate shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Warrants are being delivered to the Company
by a Holder for registration in the name of such
Holder, without transfer, a certification from such
Holder to that effect (in substantially the form of
Exhibit B hereto); or
(B) if such Warrants are being transferred pursuant to an
exemption from registration in accordance with Rule
144 ("RULE 144") or Regulation S ("REGULATION S"), in
each case, under the Securities Act, a certification
to that effect (in substantially the form of Exhibit
B hereto); or
(C) if such Warrants are being transferred to an
institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities
Act (an "INSTITUTIONAL ACCREDITED INVESTOR")),
delivery of a certification to that effect (in
substantially the form of Exhibit B hereto) and a
Transferee Certificate for Institutional Accredited
Investors in substantially the form of Exhibit C
hereto and an opinion of counsel and/or other
information satisfactory to the Company to the effect
that such transfer is in compliance with the
Securities Act; or
(D) if such Warrants are being transferred in reliance on
another exemption from the registration requirements
of the Securities Act, a certification to that effect
(in substantially the form of Exhibit B hereto) and
an opinion of counsel reasonably satisfactory to the
Company to the effect that such transfer is in
compliance with the Securities Act.
Section 5. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares upon the exercise
of the Warrant; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
Section 6. Mutilated or Missing Warrant Certificate. In case this
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company
will issue and countersign, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence satisfactory to the Company of such
loss, theft or destruction of the Warrant Certificate and an indemnification
agreement satisfactory to the Company with respect to such loss, theft or
destruction. Applicants for such substitute Warrant Certificate(s) shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
Section 7. Reservation of Warrant Shares. The Company will at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued Class A Common Stock or its authorized and issued
Class A Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of the Warrant, the
maximum number of shares of Class A Common Stock which may then be deliverable
upon the exercise of the Warrant. Following approval of the Stockholder
Proposal, the Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued
non-voting common stock for the purpose of enabling it to satisfy any obligation
to issue such non-voting common stock upon exercise of the Warrant, the maximum
number of shares of non-voting common stock which may then be deliverable upon
the exercise of the Warrant.
The transfer agent for the Class A Common Stock (the "TRANSFER AGENT")
and every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the Warrant will be irrevocably authorized
and directed at all times to reserve such number of authorized shares as shall
be required for such purpose. The Company will keep a copy of this Warrant
Certificate on file with the Transfer Agent and with every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of the Warrant. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 10. The Company will furnish
such Transfer Agent a copy of all notices of adjustments and certificates
related thereto transmitted to each holder pursuant to Section 11 hereof.
The Company covenants that all Warrant Shares which may be issued upon
exercise of the Warrant in accordance with the terms of the Warrant Certificate
will, upon payment of the Exercise Price therefor and issue, be validly
authorized and issued, fully paid, nonassessable, free of preemptive rights and
free from all taxes, liens, charges and security interests with respect to the
issuance thereof. The Company will take no action to increase the par value of
the Class A Common Stock to an amount in excess of the Exercise Price, and the
Company will not enter into any agreements inconsistent with the rights of the
Holder hereunder. The Company will use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations hereunder. The Company shall not take any action reasonably within
its control, including the hiring of a broker to solicit exercises, which would
render unavailable an exemption from registration under the Securities Act which
might otherwise be available with respect to the issuance of Warrant Shares upon
exercise of the Warrant.
Section 8. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of the Warrant, will be listed
on the principal securities exchanges and markets within the United States of
America on which other shares of Class A Common Stock are then listed. In the
event that, at any time during the period in which the Warrant is exercisable,
the Class A Common Stock is not listed on any principal securities exchanges or
markets within the United States of America, the Company will use its best
efforts to permit the Warrant Shares to be designated PORTAL securities in
accordance with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. relating to trading in the Private Offering, Resales
and Trading through Automated Linkages market.
Section 9. Adjustment of Number of Warrant Shares Issuable and Exercise
Price. The number of shares of Class A Common Stock issuable upon the exercise
of the Warrant (the "EXERCISE RATE") and the Exercise Price are subject to
adjustment from time to time upon the occurrence of the events enumerated in
this Section 9.
(a) Adjustment for Change in Capital Stock. If the Company (1)
pays a dividend or makes a distribution on its Class A Common Stock in shares of
its Class A Common Stock; (2) subdivides its outstanding shares of Class A
Common Stock into a greater number of shares; (3) combines its outstanding
shares of Class A Common Stock into a smaller number of shares; or (4) issues,
by reclassification of its shares of Class A Common Stock, any shares of its
capital stock; then and in each such case the Exercise Rate in effect
immediately prior to such action shall be adjusted so that the holder of any
Warrant thereafter exercised shall be entitled to receive, upon exercise of the
Warrant, the number of shares of Class A Common Stock or other securities of the
Company which such holder would have owned immediately following such action if
the Warrant had been exercised immediately prior to such action; provided,
however, that notwithstanding the foregoing, upon the occurrence of an event
described in clause (1) above which otherwise would have given rise to an
adjustment, no adjustment shall be made if the Company includes the Holder in
such distribution pro rata according to the number of shares of Common Stock
issued and outstanding as if the Warrant Shares were issued and outstanding.
Any adjustment hereunder shall become effective immediately after the
record date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification
(each such time, the "TIME OF DETERMINATION"). Such adjustment shall be made
successively whenever any event listed above shall occur.
If after an adjustment the Holder upon exercise of the Warrant may
receive shares of two or more classes of capital stock of the Company, the Board
of Directors of the Company shall determine the allocation of the adjusted
Exercise Price and Exercise Rate between the classes of capital stock. After
such allocation, the Exercise Price and Exercise Rate of each class of capital
stock shall thereafter be subject to adjustment on terms comparable to those
applicable to the Class A Common Stock in this Section.
(b) Adjustment for Certain Issuances of Class A Common Stock.
If the Company issues or distributes to all holders of its Class A Common Stock
any rights or warrants to purchase, acquire or subscribe for shares of Class A
Common Stock (including a right or warrant with respect to any security
convertible into or exchangeable for shares of Class A Common Stock) at a price
per share of Class A Common Stock less than the Common Stock Trading Price at
the Time of Determination, the Exercise Rate shall be adjusted in accordance
with the formula:
E' = E x O + N
-------
O + N x P
-----
M
where:
E' = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the
Time of Determination for any such
distribution.
O = the number of Fully Diluted Shares (as
defined in Section 9(m)) outstanding at the
Time of Determination for any such issuance
or distribution.
N = the number of additional shares of the
Class A Common Stock issued or issuable upon
exercise of such rights, options or
warrants.
P = the sum of the consideration per share
received for the issuance of such rights,
options or warrants and the exercise price
per share of such rights, options or
warrants.
M = the Common Stock Trading Price per share
of the Class A Common Stock at the Time of
Determination for any such issuance, sale or
distribution.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued or distributed and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive the rights, options or warrants. If at the end of the period during
which any such rights, options or warrants are exercisable, not all rights,
options or warrants shall have been exercised, the Exercise Rate shall be
immediately readjusted to what it would have been if "N" in the above formula
had been the number of shares actually issued.
(c) Adjustment for Other Distributions. If the Company
distributes to all holders of its Class A Common Stock (i) any securities of the
Company or rights, options or warrants to purchase or subscribe for securities
of the Company (other than those dividends and distributions referred to in
Sections 9(a) and 9(b) above), (ii) any evidences of indebtedness of the Company
or any other person, or (iii) any Extraordinary Cash Dividend, the Exercise Rate
shall be adjusted in accordance with the formula:
E' = E x M
---
M - F
where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate on the record date
mentioned below.
M = the Common Stock Trading Price per share
of Class A Common Stock on the record date
mentioned below.
F = the fair market value on the record date
mentioned below of the indebtedness, assets
(including the Extraordinary Cash Dividend),
rights, options or warrants distributable
with respect to one share of Class A Common
Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
Notwithstanding the foregoing provisions of this Section 9(c), an event which
would otherwise give rise to an adjustment pursuant to this Section 9(c) shall
not give rise to such an adjustment if the Company includes the Holder in such
distribution pro rata to the number of shares of Class A Common Stock issued and
outstanding after giving effect to the Warrant Shares as if they were issued and
outstanding.
(d) Adjustment of Exercise Price. Whenever the number of
Warrant Shares purchasable upon the exercise of the Warrant is adjusted, as
herein provided, the Exercise Price per Warrant Share payable upon exercise of
the Warrant shall be adjusted (calculated to the nearest $.0001) so that it
shall equal the price determined by multiplying the Exercise Price immediately
prior to such adjustment by a fraction, the numerator of which shall be the
number of Warrant Shares purchasable upon the exercise of the Warrant
immediately prior to such adjustment, and the denominator of which shall be the
number of Warrant Shares so purchasable immediately thereafter.
(e) Definitions.
"COMMON STOCK TRADING PRICE" on any date means, with respect to the
Class A Common Stock, the Closing Price for the Class A Common Stock on such
date.
"EXTRAORDINARY CASH DIVIDEND" means cash dividends with respect to the
Class A Common Stock the aggregate amount of which in any fiscal year exceeds
10% of Adjusted EBITDA (as defined in the certificate of designation for the
Company's Series A Convertible Preferred Stock as in existence on the date
hereof) of the Company and its subsidiaries for the fiscal year immediately
preceding the payment of such dividend.
"FAIR MARKET VALUE" of any consideration other than cash or of any
securities shall mean the amount which a willing buyer would pay to a willing
seller in an arm's length transaction as determined by an independent investment
banking or appraisal firm experienced in the valuation of such securities or
property selected in good faith by the Board of Directors of the Company or a
committee thereof.
(g) When De Minimis Adjustment May Be Deferred. No adjustment
in the Exercise Rate need be made unless the adjustment would require an
increase or decrease of at least 1.0% in the Exercise Rate. Notwithstanding the
foregoing, any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment, provided that no such adjustment
shall be deferred beyond the date on which a Warrant is exercised. All
calculations under this Section 9 shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be.
(h) When No Adjustment Required. If an adjustment is made upon
the establishment of a record date for a distribution subject to subsections
(a), (b) or (c) hereof and such distribution is subsequently cancelled, the
Exercise Rate then in effect shall be readjusted, effective as of the date when
the Board of Directors determines to cancel such distribution, to that which
would have been in effect if such record date had not been fixed.
(i) Notice of Adjustment. Whenever the Exercise Rate or
Exercise Price is adjusted, the Company shall provide the notices required by
Section 11 hereof.
(j) When Issuance or Payment May Be Deferred. In any case in
which this Section 9 shall require that an adjustment in the Exercise Rate be
made effective as of a record date for a specified event, the Company may elect
to defer until the occurrence of such event (i) issuing to the Holder of any
Warrant exercised after such record date the Warrant Shares and other capital
stock of the Company, if any, issuable upon such exercise over and above the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise on the basis of the Exercise Rate prior to such adjustment, and
(ii) paying to such Holder any amount in cash in lieu of a fractional share
pursuant to Section 10; provided, however, that the Company shall deliver to the
Holder a due bill or other appropriate instrument evidencing such Holder's right
to receive such additional Warrant Shares, other capital stock and cash upon the
occurrence of the event requiring such adjustment.
(k) Reorganizations. In the event of any capital
reorganization or reclassification of outstanding shares of Class A Common Stock
(other than in the cases referred to in Sections 9(a), (b) or (c) hereof), or in
case of any merger, consolidation or other corporate combination of the Company
with or into another corporation (other than a merger or consolidation in which
the Company is the continuing corporation and which does not result in any
reclassification of the outstanding shares of Class A Common Stock into shares
of stock or other securities or property), or in case of any sale or conveyance
to another corporation of the property of the Company as an entirety or
substantially as an entirety (each of the foregoing being referred to as a
"REORGANIZATION"), there shall thereafter be deliverable upon exercise of the
Warrants (in lieu of the number of shares of Class A Common Stock theretofore
deliverable) the number of shares of stock or other securities or property to
which a holder of the number of shares of Class A Common Stock that would
otherwise have been deliverable upon the exercise of the Warrants would have
been entitled upon such Reorganization if the Warrants had been exercised in
full immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a duly adopted resolution
certified by the Company's Secretary or Assistant Secretary, shall be made in
the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise of the Warrants.
The Company shall not effect any such Reorganization unless prior to or
simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such Reorganization or the corporation
purchasing or leasing such assets or other appropriate corporation or entity
shall expressly assume the obligation to deliver to the Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions, the
Holder may be entitled to purchase, and all other obligations and liabilities
under the Warrant.
The foregoing provisions of this Section 9(k) shall apply to successive
Reorganization transactions.
(l) Form of Warrants. Irrespective of any adjustments in the
number or kind of shares purchasable upon the exercise of the Warrant, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in this Warrant as initially issued.
(m) Miscellaneous. For purposes of this Section 9 the term
"CLASS A COMMON STOCK" shall mean (i) the shares of stock designated as the
Class A Common Stock, par value $.001 per share, of the Company as of the date
of this Warrant, and (ii) shares of any other class of stock resulting from
successive changes or reclassification of such shares consisting solely of
changes in par value, or from par value to no par value, or from no par value to
par value. For purposes of this Section 9 the term "FULLY DILUTED SHARES" shall
mean (i) the shares of Class A Common Stock outstanding as of a specified date,
and (ii) shares of Class A Common Stock into or for which rights, options,
warrants or other securities outstanding as of such date are exercisable or
convertible (other than this Warrant and Warrant A). In the event that at any
time, as a result of an adjustment made pursuant to this Section 9, the Holder
shall become entitled to purchase any securities of the Company other than, or
in addition to, shares of Class A Common Stock, thereafter the number or amount
of such other securities so purchasable upon exercise of the Warrants shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in subsections (a) through (j) of this Section 9, inclusive, and the
provisions of Sections 1, 5, 7 and 10 with respect to the Warrant Shares or the
Class A Common Stock shall apply on like terms to any such other securities.
(n) Certain Events. If any change in the outstanding Common
Stock of the Company or any other event occurs as to which the provisions of
this Section 9 are not strictly applicable or, if strictly applicable, would not
fairly protect the purchase rights of the Holder in accordance with such
provisions, then the Board of Directors of the Company shall make such
adjustments to the Exercise Rate, the Exercise Price or the application of such
provisions as may be necessary to protect such purchase rights as aforesaid and
to assure that the Holder, upon exercise for the same aggregate Exercise Price,
shall receive the total number, class and kind of shares as it would have owned
had the Warrant been exercised prior to the event and had the Holder continued
to hold such shares until after the event requiring adjustment.
Section 10. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of the Warrant. If more than one
Warrant Certificate shall be presented for exercise in full at the same time by
the same Holder, the number of full Warrant Shares which shall be issuable upon
the exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrant so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 10,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the Common Stock Trading Price on
the trading day immediately preceding the date the Warrant is presented for
exercise, multiplied by such fraction.
Section 11. Notices to Holder. Upon any adjustment pursuant to Section
9 hereof, the Company shall give prompt written notice of such adjustment to the
Holder at its address appearing on the records of the Company within ten days
after such adjustment, by first class mail, postage prepaid, and shall deliver
to the Holder a certificate of the Chief Financial Officer of the Company,
accompanied by the report thereon by a firm of independent public accountants
selected by the Board of Directors of the Company (who may be the regular
accountants for the Company), setting forth in reasonable detail (i) the number
of Warrant Shares purchasable upon the exercise of the Warrant and the Exercise
Price of the Warrant after such adjustment(s), (ii) a brief statement of the
facts requiring such adjustment(s) and (iii) the computation by which such
adjustment(s) was made. Where appropriate, such notice may be given in advance
and included as a part of the notice required under the other provisions of this
Section 11.
In case:
(a) the Company proposes to take any action that would require
an adjustment to the Exercise Rate or the Exercise Price pursuant to Section 9
hereof; or
(b) of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is required, or
of the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Class A
Common Stock issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination), or a tender offer or exchange
offer for shares of Class A Common Stock; or
(c) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall give prompt written notice to the Holder at its address
appearing on the records of the Company, at least 30 days (or 20 days in any
case specified in clause (a) above) prior to the applicable record date
hereinafter specified, or the date of the event in the case of events for which
there is no record date, by first-class mail, postage prepaid, stating (i) the
date as of which the holders of record of shares of Class A Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Class A Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective or be consummated, and the date as
of which it is expected that holders of record of shares of Class A Common Stock
shall be entitled to exchange such shares for securities or other property, if
any, deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure by the Company to
give such notice or any defect therein shall not affect the legality or validity
of any distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote upon any action.
The Company shall give prompt written notice to the Holder of
any determination to make a distribution or dividend to the holders of its Class
A Common Stock of any assets (including cash), debt securities, preferred stock,
or any rights or warrants to purchase debt securities, preferred stock, assets
or other securities (other than Class A Common Stock, or rights, options, or
warrants to purchase Class A Common Stock) of the Company, which notice shall
state the nature and amount of such planned dividend or distribution and the
record date therefor, and shall be received by the Holder at least 30 days prior
to such record date therefor.
Nothing contained in this Warrant Certificate shall be
construed as conferring upon the Holder the right to vote or to consent or to
receive notice as shareholders in respect of the meetings of shareholders or the
election of Directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company.
Section 12. Notices to the Company. Any notice or demand to be given or
made by the Holder to or on the Company shall be sufficiently given or made when
received at the office of the Company expressly designated by the Company as its
office for purposes of this Certificate, as follows:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: General Counsel
Section 13. Supplements and Amendments. The Warrant may not be
supplemented or amended without the written approval of both the Holder and the
Company.
Section 14. Successors. All the covenants and provisions of
this Certificate by or for the benefit of the Company or the Holder shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 15. Termination. This Certificate and the Warrants
represented hereby shall terminate on the Expiration Date. Notwithstanding the
foregoing, this Certificate will terminate on any earlier date if all Warrants
have been exercised pursuant hereto.
Section 16. Governing Law. The Warrant Certificate shall be
deemed to be a contract made under the laws of the State of New York.
Section 17. Benefits of This Certificate. Nothing in this
Certificate shall be construed to give to any person or corporation other than
the Company and the registered Holder any legal or equitable right, remedy or
claim hereunder; but this Certificate shall be for the sole and exclusive
benefit of the Company and the registered Holder.
IN WITNESS WHEREOF, Paxson Communications Corporation has
caused this Certificate to be duly executed by the undersigned.
Dated: September 15, 1999
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Lowell W. Paxson
Name: Lowell W. Paxson
Title: President
By: /s/ Jeffrey Sagansky
Name: Jeffrey Sagansky
Title: President and Chief Executive Officer
<PAGE>
Exhibit A
[Form of Election to Purchase]
(To Be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____ shares of Class A
Common Stock and herewith tenders payment for such shares to the order of Paxson
Communications Corporation in the amount of $________ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of ______________, whose address is __________ and that
such shares be delivered to _________ whose address is ______________. If said
number of shares is less than all of the shares of Class A Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_____________, whose address is ________, and that such Warrant Certificate be
delivered to ___________, whose address is ________________.
Signature:
Date:
Signature Guaranteed:
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to purchase Class A
Common Stock (the "Securities")
of Paxson Communications Corporation
This Certificate relates to _______ Securities held by ______ (the
"Transferor").
The Transferor has requested that the Company by written order exchange
or register the transfer of Warrants.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with the
Warrant Certificate relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Sections 3 and 4 of such
Warrant Certificate, and that the transfer of these Securities does not require
registration under the Securities Act of 1933, as amended (the " Securities
Act") because*:
/ / Such Security is being acquired for the
Transferor's own account, without transfer.
/ / Such Security is being transferred pursuant to an
exemption from registration under the Securities Act in accordance with Rule 144
or Regulation S promulgated under the Securities Act.
/ / Such Security is being transferred to an institutional
"accredited investor" (within the meaning of subparagraphs (a)(1), (2), (3) or
(7) of Rule 501 under the Securities Act).
/ / Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act other than Rule 144 or Regulation S under the Securities Act. An
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this certificate.
-------------------------------
[INSERT NAME OF TRANSFEROR]
By: ---------------------------------
[Authorized Signatory]
Date:
*Check applicable box.
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
---------------, ----
First Union National Bank,
Charlotte, North Carolina
1525 West W.T. Harris Blvd.
Building 3C3
Charlotte, North Carolina 28288-1153
Attention: Corporate Trust Administration
Re: Paxson Communications Corporation
(the "Company"), Warrants to Purchase
Class A Common Stock (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of the Securities, we confirm
that:
1. We understand that the Securities have not been registered
under the Securities Act of 1933, as amended (the "Securities Act")
and, unless so registered, may not be sold except as permitted in the
following sentence. We agree to offer, sell or otherwise transfer such
Securities while the offer and sale thereof have not been registered
under the Securities Act only (a) to the Company or any of its
subsidiaries, (b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) pursuant to an
exemption from registration under Rule 144 under the Securities Act;
(d) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act, (e) to an
institutional "accredited investor" within the meaning of subparagraphs
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is
purchasing for his own account or for the account of such an
institutional "accredited investor," or (f) pursuant to any other
available exemption from the registration requirements of the
Securities Act. The foregoing restrictions on resale shall apply so
long as transfer of a Security is not permitted without registration
under the Securities Act. We understand that the Securities purchased
by us will bear a legend to the foregoing effect.
2. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and we are acquiring the Securities for investment purposes and
not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each
able to bear the economic risk of our or its investment for an
indefinite period.
3. We are acquiring the Securities purchased by us for our own
account.
4. You and your counsel are entitled to rely upon this letter
and you are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered
hereby.
Very truly yours,
(Name of Purchaser)
By:
Date:
Upon transfer the Securities would be registered in the name of the new
beneficial owner as follows:
Name:
Address:
Taxpayer ID Number:
<PAGE>
Exhibit A
[Form of Election to Purchase]
(To Be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____ shares of Class A
Common Stock and herewith tenders payment for such shares to the order of Paxson
Communications Corporation in the amount of $________ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of ______________, whose address is __________ and that
such shares be delivered to _________ whose address is ______________. If said
number of shares is less than all of the shares of Class A Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
_____________, whose address is ________, and that such Warrant Certificate be
delivered to ___________, whose address is ________________.
Signature:
Date:
Signature Guaranteed:
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to purchase Class A
Common Stock (the "Securities")
of Paxson Communications Corporation
This Certificate relates to _______ Securities held by ______ (the
"Transferor").
The Transferor has requested that the Company by written order exchange
or register the transfer of Warrants.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with the
Warrant Certificate relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Sections 3 and 4 of such
Warrant Certificate, and that the transfer of these Securities does not require
registration under the Securities Act of 1933, as amended (the " Securities
Act") because*:
/ / Such Security is being acquired for the Transferor's
own account, without transfer.
/ / Such Security is being transferred pursuant to an
exemption from registration under the Securities Act in accordance with Rule 144
or Regulation S promulgated under the Securities Act.
/ / Such Security is being transferred to an institutional
"accredited investor" (within the meaning of subparagraphs (a)(1), (2), (3) or
(7) of Rule 501 under the Securities Act).
/ / Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act other than Rule 144 or Regulation S under the Securities Act. An
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this certificate.
----------------------------------
[INSERT NAME OF TRANSFEROR]
By: ----------------------------------
[Authorized Signatory]
Date:
*Check applicable box.
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
---------------, ----
First Union National Bank,
Charlotte, North Carolina
1525 West W.T. Harris Blvd.
Building 3C3
Charlotte, North Carolina 28288-1153
Attention: Corporate Trust Administration
Re: Paxson Communications Corporation
(the "Company"), Warrants to Purchase
Class A Common Stock (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of the Securities, we confirm
that:
1. We understand that the Securities have not been registered
under the Securities Act of 1933, as amended (the "Securities Act")
and, unless so registered, may not be sold except as permitted in the
following sentence. We agree to offer, sell or otherwise transfer such
Securities while the offer and sale thereof have not been registered
under the Securities Act only (a) to the Company or any of its
subsidiaries, (b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) pursuant to an
exemption from registration under Rule 144 under the Securities Act;
(d) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act, (e) to an
institutional "accredited investor" within the meaning of subparagraphs
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that is
purchasing for his own account or for the account of such an
institutional "accredited investor," or (f) pursuant to any other
available exemption from the registration requirements of the
Securities Act. The foregoing restrictions on resale shall apply so
long as transfer of a Security is not permitted without registration
under the Securities Act. We understand that the Securities purchased
by us will bear a legend to the foregoing effect.
2. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and we are acquiring the Securities for investment purposes and
not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each
able to bear the economic risk of our or its investment for an
indefinite period.
3. We are acquiring the Securities purchased by us for
our own account.
4. You and your counsel are entitled to rely upon this letter
and you are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered
hereby.
Very truly yours,
(Name of Purchaser)
By:
Date:
Upon transfer the Securities would be registered in the name of the new
beneficial owner as follows:
Name:
Address:
Taxpayer ID Number:
<PAGE>
Exhibit 9
PAXSON COMMUNICATIONS CORPORATION, as Issuer,
ITS DIRECT AND INDIRECT SUBSIDIARIES, as Guarantors,
and
___________________, as Trustee
--------------------
INDENTURE
Dated as of September , 1999
--------------------
$___,000,000
__% Exchange Debentures due 2009
<PAGE>
<TABLE>
CROSS-REFERENCE TABLE
<CAPTION>
TIA Indenture
Section Section
<S> <C>
310(a)(1)................................................................ 7.10
(a)(2)............................................................. 7.10
(a)(3)............................................................. N.A.
(a)(4)............................................................. N.A.
(b)................................................................ 7.08; 7.10; 12.02
(b)(1)............................................................. 7.10
(b)(9)............................................................. 7.10
(c)................................................................ N.A.
311(a)................................................................... 7.11
(b)................................................................ 7.11
(c)................................................................ N.A.
312(a)................................................................... 2.05
(b)................................................................ 12.03
(c)................................................................ 12.03
313(a)................................................................... 7.06
(b)(1)............................................................. 7.06
(b)(2)............................................................. 7.06
(c)................................................................ 12.02
(d)................................................................ 7.06
314(a)................................................................... 4.02; 4.04 12.02
(b)................................................................ N.A.
(c)(1)............................................................. 12.04; 12.05
(c)(2)............................................................. 12.04; 12.05
(c)(3)............................................................. N.A.
(d)................................................................ N.A.
(e)................................................................ 12.05
(f)................................................................ N.A.
315(a)................................................................... 7.01; 7.02
(b)................................................................ 7.05; 12.02
(c)................................................................ 7.01
(d)................................................................ 6.05; 7.01; 7.02
(e)................................................................ 6.11
316(a)(last sentence).................................................... 12.06
(a)(1)(A).......................................................... 6.05
(a)(1)(B).......................................................... 6.04
(a)(2)............................................................. 8.02
(b)................................................................ 6.07
(c)................................................................ 8.04
317(a)(1)................................................................ 6.08
(a)(2)............................................................. 6.09
(b)................................................................ 7.12
318(a)................................................................... 12.01
<FN>
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture
</FN>
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<CAPTION>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
Section 1.01. Definitions................................................................1
Section 1.02. Other Definitions.........................................................24
Section 1.03. Incorporation by Reference of Trust Indenture Act.........................25
Section 1.04. Rules of Construction.....................................................26
ARTICLE 2 THE SECURITIES
Section 2.01. Dating; Incorporation of Form in Indenture................................26
Section 2.02. Execution and Authentication..............................................27
Section 2.03. Registrar and Paying Agent................................................28
Section 2.04. Paying Agent to Hold Assets in Trust......................................28
Section 2.05. Securityholder Lists......................................................28
Section 2.06. Transfer and Exchange.....................................................29
Section 2.07. Replacement Securities....................................................29
Section 2.08. Outstanding Securities....................................................30
Section 2.09. Temporary Securities......................................................30
Section 2.10. Cancellation..............................................................30
Section 2.11. Defaulted Interest........................................................31
Section 2.12. Deposit of Moneys.........................................................31
Section 2.13. CUSIP Number..............................................................31
ARTICLE 3 REDEMPTION
Section 3.01. Notices to Trustee........................................................32
Section 3.02. Selection by Trustee of Securities to Be Redeemed.........................32
Section 3.03. Notice of Redemption......................................................32
Section 3.04. Effect of Notice of Redemption............................................33
Section 3.05. Deposit of Redemption Price...............................................34
Section 3.06. Securities Redeemed in Part...............................................34
ARTICLE 4 COVENANTS
Section 4.01. Payment of Securities.....................................................34
Section 4.02. SEC Reports...............................................................35
Section 4.03. Waiver of Stay, Extension or Usury Laws...................................36
Section 4.04. Compliance Certificate....................................................36
Section 4.05. Taxes.....................................................................37
Section 4.06. Limitation on Incurrence of Additional Indebtedness.......................37
Section 4.07. Limitation on Preferred Stock of Restricted Subsidiaries..................38
Section 4.08. Limitation on Restricted Payments.........................................38
Section 4.09. Limitation on Certain Asset Sales.........................................40
Section 4.10. Limitation on Transactions with Affiliates................................43
Section 4.11. Limitation on Creation of Subsidiaries....................................44
Section 4.12. Limitation on Other Senior Subordinated Debt..............................44
Section 4.13. Payments for Consent......................................................45
Section 4.14. Corporate Existence.......................................................45
Section 4.15. Change of Control.........................................................45
Section 4.16. Maintenance of Office or Agency...........................................48
ARTICLE 5 SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets....................49
Section 5.02. Successor Person Substituted..............................................50
ARTICLE 6 DEFAULTS AND REMEDIES
Section 6.01. Events of Default.........................................................51
Section 6.02. Acceleration..............................................................53
Section 6.03. Other Remedies............................................................54
Section 6.04. Waiver of Past Defaults and Events of Default.............................54
Section 6.05. Control by Majority.......................................................54
Section 6.06. Limitation on Suits.......................................................55
Section 6.07. Rights of Holders to Receive Payment......................................55
Section 6.08. Collection Suit by Trustee................................................55
Section 6.09. Trustee May File Proofs of Claim..........................................56
Section 6.10. Priorities................................................................56
Section 6.11. Undertaking for Costs.....................................................57
ARTICLE 7 TRUSTEE
Section 7.01. Duties of Trustee.........................................................57
Section 7.02. Rights of Trustee.........................................................59
Section 7.03. Individual Rights of Trustee..............................................59
Section 7.04. Trustee's Disclaimer......................................................59
Section 7.05. Notice of Defaults........................................................60
Section 7.06. Reports by Trustee to Holders.............................................60
Section 7.07. Compensation and Indemnity................................................60
Section 7.08. Replacement of Trustee....................................................62
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion..................63
Section 7.10. Eligibility; Disqualification.............................................63
Section 7.11. Preferential Collection of Claims Against Company.........................63
Section 7.12. Paying Agents.............................................................63
ARTICLE 8 AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders................................................64
Section 8.02. With Consent of Holders...................................................64
Section 8.03. Compliance with Trust Indenture Act.......................................66
Section 8.04. Revocation and Effect of Consents.........................................66
Section 8.05. Notation on or Exchange of Securities.....................................67
Section 8.06. Trustee to Sign Amendments, etc...........................................67
ARTICLE 9 DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture....................................................68
Section 9.02. Legal Defeasance..........................................................68
Section 9.03. Covenant Defeasance.......................................................69
Section 9.04. Conditions to Defeasance or Covenant Defeasance...........................69
Section 9.05. Deposited Money and U.S. Government Obligations to Be Held in Trust; Other
Miscellaneous Provisions...............................................71
Section 9.06. Reinstatement.............................................................72
Section 9.07. Moneys Held by Paying Agent...............................................73
Section 9.08. Moneys Held by Trustee....................................................73
ARTICLE 10 GUARANTEE OF SECURITIES
Section 10.01. Guarantee.................................................................74
Section 10.02. Execution and Delivery of Guarantees......................................75
Section 10.03. Limitation of Guarantee...................................................75
Section 10.04. Additional Guarantors.....................................................76
Section 10.05. Release of Guarantor......................................................76
Section 10.06. Guarantee Obligations Subordinated to Guarantor Senior Debt...............76
Section 10.07. Payment Over of Proceeds upon Dissolution, etc., of a Guarantor...........77
Section 10.08. Suspension of Guarantee Obligations When Guarantor Senior Debt in Default.79
Section 10.09. Subrogation to Rights of Holders of Guarantor Senior Debt.................81
Section 10.10. Guarantee Subordination Provisions Solely to Define Relative Rights.......81
Section 10.11. Application of Certain Article 11 Provisions..............................82
ARTICLE 11 SUBORDINATION OF SECURITIES
Section 11.01. Securities Subordinate to Senior Debt.....................................82
Section 11.02. Payment Over of Proceeds upon Dissolution, etc............................83
Section 11.03. Suspension of Payment When Senior Debt in Default.........................85
Section 11.04. Trustee's Relation to Senior Debt.........................................86
Section 11.05. Subrogation to Rights of Holders of Senior Debt...........................87
Section 11.06. Provisions Solely to Define Relative Rights...............................87
Section 11.07. Trustee to Effectuate Subordination.......................................88
Section 11.08. No Waiver of Subordination Provisions.....................................89
Section 11.09. Notice to Trustee.........................................................89
Section 11.10. Reliance on Judicial Order or Certificate of Liquidating Agent............90
Section 11.11. Rights of Trustee as a Holder of Senior Debt; Preservation of Trustee's
Rights. 91
Section 11.12. Article Applicable to Paying Agents.......................................91
Section 11.13. No Suspension of Remedies.................................................91
ARTICLE 12 CONVERSION OF SECURITIES
Section 12.01. Conversion Privilege...................................................................92
Section 12.02. Exercise of Conversion Privilege.......................................................92
Section 12.03. Fractional Interests...................................................................94
Section 12.04. Conversion Price.......................................................................94
Section 12.05. Adjustment of Conversion Price.........................................................94
Section 12.06. Continuation of Conversion Privilege in Case of Reclassification, Change,
Merger, Consolidation or Sale of Assets .............................. 98
Section 12.07. Notice of Certain Events..............................................................100
Section 12.08. Taxes on Conversion...................................................................101
Section 12.09. Company to Provide Stock..............................................................101
Section 12.10. Disclaimer of Responsibility for Certain Matters.........................102
Section 12.11. Return of Funds Deposited for Redemption of Converted Securities.........102
ARTICLE 13 MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls.............................................103
Section 13.02. Notices..................................................................103
Section 13.03. Communications by Holders with Other Holders.............................104
Section 13.04. Certificate and Opinion as to Conditions Precedent.......................104
Section 13.05. Statements Required in Certificate and Opinion...........................105
Section 13.06. When Treasury Securities Disregarded.....................................105
Section 13.07. Rules by Trustee and Agents..............................................105
Section 13.08. Business Days; Legal Holidays............................................106
Section 13.09. Governing Law............................................................106
Section 13.10. No Adverse Interpretation of Other Agreements............................106
Section 13.11. No Recourse Against Others...............................................106
Section 13.12. Successors...............................................................107
Section 13.13. Multiple Counterparts....................................................107
Section 13.14. Table of Contents, Headings, etc.........................................107
Section 13.15. Separability.............................................................107
EXHIBITS
Exhibit A. Form of Security............................................................ A-1
</TABLE>
<PAGE>
INDENTURE, dated as of September , 1999, among PAXSON
COMMUNICATIONS CORPORATION, a Delaware corporation, as Issuer (the "Company"),
its direct and indirect subsidiaries (each individually, a "Guarantor" and,
collectively, the "Guarantors") and ___________________, a New York banking
corporation, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
__% Exchange Debentures due 2009 (the "Securities").
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01......Definitions.
"Acquired Indebtedness" means Indebtedness of a Person
(including an Unrestricted Subsidiary) existing at the time such Person becomes
a Restricted Subsidiary or assumed in connection with the acquisition of assets
from such Person.
"Adjusted Net Assets" of a Guarantor at any date shall mean
the lesser of the amount by which (x) the fair value of the property of such
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities), but excluding liabilities under the Guarantee, of such
Guarantor at such date and (y) the present fair ratable value of the assets of
such Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities and after giving effect to any collection
from any Subsidiary of such Guarantor in respect of the obligations of such
Subsidiary under the Guarantee), excluding Indebtedness in respect of the
Guarantee, as they become absolute and matured.
"Affiliate" means, for any Person, a Person who, directly or
indirectly, through one or more intermediaries controls, or is controlled by, or
is under common control with, such other Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. With respect to the
Company, Affiliate will also include any Permitted Holders or Persons controlled
by the Permitted Holders.
"Agent" means any Registrar, Paying Agent, co-registrar or
agent for service of notices and demands.
"Asset Sale" means the sale, transfer or other disposition
(other than to the Company or any of its Restricted Subsidiaries) in any single
transaction or series of related transactions involving assets with a fair
market value in excess of $2,000,000 of (a) any Capital Stock of or other equity
interest in any Restricted Subsidiary of the Company other than in a transaction
where the Company or a Restricted Subsidiary receives therefor one or more media
properties with a fair market value equal to the fair market value of the
Capital Stock issued, transferred or disposed of by the Company or the
Restricted Subsidiary (with such fair market values being determined by the
board of directors of the Company), (b) all or substantially all of the assets
of the Company or of any Restricted Subsidiary thereof, (c) real property or (d)
all or substantially all of the assets of any media property, or part thereof,
owned by the Company or any Restricted Subsidiary thereof, or a division, line
of business or comparable business segment of the Company or any Restricted
Subsidiary thereof; provided that Asset Sales shall not include sales, leases,
conveyances, transfers or other dispositions to the Company or to a Restricted
Subsidiary or to any other Person if after giving effect to such sale, lease,
conveyance, transfer or other disposition such other Person becomes a Restricted
Subsidiary, or the sale of all or substantially all of the assets of the Company
or a Restricted Subsidiary in a transaction complying with the "Merger
Consolidation and Sale of Assets" covenant, in which case only the assets not so
sold shall be deemed an Asset Sale.
"Asset Sale Proceeds" means, with respect to any Asset Sale,
(i) cash received by the Company or any Restricted Subsidiary from such Asset
Sale (including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale, (b) payment of all brokerage commissions, underwriting, accounting, legal
and other fees and expenses related to such Asset Sale, (c) provision for
minority interest holders in any Restricted Subsidiary as a result of such Asset
Sale and (d) deduction of appropriate amounts to be provided by the Company or a
Restricted Subsidiary as a reserve, in accordance with GAAP, against any
liabilities associated with the assets sold or disposed of in such Asset Sale
and retained by the Company or a Restricted Subsidiary after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with the assets sold or disposed of in
such Asset Sale, and (ii) promissory notes and other non-cash consideration
received by the Company or any Restricted Subsidiary from such Asset Sale or
other disposition upon the liquidation or conversion of such notes or non-cash
consideration into cash.
"Available Asset Sale Proceeds" means, with respect to any
Asset Sale, the aggregate Asset Sale Proceeds from such Asset Sales that have
not been applied in accordance with clause (iii)(a), (b) or (c) and which has
not yet been the subject of an Excess Proceeds Offer in accordance with clause
(iii)(d) of the first paragraph of "Section 4.09."
"Board of Directors" means the board of directors of the
Company or a Guarantor, as appropriate, or any committee authorized to act
therefor.
"Board Resolution" means a copy of a resolution certified
pursuant to an Officers' Certificate to have been duly adopted by the Board of
Directors of the Company or a Guarantor, as appropriate, and to be in full force
and effect, and delivered to the Trustee.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock, including each class of common stock and
preferred stock of such Person and (ii) with respect to any Person that is not a
corporation, any and all partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligation of such Person to pay rent or other amounts under a lease to which
such Person is a party that is required to be classified and accounted for as
capital lease obligations under GAAP and, for purposes of this definition, the
amount of such obligations at any date shall be the capitalized amount of such
obligations at such date, determined in accordance with GAAP.
"Cash" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Cash Equivalents" means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no
more than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any U.S. branch of a foreign bank having at the date
of acquisition thereof combined capital and surplus of not less than
$250,000,000; (v) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above entered
into with any bank meeting the qualifications specified in clause (iv) above;
and (vi) investments in money market funds which invest substantially all their
assets in securities of the types described in clauses (i) through (v) above.
"Certificate of Designation" means the Certificate of
Designation under which the Series B Convertible Preferred Stock was issued, as
in effect on the date of this Indenture.
A "Change of Control" of the Company will be deemed to have
occurred at such time as (i) any Person (including a Person's Affiliates), other
than a Permitted Holder, becomes the beneficial owner (as defined under Rule
13d-3 or any successor rule or regulation promulgated under the Exchange Act) of
50% or more of the total voting power of the Company's Common Stock, (ii) any
Person (including a Person's Affiliates), other than a Permitted Holder, becomes
the beneficial owner of more than 33 1/3% of the total voting power of the
Company's Common Stock, and the Permitted Holders beneficially own, in the
aggregate, a lesser percentage of the total voting power of the Common Stock of
the Company than such other Person and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of the Company, (iii) there shall be
consummated any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which the Common
Stock of the Company would be converted into cash, securities or other property,
other than a merger or consolidation of the Company in which the holders of the
Common Stock of the Company outstanding immediately prior to the consolidation
or merger hold, directly or indirectly, at least a majority of the voting power
of the Common Stock of the surviving corporation immediately after such
consolidation or merger, (iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Company has been approved by a majority of the directors then still in office
who either were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the Board of Directors of the Company or (v) any "change in control"
occurs (as defined at such time) with respect to the Existing Preferred Stock or
any issue of Disqualified Capital Stock.
"Class A Common Stock" means the Class A Common Stock, par
value $.001 per share, of the Company.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of, such Person's common stock, whether
outstanding on the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"Common Stock Trading Price" on any date means, with respect
to the Company Common Stock, the Closing Price for the Class A Common Stock on
such date. The "Closing Price" on any date shall mean the last sale price for
the Class A Common Stock, regular way, or, in case no such sale takes place on
such date, the average of the closing bid and asked prices, regular way, for the
Class A Common Stock in either case as reported in the principal consolidated
transaction reporting system with respect to the principal national securities
exchange on which the Class A Common Stock is listed or admitted to trading or,
if the Class A Common Stock is not listed or admitted to trading on any national
securities exchange, the last quoted price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the principal automated quotation system that may then be in use or, if the
Class A Common Stock is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Class A Common Stock selected by the Board of Directors or, in
the event that no trading price is available for the Class A Common Stock, the
fair market value of the Class A Common Stock, as determined in good faith by
the Board of Directors.
"Company" means the party named as such in the first paragraph
of this Indenture until a successor replaces such party pursuant to Article 5 of
this Indenture and thereafter means the successor and any other obligor on the
Securities.
"Company Common Stock" means, individually and collectively,
(i) the Class A Common Stock or (ii) in the case of the Initial Holder only, if
the Initial Holder determines in its sole discretion that it is prevented under
applicable laws and regulations of the FCC from holding shares of Class A Common
Stock issuable upon conversion of its Securities, the shares of non-voting
Common Stock of the Company (which upon disposition by the Initial Holder shall
automatically be converted into shares of Class A Common Stock) into which the
Securities are from time to time convertible.
"Company Request" means any written request signed in the name
of the Company by the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer or the Treasurer and attested to by the
Secretary or any Assistant Secretary of the Company.
"Consolidated EBITDA" means, for any Person, for any period,
an amount equal to (a) the sum of Consolidated Net Income for such period, plus,
to the extent deducted from the revenues of such Person in determining
Consolidated Net Income, (i) the provision for taxes for such period based on
income or profits and any provision for taxes utilized in computing a loss in
Consolidated Net Income above, plus (ii) Consolidated Interest Expense, net of
interest income earned on cash or cash equivalents for such period (including,
for this purpose, dividends on the Existing Preferred Stock and the Series B
Convertible Preferred Stock and any Redeemable Dividends in each case only to
the extent that such dividends were deducted in determining Consolidated Net
Income), plus (iii) depreciation for such period on a consolidated basis, plus
(iv) amortization of intangibles and broadcast program licenses for such period
on a consolidated basis, minus (b) scheduled payments relating to broadcast
program license liabilities, except that with respect to the Company each of the
foregoing items shall be determined on a consolidated basis with respect to the
Company and its Restricted Subsidiaries only; provided, however, that, for
purposes of calculating Consolidated EBITDA during any fiscal quarter, cash
income from a particular Investment of such Person shall be included only if
cash income has been received by such Person as a result of the operation of the
business in which such Investment has been made in the ordinary course without
giving effect to any extraordinary unusual and non-recurring gains.
"Consolidated Interest Expense" means, with respect to any
Person, for any period, the aggregate amount of interest which, in conformity
with GAAP, would be set forth opposite the caption "interest expense" or any
like caption on an income statement for such Person and its Subsidiaries on a
consolidated basis, including, but not limited to, Redeemable Dividends, whether
paid or accrued, on Subsidiary Preferred Stock, imputed interest included in
Capitalized Lease Obligations, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with hedging obligations, amortization of
other financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other non-cash
interest expense (other than interest amortized to cost of sales) plus, without
duplication, all net capitalized interest for such period and all interest
incurred or paid under any guarantee of Indebtedness (including a guarantee of
principal, interest or any combination thereof) of any Person, all time
brokerage fees relating to financing of radio or television stations which the
Company has an agreement or option to acquire, plus the amount of all dividends
or distributions paid on Disqualified Capital Stock (other than dividends paid
or payable in shares of Capital Stock of the Company).
"Consolidated Net Income" means, with respect to any Person,
for any period, the aggregate of the net income (or loss) of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that (a) the net income of any Person (the "other
Person") in which the Person in question or any of its Subsidiaries has less
than a 100% interest (which interest does not cause the net income of such other
Person to be consolidated into the net income of the Person in question in
accordance with GAAP) shall be included only to the extent of the amount of
dividends or distributions paid to the Person in question or to the Subsidiary,
(b) the net income of any Subsidiary of the Person in question that is subject
to any restriction or limitation on the payment of dividends or the making of
other distributions (other than pursuant to the Securities, the Existing
Exchange Debentures or the Existing Notes) shall be excluded to the extent of
such restriction or limitation, (c) (i) the net income of any Person acquired in
a pooling of interests transaction for any period prior to the date of such
acquisition and (ii) any net gain (but not loss) resulting from an Asset Sale by
the Person in question or any of its Subsidiaries other than in the ordinary
course of business shall be excluded, (d) extraordinary, unusual and
non-recurring gains and losses shall be excluded, (e) losses associated with
discontinued and terminated operations in an amount not to exceed $1,000,000 per
annum shall be excluded and (f) all non-cash items (including, without
limitation, cumulative effects of changes in GAAP and equity entitlements
granted to employees of the Company and its Restricted Subsidiaries) increasing
and decreasing Consolidated Net Income and not otherwise included in the
definition of Consolidated EBITDA shall be excluded.
"Conversion Price" has the meaning ascribed to such term in
Section 12.04 hereof.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 101 Barclay Street, Floor 21 West, New York, NY 10286, attention: Corporate
Trust Administration.
"Credit Facility" means the Credit Agreement dated as of
December 19, 1995, and amended and restated as of April 30, 1998, among the
Company, the financial institutions party thereto in their capacities as lenders
thereunder and Union Bank, as agent, as the same may be amended from time to
time, and any one or more agreements evidencing the refinancing, modification,
replacement, renewal, restatement, refunding, deferral, extension, substitution,
supplement, reissuance or resale thereof.
"Cumulative Consolidated EBITDA" means, with respect to any
Person, as of any date of determination, Consolidated EBITDA from the Issue Date
to the end of the Company's most recently ended full fiscal quarter prior to
such date, taken as a single accounting period.
"Cumulative Consolidated Interest Expense" means, with respect
to any Person, as of any date of determination, Consolidated Interest Expense
plus any cash dividends paid on Senior Securities or Parity Securities not
already reflected in Consolidated Interest Expense, in each case from the Issue
Date to the end of such Person's most recently ended full fiscal quarter prior
to such date, taken as a single accounting period.
"Default" means an event or condition the occurrence of which
is, or with the lapse of time or the giving of notice or both would be, an Event
of Default.
"Depository" means, with respect to the Securities issued in
the form of one or more Global Securities, The Depository Trust Company or
another Person designated as Depository by the Company, which Person must be a
clearing agency registered under the Exchange Act.
"Designated Senior Debt" means (i) Indebtedness under or in
respect of the Credit Facility and (ii) any other Indebtedness constituting
Senior Debt which, at the time of determination, has an aggregate principal
amount of at least $25,000,000 (or accreted value in the case of Indebtedness
issued at a discount) and is specifically designated in the instrument
evidencing such Senior Debt as "Designated Senior Debt" by the Company.
"Disqualified Capital Stock" means any Capital Stock which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the sole option of the holder thereof, in whole
or in part, on or prior to the final maturity date of the Securities. Without
limitation of the foregoing, Disqualified Capital Stock shall be deemed to
include (i) any Preferred Stock of a Restricted Subsidiary, (ii) any Preferred
Stock of the Company, with respect to either of which, under the terms of such
Preferred Stock, by agreement or otherwise, such Restricted Subsidiary or the
Company is obligated to pay current dividends or distributions in cash during
the period prior to the maturity date of the Securities; and (iii) as long as
the Series B Convertible Preferred Stock remains outstanding, Senior Securities
and Parity Securities; provided, however, that (i) Preferred Stock of the
Company or any Restricted Subsidiary that is issued with the benefit of
provisions requiring a change of control offer to be made for such Preferred
Stock in the event of a change of control of the Company or Restricted
Subsidiary shall not be deemed to be Disqualified Capital Stock solely by virtue
of such provisions; (ii) the Series B Convertible Preferred Stock and the
Existing Preferred Stock, as in effect on the Issue Date, shall not be
considered Disqualified Capital Stock; and (iii) Capital Stock paid as dividends
on Preferred Stock existing on the Issue Date or subsequently issued, in each
case in accordance with the terms of such Preferred Stock at the time it was
issued, shall not be considered Disqualified Capital Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Date" means the date of original issuance of the
Securities.
"Existing Debt Indentures" means the Existing Exchange
Indentures and the Existing Indenture.
"Existing Exchange Debentures" means the 12 1/2% Exchange
Debentures due 2006 (if issued) and the 13 1/4% Exchange Debentures due 2006 (if
issued) issued under the Existing Exchange Indentures.
"Existing Exchange Indentures" means the indentures dated
October 4, 1996, and June 10, 1998, between the Company, the guarantors thereto
and The Bank of New York, as trustee, which govern the Existing Exchange
Debentures.
"Existing Indenture" means the indenture dated as of September
28, 1995 among the Company and The Bank of New York, as trustee which governs
the Existing Notes.
"Existing Notes" means the 11 5/8% Senior Subordinated Notes
due 2002 issued under the Existing Indenture.
"Existing Preferred Stock" means the Junior Cumulative
Compounding Redeemable Preferred Stock, $.001 par value, 12% dividend rate per
annum, of which 33,000 shares are outstanding as of the Issue Date with a
liquidation preference of $1,000 per share; the 12 1/2% Cumulative Exchangeable
Preferred Stock, $.001 par value, of which 192,717 shares are outstanding as of
the Issue Date with a liquidation preference of $1,000 per share; the 13 1/4%
Cumulative Junior Exchangeable Preferred Stock, $.001 par value, of which
[21,170] shares are outstanding as of the Issue Date with a liquidation
preference of $10,000 per share; and the 9 3/4% Series A Convertible Preferred
Stock, $.001 par value, of which [7,913] shares are outstanding as of the Issue
Date with a liquidation preference of $10,000 per share.
"Extraordinary Cash Dividend" means cash dividends with
respect to the Company Common Stock the aggregate amount of which in any fiscal
year exceeds 10% of Consolidated EBITDA of the Company and its subsidiaries for
the fiscal year immediately preceding the payment of such dividend.
"Fair Market Value" of any consideration other than Cash or of
any securities shall mean the amount which a willing buyer would pay to a
willing seller in an arm's length transaction as determined by an independent
investment banking or appraisal firm experienced in the valuation of such
securities or property selected in good faith by the Board of Directors or a
committee thereof.
"FCC" means the United States Federal Communications
Commission as constituted from time to time or any successor performing
substantially the same functions.
"GAAP" means generally accepted accounting principles
consistently applied as in effect in the United States from time to time.
"Guarantee" means the guarantee of the Obligations of the
Company with respect to the Securities by each Guarantor pursuant to the terms
of Article 10 hereof.
"Guarantor" means (i) each of the Company's Subsidiaries in
existence on the Issue Date and (ii) each of the Company's Restricted
Subsidiaries that in the future executes a supplemental indenture in which such
Restricted Subsidiary agrees to be bound by the terms of this Indenture as a
Guarantor; provided that any Person constituting a Guarantor as described above
shall cease to constitute a Guarantor when its respective Guarantee is released
in accordance with the terms of this Indenture.
"Guarantor Senior Debt" means the principal of and premium, if
any, and interest (including, without limitation, interest accruing or that
would have accrued but for the filing of a bankruptcy, reorganization or other
insolvency proceeding whether or not such interest constitutes an allowed claim
in such proceeding) on, and any and all other fees, expense reimbursement
obligations, indemnities and other amounts due pursuant to the terms of all
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with, (a) Guarantor's direct
incurrence of any Indebtedness or its guarantee of all Indebtedness of the
Company or any Restricted Subsidiaries, in each case, owed to lenders under the
Credit Facility, (b) all obligations of such Guarantor with respect to any
Interest Rate Agreement, (c) all obligations of such Guarantor to reimburse any
bank or other person in respect of amounts paid under letters of credit,
acceptances or other similar instruments, (d) all other Indebtedness of such
Guarantor which does not provide that it is to rank pari passu with or
subordinate to the Guarantees and (e) all deferrals, renewals, extensions and
refundings of, and amendments, modifications and supplements to, any of the
Guarantor Senior Debt described above. Notwithstanding anything to the contrary
in the foregoing, Guarantor Senior Debt will not include (i) Indebtedness of
such Guarantor to any of its Subsidiaries, (ii) Indebtedness represented by the
Guarantees, (iii) any Indebtedness which by the express terms of the agreement
or instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Guarantor Senior Debt, (iv) any
trade payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business or (v) Indebtedness incurred in
violation of this Indenture, except if such Indebtedness was incurred under the
Credit Facility based on financial information and certificates provided by
responsible officers of the Company and relied on in good faith by the lenders
thereunder in which event such Indebtedness shall be deemed to have been
incurred in compliance with this Indenture and constitute Guarantor Senior Debt.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred," "incurrable" and "incurring" shall
have meanings correlative to the foregoing); provided that a change in GAAP that
results in an obligation of such Person that exists at such time becoming
Indebtedness shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to
any Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof) or evidenced by bonds, notes, debentures or similar instruments
or representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables and other accrued liabilities arising in the ordinary
course of business, including, without limitation, any and all programming
broadcast obligations) if and to the extent any of the foregoing indebtedness
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and shall also include, to the extent not otherwise
included, (i) any Capitalized Lease Obligations, (ii) obligations secured by a
Lien to which the property or assets owned or held by such Person are subject,
whether or not the obligation or obligations secured thereby shall have been
assumed (provided, however, that if such obligation or obligations shall not
have been assumed, the amount of such Indebtedness shall be deemed to be the
lesser of the principal amount of the obligation or the fair market value of the
pledged property or assets), (iii) guarantees of items of other Persons which
would be included within this definition for such other Persons (whether or not
such items would appear upon the balance sheet of the guarantor), (iv) all
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (v) in the case of the
Company, Disqualified Capital Stock of the Company or any Restricted Subsidiary
thereof and (vi) obligations of any such Person under any Interest Rate
Agreement applicable to any of the foregoing (if and to the extent such Interest
Rate Agreement obligations would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP). The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency giving
rise to the obligation, provided that (i) the amount outstanding at any time of
any Indebtedness issued with original issue discount is the principal amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with GAAP
and (ii) Indebtedness shall not include any liability for federal, state, local
or other taxes. Notwithstanding any other provision of the foregoing definition,
any trade payable arising from the purchase of goods or materials or for
services obtained in the ordinary course of business or contingent obligations
arising out of customary indemnification agreements with respect to the sale of
assets or securities shall not be deemed to be "Indebtedness" of the Company or
any Restricted Subsidiaries for purposes of this definition. Furthermore,
guarantees of (or obligations with respect to letters of credit supporting)
Indebtedness otherwise included in the determination of such amount shall not
also be included.
"Indenture" means this Indenture as amended, restated or
supplemented from time to time.
"Initial Holder" means National Broadcasting Company, Inc.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Securities.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect the party indicated therein
against fluctuations in interest rates.
"Investment" means, directly or indirectly, any advance,
account receivable (other than an account receivable arising in the ordinary
course of business), loan or capital contribution to (by means of transfers of
property to others, payments for property or services for the account or use of
others or otherwise), the purchase of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities of, the acquisition,
by purchase or otherwise, of all or substantially all of the business or assets
or stock or other evidence of beneficial ownership of, any Person or the making
of any investment in any Person. Investments shall exclude extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices and repurchases or redemptions of the Existing Notes, the Securities,
the Existing Exchange Debentures, the Existing Preferred Stock or the Series B
Convertible Preferred Stock by the Company.
"Issue Date" means the date of original issuance of the
Securities.
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Major Asset Sale" means an Asset Sale or series of related
Asset Sales involving assets with a fair market value in excess of $25,000,000.
"Maturity Date" means December 31, 2009.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Proceeds" means (a) in the case of any sale of Capital
Stock by the Company, an Asset Sale or a Major Asset Sale, the aggregate net
proceeds received by the Company, after payment of expenses, commissions and the
like incurred in connection therewith, whether such proceeds are in cash or in
property (valued at the fair market value thereof, as determined in good faith
by the Board of Directors, at the time of receipt) and (b) in the case of any
exchange, exercise, conversion or surrender of outstanding securities of any
kind for or into shares of Capital Stock of the Company which is not
Disqualified Capital Stock, the net book value of such outstanding securities on
the date of such exchange, exercise, conversion or surrender (plus any
additional amount required to be paid by the holder to the Company upon such
exchange, exercise, conversion or surrender, less any and all payments made to
the holders, e.g., on account of fractional shares and less all expenses
incurred by the Company in connection therewith).
"Non-Payment Event of Default" means any event (other than a
Payment Default) the occurrence of which entitles one or more Persons to
accelerate the maturity of any Designated Senior Debt.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing, or otherwise relating to,
any Indebtedness.
"Offer Period" shall have the meaning specified in section
4.09(b).
"Officer" means the Chief Executive Officer, the president,
any Vice President, the Chief Financial Officer, the Treasurer, the Controller
or the Secretary of the Company or a Guarantor, or any other officer designated
by the Board of Directors, as the case may be.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President, the Chief Financial Officer, the Controller or any Treasurer of such
Person that shall comply with applicable provisions of this Indenture.
"Opinion of Counsel" means a written opinion from legal
counsel which counsel is reasonably acceptable to the Trustee.
"Payment Default" means any default, whether or not any
requirement for the giving of notice, the lapse of time or both, or any other
condition to such default becoming an event of default has occurred, in the
payment of principal of (or premium, if any) or interest on or any other amount
payable in connection with Designated Senior Debt.
"Permitted Holders" means (i) collectively, Lowell W. Paxson,
his spouse, children or other lineal descendants (whether adoptive or
biological) and any revocable or irrevocable inter vivos or testamentary trust
or the probate estate of any such individual, so long as one or more of the
foregoing individuals is the principal beneficiary of such trust or probate
estate; and (ii) National Broadcasting Company, Inc., and those of its
Affiliates which are direct or indirect wholly-owned subsidiaries organized
under the laws of any state of the United States of its ultimate parent
corporation.
"Permitted Indebtedness" means, without duplication, each of
the following:
(i) Indebtedness under the Securities and the Guarantees,
including any Securities issued in accordance with this Indenture as payment of
interest on the Securities;
(ii) Indebtedness under the Existing Exchange Debentures, and
the Guarantees related thereto, including any Existing Exchange Debentures
issued in accordance with the Existing Exchange Indentures as payment of
interest on the Existing Exchange Debentures;
(iii)Indebtedness incurred pursuant to any Credit Facility in
an aggregate principal amount at any time outstanding not to exceed $25,000,000;
(iv) all other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date, including, without limitation, the
Existing Notes, reduced by the amount of any scheduled amortization payments or
mandatory prepayments when actually paid or permanent reductions thereon;
(v) Obligations under Interest Rate Agreements of the Company
covering Indebtedness of the Company or any of its Restricted Subsidiaries;
provided, however, that such Interest Rate Agreements are entered into to
protect the Company and its Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness incurred in accordance with the Certificate of
Designation or this Indenture to the extent the notional principal amount of
such Interest Rate Agreement does not exceed the principal amount of the
Indebtedness to which such Interest Rate Agreement relates;
(vi) Indebtedness of a Restricted Subsidiary of the Company to
the Company or to a Restricted Subsidiary of the Company for so long as such
Indebtedness is held by the Company or a Restricted Subsidiary of the Company,
in each case subject to no Lien held by a Person other than the Company or a
Restricted Subsidiary of the Company; provided that if as of any date any Person
other than the Company or a Restricted Subsidiary of the Company owns or holds
any such Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness;
(vii)Indebtedness of the Company to a Restricted Subsidiary of
the Company for so long as such Indebtedness is held by a Restricted Subsidiary
of the Company, in each case subject to no Lien; provided that (a) any
Indebtedness of the Company to any Restricted Subsidiary of the Company is
unsecured and subordinated, pursuant to a written agreement, to the Company's
Obligations under this Indenture and the Securities and (b) if as of any date
any Person other than a Restricted Subsidiary of the Company owns or holds any
such Indebtedness or any Person holds a Lien in respect of such Indebtedness,
such date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the Company;
(viii) Purchase Money Indebtedness and Capitalized Lease
Obligations incurred to acquire property in the ordinary course of business
which Indebtedness and Capitalized Lease Obligations do not in the aggregate
exceed 5% of the Company's consolidated total assets at any one time;
(ix) Refinancing Indebtedness; and
(x) additional Indebtedness of the Company in an aggregate
principal amount not to exceed $10,000,000 at any one time outstanding.
"Permitted Investments" means, for any Person, Investments
made on or after the Issue Date consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary;
(ii) Cash Equivalents;
(iii) Investments by the Company, or by a Restricted
Subsidiary thereof, in a Person (or in all or substantially all of the business
or assets of a Person) if as a result of such Investment (a) such Person becomes
a Restricted Subsidiary of the Company, (b) such Person is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary thereof
or (c) such business or assets are owned by the Company or a Restricted
Subsidiary;
(iv) reasonable and customary loans made to employees not to
exceed $5,000,000 in the aggregate at any one time outstanding;
(v) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued by a
third party to the Company or a Restricted Subsidiary solely as partial
consideration for the consummation of an Asset Sale that is otherwise permitted
under the covenant described under Section 4.09;
(vi) time brokerage and other similar agreements (including
all local marketing
agreements, joint sales agreements and similar agreements, however denominated)
under which separately owned and licensed broadcast properties enter into
cooperative arrangements and which may include an option to acquire the
broadcast property at a future date;
(vii) accounts receivable of the Company and its Restricted
Subsidiaries generated in the ordinary course of business;
(viii) loans and guarantees of loans by third-party lenders to
third parties in connection with the acquisition of media properties, secured by
substantially all of such Person's assets (to the extent permitted by FCC
rules), which are made in conjunction with the execution of a time brokerage
agreement;
(ix) options on media properties having an exercise price of
an amount not in excess of $100,000 plus the forgiveness of any loan referred to
in clause (viii) above entered into in connection with the execution of time
brokerage agreements; and
(x) additional Investments of the Company and its Restricted
Subsidiaries from time to time of an amount not to exceed $75,000,000.
"Person" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemption or upon liquidation.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Public Equity Offering" means a public offering by the
Company of shares of its Common Stock (however designated and whether voting or
non-voting) and any and all rights, warrants or options to acquire such Common
Stock.
"Purchase Date" shall have the meaning specified in Section
4.09(b).
"Purchase Money Indebtedness" means any Indebtedness incurred
in the ordinary course of business by a Person to finance the cost (including
the cost of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Redeemable Dividend" means, for any dividend or distribution
with regard to Disqualified Capital Stock, the quotient of the dividend or
distribution divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the issuer of such Disqualified Capital Stock.
"Redemption Date" when used with respect to any Security to be
redeemed means the date fixed for such redemption pursuant to this Indenture.
"Refinance" means, in respect of any security or Indebtedness,
to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire,
or to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the
Company or any Restricted Subsidiary of the Company of Indebtedness incurred in
accordance with the "Limitation on Incurrence of Additional Indebtedness"
covenant, in each case that does not (i) result in an increase in the aggregate
principal amount of Indebtedness of such Person as of the date of such proposed
Refinancing (plus the amount of any premium required to be paid under the terms
of the instrument governing such Indebtedness and plus the amount of reasonable
expenses incurred by the Company in connection with such Refinancing) or (ii)
create Indebtedness with (A) a Weighted Average Life to Maturity that is less
than the Weighted Average Life to Maturity of the Indebtedness being Refinanced
or (B) a final maturity earlier than the final maturity of the Indebtedness
being Refinanced; provided that (x) if such Indebtedness being Refinanced is
Indebtedness of the Company, then such Refinancing Indebtedness shall be
Indebtedness solely of the Company and (y) if such Indebtedness being Refinanced
is subordinate or junior to the Securities, then such Refinancing Indebtedness
shall be subordinate to the Securities at least to the same extent and in the
same manner as the Indebtedness being Refinanced.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Payment" means (i) the declaration or payment of
any dividend or the making of any other distribution (other than dividends or
distributions payable in Qualified Capital Stock) on shares of the Company's
Capital Stock other than the Existing Preferred Stock and the Series B
Convertible Preferred Stock, (ii) the purchase, redemption, retirement or other
acquisition for value of any Capital Stock of the Company, or any warrants,
rights or options to acquire shares of Capital Stock of the Company, other than
the exchange of shares of Existing Preferred Stock for the Existing Exchange
Debentures or the exchange of shares of Series B Convertible Preferred Stock for
the Securities or through the exchange of such Capital Stock or any warrants,
rights or options to acquire shares of any class of such Capital Stock for
Qualified Capital Stock or warrants, rights or options to acquire Qualified
Capital Stock, (iii) the making of any principal payment on, or the purchase,
defeasance, redemption, prepayment, decrease or other acquisition or retirement
for value, prior to any scheduled final maturity, scheduled repayment or
scheduled sinking fund payment, of, any Indebtedness of the Company or its
Subsidiaries that is subordinated or junior in right of payment to the
Securities, (iv) the making of any Investment (other than a Permitted
Investment), (v) any designation of a Restricted Subsidiary as an Unrestricted
Subsidiary on the basis of the fair market value of such Subsidiary utilizing
standard valuation methodologies and approved by the Board of Directors,
excluding any such Subsidiary with a fair market value equal to or less than
$500 or (vi) forgiveness of any Indebtedness of an Affiliate of the Company to
the Company or a Restricted Subsidiary.
"Restricted Subsidiary" means a Subsidiary of the Company
other than an Unrestricted Subsidiary and includes all of the Subsidiaries of
the Company existing as of the Issue Date. The Board of Directors of the Company
may designate any Unrestricted Subsidiary or any Person that is to become a
Subsidiary as a Restricted Subsidiary if immediately after giving effect to such
action (and treating any Acquired Indebtedness as having been incurred at the
time of such action), the Company could have incurred at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
"Limitation on Additional Indebtedness" covenant.
"S&P" means Standard & Poor's Corporation and its successors.
"SEC" means the United States Securities and Exchange
Commission as constituted from time to time or any successor performing
substantially the same functions.
"Secondary Securities" shall have the meaning specified in the
Securities.
"Securities" means the Company's ___% Exchange Debentures due
2009, as amended or supplemented from time to time in accordance with the terms
hereof, that are issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means, the principal of and premium, if any, and
interest (including, without limitation, interest accruing or that would have
accrued but for the filing of a bankruptcy, reorganization or other insolvency
proceeding whether or not such interest constitutes an allowed claim in such
proceeding) on, and any and all other fees, expense reimbursement obligations,
indemnities and other amounts due pursuant to their terms of all agreements,
documents and instruments providing for, creating, securing or evidencing or
otherwise entered into in connection with (a) all Indebtedness of the Company
owed under the Credit Facility, (b) all obligations of the Company with respect
to any Interest Rate Agreement, (c) all obligations of the Company to reimburse
any bank or other person in respect of amounts paid under letters of credit,
acceptances or other similar instruments, (d) all other Indebtedness of the
Company which does not provide that it is to rank pari passu with or subordinate
to the Securities and (e) all deferrals, renewals, extensions and refundings of,
and amendments, modifications and supplements to, any of the Senior Debt
described above. Notwithstanding anything to the contrary in the foregoing,
Senior Debt will not include (i) Indebtedness of the Company to any of its
Subsidiaries, (ii) Indebtedness represented by the Securities, (iii) any
Indebtedness which by the express terms of the agreement or instrument creating,
evidencing or governing the same is junior or subordinate in right of payment to
any item of Senior Debt, (iv) any trade payable arising from the purchase of
goods or materials or for services obtained in the ordinary course of business
or (v) Indebtedness incurred in violation of this Indenture.
"Series B Convertible Preferred Stock" means the 8% Cumulative
Exchangeable Preferred Stock, par value $.001 per share of the Company.
"Stock Transaction" has the meaning ascribed to such term in
Section 12.05(i)(a) hereof.
"Subsidiary", with respect to any Person, means (i) any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such Person
or (ii) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at the time, directly or indirectly, owned by
such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. code
ss.ss. 77aaa-77bbbb) as in effect on the date of this
Indenture (except as provided in Section 8.03 hereof).
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer trust accounts.
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor.
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary and (b) any Subsidiary of the Company which is
classified after the Issue Date as an Unrestricted Subsidiary by a resolution
adopted by the Board of Directors; provided that a Subsidiary organized or
acquired after the Issue Date may be so classified as an Unrestricted Subsidiary
only if such classification is not in violation of Section 4.08. The Trustee
shall be given prompt notice by the Company of each resolution adopted by the
Board of Directors under this provision, together with a copy of each such
resolution adopted.
"U.S. Government Obligations" means (a) securities that are
direct obligations of the United States of America for the payment of which its
full faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary all
of the outstanding voting securities (other than directors' qualifying shares)
of which are owned, directly or indirectly, by the Company.
Section 1.02......Other Definitions.
The definitions of the following terms may be found in the
sections indicated as follows:
Term Defined in Section
"Affiliate Transaction".............................. 4.10
"Agent Members"...................................... 2.14
"Bankruptcy Law"..................................... 6.01
"Business Day"....................................... 12.08
"Change of Control Offer"............................ 4.15
"Change of Control Payment Date"..................... 4.15
"Covenant Defeasance"................................ 9.03
"Custodian".......................................... 6.01
"Event of Default"................................... 6.01
"Excess Proceeds Offer".............................. 4.09
"Guarantee Payment Blockage Period".................. 10.08
"Guarantor Representative"........................... 10.08
"Initial Blockage Period"............................ 11.03
"Initial Guarantee Blockage Period".................. 10.08
"Legal Defeasance"................................... 9.02
"Legal Holiday"...................................... 12.08
"Offer Period"....................................... 4.09
"Paying Agent"....................................... 2.03
"Payment Blockage Period"............................ 11.03
"Purchase Date"...................................... 4.09
"Registrar".......................................... 2.03
"Reinvestment Date".................................. 4.09
"Representative"..................................... 11.03
"Required Filing Dates".............................. 4.02
Section 1.03. Incorporation by Reference of Trust
Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
portion of such provision required to be incorporated herein in order for this
Indenture to be qualified under the TIA is incorporated by reference in and made
a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor on the indenture securities" means the Company, the
Guarantors or any other obligor on the Securities.
All other terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings therein assigned to them.
Section 1.04......Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether
defined expressly or by reference;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) words used herein implying any gender shall apply to
every gender.
ARTICLE 2
THE SECURITIES
Section 2.01. Dating; Incorporation of Form in Indenture.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A which is incorporated in and
made part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company may use
"CUSIP" numbers in issuing the Securities. The Company shall approve the form of
the Securities. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Section 2.02. Execution and Authentication.
The Securities shall be executed on behalf of the Company by
two Officers of the Company or an Officer and an Assistant Secretary of the
Company. Such signature may be either manual or facsimile. The Company's seal
shall be impressed, affixed, imprinted or reproduced on the Securities and may
be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A security shall not be valid until the Trustee manually signs
the certificate of authentication on the Security. Such signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee or an authenticating agent shall authenticate
Securities for original issue in the aggregate principal amount of up to
$___,000,000 upon a Company Request. The aggregate principal amount of
Securities outstanding at any time may not exceed such amount except as provided
in Section 2.07 hereof.
The Trustee may appoint an authenticating agent to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same right as an Agent to deal with the Company or
an Affiliate.
The Securities shall be issuable in fully registered form
only, without coupons, in denominations of $1,000 and any integral multiple
thereof; provided, however, that Securities may be issued in denominations of
less than $1,000 (but not less than $1.00) upon the initial exchange of the
Series B Convertible Preferred Stock for the Securities such that each holder of
Series B Convertible Preferred Stock shall receive Securities in a principal
amount equal to the full liquidation preference of the Series B Convertible
Preferred Stock on the Issue Date; provided, further, however, that Secondary
Securities may be issued in denominations of less than $1,000 (but not less than
$1.00).
The Trustee shall have the right to decline to authenticate
and deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith shall determine that such action would expose the Trustee to
personal liability to existing Holders.
Section 2.03......Registrar and Paying Agent.
The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for exchange
("Registrar"), an office or agency located in the Borough of Manhattan, City of
New York, State of New York where Securities may be presented for payment
("Paying Agent") and an office or agency where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-registrars and one or more
additional paying agents. Neither the Company nor any Affiliate may act as
Paying Agent. The Company may change any Paying Agent, Registrar or co-registrar
without notice to any Securityholder.
The Company shall enter into an appropriate agency agreement
with any Registrar or Paying Agent not a party to this Indenture. The agreement
shall implement the provisions of this Indenture that relate to such Agent. The
Company shall notify the Trustee of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, or agent for service
of notices and demands, or fails to give the foregoing notice, the Trustee shall
act as such. The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of notices and demands in connection with the
Securities.
Section 2.04......Paying Agent to Hold Assets in Trust.
On or before each due date of the principal of and interest on
any Securities, the Company shall deposit with the Paying Agent a sum sufficient
to pay such principal and interest so becoming due. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and the
Trustee, may at any time during the continuance of any Payment Default, upon
written request to a Paying Agent, require such Paying Agent to forthwith pay to
the Trustee all sums so held in trust by such Paying Agent together with a
complete accounting of such sums. Upon doing so, the Paying Agent shall have no
further liability for the money.
Section 2.05......Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee on or before each June 15 and December 15 in each
year, and at such other times as the Trustee may request in writing, a list as
of the applicable Record Date and in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
Section 2.06......Transfer and Exchange.
When a Security is presented to the Registrar with a request
to register the transfer thereof, the Registrar shall register the transfer as
requested if the requirements of applicable law are met and, when Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other authorized denominations, the Registrar
shall make the exchange as requested provided that every Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by the Holder thereof or his attorney
duly authorized in writing. To permit transfers and exchanges, upon surrender of
any Security for registration of transfer at the office or agency maintained
pursuant to Section 2.03 hereof, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's request. Any exchange or transfer
shall be without charge, except that the Company may require payment by the
Holder of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation to a transfer or exchange, but this provision shall
not apply to any exchange pursuant to Sections 2.09, 3.06 or 8.05 hereof. The
Trustee shall not be required to register transfers of Securities or to exchange
Securities for a period of 15 days before selection of any Securities to be
redeemed. The Trustee shall not be required to exchange or register transfers of
any Securities called or being called for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.
Section 2.07......Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if
the Holder of a Security presents evidence to the satisfaction of the Company
and the Trustee that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a replacement
Security if the requirements of Section 8-405 of the New York Uniform Commercial
Code as in effect on the date of this Indenture are met. An indemnity bond shall
be required that is sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. In every case of destruction, loss or
theft, the applicant shall also furnish to the Company and to the Trustee
evidence to their satisfaction of the destruction, loss or the theft of such
Security and the ownership thereof. The Company and the Trustee may charge for
its expenses in replacing a Security. Every replacement Security is an
additional obligation of the Company.
Section 2.08......Outstanding Securities.
Securities outstanding at any time are all Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, and those described in this Section 2.08 as not
outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding until the Company and the Trustee receive proof satisfactory
to each of them that the replaced security is held by a bona fide purchaser.
If a Paying Agent holds on a Redemption Date or Maturity Date
money sufficient to pay the principal of, premium, if any, and accrued interest
on Securities payable on that date, then on and after that date such Securities
cease to be outstanding and interest on them ceases to accrue.
Subject to Section 13.06, a Security does not cease to be
outstanding solely because the Company or an Affiliate holds the Security.
Section 2.09......Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form, and shall carry all
rights, of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive securities
in exchange for temporary Securities presented to it.
Section 2.10......Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or payment.
The Trustee shall cancel and retain or, upon written request of the Company, may
return to the Company in accordance with its normal practice, all Securities
surrendered for transfer, exchange, payment or cancellation. Subject to Section
2.07 hereof, the Company may not issue new Securities to replace Securities in
respect of which it has previously paid all principal, premium and interest
accrued thereon, or delivered to the Trustee for cancellation.
Section 2.11......Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted amounts, plus any interest payable on
defaulted amounts pursuant to Section 4.01 hereof, to the persons who are
Securityholders on a subsequent special record date. The Company shall fix the
special record date and Payment date in a manner satisfactory to the Trustee and
provide the Trustee at least 20 days notice of the proposed amount of default
interest to be paid and the special payment date. At least 15 days before the
special record date, the Company shall mail or cause to be mailed to each
Securityholder at his address as it appears on the Securities register
maintained by the Registrar a notice that states the special record date, the
payment date (which shall be not less than five nor more than ten days after the
special record date), and the amount to be paid. In lieu of the foregoing
procedures, the Company may pay defaulted interest in any other lawful manner
satisfactory to the Trustee.
Section 2.12......Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on each Interest
Payment Date and Maturity Date, the Company shall have deposited with the Paying
Agent in immediately available funds money sufficient to make cash payments, if
any, due on such Interest Payment Date or Maturity Date, as the case may be, in
a timely manner which permits the Trustee to remit payment to the Holders on
such Interest Payment Date or Maturity Date, as the case may be.
Section 2.13......CUSIP Number.
The Company in issuing the Securities may use a "CUSIP"
number(s), and if so, the Trustee shall use the CUSIP number(s) in notices of
redemption or exchange as a convenience to Holders, provided that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number(s) printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed on
the Securities. The Company shall promptly inform the Trustee of any change in
the CUSIP number(s).
ARTICLE 3
REDEMPTION
Section 3.01......Notices to Trustee.
If the Company elects to redeem Securities pursuant to
paragraph 6 of the Securities, (i) at least 30 days prior to the Redemption Date
in the case of a partial redemption, (ii) at least 30 days prior to the
Redemption Date in the case of a total redemption or (iii) during such other
period as the Trustee may agree to, the Company shall notify the Trustee in
writing of the Redemption Date, the principal amount of Securities to be
redeemed and the redemption price, and deliver to the Trustee an Officers'
Certificate stating that such redemption will comply with the conditions
contained in paragraph 6 of the Securities, as appropriate.
Section 3.02. Selection by Trustee of
Securities to Be Redeemed.
In the event that fewer than all of the Securities are to be
redeemed, the Trustee shall select the Securities to be redeemed, if the
Securities are listed on a national securities exchange, in accordance with the
rules of such exchange or, if the Securities are not so listed, on either a pro
rata basis or by lot, or such other method as it shall deem fair and equitable.
The Trustee shall promptly notify the Company of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed. The Trustee may select for
redemption portions of the principal of Securities that have denominations
larger than $1,000. Securities and portions thereof the Trustee selects shall be
redeemed in amounts of $1,000 or whole multiples of $1,000. For all purposes of
this Indenture unless the context otherwise requires, provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption.
Section 3.03......Notice of Redemption.
At least 90 days before a Redemption Date, the Company shall
mail, or cause to be mailed, a notice of redemption by first-class mail to each
Holder of Securities to be redeemed at his or her last address as the same
appears on the registry books maintained by the Registrar pursuant to Section
2.03 hereof.
The notice shall identify the Securities to be redeemed
(including the CUSIP number(s) thereof) and shall state:
(1) the Redemption Date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after the
Redemption Date and upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(6) that unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on and
after the Redemption Date;
(7) the paragraph of the Securities pursuant to which the
Securities are being redeemed; and
(8) the aggregate principal amount of Securities that are
being redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's sole expense.
Section 3.04. Effect of Notice of Redemption.
Once the notice of redemption described in Section 3.03 is
mailed, Securities called for redemption become due and payable on the
Redemption Date and at the redemption price, including any premium, plus
interest accrued to the Redemption Date. Upon surrender to the Paying Agent,
such Securities shall be paid at the redemption price, including any premium,
plus interest accrued to the Redemption Date, provided that if the Redemption
Date is after a regular interest payment record date and on or prior to the
Interest Payment Date, the accrued interest shall be payable to the Holder of
the redeemed Securities registered on the relevant record date, and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
Section 3.05......Deposit of Redemption Price.
On or prior to 10:00 A.M., New York City time, on each
Redemption Date, the Company shall deposit with the Paying Agent in immediately
available funds money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than Securities or
portions thereof called for redemption on that date which have been delivered by
the Company to the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay
the redemption price of and accrued interest on Securities called for redemption
shall have been made available in accordance with the preceding paragraph, the
Securities called for redemption will cease to accrue interest and the only
right of the Holders of such Securities will be to receive payment of the
redemption price of and, subject to the first proviso in Section 3.04, accrued
and unpaid interest on such Securities to the Redemption Date. If any Security
called for redemption shall not be so paid, interest will be paid, from the
Redemption Date until such redemption payment is made, on the unpaid principal
of the Security and any interest not paid on such unpaid principal, in each
case, at the rate and in the manner provided in the Securities.
Section 3.06......Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Trustee shall authenticate for a Holder a new Security equal in principal amount
to the unredeemed portion of the Security surrendered.
ARTICLE 4
COVENANTS
Section 4.01......Payment of Securities.
The Company shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal of or interest on the Securities shall be
considered paid on the date it is due if the Trustee or Paying Agent holds on
that date money designated for and sufficient to pay the installment or, if the
interest is to be paid in Secondary Securities, if the Trustee or the Paying
Agent holds on that date duly authenticated Secondary Securities in an aggregate
principal amount equal to such installment. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months and the actual number
of days elapsed.
The Company shall pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Securities.
Section 4.02......SEC Reports.
(a) The Company will file with the SEC all information,
documents and reports to be filed with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act, whether or not the Company is subject to such filing
requirements so long as the SEC will accept such filings. The Company (at its
own expense) will file with the Trustee within 15 days after it files them with
the SEC, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the SEC may
by rules and regulations prescribe) which the Company files with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. The Company shall also
comply with the provisions of TIA ss. 314(a). Delivery of such reports,
information and documents to the Trustee is for informational purposes only and
the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
(b) At the Company's expense, regardless of whether the
Company is required to furnish such reports and other information referred to in
paragraph (a) above to its stockholders pursuant to the Exchange Act, the
Company shall cause such reports and other information to be mailed to the
Holders at their addresses appearing in the register of Securities maintained by
the Registrar within 15 days after it files them with the SEC. In the event that
the Company is no longer required to furnish such reports to its stockholders
pursuant to the Exchange Act, the Company will cause its consolidated financial
statements, comparable to those which would have been required to appear in
annual or quarterly reports, to be delivered to the holders of the Securities.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates)
Section 4.03. Waiver of Stay, Extension or
Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead (as a defense or
otherwise) or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law which would prohibit
or forgive the Company from paying all or any portion of the principal of,
premium, if any, and/or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
Section 4.04......Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 100 days
after the end of each fiscal year and on or before 50 days after the end of the
first, second and third quarters of each fiscal year, an Officers' Certificate
(one of the signers of which shall be the principal executive officer, principal
financial officer or principal accounting officer of the Company) stating that a
review of the activities of the Company and its Subsidiaries during such fiscal
year or fiscal quarter, as the case may be, has been made under the supervision
of the signing officers with a view to determining whether each has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge each has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all or
such Defaults or Events of Default of which he or she may have knowledge and
what action each is taking or proposes to take with respect thereto) and that to
the best of his or her knowledge no event has occurred and remains in existence
by reason of which payments on account of the principal of or interest, if any,
on the Securities is prohibited or if such event has occurred, a description of
the event and what action each is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.02 above shall be
accompanied by a written statement of the Company's independent certified public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of this Article 4 or Article 5 hereof of
this Indenture or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall not
be liable directly or indirectly for any failure to obtain knowledge of any such
violation.
(c) The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with a respect thereto.
Section 4.05......Taxes.
The Company shall, and shall cause each of its Subsidiaries
to, pay prior to delinquency all material taxes, assessments, and governmental
levies except as contested in good faith and by appropriate proceedings.
Section 4.06. Limitation on Incurrence of
Additional Indebtedness.
The Company shall not, and shall not permit any Restricted
Subsidiary of the Company to, directly or indirectly incur any Indebtedness
(including Acquired Indebtedness) other than Permitted Indebtedness.
Notwithstanding the foregoing limitations, the Company and its Restricted
Subsidiaries may incur Indebtedness if (a) after giving effect to the incurrence
of such Indebtedness and the receipt and application of the proceeds thereof,
the ratio of the Company's total Indebtedness to the Company's Consolidated
EBITDA (determined on a pro forma basis for the last four full fiscal quarters
of the Company for which financial statements are available at the date of
determination) is less than 7.0 to 1; provided, however, that if the
Indebtedness which is the subject of a determination under this provision is
Acquired Indebtedness, or Indebtedness incurred in connection with the
simultaneous acquisition of any Person, business, Property or assets, then such
ratio shall be determined by giving effect (on a pro forma basis, as if the
transaction had occurred at the beginning of the four quarter period) to both
the incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by the Company and the inclusion in the Company's Consolidated
EBITDA of the Consolidated EBITDA of the acquired Person, business, Property or
assets; and, provided, further, that in the event that the Consolidated EBITDA
of the acquired Person, business, Property or assets reflects an operating loss,
no amounts shall be deducted from the Company's Consolidated EBITDA in making
the determinations described above and (b) no Default or Event of Default shall
have occurred and be continuing at the time or as a consequence of the
incurrence of such Indebtedness.
Section 4.07. Limitation on Preferred Stock of Restricted
Subsidiaries.
The Company shall not permit any Restricted Subsidiary to
issue any Preferred Stock (except to the Company or to a Restricted Subsidiary)
or permit any Person (other than the Company or a Restricted Subsidiary) to hold
any such Preferred Stock unless the Company or such Restricted Subsidiary would
be entitled to incur or assume Indebtedness in compliance with Section 4.06 in
an aggregate principal amount equal to the aggregate liquidation value of the
Preferred Stock to be issued.
Section 4.08......Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment
if at the time of such Restricted Payment and immediately after giving effect
thereto:
(i) any Default or Event of Default shall have occurred and be
continuing; or
(ii) the Company could not incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.06; or
(iii) the aggregate amount of Restricted Payments declared or
made after the Issue Date (the amount expended for such purposes, if
other than in cash, being the fair market value of such Property as
determined by the Board of Directors of the Company in good faith)
exceeds the sum of (a) 100% of the Company's Cumulative Consolidated
EBITDA minus 1.4 times the Company's Cumulative Consolidated Interest
Expense, plus (b) 100% of the aggregate Net Proceeds and the fair
market value of securities or other Property received by the Company
from the issue or sale, after the Issue Date, of Capital Stock (other
than Disqualified Capital Stock of the Company or Capital Stock of the
Company issued to any Restricted Subsidiary of the Company) of the
Company or any Indebtedness or other securities of the Company
convertible into or exercisable or exchangeable for Capital Stock
(other than Disqualified Capital Stock) of the Company which have been
so converted or exercised or exchanged, as the case may be, plus (c)
$10,000,000.
(b) Notwithstanding the foregoing, these provisions will not
prohibit: (1) the payment of any dividend or the making of any distribution
within 60 days after the date of its declaration if such dividend or
distribution would have been permitted on the date of declaration; or (2) the
purchase, redemption or other acquisition or retirement of any Capital Stock of
the Company or any warrants, options or other rights to acquire shares of any
class of such Capital Stock either (x) solely in exchange for shares of
Qualified Capital Stock or other rights to acquire Qualified Capital Stock or
(y) through the application of the Net Proceeds of a substantially concurrent
sale for cash (other than to a Restricted Subsidiary) of shares of Qualified
Capital Stock or warrants, options or other rights to acquire Qualified Capital
Stock; (3) the acquisition of Indebtedness of the Company that is subordinate or
junior in right of payment to the Securities either (x) solely in exchange for
shares of Qualified Capital Stock (or warrants, options or other rights to
acquire Qualified Capital Stock) or for Indebtedness of the Company that is
subordinate or junior in right of payment to the Securities, at least to the
extent that the Indebtedness being acquired is subordinated to the Securities
and has a Weighted Average Life to Maturity no less than that of the
Indebtedness being acquired or (y) through the application of the Net Proceeds
of a substantially concurrent sale for cash (other than to a Restricted
Subsidiary) of shares of Qualified Capital Stock (or warrants, options or other
rights to acquire Qualified Capital Stock) or Indebtedness of the Company which
is subordinate or junior in right of payment to the Securities, at least to the
extent that the Indebtedness being acquired is subordinated to the Securities
and has a Weighted Average Life to Maturity no less than that of the
Indebtedness being refinanced; (4) the retirement of the Series B Convertible
Preferred Stock in accordance with the optional redemption and put provisions as
in effect on the Issue Date and the payment of cash dividends on the Series B
Convertible Preferred Stock; or (5) as long as no Default or Event of Default
shall have occurred and be continuing, the payment of cash dividends on the
Existing Preferred Stock or the redemption thereof at times and in amounts no
less favorable to holders of the Securities than such provisions as are in
effect in the related certificates of designation on the Issue Date; provided,
however, that any cash dividends or cash redemptions or premiums in respect
thereof paid with respect to the Existing Preferred Stock shall reduce amounts
otherwise available for Restricted Payments.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.08 were computed, which calculations may
be based upon the Company's latest available financial statements, and that no
Default or Event of Default exists and is continuing and no Default or Event of
Default will occur immediately after giving effect to any Restricted Payments.
Section 4.09......Limitation on Certain Asset Sales.
(a) The Company shall not, and shall not cause or permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company or such Restricted Subsidiary, as the case may be, receives
consideration at least equal to the fair market value thereof on the date the
Company or Restricted Subsidiary (as applicable) entered into the agreement to
consummate such Asset Sale (as determined in good faith by the Company's Board
of Directors, and evidenced by a Board Resolution); (ii) not less than 75% of
the consideration received by the Company or its Subsidiaries, as the case may
be, is in the form of cash or Cash Equivalents, other than in the case where the
Company is exchanging all or substantially all of the assets of one or more
media properties operated by the Company (including by way of the transfer of
capital stock) for all or substantially all of the assets (including by way of
the transfer of capital stock) constituting one or more media properties
operated by another Person, provided that not less than 75% of the consideration
received by the Company in such exchange is in the form of cash or Cash
Equivalents considering, for this purpose only, the media properties, valued at
their fair market value, as Cash Equivalents; and (iii) the Asset Sale Proceeds
received by the Company or such Restricted Subsidiary are applied (a) first, to
the extent the Company elects, or is required, to prepay, repay or purchase
Indebtedness under any then existing Senior Debt of the Company or any
Restricted Subsidiary within 180 days following the receipt of the Asset Sale
Proceeds from any Asset Sale; (b) second, to the extent of the balance of Asset
Sale Proceeds after application as described above, to the extent the Company
elects, to make an Investment in assets (including Capital Stock or other
securities purchased in connection with the acquisition of Capital Stock or
Property of another Person) used or useful in businesses similar or ancillary to
the business of the Company or Restricted Subsidiary as conducted at the time of
such Asset Sale, provided that such Investment occurs or the Company or a
Restricted Subsidiary enters into contractual commitments to make such
investment, subject only to customary conditions (other than the obtaining of
financing), on or prior to the 181st day following receipt of such Asset Sale
Proceeds (the "Reinvestment Date") and Asset Sale Proceeds contractually
committed are so applied within 360 days following the receipt of such Asset
Sale proceeds; (c) third, to make any required Excess Proceeds Offer (as defined
in the Existing Debt Indentures) to holders of the Existing Notes and Existing
Exchange Debentures in accordance with the terms of the Existing Indenture; and
(d) fourth, to make an offer for the Securities as described under paragraph 6
of the Securities following a Major Asset Sale or, if on the Reinvestment Date
with respect to any Asset Sale, the Available Asset Sale Proceeds exceed
$10,000,000, the Company shall apply an amount equal to such Available Asset
Sale Proceeds to an offer to repurchase the Securities, at a purchase price in
cash equal to 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase (an "Excess Proceeds Offer"). If an
Excess Proceeds Offer is not fully subscribed, the Company may retain the
portion of the Available Asset Sale Proceeds not required to repurchase
Securities.
(b) If the Company is required to make an Excess Proceeds
Offer, the Company shall mail, within 30 days following the Reinvestment Date, a
notice to the registered Holders stating, among other things: (1) that such
Holders have the right to require the Company to apply the Available Asset Sale
Proceeds to repurchase such Securities at a purchase price in cash equal to 100%
of the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase; (2) the purchase date (the "Purchase Date"), which shall be no
earlier than 30 days and not later than 60 days from the date such notice is
mailed; (3) the instructions, determined by the Company, that each Holder must
follow in order to have such Securities repurchased; and (4) the calculations
used in determining the amount of Available Asset Sale Proceeds to be applied to
the repurchase of such Securities. The Excess Proceeds Offer shall remain open
for a period of 20 Business Days following its commencement (the "Offer
Period"). The notice, which shall govern the terms of the Excess Proceeds Offer,
shall also state:
(1) that the Excess Proceeds Offer is being made pursuant to
this Section 4.09 and the length of time the Excess Proceeds Offer will remain
open;
(2) the purchase price and the Purchase Date;
(3) that any Security not tendered or accepted for payment
will continue to accrue interest;
(4) that any Security accepted for payment pursuant to the
Excess Proceeds Offer shall cease to accrue interest on and after the Purchase
Date;
(5) that Holders electing to have a Security purchased
pursuant to any Excess Proceeds Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Security completed, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three Business Days before the Purchase Date;
(6) that Holders will be entitled to withdraw their election
if the Company, depositary or Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Security the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have the Security purchased;
(7) that, if the aggregate principal amount of Securities
surrendered by Holders exceeds the Available Asset Sale Proceeds, the Company
shall select the Securities to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only Securities
in denominations of $1,000, or integral multiples thereof, shall be purchased);
and
(8) that Holders whose Securities were purchased only in part
will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
Securities or portions thereof tendered pursuant to the Excess Proceeds Offer,
deposit with the Paying Agent U.S. legal tender sufficient to pay the purchase
price plus accrued interest, if any, on the Securities to be purchased and
deliver to the Trustee an Officers' Certificate stating that such securities or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 4.09. The Paying Agent shall promptly (but in any case not
later than 5 days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Security tendered by such
Holder and accepted by the Company for purchase, and the Company shall promptly
issue a new Security, and the Trustee shall authenticate and mail or make
available for delivery such new Security to such Holder equal in principal
amount to any unpurchased portion of the Security surrendered. Any Security not
so accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company will publicly announce the results of the Excess Proceeds
Offer on the Purchase Date. If an Excess Proceeds Offer is not fully subscribed,
the Company may retain that portion of the Available Asset Sale Proceeds not
required to repurchase Securities.
Section 4.10. Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not cause or permit any
of its Restricted Subsidiaries to, directly or indirectly, enter into or suffer
to exist any transaction or series of related transactions (including without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate or holder of 10% or more of the Company's Common
Stock (an "Affiliate Transaction") or extend, renew, waive or otherwise modify
the terms of any Affiliate Transaction entered into prior to the Issue Date
unless (i) such Affiliate Transaction is between or among the Company and its
Wholly-Owned Subsidiaries; or (ii) the terms of such Affiliate Transaction are
fair and reasonable to the Company or such Restricted Subsidiaries, as the case
may be, and the terms of such Affiliate Transaction are at least as favorable as
the terms which could be obtained by the Company or such Restricted Subsidiary,
as the case may be, in a comparable transaction made on an arm's-length basis
between unaffiliated parties. In any Affiliate Transaction involving an amount
or having a value in excess of $1,000,000 which is not permitted under clause
(i) above, the Company must obtain a resolution of the board of directors
certifying that such Affiliate Transaction complies with clause (ii) above. In
transactions with a value in excess of $5,000,000 which are not permitted under
clause (i) above, unless such transaction is with a Subsidiary in which no
Affiliate has a minority interest therein, the Company must obtain a valuation
of the assets subject to such transaction by an Independent Appraiser or a
written opinion as to the fairness of such a transaction from an independent
investment banking firm or an Independent Appraiser.
(b) The limitations set forth in Section 4.10(a) shall not
apply to (i), any Restricted Payment that is not prohibited by Section 4.08,
(ii) any transaction, approved by the Board of Directors of the Company, with an
officer or director of the Company or of any Subsidiary in his or her capacity
as officer or director entered into in the ordinary course of business,
including compensation and employee benefit arrangements with any officer or
director of the Company or of any Subsidiary that are customary for public
companies in the broadcasting industry or (iii) modifications of the Existing
Preferred Stock.
Section 4.11......Limitation on Creation of Subsidiaries.
The Company shall not create or acquire, nor permit any of its
Restricted Subsidiaries to create or acquire, any Subsidiary other than (i) a
Restricted Subsidiary existing as of the date of this Indenture, (ii) a
Restricted Subsidiary that is acquired or created after the date hereof, or
(iii) an Unrestricted Subsidiary; provided, however, that each Restricted
Subsidiary acquired or created pursuant to clause (ii) shall at the time it has
either assets or stockholder's equity in excess of $5,000 execute a guarantee,
satisfactory in form and substance to the Trustee (and with such documentation
relating thereto as the Trustee shall require, including, without limitation a
supplement or amendment to this Indenture and Opinions of Counsel as to the
enforceability of such guarantee), pursuant to which such Restricted Subsidiary
shall become a Guarantor.
Section 4.12. Limitation on Other Senior
Subordinated Debt.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, incur, contingently or
otherwise, any Indebtedness that is both (i) subordinate in right of payment to
any Senior Debt of the Company or its Restricted Subsidiaries, as the case may
be, and (ii) senior in right of payment to the Securities and the Guarantees, as
the case may be. For purposes of this Section 4.12, Indebtedness is deemed to be
senior in right of payment to the Securities and the Guarantees, as the case may
be, if it is not explicitly subordinate in right of payment to Senior Debt at
least to the same extent as the Securities and the Guarantees, as the case may
be, are subordinate to Senior Debt.
Section 4.13......Payments for Consent.
Neither the Company nor any of its Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Securities unless such consideration is offered to be
paid or agreed to be paid to all Holders of the Securities which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
Section 4.14......Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each Restricted Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Restricted
Subsidiary and the rights (charter and statutory), licenses and franchises of
the Company and its Restricted Subsidiaries; provided, however, that the Company
shall not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Restricted Subsidiaries,
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Restricted Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders.
Section 4.15......Change of Control.
(a) Within 30 days of the occurrence of a Change of Control,
the Company shall notify the Trustee in writing of such occurrence and shall
make an offer to purchase (the "Change of Control Offer") the outstanding
Securities at a purchase price equal to 101% of the principal amount thereof
plus any accrued and unpaid interest thereon to the Change of Control Payment
Date (such applicable purchase price being hereinafter referred to as the
"Change of Control Purchase Price") in accordance with the procedures set forth
in this Section 4.15.
At the time of the occurrence of a Change of Control, prior to
the mailing of the notice to Holders described in paragraph (b) below, but in
any event within 30 days following the date on which a Change of Control occurs,
the Company covenants that if the purchase of the Securities would violate or
constitute a default under the Credit Facility or any other then outstanding
Senior Debt, then the Company will, to the extent needed to permit such purchase
of Securities, either (i) repay in full all Indebtedness on the basis required
by the Credit Facility and such Senior Debt (and terminate all commitments
thereunder) or (ii) obtain the requisite consents under the Credit Facility and
the instrument governing such Senior Debt to permit the repurchase of the
Securities as provided in paragraph (b) below. The Company must first comply
with the covenant described in the preceding sentence before it shall be
required to repurchase Securities pursuant to the provisions described in
paragraph (b) below; provided that the Company's failure to comply with the
covenant described in the preceding sentence will constitute an Event of Default
described in clause (3) under Section 6.01 hereof if not cured within 60 days
after the notice required by such clause.
(b) Within 30 days of the occurrence of a Change of Control,
the Company also shall (i) cause a notice of the Change of Control Offer to be
sent at least once to the Dow Jones News Service or similar business news
service in the United States and (ii) send by first-class mail, postage prepaid,
to the Trustee and to each Holder of the Securities, at the address appearing in
the register maintained by the Registrar of the Securities, a notice stating:
(i) that the Change of Control Offer is being made pursuant to
this Section 4.15 and that all Securities tendered will be accepted for payment,
and otherwise subject to the terms and conditions set forth in this Indenture;
(ii) the Change of Control Purchase Price and the purchase
date (which shall be a Business Day no earlier than 30 days nor more than 60
days from the date such notice is mailed (the "Change of Control Payment Date");
(iii) that any Security not tendered will continue to accrue
interest;
(iv) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Securities accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest after the Change
of Control Payment Date;
(v) that Holders accepting the offer to have their Securities
purchased pursuant to a Change of Control Offer will be required to surrender
the Securities, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Security completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business Day
preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their
acceptance if the Paying Agent receives, not later than the close of business on
the third Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Securities delivered for purchase, and a statement
that such Holder is withdrawing his election to have such Securities purchased;
(vii) that Holders whose Securities are being purchased only
in part will be issued a new certificate representing Securities equal
in principal amount to the unpurchased portion of the Securities
surrendered, provided that each Security purchased and each such
Security issued shall be in an original principal amount in
denominations of $1,000 and integral multiples thereof;
(viii) any other procedures that a Holder must follow to
accept a Change of Control Offer or effect withdrawal of such acceptance; and
(ix) the name and address of the Paying Agent.
(c) On the Change of Control Payment Date, the Company shall
to the extent lawful (i) accept for payment Securities or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Securities or portions
thereof so tendered and (iii) deliver or cause to be delivered to the Trustee
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof tendered to the Company. The Paying Agent shall
promptly mail to each Holder of Securities so accepted payment in an amount
equal to the purchase price for such Securities, and the Company shall execute
and issue, and the Trustee shall promptly authenticate and mail to such holder,
a Security equal in principal amount to any unpurchased portion of the
Securities surrendered; provided that each such Security shall be issued in an
original principal amount in denominations of $1,000 and integral multiples
thereof.
(d) The Company will comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the purchase of the Securities pursuant to a Change of Control Offer. To
the extent the provisions of any such rule conflict with the provisions of this
Indenture relating to a Change of Control Offer, the Company shall comply with
the provisions of such rule and be deemed not to have breached its obligations
relating to such Change of Control Offer by virtue thereof.
This "Change of Control" covenant will not apply in the event
of (a) changes in a majority of the Board of Directors of the Company in certain
instances as contemplated by the definition of "Change of Control" and (b)
certain transactions with Permitted Holders. In addition, this covenant is not
intended to afford holders of Securities protection in the event of certain
highly leveraged transactions, reorganizations, restructurings, mergers and
other similar transactions that might adversely affect the holders of
Securities, but would not constitute a Change of Control.
None of the provisions in this Indenture relating to a
repurchase upon a Change of Control is waivable by the Board of Directors of the
Company. In addition, the Trustee may not waive the right of any holder of the
Securities to redeem its Securities upon a Change of Control, except to the
extent the Trustee is acting at the direction of the holders of the Securities
then outstanding.
Section 4.16......Maintenance of Office or Agency.
The Company shall maintain an office or agency where
Securities may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee as set forth in Section
13.02.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations. The Company shall give prompt written notice to the Trustee of
such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby initially designates the Corporate Trust
Office of the Trustee set forth in Section 13.02 as such office of the Company.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger
and Sale of Assets.
The Company shall not in a single transaction or series of
related transactions, consolidate with or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets to, another Person or adopt a plan of liquidation unless (i) either (1)
the Company is the survivor of such merger or consolidation or (2) the surviving
or transferee Person is a corporation, partnership or trust organized and
existing under the laws of the United States, any state thereof or the District
of Columbia and such surviving or transferee Person expressly assumes by
supplemental indenture all the obligations of the Company, under the Securities
and this Indenture; (ii) immediately after giving effect to such transaction and
the use of proceeds therefrom (on a pro forma basis, including any Indebtedness
incurred or anticipated to be incurred in connection with such transaction), the
Company or the surviving or transferee Person is able to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.06; (iii) immediately after giving effect to such transaction
(including any Indebtedness incurred or anticipated to be incurred in connection
with the transaction) no Default or Event of Default has occurred and is
continuing; and (iv) the Company has delivered to the Trustee an Officers'
Certificate and Opinion of Counsel, each stating that such consolidation, merger
or transfer complies with this Indenture, that the surviving Person agrees by
supplemental Indenture to be bound thereby, and that all conditions precedent in
this Indenture relating to such transaction have been satisfied. For purposes of
the foregoing, the transfer (by lease, assignment, sale or otherwise, in a
single transaction or series of related transactions) of all or substantially
all of the properties and assets of one or more Subsidiaries the Capital Stock
of which constitutes all or substantially all of the properties and assets of
the Company will be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
The Company will not permit any Guarantor to consolidate with,
merge with or into, or transfer all or substantially all of its assets (as an
entirety or substantially as an entirety in one transaction or series of related
transactions) to, any Person unless: (i) the transaction will comply with
Section 4.09 hereof or (ii)(A) the Person into which such Guarantor consolidates
or merges or to which it transfers its assets is (x) the Company or a Guarantor
or (y) a corporation organized and existing under the laws of the United States
or any State thereof or the District of Columbia that shall expressly assume, by
supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of such Guarantor under its
Guarantee and Indenture, (B) immediately before and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and continuing; and (C) except when the Person into which such Guarantor
consolidates or merges or to which it transfers its assets is the Company or a
Wholly Owned Subsidiary that is a Guarantor, immediately after giving effect to
such transaction, on a pro forma basis the Company or such Person could incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) under
the covenant set forth under Section 4.06.
Section 5.02......Successor Person Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company or any Guarantor in accordance
with Section 5.01 above, the successor corporation formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and of, the
Company or such Guarantor under this Indenture with the same effect as if such
successor corporation had been named as the Company or such Guarantor herein,
and thereafter the predecessor corporation shall be relieved of all obligations
and covenants under this Indenture and the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01......Events of Default.
An "Event of Default" occurs if
(1) there is a default in the payment of any principal of, or
premium, if any, on the Securities when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise, whether or not such
payment is prohibited by the provisions of Article 11 hereof;
(2) there is a default in the payment of any interest on any
Security when the same becomes due and payable and the Default continues for a
period of 30 days, whether or not such payment is prohibited by the provisions
of Article 11 hereof;
(3) the Company or any Guarantor defaults in the observance or
performance of any other covenant or agreement in the Securities or this
Indenture for 60 days after the Company receives written notice thereof
specifying the default from the Trustee or the Holders of not less than 25% in
the aggregate principal amount of the Securities then outstanding;
(4) there is a default in the payment at final maturity of
principal in an aggregate amount of $10,000,000 or more with respect to any
Indebtedness of the Company or any Restricted Subsidiary thereof which default
shall not be cured, waived or postponed pursuant to an agreement with the
holders of such Indebtedness within 60 days after written notice, or the
acceleration of any such Indebtedness aggregating $10,000,000 or more which
acceleration shall not be rescinded or annulled within 20 days after written
notice to the Company of such Default by the Trustee or any Holder;
(5) a court of competent jurisdiction enters a final judgment
or judgments which can no longer be appealed for the payment of money in excess
of $10,000,000 against the Company or any Restricted Subsidiary thereof and such
judgment remains undischarged for any period of 60 consecutive days during which
a stay of enforcement of such judgment shall not be in effect;
(6) the Company or any Restricted Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become
due; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Restricted Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any
Restricted Subsidiary or for all or substantially all of the
property of the Company or any Restricted Subsidiary, or
(C) orders the liquidation of the Company or any
Restricted Subsidiary, and the order or decree remains
unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
The Trustee may withhold notice to the Holders of the
Securities of any Default (except in payment of principal or premium, if any, or
interest on the Securities) if the Trustee considers it to be in the best
interest of the Holders of the Securities to do so.
Section 6.02......Acceleration.
If an Event of Default (other than an Event of Default arising
under Section 6.01(6) or (7) with respect to the Company) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of not less
than 25% in aggregate principal amount of the Securities then outstanding may by
written notice to the Company and the Trustee declare to be immediately due and
payable the entire principal amount of all the Securities then outstanding plus
accrued but unpaid interest, if any, to the date of acceleration and (i) such
amounts shall become immediately due and payable or (ii) if there are any
amounts outstanding under any of the instruments constituting the Senior Debt,
such amounts shall become due and payable upon the first to occur of an
acceleration under any of the instruments constituting the Senior Debt or five
Business Days after receipt by the Company and the Representative under any of
the Senior Debt of notice of the acceleration of the Securities unless all
Events of Default specified in such Acceleration Notice have been cured or
waived; provided, however, that after such acceleration but before a judgment or
decree based on such acceleration is obtained by the Trustee, the Holders of a
majority in aggregate principal amount of the outstanding Securities (by notice
to the Trustee) may rescind and cancel such acceleration and its consequences if
(i) all existing Events of Default, other than the nonpayment of accelerated
principal, premium, if any, or interest that has become due solely because of
the acceleration, have been cured or waived, (ii) to the extent the payment of
such interest is lawful, interest (at the same rate specified in the Securities)
on overdue installments of interest and overdue principal, which has become due
otherwise than by such declaration of acceleration, has been paid, (iii) the
Company has paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements and advances, (iv) the rescission would
not conflict with any judgment or decree of a court of competent jurisdiction
and (v) in the event of the cure or waiver of a Default or Event of Default
described in Section 6.01(6) or (7), the Trustee has received an Officers'
Certificate and an Opinion of Counsel that such Default or Event of Default has
been cured or waived. No such rescission shall affect any subsequent Default or
impair any right consequent thereto. In case an Event of Default specified in
Section 6.01(6) or (7) with respect to the Company occurs, such principal,
premium, if any, and interest amount with respect to all of the Securities shall
be due and payable immediately without any declaration or other act on the part
of the Trustee or the Holders of the Securities.
Section 6.03......Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, or premium, if any, and interest on the Securities or
to enforce the performance of any provision of the Securities or this Indenture
and may take any necessary action requested of it as Trustee to settle,
compromise, adjust or otherwise conclude any proceedings to which it is a party.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All available remedies are
cumulative.
Section 6.04. Waiver of Past Defaults and Events of
Default.
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of
a majority in principal amount of the Securities then outstanding have the right
to waive any existing Default or Event of Default or compliance with any
provision of this Indenture or the Securities. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereto.
Section 6.05......Control by Majority.
The Holders of a majority in principal amount of the
Securities then outstanding may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee by this Indenture. The Trustee, however, may
refuse to follow any direction that conflicts with law or this Indenture or that
the Trustee determines may be unduly prejudicial to the rights of another
Securityholder not taking part in such direction, and the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel, determines that the action so directed may not lawfully be taken or if
the Trustee in good faith shall, by a Trust Officer, determine that the
proceedings so directed may involve it in personal liability; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.06......Limitation on Suits.
Subject to Section 6.07 below, a Securityholder may not
institute any proceeding or pursue any remedy with respect to this Indenture or
the Securities unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount
of the Securities then outstanding make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60 day period by the Holders of a
majority in aggregate principal amount of the Securities then
outstanding.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
Section 6.07......Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal of, or
premium, if any, and interest of the Security on or after the respective due
dates expressed in the Security, or to bring suit for the enforcement of any
such payment on or after such respective dates, is absolute and unconditional
and shall not be impaired or affected without the consent of the Holder.
Section 6.08......Collection Suit by Trustee.
If an Event of Default in payment of principal, premium or
interest specified in Section 6.01(l) or (2) hereof occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or the Guarantors (or any other obligor on the
Securities) for the whole amount of unpaid principal and accrued interest
remaining unpaid, together with interest on overdue principal and, to the extent
that payment of such interest is lawful, interest on overdue installments of
interest, in each case at the rate then borne by the Securities, and such
further amounts as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 6.09......Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Securityholders allowed in any judicial proceedings relative to the Company or
the Guarantors (or any other obligor upon the Securities), its creditors or its
property and shall be entitled and empowered to collect and receive any monies
or other property payable or deliverable on any such claims and to distribute
the same after deduction of its charges and expenses to the extent that any such
charges and expenses are not paid out of the estate in any such proceedings and
any custodian in any such judicial proceeding is hereby authorized by each
Securityholder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
Section 6.10......Priorities.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07
hereof;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest as to each, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Securities; and
THIRD: to the Company or, to the extent the Trustee collects
any amount from any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section 6.10.
Section 6.11......Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a
suit by a Holder pursuant to Section 6.07 hereof or a suit by Holders of more
than 10% in principal amount of the Securities then outstanding.
ARTICLE 7
TRUSTEE
Section 7.01......Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the same circumstances in the conduct
of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture but, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Sections 6.02 and 6.05 hereof.
(4) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity satisfactory to it against such risk or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided, paragraphs
(a), (b) and (c) of this Section 7.01 shall govern every provision of this
Indenture that in any way relates to the Trustee.
(e) The Trustee may refuse to perform any duty or exercise any
right or power unless it receives indemnity reasonably satisfactory to it
against any loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company or
any Guarantor. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by the law.
Section 7.02......Rights of Trustee.
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably believed
by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in
the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both,
which shall conform to the provisions of Section 13.05 hereof. The
Trustee shall be protected and shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or
opinion.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed by
it with due care.
(4) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(5) The Trustee may consult with counsel of its selection,
and the advice or opinion of such counsel as to matters of law shall be
full and complete authorization and protection from liability in
respect of any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such
counsel.
Section 7.03......Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may make loans to, accept deposits from,
perform services for or otherwise deal with the Company or any Guarantor, or any
Affiliates thereof, with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights. The Trustee, however, shall be
subject to Sections 7.10 and 7.11 hereof.
Section 7.04......Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Company's use of the proceeds from the sale of Securities or any money paid
to the Company pursuant to the terms of this Indenture and it shall not be
responsible for any statement in the Securities other than its certificate of
authentication.
Section 7.05......Notice of Defaults.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Securityholder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
the principal of, or premium, if any, or interest on any Security the Trustee
may withhold the notice if and so long as the board of directors of the Trustee,
the executive committee or any trust committee of such board and/or its Trust
Officers in good faith determine(s) that withholding the notice is in the
interests of the Securityholders.
Section 7.06......Reports by Trustee to Holders.
If required by TIA ss. 313(a), within 60 days after May 15 of
any year, commencing the May 15 following the date of this Indenture, the
Trustee shall mail to each Securityholder a brief report dated as of such May 15
that complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313 (c) and TIA ss. 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by
mail:
(1) to all registered Holders of Securities, as the names
and addresses of such Holders appear on the Registrar's books; and
(2) to such Holder of Securities as have, within the two
years preceding such transmission, filed their names and addresses with
the Trustee for that purpose.
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange on which the
Securities are listed. The Company shall promptly notify the Trustee when the
Securities are listed on any stock exchange.
Section 7.07......Compensation and Indemnity.
The Company and the Guarantors shall pay to the Trustee from
time to time such compensation as shall be agreed in writing between the Company
and the Trustee for its services hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust). The Company and the Guarantors shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances incurred or made
by it in connection with its duties under this Indenture, including the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Company and the Guarantors shall indemnify each of the
Trustee and any predecessor Trustee for, and hold it harmless against, any and
all loss, damage, claim, liability or reasonable expense, including taxes (other
than taxes based on the income of the Trustee) incurred by it in connection with
the acceptance or performance of its duties under this Indenture including the
reasonable costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder (including, without limitation, settlement costs). The Trustee shall
notify the Company and the Guarantors in writing promptly of any claim asserted
against the Trustee for which it may seek indemnity. However, the failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder except to the extent the Company is prejudiced thereby.
Notwithstanding the foregoing, the Company and the Guarantors
need not reimburse the Trustee for any expense or indemnify it against any loss
or liability incurred by the Trustee through its negligence or bad faith. To
secure the payment obligations of the Company and the Guarantors in this Section
7.07, the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee except such money or property held in
trust to pay principal of and interest on particular Securities.
The Trustee shall have a lien prior to the Securities as to
all property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section, except with respect to funds held
in trust for the benefit of the Holders of particular Securities.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) hereof occurs, the expenses
and the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall
include any trustee appointed pursuant to Article 9.
Section 7.08......Replacement of Trustee.
The Trustee may resign by so notifying the Company and the
Guarantors in writing. The Holders of a majority in principal amount of the
outstanding Securities may remove the Trustee by notifying the removed Trustee
in writing and may appoint a successor Trustee with the Company's written
consent which consent shall not be unreasonably withheld. The Company may remove
the Trustee at its election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property;
(4) the Trustee otherwise becomes incapable of acting; or
(5) a successor corporation becomes successor Trustee pursuant
to Section 7.09 below.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Securityholder. Notwithstanding replacement of
the Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by
Consolidation, Merger or Conversion.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, the successor corporation without
any further act shall be the successor Trustee.
Section 7.10......Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1) and (2) in every respect. The Trustee shall
have a combined capital and surplus of at least $100,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA 310(b), including the provision in ss. 310(b)(1).
Section 7.11. Preferential Collection of
Claims Against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311 (b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
Section 7.12......Paying Agents.
The Company shall cause each Paying Agent other than the
Trustee to execute and deliver to it and the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the provisions of this Section
7.12:
(A) that it will hold all sums held by it as agent for the
payment of principal of, or premium, if any, or interest on, the
Securities (whether such sums have been paid to it by the Company or by
any obligor on the Securities) in trust for the benefit of Holders of
the Securities or the Trustee;
(B) that it will at any time during the continuance of any
Event of Default, upon written request from the Trustee, deliver to the
Trustee all sums so held in trust by it together with a full accounting
thereof; and
(C) that it will give the Trustee written notice within three
(3) Business Days of any failure of the Company (or by any obligor on
the Securities) in the payment of any installment of the principal of,
premium, if any, or interest on, the Securities when the same shall be
due and payable.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01......Without Consent of Holders.
The Company and the Guarantors, when authorized by a Board
Resolution of each of them, and the Trustee may amend or supplement this
Indenture or the Securities without notice to or consent of any Securityholder:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Securities in addition to or
in place of certificated Securities;
(3) to comply with any requirements of the SEC under the TIA;
(4) to cure any ambiguity, defect or inconsistency, or to make
any other change that does not materially and adversely affect the
rights of any Securityholder; or
(5) to make any other change that does not, in the opinion of
the Trustee, adversely affect in any material respect the rights of any
Securityholders hereunder.
The Trustee is hereby authorized to join with the Company and
the Guarantors in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
adversely affects its own rights, duties or immunities under this Indenture.
Section 8.02......With Consent of Holders.
Subject to the rights of holders of Preferred Stock, if any,
provided for in paragraph (f)(i)(A) of the Certificate of Designation, the
Company, the Guarantors and the Trustee may modify or supplement this Indenture
or the Securities with the written consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding securities without
notice to any Securityholder. The Holders of not less than a majority in
aggregate principal amount of the outstanding Securities may waive compliance in
a particular instance by the Company with any provision of this Indenture or the
Securities without notice to any Securityholder. Subject to the rights of
holders of Preferred Stock, if any, provided for in paragraph (f)(i)(A) of the
Certificate of Designation, and further subject to Section 8.04, without the
consent of each Securityholder affected, however, an amendment, supplement or
waiver, including a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment, supplement or waiver to this Indenture or the
Securities;
(2) reduce the rate of or change the time for payment of
interest on any Security;
(3) reduce the principal of or premium on or change the stated
maturity of any Security;
(4) make any Security payable in money other than that stated
in the Security or change the place of payment from New York, New York;
(5) change the amount or time of any payment required by the
Securities or reduce the premium payable upon any redemption of the
Securities in accordance with Section 3.07 hereof, or change the time
before which no such redemption may be made;
(6) waive a default in the payment of the principal of, or
interest on, or redemption payment with respect to, any Security
(including any obligation to make a Change of Control offer or, after
the Company's obligation to purchase Securities arises thereunder, an
Excess Proceeds Offer or modify any of the provisions or definitions
with respect to such offers);
(7) make any changes in Sections 6.04 or 6.07 hereof or this
sentence of Section 8.02; or
(8) affect the ranking of the Securities in a manner adverse
to the Holders.
After an amendment, supplement or waiver under this section
becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver.
Upon the request of the Company, accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Securityholders as aforesaid and upon receipt by
the Trustee of the documents described in Section 8.06 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Persons entitled to consent to any
indenture supplemental hereto. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and only such Persons, shall be
entitled to consent to such supplemental indenture, whether or not such Holders
remain Holders after such record date; provided, that unless such consent shall
have become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
It shall not be necessary for the consent of the Holders under
this Section 8.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Section 8.03......Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 8.04......Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Security is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Security or portion thereof, and of any Security issued upon the transfer
thereof or in exchange therefor or in place thereof, even if notation of the
consent is not made on any such Security. Any such Holder or subsequent Holder,
however, may revoke the consent as to his Security or portion of a Security, if
the Trustee receives the notice of revocation before the date the amendment,
supplement, waiver or other action becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement, or waiver. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date unless the consent of the requisite number
of Holders has been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Securityholder, unless it makes a change
described in any of clauses (1) through (8) of Section 8.02 hereof. In that case
the amendment, supplement, waiver or other action shall bind each Holder of a
Security who has consented to it and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security.
Section 8.05......Notation on or Exchange of Securities.
If an amendment, supplement, or waiver changes the terms of a
Security, the Trustee may request the Holder of the Security to deliver it to
the Trustee. In such case, the Trustee shall place an appropriate notation on
the Security about the changed terms and return it to the Holder. Alternatively,
if the Company or the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new security that
reflects the changed terms. Failure to make the appropriate notation or issue a
new Security shall not affect the validity and effect of such amendment
supplement or waiver.
Section 8.06......Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article 8 if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver the Trustee shall be
entitled to receive and, subject to Section 7.01 hereof, shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that such amendment, supplement or waiver is authorized or permitted by
this Indenture. The Company or any Guarantor may not sign an amendment or
supplement until the Board of Directors of the Company or such Guarantor, as
appropriate, approves it.
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01......Discharge of Indenture.
The Company and the Guarantors may terminate their obligations
under the Securities, the Guarantees and this Indenture, except the obligations
referred to in the last paragraph of this Section 9.01, if there shall have been
canceled by the Trustee or delivered to the Trustee for cancellation all
Securities theretofore authenticated and delivered (other than any Securities
that are asserted to have been destroyed, lost or stolen and that shall have
been replaced as provided in Section 2.07 hereof) and the Company has paid all
sums payable by it hereunder or deposited all required sums with the Trustee.
After such delivery the Trustee upon request shall acknowledge
in writing the discharge of the Company's and the Guarantors' obligations under
the Securities, the Guarantees and this Indenture except for those surviving
obligations specified below.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company in Sections 7.07, 9.05 and 9.06 hereof
shall survive.
Section 9.02......Legal Defeasance.
The Company may at its option, by Board Resolution, be
discharged from its obligations with respect to the Securities and the
Guarantors discharged from their obligations under the Guarantees on the date
the conditions set forth in Section 9.04 below are satisfied (hereinafter,
"Legal Defeasance"). For this purpose, such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the Securities and to have satisfied all its other obligations
under such Securities and this Indenture insofar as such Securities are
concerned (and the Trustee, at the expense of the Company, shall, subject to
Section 9.06 hereof, execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of outstanding Securities to receive solely
from the trust funds described in Section 9.04 hereof and as more fully set
forth in such Section, payments in respect of the principal of, premium, if any,
and interest on such Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 2.03, 2.04, 2.05,
2.06, 2.07, 2.08 and 4.16 hereof, (C) the rights, powers, trusts, duties, and
immunities of the Trustee hereunder (including claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof) and (D) this Article 9.
Subject to compliance with this Article 9, the Company may exercise its option
under this Section 9.02 with respect to the Securities notwithstanding the prior
exercise of its option under Section 9.03 below with respect to the Securities.
Section 9.03......Covenant Defeasance.
At the option of the Company, pursuant to a Board Resolution,
the Company and the Guarantors shall be released from their respective
obligations under Sections 4.02 through 4.15 hereof, inclusive, and clause (ii)
of the first paragraph of Section 5.01 hereof with respect to the outstanding
Securities on and after the date the conditions set forth in Section 9.04 hereof
are satisfied (hereinafter, "Covenant Defeasance"). For this purpose, such
Covenant Defeasance means that the Company and the Guarantors may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such specified Section or portion thereof, whether directly or
indirectly by reason of any reference elsewhere herein to any such specified
section or portion thereof or by reason of any reference in any such specified
Section or portion thereof to any other provision herein or in any other
document, but the remainder of this Indenture and the Securities shall be
unaffected thereby.
Section 9.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of Section 9.02 or Section
9.03 hereof to the outstanding Securities:
(1) the Company shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 hereof who shall agree to comply with the
provisions of this Article 9 applicable to it) as funds in trust for
the purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of
the Securities, (A) money in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will
provide, not later than the due date of any payment, money in an
amount, or (C) a combination thereof, sufficient, in the opinion of a
nationally-recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal of, premium, if
any, and accrued interest on the outstanding Securities at the maturity
date of such principal, premium, if any, or interest, or on dates for
payment and redemption of such principal, premium, if any, and interest
selected in accordance with the terms of this Indenture and of the
Securities;
(2) no Event of Default or Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit, or shall have occurred and be continuing at any time during
the period ending on the 91st day after the date of such deposit or, if
longer, ending on the day following the expiration of the longest
preference period under any Bankruptcy Law applicable to the Company in
respect of such deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall not
cause the Trustee to have a conflicting interest for purposes of the
TIA with respect to any securities of the Company;
(4) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute default under any
other agreement or instrument to which the Company is a party or by
which it is bound;
(5) the Company shall have delivered to the Trustee an
Opinion of Counsel stating that, as a result of such Legal Defeasance
or Covenant Defeasance, neither the trust nor the Trustee will be
required to register as an investment company under the Investment
Company Act of 1940, as amended;
(6) in the case of an election under Section 9.02 above, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling to the effect that
or (ii) there has been a change in any applicable Federal income tax
law with the effect that, and such opinion shall confirm that, the
Holders of the outstanding Securities or persons in their positions
will not recognize income, gain or loss for Federal income tax purposes
solely as a result of such Legal Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner, including
as a result of prepayment, and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(7) in the case of an election under Section 9.03 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the Holders of the outstanding Securities will not
recognize income, gain or loss for Federal income tax purposes as a
result of such Covenant Defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(8) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Legal
Defeasance under Section 9.02 above or the Covenant Defeasance under
Section 9.03 hereof (as the case may be) have been complied with;
(9) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit under clause (1) was not
made by the Company with the intent of defeating, hindering, delaying
or defrauding any creditors of the Company or others; and
(10) the Company shall have paid or duly provided for payment
under terms mutually satisfactory to the Company and the Trustee all
amounts then due to the Trustee pursuant to Section 7.07 hereof.
Section 9.05. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other Miscellaneous Provisions.
All money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee pursuant to Section 9.04 hereof in
respect of the outstanding Securities shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent as the
Trustee may determine, to the Holders of such Securities, of all sums due and to
become due thereon in respect of principal, premium, if any, and accrued
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company and the Guarantors shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 9.04 hereof or the
principal, premium, if any, and interest received in respect thereof other than
any such tax, fee or other charge which by law is for the account of the Holders
of the outstanding Securities.
Anything in this Article 9 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 9.04 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 9.06......Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof
by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's and each Guarantor's obligations under this
Indenture, the Securities and the Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to this Article 9 until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 9.01 hereof; provided, however, that if
the Company or the Guarantors have made any payment of principal of, premium, if
any, or accrued interest on any Securities because of the reinstatement of their
obligations, the Company or the Guarantors, as the case may be, shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
Section 9.07......Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under the provisions of this
Indenture shall, upon demand of the Company, be paid to the Trustee, or if
sufficient moneys have been deposited pursuant to Section 9.01 hereof, to the
Company (or, if such moneys had been deposited by the Guarantors, to such
Guarantors), and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
Section 9.08......Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or
then held by the Company or the Guarantors in trust for the payment of the
principal of, or premium, if any, or interest on any Security that are not
applied but remain unclaimed by the Holder of such Security for two years after
the date upon which the principal of, or premium, if any, or interest on such
Security shall have respectively become due and payable shall be repaid to the
Company (or, if appropriate, the Guarantors) upon Company Request, or if such
moneys are then held by the Company or the Guarantors in trust, such moneys
shall be released from such trust; and the Holder of such Security entitled to
receive such payment shall thereafter, as an unsecured general creditor, look
only to the Company and the Guarantors for the payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that the Trustee or any such Paying
Agent, before being required to make any such repayment, may, at the expense of
the Company and the Guarantors, either mail to each Securityholder affected, at
the address shown in the register of the Securities maintained by the Registrar
pursuant to Section 2.03 hereof, or cause to be published once a week for two
successive weeks, in a newspaper published in the English language, customarily
published each Business Day and of general circulation in the City of New York,
New York, a notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
mailing or publication, any unclaimed balance of such moneys then remaining will
be repaid to the Company. After payment to the Company or the Guarantors or the
release of any money held in trust by the Company or any Guarantors, as the case
may be, Securityholders entitled to the money must look only to the Company and
the Guarantors for payment as general creditors unless applicable abandoned
property law designates another person.
ARTICLE 10
GUARANTEE OF SECURITIES
Section 10.01.....Guarantee.
Subject to the provisions of this Article 10, each Guarantor
hereby jointly and severally unconditionally guarantees to each Holder and to
the Trustee, on behalf of the Holders, (i) the due and punctual payment of the
principal of, and premium, if any, and interest on each Security, when and as
the same shall become due and payable, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal of,
and premium, if any, and interest on the Securities, to the extent lawful, and
the due and punctual performance of all other Obligations of the Company to the
Holders or the Trustee all in accordance with the terms of such Security and
this Indenture, and (ii) in the case of any extension of time of payment or
renewal of any Securities or any of such other Obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, at stated maturity, by acceleration or otherwise. Each
Guarantor hereby agrees that its obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any such Security or this Indenture, any
failure to enforce the provisions of any such Security or this Indenture, any
waiver, modification or indulgence granted to the Company with respect thereto
by the Holder of such Security or the Trustee, or any other circumstances which
may otherwise constitute a legal or equitable discharge of a surety or such
Guarantor.
Each Guarantor hereby waives diligence, presentment, filing of
claims with a court in the event of merger or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest or notice with
respect to any such Security or the Indebtedness evidenced thereby and all
demands whatsoever, and covenants that this Guarantee will not be discharged as
to any such Security except by payment in full of the principal thereof, premium
if any, and interest thereon and as provided in Section 9.01 hereof. Each
Guarantor further agrees that, as between such Guarantor, on the one hand, and
the Holders and the Trustee, on the other hand, (i) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (ii) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by each Guarantor
for the purpose of this Guarantee. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article 6 hereof,
the Trustee shall promptly make a demand for payment on the Securities under the
Guarantee provided for in this Article 10 and not discharged.
The Guarantee set forth in this Section 10.01 shall not be
valid or become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by or on
behalf of the Trustee.
Section 10.02.....Execution and Delivery of Guarantees.
To evidence the Guarantee set forth in this Article 10, each
Guarantor hereby agrees that a notation of such Guarantee shall be placed on
each Security authenticated and made available for delivery by the Trustee and
that this Guarantee shall be executed on behalf of each Guarantor by the manual
or facsimile signature of an Officer of each Guarantor.
Each Guarantor hereby agrees that the Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on the
Guarantee no longer holds that office at the time the Trustee authenticates the
Security on which the Guarantee is endorsed, the Guarantee shall be valid
nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guarantee
set forth in this Indenture on behalf of each Guarantor.
Section 10.03.....Limitation of Guarantee.
The obligations of each Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor (including, without limitation, any guarantees of
Senior Debt) and after giving effect to any collections from or payments made by
or on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
this Indenture, result in the obligations of such Guarantor under the Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Guarantee
shall be entitled to a contribution from each other Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Subsidiary Guarantor.
Section 10.04.....Additional Guarantors.
The Company covenants and agrees that it will cause any Person
which becomes obligated to guarantee the Securities, pursuant to the terms of
Section 4.11 hereof, to execute a guarantee satisfactory in form and substance
to the Trustee pursuant to which such Restricted Subsidiary shall guarantee the
obligations of the Company under the Securities and this Indenture in accordance
with this Article 10 with the same effect and to the same extent as if such
Person had been named herein as a Guarantor.
Section 10.05.....Release of Guarantor.
A Guarantor shall be released from all of its obligations
under its Guarantee if:
(i) the Guarantor has sold all or substantially all of its
assets or the Company and its Restricted Subsidiaries have sold all of
the Capital Stock of the Guarantor owned by them, in each case in a
transaction in compliance with Sections 4.09 or 5.01 hereof (as
applicable); or
(ii) the Guarantor merges with or into or consolidates with,
or transfers all or substantially all of its assets to, the Company or
another Guarantor in a transaction in compliance with Section 5.01
hereof;
and in each such case, the Guarantor has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to such transactions have been complied
with.
Section 10.06. Guarantee Obligations Subordinated to
Guarantor Senior Debt.
Each Guarantor covenants and agrees, and each Holder of
Securities, by its acceptance thereof, likewise covenants and agrees, that to
the extent and in the manner hereinafter set forth in this Article 10, the
Indebtedness represented by the Guarantee and the payment of the principal of,
premium, if any, and interest on the Securities pursuant to the Guarantee by
such Guarantor are hereby expressly made subordinate and subject in right of
payment as provided in this Article 10 to the prior payment in full in cash or
Cash Equivalents or, as acceptable to the holders of Guarantor Senior Debt of
such Guarantor, in any other manner, of all Guarantor Senior Debt of such
Guarantor.
This Section 10.06 and the following Sections 10.07 through
10.11 shall constitute a continuing offer to all Persons who, in reliance upon
such provisions, become holders of or continue to hold Guarantor Senior Debt of
any Guarantor; and such provisions are made for the benefit of the holders of
Guarantor Senior Debt of each Guarantor; and such holders are made obligees
hereunder and they or each of them may enforce such provisions.
Section 10.07. Payment Over of Proceeds upon
Dissolution, etc., of a Guarantor.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to any Guarantor or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or (b)
any liquidation, dissolution or other winding-up of any Guarantor, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy
or (c) any general assignment for the benefit of creditors or any other
marshaling of assets or liabilities of any Guarantor, then and in any such
event:
(1) the holders of all Guarantor Senior Debt of such
Guarantor shall be entitled to receive payment in full in cash or Cash
Equivalents or, as acceptable to the holders of such Guarantor Senior
Debt, in any other manner, of all amounts due on or in respect of all
such Guarantor Senior Debt, or provision shall be made for such
payment, before the Holders of the Securities are entitled to receive,
pursuant to the Guarantee of such Guarantor, any payment or
distribution of any kind or character by such Guarantor on account of
any of its obligations on its Guarantee; and
(2) any payment or distribution of assets of such Guarantor
of any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which the Holders or the Trustee would be
entitled but for the subordination provisions of this Article 10 shall
be paid by the liquidating trustee or agent or other Person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Guarantor
Senior Debt of such Guarantor or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Guarantor Senior Debt may
have been issued, ratably according to the aggregate amounts remaining
unpaid on account of such Guarantor Senior Debt held or represented by
each, to the extent necessary to make payment in full in cash, Cash
Equivalents or, as acceptable to the Holders of such Guarantor Senior
Debt of such Guarantor, in any other manner, of all such Guarantor
Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Guarantor Senior Debt;
and
(3) in the event that, notwithstanding the foregoing
provisions of this Section 10.07, the Trustee or the Holder of any
Security shall have received any payment or distribution of assets of
such Guarantor of any kind or character, whether in cash, property or
securities, including, without limitation, by way of set-off or
otherwise, in respect of any of its Obligations on its Guarantee before
all Guarantor Senior Debt of such Guarantor is paid in full or payment
thereof provided for, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee
in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payment or distribution of assets of such
Guarantor for application to the payment of all such Guarantor Senior
Debt remaining unpaid, to the extent necessary to pay all of such
Guarantor Senior Debt in full in cash, Cash Equivalents or, as
acceptable to the holders of such Guarantor Senior Debt, any other
manner, after giving effect to any concurrent payment or distribution
to or for the holders of such Guarantor Senior Debt.
The consolidation of a Guarantor with, or the merger of a
Guarantor with or into, another Person or the liquidation or dissolution of a
Guarantor following the conveyance, transfer or lease of its properties and
assets substantially as an entirety to another Person upon the terms and
conditions set forth in Article 5 hereof shall not be deemed a dissolution,
winding-up, liquidation, reorganization, assignment for the benefit of creditors
or marshaling of assets and liabilities of such Guarantor for the purposes of
this Article 10 if the Person formed by such consolidation or the surviving
entity of such merger or the Person which acquires by conveyance, transfer or
lease such properties and assets substantially as an entirety, as the case may
be, shall, as a part of such consolidation, merger, conveyance, transfer or
lease, comply with the conditions set forth in such Article 5 hereof.
Section 10.08. Suspension of Guarantee
Obligations When Guarantor Senior Debt in Default.
(a) Unless Section 10.07 hereof shall be applicable, after the
occurrence of a Payment Default no payment or distribution of any assets or
securities of a Guarantor (or any Restricted Subsidiary or Subsidiary of such
Guarantor) of any kind or character (including, without limitation, cash,
Property and any payment or distribution which may be payable or deliverable by
reason of the payment of any other Indebtedness of such Guarantor being
subordinated to its Obligations on its Guarantee) may be made by or on behalf of
such Guarantor (or any Restricted Subsidiary or Subsidiary of such Guarantor),
including, without limitation, by way of set-off or otherwise, for or on account
of its Obligations on its Guarantee, and neither the Trustee nor any holder or
owner of any Securities shall take or receive from any Guarantor (or any
Restricted Subsidiary or Subsidiary of such Guarantor), directly or indirectly
in any manner, payment in respect of all or any portion of its Obligations on
its Guarantee following the delivery by the representative of the holders of
Guarantor Senior Debt (the "Guarantor Representative") to the Trustee of written
notice of the occurrence of a Payment Default, and in any such event, such
prohibition shall continue until such Payment Default is cured, waived in
writing or ceases to exist. At such time as the prohibition set forth in the
preceding sentence shall no longer be in effect, subject to the provisions of
the following paragraph (b), such Guarantor shall resume making any and all
required payments in respect of its obligations under its Guarantee.
(b) Unless Section 10.07 hereof shall be applicable, upon the
occurrence of a Non-Payment Event of Default on Designated Senior Debt, no
payment or distribution of any assets of such Guarantor of any kind or character
shall be made by such Guarantor, including, without limitation, by way of
set-off or otherwise, on account of any of its obligations on its Guarantee for
a period (the "Guarantee Payment Blockage Period") commencing on the date of
receipt by the Trustee of written notice from the Guarantor Representative of
such Non-Payment Event of Default, unless and until (subject to any blockage of
payments that may then be in effect under the preceding paragraph (a)) the
earliest to occur of the following events: (w) more than 179 days shall have
elapsed since the date of receipt of such written notice by the Trustee, (x)
such Non-Payment Event of Default shall have been cured or waived in writing or
shall have ceased to exist, (y) such Designated Senior Debt shall have been
discharged or paid in full in cash or Cash Equivalents or (z) such Guarantee
Payment Blockage Period shall have been terminated by written notice to such
Guarantor or the Trustee from the Guarantor Representative initiating such
Guarantee Payment Blockage Period, or the holders of at least a majority in
principal amount of such issue of Designated Senior Debt, after which, in the
case of clause (w), (x), (y) or (z), such Guarantor shall resume making any and
all required payments in respect of its Obligations on its Guarantee.
Notwithstanding any other provisions of this Indenture, no Non-Payment Event of
Default with respect to Designated Senior Debt which existed or was continuing
on the date of the commencement of any Guarantee Payment Blockage Period
initiated by the Guarantor Representative shall be, or be made, the basis for
the commencement of a second Guarantee Payment Blockage Period initiated by the
Guarantor Representative unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days. In no event shall a
Guarantee Payment Blockage Period extend beyond 179 days from the date of the
receipt by the Trustee of the notice referred to in this Section 10.08(b) or, in
the event of a Non-Payment Event of Default which formed the basis for a Payment
Blockage Period under Section 11.03(b) hereof, 179 days from the date of the
receipt by the Trustee of the notice referred to in Section 11.03(b) (the
"Initial Guarantee Blockage Period"). Any number of additional Guarantee Payment
Blockage Periods may be commenced during the Initial Guarantee Blockage Period;
provided, however, that no such additional Guarantee Payment Blockage Period
shall extend beyond the Initial Guarantee Blockage Period. After the expiration
of the Initial Guarantee Blockage Period, no Guarantee Payment Blockage Period
may be commenced under this Section 10.08(b) and no Payment Blockage Period may
be commenced under Section 11.03(b) hereof until at least 180 consecutive days
have elapsed from the last day of the Initial Guarantee Blockage Period.
(c) In the event that, notwithstanding the foregoing, the
Trustee or the Holder of any Security shall have received any payment from a
Guarantor prohibited by the foregoing provisions of this Section 10.08, then and
in such event such payment shall be paid over and delivered forthwith to the
Guarantor Representative initiating the Guarantee Payment Blockage Period, in
trust for distribution to the holders of Guarantor Senior Debt or, if no amounts
are then due in respect of Guarantor Senior Debt, promptly returned to the
Guarantor, or as a court of competent jurisdiction shall direct.
Section 10.09. Subrogation to Rights of Holders of
Guarantor Senior Debt.
Upon the payment in full of all amounts payable under or in
respect of all Guarantor Senior Debt of a Guarantor, the Holders shall be
subrogated to the rights of the holders of such Guarantor Senior Debt to receive
payments and distributions of cash, Property and securities of such Guarantor
made on such Guarantor Senior Debt until all amounts due to be paid under the
Guarantee shall be paid in full. For the purposes of such subrogation, no
payments or distributions to holders of Guarantor Senior Debt of any cash,
Property or securities to which Holders of the Securities or the Trustee would
be entitled except for the provisions of this Article 10, and no payments over
pursuant to the provisions of this Article 10 to holders of Guarantor Senior
Debt by Holders of the Securities or the Trustee, shall, as among each
Guarantor, its creditors other than holders of Guarantor Senior Debt and the
Holders of the Securities, be deemed to be a payment or distribution by such
Guarantor to or on account of such Guarantor Senior Debt.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article 10 shall
have been applied, pursuant to the provisions of this Article 10, to the payment
of all amounts payable under Guarantor Senior Debt, then and in such case, the
Holders shall be entitled to receive from the holders of such Guarantor Senior
Debt at the time outstanding any payments or distributions received by such
holders of Guarantor Senior Debt in excess of the amount sufficient to pay all
amounts payable under or in respect of such Guarantor Senior Debt in full in
cash or Cash Equivalents.
Section 10.10. Guarantee Subordination
Provisions Solely to Define Relative Rights.
The subordination provisions of this Article 10 are and are
intended solely for the purpose of defining the relative rights of the Holders
of the Securities on the one hand and the holders of Guarantor Senior Debt on
the other hand. Nothing contained in this Article 10 or elsewhere in this
Indenture or in the Securities is intended to or shall (a) impair, as among each
Guarantor, its creditors other than holders of its Guarantor Senior Debt and the
Holders of the Securities, the obligation of such Guarantor, which is absolute
and unconditional, to make payments to the Holders in respect of its Obligations
on its Guarantee in accordance with its terms; or (b) affect the relative rights
against such Guarantor of the Holders of the Securities and creditors of such
Guarantor other than the holders of the Guarantor Senior Debt; or (c) prevent
the Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon a Default or an Event of Default under this
Indenture, subject to the rights, if any, under this Article 10 of the holders
of Guarantor Senior Debt (1) in any case, proceeding, dissolution, liquidation
or other winding-up, assignment for the benefit of creditors or other marshaling
of assets and liabilities of the Company referred to in Section 10.07 hereof, to
receive, pursuant to and in accordance with such Section, cash, Property and
securities otherwise payable or deliverable to the Trustee or such Holder, or
(2) under the conditions specified in Section 10.08 hereof, to prevent any
payment prohibited by such Section or enforce their rights pursuant to Section
10.08(c) hereof.
The failure by any Guarantor to make a payment in respect of
its obligations on its Guarantee by reason of any provision of this Article 10
shall not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.
Section 10.11. Application of Certain Article 11 Provisions.
The provisions of Sections 11.04, 11.07, 11.08, 11.09, 11.10,
11.12 and 11.13 hereof shall apply, mutatis mutandis, to each Guarantor and
their respective holders of Guarantor Senior Debt and the rights, duties and
obligations set forth therein shall govern the rights, duties and obligations of
each Guarantor, the holders of Guarantor Senior Debt, the Holders and the
Trustee with respect to the Guarantee and all references therein to Article 11
hereof shall mean this Article 10.
ARTICLE 11
SUBORDINATION OF SECURITIES
Section 11.01.....Securities Subordinate to Senior Debt.
The Company covenants and agrees, and each Holder of
securities, by its acceptance thereof, likewise covenants and agrees, that, to
the extent and in the manner hereinafter set forth in this Article 11, the
Indebtedness represented by the securities and the payment of the principal of,
premium, if any, and interest on the securities are hereby expressly made
subordinate and subject in right of payment as provided in this Article 11 to
the prior payment in full in cash or Cash Equivalents or as acceptable to the
holders of Senior Debt, in any other manner, of all Senior Debt.
This Article 11 shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of or continue to
hold Senior Debt; and such provisions are made for the benefit of the holders of
Senior Debt; and such holders are made obligees hereunder and they or each of
them may enforce such provisions.
Section 11.02. Payment Over of Proceeds upon
Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, whether voluntary or involuntary or (b)
any liquidation, dissolution or other winding-up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c) any general assignment for the benefit of creditors or other marshalling
of assets or liabilities of the Company (except in connection with the merger or
consolidation of the Company or its liquidation or dissolution following the
transfer of substantially all of its assets, upon the terms and conditions
permitted as described under Section 5.01), then and in any such event:
(1) the holders of Senior Debt of the Company shall be
entitled to receive payment in full in cash or Cash Equivalents or, as
acceptable to the holders of Senior Debt of the Company, in any other
manner, of all amounts due on or in respect of all Senior Debt of the
Company, or provision shall be made for such payment, before the
Holders of the Securities are entitled to receive or retain any payment
or distribution of any kind or character on account of principal of,
premium, if any, or interest on the Securities; and
(2) any payment or distribution of assets of the Company of
any kind or character, whether in cash, Property or securities, by
set-off or otherwise, to which the Holders he Trustee would be entitled
but for the provisions of this Article 11 shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Debt or their representative or representatives or to the trustee or
trustees under any indenture under which any instruments evidencing any
of such Senior Debt may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Debt held
or represented by each, to the extent necessary to make payment in full
in cash, Cash Equivalents or, as acceptable to the holders of Senior
Debt, in any other manner, of all Senior Debt remaining unpaid, after
giving effect to any concurrent payment or distribution, or provision
therefor, to the holders of such Senior Debt; and
..................(3) in the event that, notwithstanding the foregoing
provisions of this Section 11.02, the Trustee or the Holder of any
Security shall have received any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or
securities, including, without limitation, by way of set-off or
otherwise, in respect of principal of, premium, if any, and interest on
the Securities before all Senior Debt of the Company is paid in full or
payment thereof provided for, then and in such event such payment or
distribution shall be held by the recipient in trust for the benefit of
holders of Senior Debt and shall be immediately paid over or delivered
to the holders of Senior Debt or their representative or
representatives to the extent necessary to make payment in full of all
Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution, or provision therefor, to or for the holders
of Senior Debt.
The consolidation of the Company with, or the merger of
Company with or into, another Person or the liquidation or dissolution of the
Company following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another Person upon the terms and conditions set
forth in Article 5 hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of the Company for the purposes of this
Article 11 if the Person formed by such consolidation or the surviving entity of
such merger or the person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in such Article 5 hereof.
Section 11.03. Suspension of Payment When
Senior Debt in Default.
(a) Unless Section 11.02 hereof shall be applicable, after the
occurrence of a Payment Default no payment or distribution of any assets or
securities of the Company or any Restricted Subsidiary of any kind or character
(including, without limitation, cash, property and any payment or distribution
which may be payable or deliverable by reason of the payment of any other
Indebtedness of the Company being subordinated to the payment of the Securities
by the Company) may be made by or on behalf of the Company or any Restricted
Subsidiary, including, without limitation, by way of set-off or otherwise, for
or on account of principal of, premium, if any, or interest on the Securities,
or for or on account of the purchase, redemption or other acquisition of the
Securities, and neither the Trustee nor any holder or owner of any Securities
shall take or receive from the Company or any Restricted Subsidiary, directly or
indirectly in any manner, payment in respect of all or any portion of Securities
following the delivery by the representative of the holders of Designated Senior
Debt (the "Representative") to the Trustee of written notice of the occurrence
of a Payment Default, and in any such event, such prohibition shall continue
until such Payment Default is cured, waived in writing or ceases to exist. At
such time as the prohibition set forth in the preceding sentence shall no longer
be in effect, subject to the provisions of the following paragraph (b), the
Company shall resume making any and all required payments in respect of the
Securities, including any missed payments.
(b) Unless Section 11.02 hereof shall be applicable, upon the
occurrence of a Non-Payment Event of Default on Designated Senior Debt, no
payment or distribution of any assets of the Company of any kind shall be made
by the Company, including, without limitation, by way of set-off or otherwise,
on account of any principal of, premium, if any, or interest on the Securities
or on account of the purchase or redemption or other acquisition of Securities
for a period ("Payment Blockage Period") commencing on the date of receipt by
the Trustee of written notice from the Representative of such Non-Payment Event
of Default unless and until (subject to any blockage of payments that may then
be in effect under the preceding paragraph (a)) the earliest of (w) more than
179 days shall have elapsed since the date of such written notice by the
Trustee, (x) such Non-Payment Event of Default shall have been cured or waived
in writing or shall have ceased to exist, (y) such Designated Senior Debt shall
have been paid in full in cash or Cash Equivalents or (z) such Payment Blockage
Period shall have been terminated by written notice to the Company or the
Trustee from the Representative initiating such Payment Blockage Period, or the
holders of at least a majority in principal amount of such issue of Designated
Senior Debt, after which, in the case of clause (w), (x), (y) or (z), the
Company shall resume making any and all required payments in respect of the
Securities, including any missed payments. Notwithstanding any other provisions
of this Indenture, no Non-Payment Event of Default with respect to Designated
Senior Debt which existed or was continuing on the date of the commencement of
any Payment Blockage Period initiated by the Representative shall be, or be
made, the basis for the commencement of a second Payment Blockage Period
initiated by the Representative, whether or not within the Initial Blockage
Period, unless such Non-Payment Event of Default shall have been cured or waived
for a period of not less than 90 consecutive days. In no event shall a Payment
Blockage Period extend beyond 179 days from the date of the receipt by the
Trustee of the notice referred to in this Section 11.03(b) (the "Initial
Blockage Period"). Any number of additional Payment Blockage Periods may be
commenced during the Initial Blockage Period; provided, however, that no such
additional Payment Blockage Period shall extend beyond the Initial Blockage
Period. After the expiration of the Initial Blockage Period, no Payment Blockage
Period may be commenced under this Section 11.03(b) and no Guarantee Payment
Blockage Period may be commenced under Section 10.08(b) hereof until at least
180 consecutive days have elapsed from the last day of the Initial Blockage
Period.
(c) In the event that, notwithstanding the foregoing, the
Trustee or the Holder of any Security shall have received any payment prohibited
by the foregoing provisions of this Section 11.03, then and in such event such
payment shall be paid over and delivered forthwith to the Representative
initiating the Payment Blockage Period, in trust for distribution to the holders
of Senior Debt or, if no amounts are then due in respect of Senior Debt,
promptly returned to the Company, or otherwise as a court of competent
Jurisdiction shall direct.
Section 11.04.....Trustee's Relation to Senior Debt.
With respect to the holders of Senior Debt, the Trustee is to
perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article 11, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciarv duty to the holders of Senior Debt and the Trustee shall not be liable
to any holder of Senior Debt if it shall mistakenly pay over or deliver to
Holders, the Company or any other Person moneys or assets to which any holder of
Senior Debt shall be entitled by virtue of this Article 11 or otherwise.
Section 11.05. Subrogation to Rights of
Holders of Senior Debt.
Upon the payment in full of all Senior Debt, the Holders of
the Securities shall be subrogated to the rights of the holders of such Senior
Debt to receive payments and distributions of cash, Property and securities
applicable to the Senior Debt until the principal of, premium, if any and
interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of Senior Debt of any
cash, Property or securities to which the Holders of the Securities or the
Trustee would be entitled except for the provisions of this Article 11, and no
payments over pursuant to the provisions of this Article 11 to the holders of
Senior Debt by Holders of the Securities or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Debt and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Debt.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article 11 shall
have been applied, pursuant to the provisions of this Article 11, to the payment
of all amounts payable under the Senior Debt of the Company, then and in such
case the Holders shall be entitled to receive from the holders of such Senior
Debt at the time outstanding any payments or distributions received by such
holders of such Senior Debt in excess of the amount sufficient to pay all
amounts payable under or in respect of such Senior Debt in full in cash or Cash
Equivalents.
Section 11.06. Provisions Solely to Define Relative
Rights.
The provisions of this Article 11 are and are intended solely
for the purpose of defining the relative rights of the Holders of the Securities
on the one hand and the holders of Senior Debt on the other hand. Nothing
contained in this Article 11 or elsewhere in this Indenture or in the Securities
is intended to or shall (a) impair, as among the Company, its creditors other
than holders of Senior Debt and the Holders of the Securities, the obligation of
the Company, which is absolute and unconditional, to pay to the Holders of the
Securities the principal of, premium, if any, and interest on the Securities as
and when the same shall become due and payable in accordance with their terms;
or (b) affect the relative rights against the Company of the Holders of the
Securities and creditors of the Company other than the holders of Senior Debt;
or (c) prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon a Default or an Event of
Default under this Indenture, subject to the rights, if any, under this Article
11 of the holders of Senior Debt (1) in any case, proceeding, dissolution,
liquidation or other winding-up, assignment for the benefit of creditors or
other marshaling of assets and liabilities of the Company referred to in Section
11.02 hereof, to receive, pursuant to and in accordance with such Section, cash,
Property and securities otherwise payable or deliverable to the Trustee or such
Holder, or (2) under the conditions specified in Section 11.03, to prevent any
payment prohibited by such Section or enforce their rights pursuant to Section
11.03(c) hereof.
The failure to make a payment on account of principal of,
premium, if any, or interest on the Securities by reason of any provision of
this Article 11 shall not be construed as preventing the occurrence of a Default
or an Event of Default hereunder.
Section 11.07.....Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the indebtedness of the Company owing to such Holder in the form required in
such proceedings and the causing of such a claim to be approved. If the Trustee
does not file such a claim prior to 30 days before the expiration of the time to
file such a claim, the holders of Senior Debt, or any Representative, may file
such a claim on behalf of Holders of the Securities.
Section 11.08.....No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Debt to enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section 11.08, the holders of Senior Debt may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article 11
or the obligations hereunder of the Holders of the Securities to the holders of
Senior Debt, do any one or more of the following: (1) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Debt or any instrument evidencing the same or any agreement under which Senior
Debt is outstanding; (2) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Debt; (3) release any
Person liable in any manner for the collection or payment of Senior Debt; and
(4) exercise or refrain from exercising any rights against the Company and any
other Person; provided, however, that in no event shall any such actions limit
the right of the Holders of the Securities to take any action to accelerate the
maturity of the Securities pursuant to Article 6 hereof or to pursue any rights
or remedies hereunder or under applicable laws if the taking of such action does
not otherwise violate the terms of this Indenture.
Section 11.09.....Notice to Trustee.
(a) The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the making of any
payment to or by the Trustee at its Corporate Trust Office in respect of the
Securities. Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder of Senior Debt
or from any trustee, fiduciary or agent therefor; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of this Section
11.09, shall be entitled in all respects to assume that no such facts exist;
provided, however, that if the Trustee shall not have received the notice
provided for in this Section 11.09 at least five Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
under this Indenture (including, without limitation, the payment of the
principal of, premium, if any, or interest on any Security), then, anything
herein contained to the contrary notwithstanding but without limiting the rights
and remedies of the holders of Senior Debt or any trustee, fiduciary or agent
therefor, the Trustee shall have full power and authority to receive such money
and to apply the same to the purpose for which such money was received and shall
not be affected by any notice to the contrary which may be received by it within
five Business Days prior to such date; nor shall the Trustee be charged with
knowledge of the curing of any such default or the elimination of the act or
condition preventing any such payment unless and until the Trustee shall have
received an Officers' Certificate to such effect.
(b) Subject to the provisions of Section 7.01 hereof, the
Trustee shall be entitled to rely on the delivery to it of a written notice to
the Trustee and the Company by a Person representing itself to be a holder of
Senior Debt (or a trustee, fiduciary or agent therefor) to establish that such
notice has been given by a holder of Senior Debt (or a trustee, fiduciary or
agent therefor); provided, however, that failure to give such notice to the
Company shall not affect in any way the ability of the Trustee to rely on such
notice. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article 11, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article 11, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
Section 11.10. Reliance on Judicial Order or
Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company
referred to in this Article 11, the Trustee, subject to the provisions of
Section 7.01 hereof, and the Holders shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding-up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
Senior Debt and other Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 11; provided that the foregoing shall apply
only if such court has been fully apprised of the provisions of this Article 11.
Section 11.11.....Rights of Trustee as a Holder of Senior
Debt; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article 11 with respect to any Senior Debt
which may at any time be held by it, to the same extent as any other holder of
Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article 11 shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 7.07 hereof.
Section 11.12.....Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article 11 in addition to or in place of the Trustee.
Section 11.13.....No Suspension of Remedies.
Nothing contained in this Article 11 shall limit the right of
the Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article 6 or to pursue any rights or
remedies hereunder or under applicable law, subject to the rights, if any, under
this Article 11 of the holders, from time to time, of Senior Debt.
ARTICLE 12
CONVERSION OF SECURITIES
Section 12.01. Conversion Privilege.
Subject to and upon compliance with the provisions of this
Article 12, at the option of the Holder thereof, any Security may at any time be
converted, in whole, or in part in integral multiples of $1,000 principal
amount, into fully paid and non-assessable shares of (i) Class A Common Stock or
(ii) in the case of the Initial Holder only, if the Initial Holder determines in
its sole discretion that it is prevented under applicable laws and regulations
of the FCC from holding shares of Class A Common Stock issuable upon conversion
of its Securities, shares of non-voting Common Stock of the Company (which upon
disposition by the Initial Holder shall automatically be converted into shares
of Class A Common Stock), at the Conversion Price in effect at the Date of
Conversion (as hereinafter defined), plus, without duplication, the accumulated
and unpaid interest on the principal amount of the Security being surrendered
for conversion, until and including, but not after the close of business on the
Maturity Date, unless such Security or some portion thereof shall have been
called for redemption prior to such date and no default is made in making due
provision for the payment of the redemption price in accordance with the terms
of this Indenture, in which case, with respect to such Security or portion
thereof as has been so called for redemption or delivered for repurchase, such
Security or portion thereof may be so converted until and including, but not
after, the close of business on the fifth Business Day immediately prior to the
Redemption Date for such Security, unless the Company subsequently fails to pay
the applicable Redemption Price.
Section 12.02. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of
any Security to be converted shall surrender such Security to the Company at any
time during usual business hours at its office or agency maintained for the
purpose as provided in this Indenture, accompanied by a fully executed written
notice, in substantially the form set forth on the reverse of the Security, that
the Holder elects to convert such Security or a stated portion thereof
constituting an integral multiple of $1,000 principal amount, and, if such
Security is surrendered for conversion during the period between the close of
business on any record date and the opening of business on the next following
Interest Payment Date and has not been called for redemption on a Redemption
Date which occurs within such period, accompanied also by payment of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of the Security being surrendered for conversion, notwithstanding such
conversion. Such notice of conversion shall also state the name or names (with
address) in which the certificate or certificates for shares of Company Common
Stock shall be issued. Securities surrendered for conversion shall (if
reasonably required by the Company or the Trustee) be duly endorsed by, or be
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company duly executed by, the Holder or his attorney duly
authorized in writing. As promptly as practicable after the receipt of such
notice and the surrender of such Security as aforesaid, the Company shall,
subject to the provisions of Section 12.08 hereof, issue and deliver at such
office or agency to such Holder, or on his written order, a certificate or
certificates for the number of full shares of Company Common Stock issuable on
such conversion of Securities in accordance with the provisions of this Article
12 and Cash, as provided in Section 12.03 hereof, if any, in respect of any
fraction of a share of Company Common Stock otherwise issuable upon such
conversion. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date (herein called the "Date of
Conversion") on which such Security shall have been surrendered as aforesaid,
and the person or persons in whose name or names any certificate or certificates
for shares of Company Common Stock shall be issuable upon such conversion shall
be deemed to have become on the Date of Conversion the holder or holders of
record of the shares represented thereby; provided, however, that any such
surrender on any date when the stock transfer books of the Company shall be
closed shall cause the person or persons in whose name or names the certificate
or certificates for such shares are to be issued to be deemed to have become the
record holder or holders thereof for all purposes at the opening of business on
the next succeeding day on which such stock transfer books are open, but such
conversion shall nevertheless be at the Conversion Price in effect at the close
of business on the date when such Security shall have been so surrendered with
the conversion notice. In the case of conversion of a portion, but less than
all, of a Security, the Company shall as promptly as practicable execute, and
the Trustee shall thereafter authenticate and deliver to the Holder thereof, at
the expense of the Company, a Security or Securities in the aggregate principal
amount of the unconverted portion of the Security surrendered.
Section 12.03. Fractional Interests.
No fractions of shares or scrip representing fractions of
shares shall be issued upon conversion of Securities. If more than one Security
shall be surrendered for conversion at one time by the same Holder, the number
of full shares which shall be issuable upon conversion thereof shall be computed
on the basis of the aggregate principal amount of the Securities so surrendered.
If any fraction of a share of Company Common Stock would, except for the
foregoing provisions of this Section 12.03, be issuable on the conversion of any
Security or Securities, the Company shall, at its sole option, either round up
the number of shares of Company Common Stock to be issued to Holder of such
Security or Securities or make payment to such Holder in lieu thereof in an
amount of Cash equal to the value of such fraction computed on the basis of the
current market price of the Class A Common Stock at the close of business on the
first Business Day preceding the Date of Conversion.
Section 12.04. Conversion Price.
The conversion price per share of Company Common Stock
issuable upon conversion of the Securities (as such price may be adjusted,
herein called the "Conversion Price") shall initially be $13.0110228131 (which
reflects a conversion rate of 76.85790845 shares of Class A Common Stock per
$1,000 in principal amount of Securities).
Section 12.05. Adjustment of Conversion Price.
(i) The Conversion Price shall be subject to adjustment from
time to time as follows:
(a) In case the Company shall (I) pay a dividend or
distribution in shares of its Class A Common Stock on its shares of Class A
Common Stock, (II) subdivide its outstanding shares of Class A Common Stock into
a greater number of shares, (III) combine its outstanding shares of Class A
Common Stock into a smaller number of shares, or (IV) issue, by reclassification
of its shares of Class A Common Stock, any shares of its Capital Stock (each
such transaction being called a "Stock Transaction"), then and in each such
case, the Conversion Price in effect immediately prior thereto shall be adjusted
so that the Holder of a Security surrendered for conversion after the record
date fixing stockholders to be affected by such Stock Transaction shall be
entitled to receive upon conversion (per $1000 in principal amount of
Securities) the number of shares of Company Common Stock which such Holder would
have been entitled to receive after the happening of such event had such
Security been converted immediately prior to such record date. Such adjustment
shall be made whenever any of such events shall happen, but shall also be
effective retroactively as to Securities converted between such record date and
the date of the happening of any such event.
(b) If the Company shall, at any time or from time to time
while any Securities are outstanding, issue, sell or distribute any right or
warrant to purchase, acquire or subscribe for shares of Class A Common Stock
(including a right or warrant with respect to any security convertible into or
exchangeable for shares of Class A Common Stock) generally to holders of Class A
Common Stock (including by way of a reclassification of shares or a
recapitalization of the Company), for a consideration on the date of such
issuance, sale or distribution less than the Common Stock Trading Price of the
shares of Class A Common Stock underlying such rights or warrants on the date of
such issuance, sale or distribution, then and in each such case, the Conversion
Price shall be adjusted by multiplying such Conversion Price by a fraction, the
numerator of which shall be the sum of (I) the Common Stock Trading Price per
share of Company Common Stock on the first trading day after the date of the
public announcement of the actual terms (including the price terms) of such
issuance, sale or distribution multiplied by the number of shares of Class A
Common Stock outstanding immediately prior to such issuance, sale or
distribution plus (II) the aggregate Fair Market Value of the consideration to
be received by the Company in respect of the purchase of the shares of Class A
Common Stock underlying such right or warrant, and the denominator of which
shall be the Common Stock Trading Price per share of Class A Common Stock on the
trading day immediately preceding the public announcement of the actual terms
(including the price terms) of such issuance, sale or distribution multiplied by
the aggregate number of shares of Class A Common Stock (I) outstanding
immediately prior to such issuance, sale or distribution plus (II) underlying
such rights or warrants at the time of such issuance. For the purposes of the
preceding sentence, the aggregate consideration receivable by the Company in
connection with the issuance, sale or distribution of any such right or warrant
shall be deemed to be equal to the sum of the aggregate offering price (before
deduction of reasonable underwriting discounts or commissions and expenses) of
all such rights or warrants.
(c) In the event the Company shall at any time or from time to
time while any Securities are outstanding declare, order, pay or make a dividend
or other distribution generally to holders of its Common Stock in stock or other
securities or rights or warrants to subscribe for securities of the Company or
any of its subsidiaries or evidences of indebtedness of the Company or any other
person or pay any Extraordinary Cash Dividend (other than any dividend or
distribution on the Class A Common Stock (I) referred to in clauses (a) or (b)
or (II) if in conjunction therewith the Company declares and pays or makes a
dividend or distribution on each share of Series B Convertible Preferred Stock
which is the same as the dividend or distribution that would have been made or
paid with respect to such share of Series B Convertible Preferred Stock had such
share been converted into shares of Class A Common Stock immediately prior to
the record date for any such dividend or distribution on the Class A Common
Stock), then, and in each such case, an appropriate adjustment to the Conversion
Price shall be made so that the Holder of each Security shall be entitled to
receive, upon the conversion thereof (per $1000 in principal amount of
Securities), the number of shares of Company Common Stock determined by
multiplying (x) the number of shares of Company Common Stock into which such
Security was convertible on the day immediately prior to the record date fixed
for the determination of stockholders entitled to receive such dividend or
distribution by (y) a fraction, the numerator of which shall be the Common Stock
Trading Price per share of Company Common Stock as of such record date, and the
denominator of which shall be such Common Stock Trading Price per share of Class
A Common Stock less the Fair Market Value per share of Class A Common Stock of
such dividend or distribution (as determined in good faith by the Board of
Directors, as evidenced by a Board Resolution mailed to each Securityholder). An
adjustment made pursuant to this clause (c) shall be made upon the opening of
business on the next business day following the date on which any such dividend
or distribution is made and shall be effective retroactively to the close of
business on the record date fixed for the determination of stockholders entitled
to receive such dividend or distribution.
(ii) The Company may, at its option, also make such reductions
in the Conversion Price in addition to those set forth above, as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
shares of Company Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for United
States federal income tax purposes.
(iii) In any case in which this Section 12.05 shall require
that an adjustment be made immediately following a record date, the Company may
elect to defer the effectiveness of such adjustment (but in no event until a
date later than the effective time of the event giving rise to such adjustment),
in which case the Company shall, with respect to any Security converted after
such record date and on and before such adjustment shall have become effective
(x) defer paying any Cash payment pursuant to Section 12.03 hereof or issuing to
the Holder of such Security the number of shares of Company Common Stock and
other capital stock of the Company (or other assets or securities) issuable upon
such conversion in excess of the number of shares of Company Common Stock
issuable thereupon only on the basis of the Conversion Price prior to
adjustment, and (y) not later than five Business Days after such adjustment
shall have become effective, pay to such Holder the appropriate Cash payment
pursuant to Section 12.03 hereof and issue to such Holder the additional shares
of Company Common Stock and other capital stock of the Company (or other assets
or securities) issuable on such conversion.
(iv) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1.0% of
the Conversion Price; provided, that any adjustments which by reason of this
subsection (iv) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(v) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly (x) file with the Trustee and each
conversion agent an Officers' Certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment, which certificate shall be conclusive evidence of the
correctness of such adjustment, and (y) mail or cause to be mailed a notice of
such adjustment to each holder of Securities at his address as the same appears
on the registry books of the Company.
(vi) In the event that the Company distributes rights or
warrants (other than those referred to in clause (c) of subsection (i) above)
pro rata to holders of Class A Common Stock, so long as any such rights or
warrants have not expired or been redeemed by the Company, the Company shall
make proper provision so that the Holder of any Security surrendered for
conversion will be entitled to receive upon such conversion, in addition to the
shares of Company Common Stock issuable upon such conversion (the "Conversion
Shares"), a number of rights or warrants to be determined as follows: (x) if
such conversion occurs on or prior to the date for the distribution to the
holders of rights or warrants of separate certificates evidencing such rights or
warrants (the "Distribution Date"), the same number of rights or warrants to
which a holder of a number of shares of Class A Common Stock equal to the number
of Conversion Shares is entitled at the time of such conversion in accordance
with the terms and provisions of and applicable to the rights or warrants, and
(y) if such conversion occurs after such Distribution Date, the same number of
rights or warrants to which a holder of the number of shares of Company Common
Stock into which the principal amount of such Security so converted was
convertible immediately prior to such Distribution Date would have been entitled
on such Distribution Date in accordance with the terms and provisions of and
applicable to the rights or warrants.
(vii) The Company shall cause the shares of Class A Common
Stock (or in the case of the Initial Holder's election to convert into
non-voting Common Stock of the Company, upon conversion to such non-voting
Common Stock) issuable upon conversion of the Securities to be approved for
listing on the American Stock Exchange (or such other principal securities
exchange on which the Company Common Stock may at the time be listed for
trading), subject to official notification of issuance, prior to the date of
issuance thereof.
Section 12.06.....Continuation of Conversion Privilege in
Case of Reclassification, Change, Merger, Consolidation or
Sale of Assets.
If any of the following shall occur, namely: (a) any
reclassification or change of outstanding shares of Company Common Stock
issuable upon conversion of the Securities (other than a change in par value, or
from par value to no par value, or from no par value, to par value, or as a
result of a subdivision or combination), (b) any consolidation or merger of the
Company with or into any other Person, or the merger of any other Person with or
into the Company (other than a merger which does not result in any
reclassification, change, conversion, exchange or cancellation of outstanding
shares of Company Common Stock) or (c) any sale, transfer or conveyance of all
or substantially all of the assets of the Company (computed on a consolidated
basis), then the Company, or such successor or purchasing entity, as the case
may be, shall, as a condition precedent to such reclassification, change,
consolidation, merger, sale or conveyance, execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right to convert such Security only into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, consolidation, merger, sale,
transfer or conveyance by a holder of the number of shares of Class A Common
Stock issuable upon conversion of such Security immediately prior to such
reclassification, change, consolidation, merger, sale, transfer or conveyance
assuming such holder of Class A Common Stock failed to exercise his rights of an
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such reclassification, change, consolidation, merger,
sale, transfer or conveyance (provided that if the kind or amount of securities,
cash, and other property receivable upon such reclassification, change,
consolidation, merger, sale, transfer or conveyance is not the same for each
share of Class A Common Stock held immediately prior to such reclassification,
change, consolidation, merger, sale, transfer or conveyance in respect of which
such rights of election shall not have been exercised ("non-electing share"),
then for the purpose of this Section 12.06 the kind and amount of securities,
cash and other property receivable upon such reclassification, change,
consolidation, merger, sale, transfer or conveyance by each non-electing share
shall be deemed to be the kind and amount so receivable per share by a plurality
of the non-electing shares). Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 12. If, in the case of any such
consolidation, merger, sale or conveyance, the stock or other securities and
property (including cash) receivable thereupon by a holder of shares of Class A
Common Stock includes shares of stock or other securities and property
(including cash) of a company other than the successor or purchasing company, as
the case may be, in such consolidation, merger, sale or conveyance, then such
supplemental indenture shall also be executed by such other company and shall
contain such additional provisions to protect the interests of the Holders of
the Securities as the Board of Directors of the Company shall reasonably
consider necessary by reason of the foregoing. The provisions of this Section
12.06 shall similarly apply to successive consolidations, mergers, sales or
conveyances.
Notice of the execution of each such supplemental indenture
shall be mailed to each Holder of Securities at his address as the same appears
on the registry books of the Company.
Neither the Trustee nor any conversion agent shall be under
any responsibility to determine the correctness of any provisions contained in
any such supplemental indenture relating either to the kind or amount of shares
of stock or securities or property (including Cash) receivable by Holders of
Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, sale or conveyance or to any
adjustment to be made with respect thereto, but, subject to the provisions of
Article 7 hereof, may accept as conclusive evidence of the correctness of any
such provisions, and shall be protected in relying upon, the Officers'
Certificate (which the Company shall be obligated to file with the Trustee prior
to the execution of any such supplemental indenture) with respect thereto.
Section 12.07. Notice of Certain Events.
In case:
(a) the Company shall declare a dividend (or any other
distribution) payable to the holders of any Company Common Stock (other than
cash dividends);
(b) the Company shall authorize the granting to the holders of
any Company Common Stock of rights, warrants or options to subscribe for or
purchase any shares of stock of any class or of any other rights;
(c) the Company shall authorize any reclassification or change
of any of the Company Common Stock (including a subdivision or combination of
its outstanding shares of Company Common Stock), or any consolidation or merger
to which the Company is a party and for which approval of any stockholders of
the Company is required, or the sale or conveyance of all or substantially all
the property or business of the Company; or
(d) there shall be proposed any voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, the Company shall cause to be filed at the office or agency maintained for
the purpose of conversion of the Securities as provided in Section 12.02 hereof,
and shall cause to be mailed to each Holder of Securities, at his address as it
shall appear on the registry books of the Company, at least 20 days before the
date hereinafter specified (or the earlier of the dates hereinafter specified,
in the event that more than one date is specified), a notice stating the date on
which (1) a record is expected to be taken for the purpose of such dividend,
distribution, rights, warrants or options or offer, or if a record is not to be
taken, the date as of which the holders of Company Common Stock of record to be
entitled to such dividend, distribution, rights, warrants or options are to be
determined, or (2) such reclassification, change, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding-up is expected to become
effective and the date, if any is to be fixed, as of which it is expected that
holders of Company Common Stock of record shall be entitled to exchange their
shares of Company Common Stock for securities or other property deliverable upon
such reclassification, change, consolidation, merger, sale, conveyance,
dissolution, liquidation or winding-up.
Section 12.08. Taxes on Conversion.
The Company will pay any and all documentary, stamp or similar
taxes payable to the United States of America or any political subdivision or
taxing authority thereof or therein in respect of the issue or delivery of
shares of Company Common Stock on conversion of Securities pursuant thereto;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issue or delivery of
shares of Company Common Stock in a name other than that of the Holder of the
Securities to be converted and no such issue or delivery shall be made unless
and until the person requesting such issue or delivery has paid to the Company
the amount of any such tax or has established, to the satisfaction of the
Company, that such tax has been paid. The Company extends no protection with
respect to any other taxes imposed in connection with conversion of Securities.
Section 12.09. Company to Provide Stock.
The Company shall reserve, free from pre-emptive rights, out
of its authorized but unissued shares, sufficient shares to provide for the
conversion of the Securities from time to time as such Securities are presented
for conversion, provided, that nothing contained herein shall be construed to
preclude the Company from satisfying its obligations in respect of the
conversion of Securities by delivery of repurchased shares of Company Common
Stock which are held in the treasury of the Company.
If any shares of Company Common Stock to be reserved for the
purpose of conversion of Securities hereunder require registration with or
approval of any governmental authority under any Federal or state law before
such shares may be validly issued or delivered upon conversion, then the Company
covenants that it will in good faith and as expeditiously as possible use all
reasonable efforts to secure such registration or approval, as the case may be,
provided, however, that nothing in this Section 12.09 shall be deemed to limit
in any way the obligations of the Company provided in this Article 12.
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value, if any, of the Company
Common Stock, the Company will take all corporate action which may, in the
Opinion of Counsel, be necessary in order that the Company may validly and
legally issue fully paid and non-assessable shares of Company Common Stock at
such adjusted Conversion Price.
The Company covenants that all shares of Company Common Stock
which may be issued upon conversion of Securities will upon issue be fully paid
and non-assessable by the Company and free of preemptive rights.
Section 12.10.....Disclaimer of Responsibility for Certain
Matters. Neither the Trustee nor any agent of the Trustee
shall at any time be under any duty or responsibility to any
Holder of Securities to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the Officers' Certificate
referred to in Section 12.05 hereof, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed, or herein
or in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor any agent of the Trustee shall be accountable with
respect to the validity or value (or the kind or amount) of any shares of
Company Common Stock, or of any securities or property (including cash), which
may at any time be issued or delivered upon the conversion of any Security; and
neither the Trustee nor any conversion agent makes any representation with
respect thereto. Neither the Trustee nor any agent of the Trustee shall be
responsible for any failure of the Company to issue, register the transfer of or
deliver any shares of Company Common Stock or stock certificates or other
securities or property (including cash) upon the surrender of any Security for
the purpose of conversion or, subject to Article 7 hereof, to comply with any of
the covenants of the Company contained in this Article 12.
Section 12.11.....Return of Funds Deposited for Redemption of
Converted Securities. Any funds which at any time shall have
been deposited by the Company or on its behalf with the
Trustee or any
other paying agent for the purpose of paying the principal of and interest on
any of the Securities and which shall not be required for such purposes because
of the conversion of such Securities, as provided in this Article 12, shall
after such conversion be repaid to the Company by the Trustee or such other
paying agent.
ARTICLE 13
MISCELLANEOUS
Section 13.01.....Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
Section 13.02.....Notices.
Any notice or communication shall be given in writing and
delivered in person, sent by facsimile, delivered by commercial courier service
or mailed by first-class mail, postage prepaid, addressed as follows:
If to the Company or any Guarantor:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Chief Financial Officer
General Counsel
Copy to:
Holland & Knight LLP
400 North Ashley
Suite 2300
Tampa, Florida 33602
Attention: Michael L. Jamieson, Esq.
If to the Trustee:
Such notices or communications shall be effective when
received and shall be sufficiently given if so given within the time prescribed
in this Indenture.
The Company, the Guarantors or the Trustee by written notice
to the others may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed to a Securityholder shall
be mailed to him by first-class mail, postage prepaid, at his address shown on
the register kept by the Registrar.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication to a Securityholder is mailed in
the manner provided above, it shall be deemed duly given, whether or not the
addressee receives it.
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
Section 13.03. Communications by Holders with Other
Holders.
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Guarantors, the Trustee, the Registrar and
anyone else shall have the protection of TIA ss. 312(c).
Section 13.04. Certificate and Opinion as to
Conditions Precedent.
Upon any request or application by the Company or any
Guarantor to the Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 13.05 below) stating that, in the
opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 13.05 below) stating that, in the
opinion of such counsel, all such conditions precedent have been
complied with.
Section 13.05. Statements Required in Certificate
and Opinion.
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, it or
he has made such examination or investigation as is necessary to enable
it or him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with.
Section 13.06.....When Treasury Securities Disregarded.
In determining whether the Holders of the required aggregate
principal amount of Securities have concurred in any direction, waiver or
consent, Securities owned by the Company, any Guarantor or any other obligor on
the Securities or by any Affiliate of any of them shall be disregarded, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which the
Trustee actually knows are so owned shall be so disregarded. Securities so owned
which have been pledged in good faith shall not be disregarded if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to the Securities and that the pledgee is not the Company, a
Guarantor or any other obligor upon the Securities or any Affiliate of any of
them.
Section 13.07.....Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or
meetings of Securityholders. The Registrar and Paying Agent may make reasonable
rules for their functions..
Section 13.08.....Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A
"Legal Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day
on which banking institutions are not required to be open in the State of New
York. If a payment date is a Legal Holiday at a place of payment, payment may be
made at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue for the intervening period.
Section 13.09.....Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE OR THE SECURITIES.
Section 13.10. No Adverse Interpretation of Other
Agreements.
This Indenture may not be used to interpret another indenture,
loan, security or debt agreement of the Company or any subsidiary thereof. No
such indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 13.11.....No Recourse Against Others.
No recourse for the payment of the principal of or premium, if
any, or interest on any of the Securities, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company or any Guarantor in this Indenture or in
any supplemental indenture, or in any of the Securities, or because of the
creation of any Indebtedness represented thereby, shall be had against any
stockholder, officer, director or employee, as such, past, present or future, of
the Company or of any successor corporation or against the Property or assets of
any such stockholder, officer, employee or director, either directly or through
the Company or any Guarantor, or any successor corporation thereof, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that this
Indenture and the Securities are solely obligations of the Company and the
Guarantors, and that no such personal liability whatever shall attach to, or is
or shall be incurred by, any stockholder, officer, employee or director of the
Company or any Guarantor, or any successor corporation thereof, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or the
Securities or implied therefrom, and that any and all such personal liability
of, and any and all claims against every stockholder, officer, employee and
director, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issuance of the
Securities. It is understood that this limitation on recourse is made expressly
for the benefit of any such shareholder, employee, officer or director and may
be enforced by any of them.
Section 13.12.....Successors.
All agreements of the Company and the Guarantors in this
Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee, any additional trustee and any Paying Agents in this
Indenture shall bind its successor.
Section 13.13.....Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 13.14.....Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 13.15.....Separability.
Each provision of this Indenture shall be considered separable
and if for any reason any provision which is not essential to the effectuation
of the basic purpose of this Indenture or the Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed, and the Company's corporate seal to be hereunto affixed and
attested, all as of the date and year first written above.
PAXSON COMMUNICATIONS CORPORATION,
(a Delaware Corporation)
By:
Name:
Title:
PAXSON COMMUNICATIONS MANAGEMENT COMPANY
(a Florida corporation)
EXCEL MARKETING ENTERPRISES, INC.
(a Florida corporation)
PAXSON SPORTS OF MIAMI, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS TELEVISION, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ATLANTA-14, INC.
(a Florida corporation)
PAXSON ATLANTA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BOSTON-60, INC.
(a Florida corporation)
PAXSON BOSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DALLAS-68, INC.
(a Florida corporation)
PAXSON DALLAS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW LONDON-26, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
PHILADELPHIA-61, INC.
(a Florida corporation)
PAXSON PHILADELPHIA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SAN JOSE-65, INC.
(a Florida corporation)
PAXSON SAN JOSE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TAMPA-66, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LOS ANGELES-30, INC.
(a Florida corporation)
PAXSON LOS ANGELES LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MINNEAPOLIS-41, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ST. LOUIS-13, INC.
(a Florida corporation)
PAXSON MINNEAPOLIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ORLANDO-56, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF HOUSTON-49, INC.
(a Florida corporation)
PAXSON HOUSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF CLEVELAND-87, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WASHINGTON-60, INC.
(a Florida corporation)
PAXSON WASHINGTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHOENIX-13, INC.
(a Florida corporation)
PAXSON PHOENIX LICENSE, INC.
(a Florida corporation)
INFOMALL LOS ANGELES, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MILWAUKEE-55, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DENVER-59, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW YORK-43, INC.
(a Florida corporation)
PAXSON NEW YORK LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF AKRON-23, INC.
(a Florida corporation)
PAXSON AKRON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DAYTON-26,INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
BATTLE CREEK-43, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ALBANY-55, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
RALEIGH DURHAM-47, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SAN JUAN, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS L.P.T.V., INC.
(a Florida corporation)
PAXSON DAYTON LICENSE, INC.
(a Florida corporation)
PAXSON DENVER LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PROVIDENCE-69, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF GREENSBORO-16, INC.
(a Florida corporation)
PAXSON GREENSBORO LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TULSA-44, INC.
(a Florida corporation)
PAXSON SPORTS VENTURES COMPANY
(a Florida corporation)
PCC DIRECT, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
OKLAHOMA CITY-62, INC.
(a Florida corporation)
PAXSON ALBANY LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SACRAMENTO-29, INC.
(a Florida corporation)
PAXSON SACRAMENTO LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHOENIX-51, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BOSTON-46, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC.
(a Florida corporation)
PAXSON LITTLE ROCK LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BIRMINGHAM-44, INC.
(a Florida corporation)
PAXSON BIRMINGHAM LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SEATTLE-33, INC.
(a Florida corporation)
PAXSON SEATTLE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
SALT LAKE CITY-30, INC.
(a Florida corporation)
PAXSON SALT LAKE CITY LICENSE, INC.
(a Florida corporation)
PAXSON OKLAHOMA CITY LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WASHINGTON-66, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SCRANTON-64, INC.
(a Florida corporation)
PAXSON SCRANTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF KANSAS CITY-50, INC.
(a Florida corporation)
PAXSON KANSAS CITY LICENSE, INC.
(a Florida corporation)
PAXSON MILWAUKEE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF HARTFORD-18, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PITTSBURGH-40, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DETROIT-31, INC.
(a Florida corporation)
PAXSON DETROIT LICENSE, INC.
(a Florida corporation)
PAXSON PITTSBURGH LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ROANOKE-38, INC.
(a Florida corporation)
PAXSON ROANOKE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FRESNO-61, INC.
(a Florida corporation)
PAXSON FRESNO LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NASHVILLE-28, INC.
(a Florida corporation)
PAXSON TENNESSEE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICAITONS OF CEDER RAPIDS-48, INC.
(a Florida corporation)
PAXSON CEDAR RAPIDS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BUFFALO-51, INC.
(a Florida corporation)
PAXSON BUFFALO LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF GREEN BAY-14, INC.
(a Florida corporation)
PAXSON GREEN BAY LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TUCSON-46, INC.
(a Florida corporation)
PAXSON TUCSON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW YORK-31, INC.
(a Florida corporation)
PAXSON MIAMI-35 LICENSE, INC.
(a Florida corporation)
PAXSON TAMPA-66 LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF HAWAII-66, INC.
(a Florida corporation)
PAXSON HAWII LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LOS ANGELES-63, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ALBUQUERQUE-14, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FAYETTEVILLE-62, INC.
(a Florida corporation)
PAXSON FAYETTEVILLE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF CHARLESTON-29, INC.
(a Florida corporation)
PAXSON CHARLESTON LICENSE, INC.
(a Florida corporation)
JETSTAR DEVELOPMENT, INC.
(a Florida corporation)
PAXSON TELEVISION PRODUCTIONS, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SYRACUSE-56, INC.
(a Florida corporation)
PAXSON SYRACUSE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DECATUR-23, INC.
(a Florida corporation)
PAXSON DECATUR LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW ORLEANS-49, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MEMPHIS-50, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF KNOXVILLE-54, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PORTLAND-23, INC.
(a Florida corporation)
PAXSON ORLANDO LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF CHICAGO-38, INC.
(a Florida corporation)
PAXSON CHICAGO LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NORFOLK-49, INC.
(a Florida corporation)
PAXSON ALBUQUERQUE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DAVENPORT-67, INC.
(a Florida corporation)
PAXSON DAVENPORT LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DES MOINES-39, INC.
(a Florida corporation)
PAXSON DES MOINES LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF GREENVILLE-38, INC.
(a Florida corporation)
PAXSON GREENVILLE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF JACKSON-51, INC.
(a Florida corporation)
PAXSON JACKSON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MOBILE-61, INC.
(a Florida corporation)
PAXSON MOBILE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ODESSA-30, INC.
(a Florida corporation)
PAXSON ODESSA LICENSE, INC.
(a Florida corporation)
PAXSON PORTLAND LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SHREVEPORT-21, INC.
(a Florida corporation)
PAXSON SHREVEPORT LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SPOKANE-34, INC.
(a Florida corporation)
PAXSON SPOKANE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ST. CROIX-15, INC.
(a Florida corporation)
PAXSON ST. CROIX LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SPRINGFIELD-34, INC.
(a Florida corporation)
PAXSON SPRINGFIELD LICENSE, INC.
(a Florida corporation)
<PAGE>
CHANNEL 56 OF ORLANDO, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
WEST PALM BEACH-67, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LEXINGTON-67, INC.
(a Florida corporation)
PAXSNO LEXINGTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PORTLAND-22, INC.
(a Florida corporation)
PAXSON SALEM LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SAN ANTONIO-26, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FARGO-27, INC.
(a Florida corporation)
PAXSON TULSA LICENSE, INC.
(a Florida corporation)
PAXSON KNOXVILLE LICENSE, INC.
(a Florida corporation)
PAX NET TELEVISION PRODUCTIONS, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WAUSAU-46, INC.
(a Florida corporation)
PAXSON WAUSAU LICENSE, INC.
(a Florida corporation)
PAXSON FARGO LICENSE, INC.
(a Florida corporation)
COCOLA MEDIA CORPORATION OF FLORIDA
(a Delaware corporation)
PAXSON COMMUNICATIONS LICENSE COMPANY, LLC
(a Delaware limited liability company)
OCEAN STATE TELEVISION, L.L.C.
(a Delaware limited liability company)
<PAGE>
PAXSON COMMUNICATIONS CORPORATION
(a Delaware corporation)
CHANNEL 44 OF TULSA, INC.
(a Delaware corporation)
THE INFOMALL TV NETWORK INC.
(a Delaware corporation)
PAX NET, INC.
(a Delaware corporation)
TRAVEL CHANNEL ACQUISITION CORPORATION
(a Delaware corporation)
UNITED BROADCAST GROUP II, INC.
( a Texas corporation)
S&E NETWORK, INC.
( a Puerto Rico corporation)
COCOLA MEDIA CORPORATION OF SAN FRANCISCO
(a California corporation)
By:
Name:
Title:
-------------------,
as Trustee
By:
Name:
Title:
<PAGE>
EXHIBIT A
CUSIP NO.
PAXSON COMMUNICATIONS CORPORATION
__% Exchangeable Debentures due 2009
No. $
PAXSON COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Company"), for value received, promises to pay to or
registered assigns the principal sum of Dollars, on December 31, 2009.
Interest Payment Dates: June 30 and December 31
Record Dates: June 15 and December 15
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
PAXSON COMMUNICATIONS CORPORATION
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
Trustee's Certificate of Authentication
This is one of the __% Exchange Debentures due 2009 referred
to in the within-mentioned Indenture.
Dated:
-------------------,
as Trustee
By:
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
___% Exchange Debentures due 2009
1. Interest. PAXSON COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Security at the rate per annum shown above which shall be equal to the
dividend rate on the Series B Preferred Stock then in effect at the Issue Date.
[Notwithstanding the foregoing, if the Issue Date is prior to September 15,
2004, then on September 15, 2004 the interest rate per annum of the Securities
shall be adjusted pursuant to the procedures specified in section (c) of the
Certificate of Designation for the Series B Convertible Preferred Stock, which
rate shall remain in effect thereafter for so long as the Securities shall be
outstanding.]1 Interest on the Securities will accrue from the most recent date
on which interest has been paid or, if no interest has been paid, from the date
of issuance hereof. The Company will pay interest semi-annually in arrears on
each Interest Payment Date, commencing on the first June 30 or December 31 after
the date of issuance hereof. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
Notwithstanding anything herein to the contrary, on each
Interest Payment Date through and including December 31, 2009, the entire amount
of the interest payment on the Securities may be paid, at the option of the
Company, in additional Securities ("Secondary Securities") (valued at 100% of
the principal amount thereof). The Company may, at its option, pay cash in lieu
of issuing any Secondary Security to the extent the principal amount such
Secondary Security is not an integral multiple of $1,000. The Company shall
notify the Trustee of the Company's election to pay interest in Secondary
Securities not less than 10 days prior to the Record Date for an Interest
Payment Date. On each such Interest Payment Date, the Trustee shall authenticate
Secondary Securities for original issuance to each holder of Securities on the
preceding Record Date, as shown on the Security Register, in the amount required
to pay such interest. For purposes of determining the principal amount of
Secondary Securities to be issued in payment of interest, the Company shall be
entitled to aggregate as to each holder the principal amount of all Securities
and Secondary Securities held of record by such holder.
The Company shall pay interest on overdue principal and on
overdue installments of interest from time to time on demand at the rate borne
by the Securities to the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Securities (except defaulted interest) to the Persons who are the registered
Holders at the close of business on the Record Date immediately preceding the
Interest Payment Date even if the Securities are canceled on registration of
transfer or registration of exchange after such Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest (to the extent not paid in Secondary
Securities) in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Company may pay principal and interest by its check payable in such U.S.
Legal Tender. The Company may deliver any such interest payment the Paying Agent
or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, ___________________,
a New York banking corporation (the "Trustee"), will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to the Holders of the Securities. Neither the Company nor any of its
Subsidiaries or Affiliates may act as Paying Agent but may act as registrar or
co-registrar.
4. Indenture and Guarantees; Restrictive Covenants. The
Company issued this Security under an Indenture dated as of September __, 1999
(the "Indenture"), among the Company, the Guarantors and the Trustee. The terms
of this Security include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. code
ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture. This Security is
subject to all such terms, and the Holder of this Security is referred to the
Indenture and said Trust Indenture Act for a statement of them. All capitalized
terms in this Security, unless otherwise defined, have the meanings assigned to
them by the Indenture.
The Securities are general unsecured obligations of the
Company limited to $___,000,000 aggregate principal amount. The Indenture
imposes certain restrictions on, among other things, the incurrence of
indebtedness, the issuance of preferred stock by the Company and its
subsidiaries, mergers and sale of assets, the payments of dividends on, or the
repurchase of, capital stock of the Company and its subsidiaries, certain other
restricted payments by the Company and its subsidiaries, certain transactions
with, and investments in, its affiliates, and a provision regarding
change-of-control transactions.
5. Subordination. The Indebtedness evidenced by the securities
is, to the extent and in the manner provided in the Indenture, subordinated and
subject in right of payment to the prior payment in full of all Senior Debt as
defined in the Indenture and this Security is issued subject to such provisions.
Each Holder of this Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee, on behalf of
such Holder, to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Indenture and (c) appoints the
Trustee attorney-in-fact of such Holder for such purpose; provided, however,
that the Indebtedness evidenced by this Security to be so subordinate and
subject in right of payment upon any defeasance of this Security referred to in
Paragraph 17 below.
6. Optional Redemption. Commencing on September 10, 2004, the Company may, at
its option, at any time and from time to time, redeem, in whole or in part, in
the manner provided for in this paragraph 6, any or all of the outstanding
Securities, at the Redemption Price. For purposes of this paragraph 6,
"Redemption Price" shall mean the product of (i) 80% (.80) of the average of the
Common Stock Trading Price for the ten consecutive trading days ending on the
trading day prior to the date of the Redemption Notice, multiplied by (ii) the
number of Conversion Shares per Security the Holder would have received if the
Holder had converted its Security to Company Common Stock as of the ninetieth
day prior to the Redemption Date.
7. Notice of Redemption. Notice of redemption will be mailed at least 90 days
before the Redemption Date to each Holder of Securities to be redeemed at such
Holder's registered address. Securities in denominations larger than $1,000 may
be redeemed in part.
8. Offers to Purchase. The Indenture requires that certain proceeds from Asset
Sales be used, subject to further limitations contained therein, to make an
offer to purchase certain amounts of Securities in accordance with the
procedures set forth in the Indenture. The Company is also required to make an
offer to Purchase Securities upon occurrence of a Change of Control in
accordance with procedures set forth in the Indenture.
9. Denominations; Transfer; Exchange. The Securities are in registered form,
without coupons, in denominations of $1,000 and integral multiples of $1,000;
provided, however, that Secondary Securities may be issued in denominations of
less than $1,000 (but not less than $1.00). A Holder shall register the transfer
of or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay certain transfer taxes or similar governmental
charges in connection therewith as permitted by the Indenture. The Registrar
need not register the transfer of or exchange any Securities during a period
beginning 15 days before the mailing of a redemption notice for any Securities
or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of this Security shall be
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal, premium or interest
on any Security remains unclaimed for two years, the Trustee and the Paying
Agent will pay the money back to the Company at its request. After that, Holders
entitled to money must look to the Company for payment as general creditors
unless an "abandoned property" law designates another Person.
12. Conversion Rights. Subject to the provisions of the Indenture, the Holders
have the right to convert the principal amount of the Securities into fully paid
and non-assessable shares of Class A Common Stock of the Company (or in the case
of the Initial Holder only, if the Initial Holder determines in its sole
discretion that it is prevented under applicable laws and regulations of the FCC
from holding shares of Class A Common Stock of the Company issuable upon
conversion of its Securities, the shares of non-voting Common Stock of the
Company (which upon disposition by the Initial Holder shall automatically be
converted into shares of Class A Common Stock of the Company)) at the initial
conversion price per share of Class A Common Stock of $13.0110228131, or at the
adjusted conversion price then in effect, if adjustment has been made as
provided in the Indenture, upon surrender of the Security to the Company,
together with a fully executed notice in the form attached hereto and, if
required by the Indenture, an amount equal to accrued interest payable on such
Security.
13. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Securities may be modified, amended or supplemented by the
Company, the Guarantors and the Trustee with the consent of the Holders of at
least a majority in principal amount of the Securities then outstanding and any
existing default or compliance with any provision may be waived in a particular
instance with the consent of the Holders of a majority in principal amount of
the Securities then outstanding. Without the consent of Holders, the Company,
the Guarantors and the Trustee may amend the Indenture or the Securities or
supplement the Indenture for certain specified purposes including providing for
uncertificated Securities in addition to certificated Securities, and curing any
ambiguity, defect or inconsistency, or making any other change that does not
materially and adversely affect the rights of any Holder.
14. Successor Entity. When a successor corporation assumes all the obligations
of its predecessor under the Securities and the Indenture and immediately before
and thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation will be released from those obligations.
15. Defaults and Remedies. Events of Default are set fourth in the Indenture. If
an Event of Default (other than an Event of Default pursuant to Section 6.01(6)
or (7) of the Indenture with respect to the Company) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount of the Securities then outstanding may declare to be
immediately due and payable the entire principal amount of all the Securities
then outstanding plus accrued but unpaid interest to the date of acceleration;
provided, however, that after such acceleration but before judgment or decree
based on such acceleration is obtained by the Trustee, the Holders of a majority
in aggregate principal amount outstanding Securities may, under certain
circumstances, rescind and annul such acceleration and its consequences if,
among other things, all existing Events of Default, other than the nonpayment of
principal, premium or interest that has become due solely because of the
acceleration, have been cured or waived and if the rescission would not conflict
with any judgment or decree. No such rescission shall affect any subsequent
Default or impair any right consequent thereto. In case an Event of Default
specified in Section 6.01(6) or (7) of the Indenture with respect to the Company
occurs, such principal amount, together with premium, if any, and interest with
respect to all of the Securities, shall be due and payable immediately without
any declaration or other act on the part of the Trustee or the Holders of the
Securities.
16. Trustee Dealings With the Company. The Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company, any Guarantor or their Affiliates, and may
otherwise deal with the Company, any Guarantor or their Affiliates as if it were
not Trustee.
17. No Recourse Against Others. As more fully described in the Indenture, a
director, officer, employee or stockholder, as such, of the Company or any
Guarantor shall not have any liability for any obligations of the Company or any
Guarantor under the Securities or the Indenture or for any claim based on, in
respect or by reason of, such obligations or their creation. The Holder of this
Security by accepting this Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of this
Security.
18. Defeasance and Covenant Defeasance. The Indenture contains provisions for
defeasance of the entire indebtedness on this Security and for defeasance of
certain covenants in the Indenture upon compliance by the Company with certain
conditions set forth in the Indenture.
19. Customary abbreviations may be used in the name of a Holder of a Security or
an assignee, such TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (joint tenants with right of survivorship and not as tenants
in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts to Minors Act).
20. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on
Uniform Note Identification Procedures, the Company has caused CUSIP Numbers to
be printed on the Securities and has directed the Trustee to use CUSIP numbers
in notices of redemption as a convenience to Holders of the Securities. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
21. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE OR THE SECURITIES.
THE COMPANY WILL FURNISH TO ANY HOLDER OF A SECURITY UPON
WRITTEN REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE, REQUESTS MAY BE MADE
TO: PAXSON COMMUNICATIONS CORPORATION, 601 Clearwater Park Road, West Palm
Beach, Florida 33401, Attention: General Counsel.
<PAGE>
ASSIGNMENT
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR
TAX I.D. NUMBER
(please print or type name and address)
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing attorney to transfer the Security on the books of the Company
with full power of substitution in the premises.
Dated:
NOTICE: The signature on this assignment must correspond with the
name as it appears upon the face of the within Security in every
particular without alteration or enlargement or any change
whatsoever and be guaranteed by the endorser's bank or broker.
Signature Guarantee:
<PAGE>
FORM OF NOTATION ON SECURITY
RELATING TO GUARANTEE
Each Guarantor (the "Guarantor", which term includes any
successor Person under the Indenture) has unconditionally guaranteed, on a
senior subordinated basis, jointly and severally, to the extent set forth in the
Indenture and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of and interest on the Securities, whether at
maturity, by acceleration or otherwise, the due and punctual payment of interest
on overdue principal, and, to the extent permitted by law, interest, and the due
and punctual performance of all other obligations of the Company to the
Securityholders or the Trustee all in accordance with the terms set forth in
Article 10 of the Indenture, and (b) in case of any extension of time of payment
or renewal of any Securities or any of such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at stated maturity, by acceleration or
otherwise.
The obligations of each Guarantor to the Securityholders and
to the Trustee pursuant to this Guarantee and the Indenture are expressly set
forth in Article 10 of the Indenture and reference is hereby made to the
Indenture for the precise terms of this Guarantee.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Security upon which this
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized signatories.
Guarantors:
By:
Name:
Title:
ATTEST:
Name:
Title:
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Security
purchased by the Company pursuant to Section 4.09 or security 4.15 of the
Indenture, check the appropriate box:
|_| Section 4.09 |_| Section 4.15
If you want to have only part of the Security purchased by the
Company pursuant to Section 4.09 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
Date:
Your Signature:
(Sign exactly as your name appears on the face of this
Security)
Signature Guaranteed
<PAGE>
FORM OF CONVERSION NOTICE
TO: Paxson Communictaions Corporation
The undersigned owner of this Security hereby (I) irrevocably
exercises the option to convert this Security, or the portion hereof below
designated, for shares of Class A Common Stock, or, in the case of the Initial
Holder, at its option, non-voting Common Stock, of Paxson Communications
Corporation in accordance with the terms of the Indenture referred to in this
Security and (II) directs that such shares of Common Stock deliverable upon the
conversion, together with any check in payment for fractional shares and any
Security or Securities representing any uncoverted principal amount hereof, be
issued and delivered to the registered holder unless a different name has been
indicated below. If shares are to be delivered registered in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto. Any amount required to be paid by the undersigned
on account of interest accompanies this Security.
Dated:
------------------------------------
--------------------------
Signature
Fill in for registration of shares if to be delivered, and of
Securities if to be issued, otherwise than to and in the name of the registered
holder.
-----------------------------
Social Security or other
Taxpayer Identifying Number
- -----------------------
(Name)
- -----------------------
(Street Address)
- -----------------------
(City, State and Zip Code)
(Please print name and address)
Principal Amount to be converted
(if less than all)
$--------------------------
<PAGE>
Exhibit 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that General Electric Company
("GE") constitutes and appoints each of the Corporate Counsel, Associate
Corporate Counsel, and Associate Securities Counsel as its true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for and on behalf of GE and in GE's respective name, place and stead, in any and
all capacities, to sign any Statements on Schedule 13D, Schedule 13G, Schedule
14D, Form 3, Form 4 or Form 5 under the Securities Exchange Act of 1934, and any
and all amendments to any thereof, and other documents in connection therewith
(including, without limitation, any joint filing agreement with respect to any
Statement on Schedule 13D, Schedule 13G or 14D or amendment thereto) and to file
the same, with all exhibits thereto, with the Securities and Exchange
Commission, granting unto each said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully and to all intents and purposes
as GE might or could do in person, hereby ratifying and confirming all that each
said attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Dated: February 8, 1999
GENERAL ELECTRIC COMPANY
By:/s/ B. W. Heineman, Jr.
Name: B. W. Heineman, Jr.
Title: Senior Vice President,
General Counsel and Secretary
- --------
1 To be included if Securities are issued prior to September 15, 2004.
